This S&P Global Market Intelligence exclusive presents a rundown of recent environmental, social and governance news involving real estate companies.
Real estate investment trusts that own retail properties could try to broaden their investment appeal by arguing that in-person shopping is better for the environment than e-commerce, Compass Point analysts said.
The analysts, Floris van Dijkum and Merrill Ross, cited a Deloitte study indicating that shopping at malls is up to 60% more sustainable than online shopping, factoring in the high rate of product returns for online purchases and the higher average number of purchases per trip for in-person.
Moreover, the analysts commented on green bonds in their May 24 note, saying larger retail landlords are better positioned than their smaller competitors to issue green bonds, which can help REITs broaden their investor base. Still, they added, "transparency and accountability are important for this market to become more widely accepted," since there is currently no commonly accepted definition of a green bond standard.
Green financing
* Equinix Inc. priced a $1.0 billion green bond offering, its third, as part of a larger $2.6 billion bond transaction.
The digital infrastructure REIT plans to allocate an amount equal to the green bonds' net proceeds to finance or refinance the development or redevelopment of eligible green projects. Until the money is allocated, the company plans to temporarily use the proceeds of the green bonds offering to repay part of its term loan facility and redeem senior notes.
BofA Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, MUFG Securities Americas Inc. and SMBC Nikko Securities America Inc. were joint bookrunning managers for the offering.
* Vornado Realty Trust priced its second green bond offering, a $750 million transaction in which the proceeds were to be allocated to eligible green projects. Pending that allocation, the company said the proceeds would go toward repaying mortgage debt. Vornado's prior green bond deal was completed in June 2014.
Citigroup Global Markets Inc., BMO Capital Markets Corp., J.P. Morgan Securities LLC, Mizuho Securities USA LLC, PNC Capital Markets LLC, TD Securities (USA) LLC, Barclays Capital Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and U.S. Bancorp Investments Inc. were the joint bookrunning managers.
* A unit of CyrusOne Inc. priced a €500 million offering of senior notes, with plans to allocate an amount equal to the net proceeds toward green building, renewable energy, energy efficiency, sustainable water and wastewater management, pollution prevention and control, and clean transportation projects.
The data center REIT plans to use some of the offering's proceeds to repay euro-denominated borrowings under its credit facility.
* Terreno Realty Corp. said it plans to sell $150 million of senior unsecured notes in a private placement, allocating net proceeds to green buildings that will be LEED, BREEAM or Energy Star certified or directing net proceeds toward projects that improve energy efficiency, sustainable water and wastewater management, and renewable energy.
PNC Capital Markets LLC was the joint lead placement agent for the offering.
* American Campus Communities Inc. amended its $1.0 billion senior unsecured revolving credit facility to include a provision under which its borrowing rate improves if it meets certain annual ESG performance targets.
The amendment also extended the facility's maturity date to May 12, 2025, from March 2022.
Sustainability goals
* Simon Property Group Inc. said it plans to reduce carbon emissions by an incremental 68% by 2035 as part of its ongoing sustainability efforts. The regional mall owner said it has reduced its carbon footprint by 32% and has cut water consumption by 18.5% since 2013.
* Jones Lang LaSalle Incorporated said it aims to reach net-zero carbon emissions by 2040 and will publish plans for achieving that goal later in 2021. The net-zero pledge applies to the company's entire operation, including client sites it manages.
* Iron Mountain Inc. pledged to achieve net-zero emissions and to use 100% clean energy 100% of the time in its data centers by 2040. The real estate investment trust also aims to reduce greenhouse gas emissions by an additional 25% from its 2019 baseline, it said in an annual corporate responsibility report.
Certifications
* Kilroy Realty Corp. secured LEED Platinum certification for its recently completed 9455 Towne Centre Drive office development in San Diego. The 160,000-square-foot property features a solar array that provides about 33% of the property's energy consumption.
* Several real estate companies said they have received Fitwel certifications at their properties, reflecting efforts to mitigate transmission of infectious respiratory diseases.
Boston Properties Inc., Alexandria Real Estate Equities Inc. and Paramount Group Inc. were among the companies that reported receiving the certification on their properties. Fitwel is a third-party healthy building certification system operated by the Center for Active Design.
Governance
* With the appointment of a new trustee, women now make up 43% of Lexington Realty Trust's board, holding three of seven seats. The newest board member, Elizabeth Noe, was a partner at the law firm Paul Hastings LLP.
