FTSE Group, NAREIT and USGBC develop investable green property indexes
FTSE Group, NAREIT and the US Green Building Council (USGBC) have jointly developed the first investable green property indexes for both institutional and retail investors.
This collaboration brings together the global market leaders in US real estate indexing, Reit market expertise and environmental building standards.
The indices, currently in the final stages of implementation prior to customer use, will give investors a structured and disciplined way to measure and model the risk and reward profile of green property, using the first codified, transparent definition of listed green property. They will also provide investors with new ways to incorporate principles of sustainability into their property selections and portfolios, and access this investment theme through index-linked financial products.
The new family of green property indexes will be based on the FTSE NAREIT Index Series, using green data (LEED & Energy Star ratings) from USGBC. The USGBC is a non-profit organisation known for its development of LEED, a global green building certification programme.
The FTSE global REITs universe represents USD1.07trn today. US Reits account for 48 per cent of this universe, valued at USD512bn.The green property indexes are based on the analysis of 13,126 LEED and 18,402 Energy Star projects that have received third-party certification based on their green achievements and performance. These projects represent 4.7 billion square-feet (440 million square-meters) of commercial real estate. USGBC certifies an average of 1.5 million square feet of additional property per day.
Mark Makepeace (pictured), chief executive, FTSE Group, says: “To date, no comparable benchmark has been available. We’ve already received expressions of interest from many large asset owners concerned about their exposure to a rapidly changing sector directly affected by the transition to the low carbon economy.”
Steve Wechsler, president and chief executive, NAREIT, adds: “We are delighted to extend our successful relationship with FTSE by coming together with USGBC on this exciting initiative. USGBC has an unparalleled reputation for excellence in green real estate research. The new indexes will be a milestone for real estate investment worldwide and will enable more real estate investors and managers to integrate sustainability factors into their strategies – both as benchmarks and as the basis for investment products.”