CenterPoint To Place $250M Through Inaugural Green Bond Issuance

CenterPoint Properties has closed its inaugural green bond issuance. The issuance will place $250 million in long-term, fixed rate notes, and it illustrates the firm’s commitment to ESG in industrial real estate. Sustainability is part of the company’s core business practices.

The green bond issuance will specifically target projects with green building construction expenditures and the development and operational maintenance and acquisitions of buildings that receive LEED, Energy Star or other environmental certifications. These projects will help to reduce carbon emissions, drive energy efficiency in buildings and ultimately make communities and local environments safer by removing or properly removing hazardous materials. As a bonus, the proceeds from the green bonds can be used to fund energy efficient projects within CenterPoint’s portfolio. This includes equipment systems, operational improvements and other sustainable maintenance.

There has been growing demand for ESG practices and standards in commercial real estate, and the coronavirus pandemic has only accelerated demand—and they are becoming more important in CRE investment decisions. A report earlier this year from GRESB characterized the need for ESG adoption as “urgent,” and said that there is a correlation between highly operational buildings and “superior operational performance, lower cost of capital, positive influence on stock prices and reputational value.”

The company outlined seven emerging ESG trends for 2020: urgency of resiliency planning, which includes modifying portfolios and operations to respond to a warmer world—an issue raised by companies like BlackRock; low-carbon economy, which asks the industry to take transition risks by switching from dependent on fossil fuels such as natural gas to cleaner energy sources; urban densification and occupant health, helping buildings to serve as barriers to the spread of viruses with proper ventilation, filtration and humidity to reduce the spread of pathogens; electrification of everything, which will mean electrifying building components to build a low-carbon economy; existing building retrofits to update the current building stock to be more efficient; getting serious about ESG disclosures; and sustainability breaks out of its silo, which means including diversity, health and wellbeing and corporate citizenship in ESG governance.

In addition, The Counselors of Real Estate released a recent report elevating the importance of ESG practices as the result of a growing influence of millennial investors, innovations in the measurement and tracking of ESG performance, and the wider acceptance of the risks of climate change among other reasons.

As ESG becomes essential in CRE, more companies are professing commitment. BlackRock recently doubled down on its ESG commitment at its annual Morningstar Investment Conference, promising 100% of its portfolios will integrate ESG metrics, up from 70% at the end of April.