Unibail-Rodamco is a European property operator, investor and developer. Large European shopping centers account for the majority of Unibail-Rodamco’s real estate portfolio. Unibail-Rodamco is also engaged with office buildings and convention and exhibition complexes.
Impacts and Opportunities for REITs
The International Energy Agency (IEA) and the United Nations Development Programme reported that buildings are the largest consumers of energy worldwide, using 2,794 million tons of oil equivalent in 2010. Under current policies, the IEA estimates that global building energy demand will grow by an additional 30% by 2035 compared to 2010. ((International Energy Agency and United Nations Development Programme. “Modernising Building Energy Codes to Secure our Global Energy Future,” 2013. Accessed June 27, 2014. http://www.iea.org/publications/freepublications/publication/PP7_Building_Codes_2013_WEB.pdf))
Unibail-Rodamco recognizes that the energy consumed by its asset portfolio accounts for most of the company’s carbon footprint (84% in 2013) and has set goals to decrease emissions. Specifically, the company has a 30% reduction goal for its cumulated carbon intensity (carbon dioxide/visit) by 2020, from a 2012 baseline. Unibail-Rodamco also has a target to increase energy efficiency (kilowatt hours/visit) at shopping centers by 25% in 2020, relative to a 2012 baseline.
As energy costs continue to rise, the energy efficiency or “greenness” of a REIT’s portfolio will influence its competitiveness and financial well-being. Pike Research forecasts that green building certified space will grow from 6 billion square feet in 2010 to 53 billion square feet in 2020. In 2020,commercial buildings will likely represent 80% of green building certified space. Leadership in Energy and Environmental Design (LEED) and Building Research Establishment Environmental Assessment Method (BREEAM) certifications will likely continue to dominate the North American and European green building markets. ((Pike Research. “Green Building Certification Programs – Executive Summary,” 2010. Accessed June 27, 2014. http://www.navigantresearch.com/wp-content/uploads/2010/05/GBCP-10-Executive-Summary.pdf))
Unibail-Rodamco is committed to obtaining a BREEAM rating of “Very Good” or above for at least 80% of its shopping centers by 2016. Unibail-Rodamco seeks BREEAM certification for all of its new developments and extensions of more than 10,000 square meters.
REITs have direct impact stemming from their managed or owned real estate assets. To minimize direct environmental impact, common initiatives include tenant engagement to minimize waste, water, and energy usage. Policies on brownfield redevelopment, supply chain transparency, and building location are key to decrease the total impact of a REIT’s asset portfolio.
Unibail-Rodamco is one of the few REITs that demonstrate an understanding and implementation of life-cycle analyses. The company has a target to have “green lease” clauses in 90% of its Retail and Office Portfolio by 2016. By the end of 2013, 52% of Unibail-Rodamco’s active leases included green lease clauses, which cover issues relevant to improving environmental awareness and performance among tenants. Moreover, in 2014 the company placed the first green bond for a real-estate company in the Euro market. The proceeds of the green bond are earmarked to finance brownfields or existing assets that meet specific environmental, social and sustainable criteria.
Areas for Improvement
Research and Development
At the end of 2012, Unibail-Rodamco developed the “UR Lab” to strengthen the company’s focus on innovation and differentiation. Sustainability research is conducted on a case-by-case and project-by-project basis. Portfolio 21 believes the UR Lab can increase the company’s effectiveness by earmarking specific research funds dedicated to sustainability research.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 7/31/14 and may not reflect current opinions or subsequent events.