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Green Property Bonds - Market Status and Sector Guidelines - Greenbuild 2016

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GRESB Green Bond Guidelines for the Real Estate Sector update and Green Bond market update

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Green Property Bonds - Market Status and Sector Guidelines - Greenbuild 2016

  1. 1. Green Property Bonds
 Market Status and Sector Guidelines © 2016 GRESB B.V. Greenbuild 2016 Los Angeles, CA Dan Winters, CRE Head of North America
  2. 2. Green Bond Market Growth Continued year-over-year expansion Market firmly established in 2013 (4x growth) 2014 expansion coincided with release of the Green Bond Principles Strong pace seen in 2016 YTD 1 0 5 10 15 20 25 30 35 40 45 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 as of 3Q
  3. 3. Asia-Pacific 12% Europe 55% Global 5% North America 28% Asia-Pacific 42% Europe 29% Global 2% North America 27% Geographic Diversification Early EU domination | rise of Asia Pacific and North America Increasing number of issuers in North America and Asia Pacific Asia-Pacific demonstrating strongest growth in 2016 2 as of 3Q16 2015
  4. 4. Green Property Bond Issuance Real estate market share – trailing 4 years Vasakronan issued first corporate green property bond issuer (2013) YTD 2016 issuance has equaled 2015 total market volume (3Q16) 3 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 2013 2014 2015 2016 REITs Governments Corporates Non-Green Property $ Billions
  5. 5. Green Property Bonds 2016 YTD Issuances 4 MarketScope Commercial Real Estate 10 issuers Listed Real Estate Companies Digital Realty Trust Unibail-Rodamco Vornado Muni / Corporate / Financial Services 55 issuers Municipals Ille de France University of Virginia Mass. Dev. Authority Corporates Skanska Telus Banks ABN AMRO Dev. Bank of Japan TD Bank GSEs Berlin Hyp Fannie Mae NWB Bank
  6. 6. Property Bond Issuers Corporates and financial institutions enter market Corporate issuance is current driving force in green property market YTD 2016 real estate issuance surpassed 2015 total market volume 5 0 2000 4000 6000 8000 10000 12000 2013 2014 2015 2016 Corporates Governments REITs $ Billions
  7. 7. Observations: Metrics Used Identifying eligible green projects in prospectus (pre-issuance) 6 Real Estate Companies Mostly global building certification schemes At least 50% of issuers use mix of local + global certification rating systems ESG factors pursued are broad-based In Common Identify building certification schemes and levels Approx. 60% specify energy reduction / improvement goals Majority have second opinions or similar external review Corporate / Financial Service Objectives / disclosures range widely to include: 3rd party certifications carbon reduction targets social goals 1 in 3 issuers blend regional and global green building schemes Energy ratings tied to country benchmarks
  8. 8. Building Certifications LEED is the most commonly specified building certification system Commercial Real Estate   6 issuers (US focus)   Wider range of certification levels   “Hedging on outcomes” Corporate / Financial Services   35 issuers (global scope)   Tighter range focused at high end   “Pushing the market” Based on prospectus review 7 0 1 2 3 4 5 6 7 Certified Silver Gold Platinum 0 5 10 15 20 25 30 35 40 Certified Silver Gold Platinum
  9. 9. Real Estate Industry Guidance GRESB Green Bond Guidelines 8   Developed as sector guidance complimenting the Green Bond Principles   Provides framework for the full spectrum of real estate issuers and investors   Drawn from GRESB Green Bond Working Group recommendations   Property bond originators   Underwriters and placement firms   Green bond investors
  10. 10. Similarities with Green Bond Principles GRESB Green Bond Guidelines 9 Use of Proceeds Project Evaluation / Selection Process Management of Bond Proceeds Investor and Stakeholder Reporting Used across multiple bond types:   Green Use of Proceeds Bond   Green Use of Proceeds Revenue Bond   Green Project Bond   Green Securitized Bond Spans the full range of construction and real estate investment activities
  11. 11. Green Bond Application Guidelines used in all stages 10 Metrics / KPIs Prospectus (pre-issuance) Process: project evaluation and selection Reporting (post-issuance) Description: actual use of proceeds
  12. 12. Key updates in 2016 GRESB Green Bond Guidelines 11 Social factors and KPIs added to eligible criteria list Implemented suggestions on ways to increase transparency and credibility -- company track record and ongoing monitoring Guidance on relating entity’s sustainability targets to green bond framework Reporting metrics and procedures to communicate environmental impacts and ESG exposure 1 2 3 4
  13. 13. Takeaways Green bond market prospects to 2020+ Green Bond market demonstrating consistent year-over-year expansion Real estate sector is a rapidly growing green bond asset class GRESB offers industry-tailored guidelines to assist bond market participants GRESB Assessment provides benchmark and track record GRESB Green Bond Working Group further evolves industry best practices 12
  14. 14. Case Study Discussion Vasakronan and Digital Realty Trust 13
  15. 15. Questions & Comments ? gresb.com info@gresb.com This presentation reflects the opinions of GRESB and not of our members. The information in the presentation has been provided in good faith and is provided on an “as is” basis. We take reasonable care to check the accuracy and completeness of the presentation prior to its publication. However, the information in the presentation has not been independently verified. In addition, the statements in the presentation may provide current expectations of future events based on certain assumptions. The variety of sources from which we obtain the information in the presentation means that we make no representations and give no warranties, express or implied as to its accuracy, availability, completeness, timeliness, merchantability or fitness for any particular purpose. The presentation is not provided as the basis for any professional advice or for transactional use. GRESB and its advisors, consultants and sub-contractors shall not be responsible or liable for any advice given to third parties, any investment decisions or trading or any other actions taken by you or by third parties based on information contained in the presentation. Except where stated otherwise, GRESB is the exclusive owner of all intellectual property rights in all the information contained in the presentation.

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