green property bonds - market status and sector guidelines - greenbuild 2016
TRANSCRIPT
Green Property BondsMarket Status and Sector Guidelines
© 2016 GRESB B.V. Greenbuild 2016 Los Angeles, CA
Dan Winters, CRE Head of North America
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
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
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
Green Property Bonds 2016 YTD Issuances
4
Mar
ket S
cope
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
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
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
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
Real Estate Industry Guidance GRESB Green Bond Guidelines
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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
Similarities with Green Bond Principles GRESB Green Bond Guidelines
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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
Green Bond Application Guidelines used in all stages
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Metrics / KPIs
Prospectus (pre-issuance)
Process: project evaluation
and selection
Reporting (post-issuance)
Description: actual use of
proceeds
Key updates in 2016 GRESB Green Bond Guidelines
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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
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2
3
4
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
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Case Study Discussion Vasakronan and Digital Realty Trust
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Questions & Comments
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