NEW YORK CITY-While sustainability can often seem like an industry buzzword that lacks a clear definition, major corporations and commercial real estate companies are actively showcasing how it can positively impact investor returns. In a recent report released by Prudential Real Estate Investors, the real estate investment and advisory business of Prudential Financial Inc., the company adopted environmental policies that helped to add $56.4 million to the value of its global portfolios through sustainable initiatives, exceeding its self-imposed $50 million goal.
“We determined if we had something tangible that we could get our arms around, it would make it easier for people to understand what we were doing and it would be an easier story to talk to investors about,” David De Vos, Pru’s global director of sustainability, tells GlobeSt.com on creating the $50 million challenge. “We had a couple of things in the works, so I thought we’d have a pretty good idea where we’d end up for the year. The year was a rollercoaster. Some programs were executed, some not. But we created $50 million challenge with the intent of trying to add $50 million of value for sustainable initiatives. The way I calculated it, we came up $56.4 million – and we exceeded it by a little over 10%. Over the next 12 to 24 months, we plan to add $100 million in value.”
By making a habit of incorporating sustainable practices and corporate governance into its company strategy, PREI added investment value to several of its properties, including, Tiong Bahru Plaza, a suburban mall in southern Singapore and the BHP Tower in Krakow, Poland. In the United States, the company calculated it added $9.6 million in value through solar roof leases, $5.4 million through a bidding process for power procurement, $3.4 million through more efficient parking lot lighting and $24.9 million through energy efficiency improvements such as lighting, motors and mechanical equipment. Some specific examples include an industrial warehouse in New Jersey where the company leased 871,200 square-feet of roof space to a solar developer, generating 6,800 kilowatts of electricity and adding $3.9 million in value to the property. It also leased 420,000 square-feet of roof space across 18 self-storage facilities, generating 3,270 kilowatts of power and adding $5.1 million of value to the portfolio.
De Vos says building managers and end users can reap the benefits of these energy initiatives through benchmarking. “The big thing about buildings and data when it comes along to energy, I think, is you need to have it so you can properly evaluate any initiative,” he says. “We have to make sure it provides economic value to our investors. The only way you can demonstrate that is by having data. You need to start with a benchmark and you need to know where you are. You need to understand where the possibilities are, so that’s why you saw so many building assessments. Those buildings assessments are guided toward showing our property management teams the opportunities that exist, and the possible paybacks to get people to understand what their next steps should be.”
While the financial crisis and other global events may have turned the real estate industry away from the green movement, De Vos says 2012 is a good time to start back up. “Now that we are generally working our way through the events of 2008, I think people are getting back to a fair operating procedure and that allows sustainability to take a foothold and continue to grow,” he says.
For the full report, click here.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
