Brookfield Property Partners is targeting USD $250 million to invest in green certified buildings and upgrades through the issuance of 10 million perpetual green preferred units. Yesterday’s release on the Nasdaq is called an industry first.
“We typically see target green spending associated with green bonds,” advises Michael Brooks, chief executive officer of REALPAC, the association representing many of Canada’s largest commercial real estate companies and institutional investors. “However, with the rise of ESG (environmental, social, governance) screening by major pension funds globally for their investments, the rise of responsible and positive-impact investing, and the fact that apparently one in four new investment dollars in the U.S. last year went into socially responsible funds, you can see the fit. This equity raise is on trend.”
Brookfield reports that proceeds from the offering will be channelled to the financing and refinancing of four types of projects:
- new class A development properties that have received or are expected to receive LEED Silver or higher, NABERS, BREEAM or equivalent certification;
- existing class A redevelopment properties that have received or are expected to receive LEED, NABERS, BREEAM or equivalent certification;
- tenant improvements that have received or are expected to receive LEED, NABERS, BREEAM or equivalent certification; and
- other projects that materially improve the energy efficiency of, or make other environmentally beneficial improvements to, a development, redevelopment or existing property.
More than 90 per cent of Brookfield’s eligible global office holdings have already achieved a sustainability designation, while its retail portfolio in the U.S. ranks as a major solar power user. “Sustainability is an integral component of our strategy to create long-term value for our unit-holders,” says Brian Kingston, Brookfield’s chief executive officer.
“There will be a ready market for these preferred units in many portfolios,” Brooks projects. “Overall, I think it’s a very positive signal for the rest of the market.”