December 2018/January 2019 Issue

Across the world, real estate owners have made progress in making their portfolios sustainable. However, quantifying the impact of green practices on real estate investments remains difficult.

Providers of property debt can benefit from progress in ESG data and benchmarking provision, argues GRESB’s Josien Piek.

Effectively one step removed from real estate assets, lenders have not been at the forefront of the industry’s sustainability commitments. However, recent sustainable financing initiatives suggest times may be changing.

As Barings Real Estate moves to expand its European lending activities, it plans to raise capital from outside its parent company’s resources.

The two banks have issued the first post-crisis transaction with significant French real estate exposure.

While real estate debt providers have made less progress than their equity counterparts to incorporate environmental, social and governance considerations into their strategies, some lenders have shown how it can be done.

Through its purchase of a debt business from Quadrant, the French giant has gained access to a greater set of lending opportunities, and the ability to be more selective.

The Chicago-based investment firm has had an active European real estate debt business since 2010.

The debt tap to finance Spanish real estate is on. New players have entered the fray and competition to fund the right assets is growing stronger.

While the prevailing view is that real estate retains its appeal over other asset classes, the annual Emerging Trends in Real Estate Europe forecast, published by PwC and the Urban Land Institute, shows investors adapting to the challenges of a ‘tough’ market.

Political tensions between Catalonia and Spain’s central government have not disappeared, but an upturn in investment activity in the region suggests it is back on the map for investors and lenders.