Green Bonds Popular With Investors, According to REIT Executives

Mark Peternell and Mike Mas of retail REIT Regency Centers (NYSE: REG), joined REIT.com for a video interview at NAREIT’s 2015 Leader in the Light Working Forum in Reston, Va.

Peternell, the company’s vice president of sustainability, said going green can serve as a “competitive differentiator” for REITs. Regency Centers started $240 million worth of development and redevelopment projects in 2014.

“We believe our commitment to sustainability and our experience delivering green projects and high-performance projects to the market can be a key contributing factor to the success of our development program,” Peternell said. “Whether that be through facilitating an entitlement or a successful joint-venture partnership with a shared interest in sustainability, we continue to see that sustainability is a driver in the success of our development program.”

Looking at Regency Centers’ larger approach to corporate social responsibility, Mas, the firm’s senior vice president of capital markets, said the company’s program is resonating with its shareholders. Early on, European equity investors were encouraging the company to focus on social responsibility, according to Mas.

Now, Mas said, the debt markets are taking greater interest. Last summer, Regency Centers issued green bonds. Mas described the offering, which was “very well received,” as a “natural extension” of the firm’s sustainability program.

“We wanted to make sure that we weren’t doing anything that would impair our more traditional fixed-income investors,” he said. “What we learned very quickly was that whether they had dedicated funds or not, everyone was very supportive of the effort.”

Mas noted that meetings with green-dedicated investors regarding the bond offering produced an 80 percent success rate in terms of encouraging them to participate.

“People believed in the story that Regency had to offer, they understood it and they supported it by eventually buying the bonds,” he said.

The proceeds from the bond offering are funding green projects that are seeking or have achieved LEED certification, according to Peternell. The company intends to publish an annual report demonstrating how the proceeds from the bonds are being used, representing an effort to assure investors that the funds are dedicated to earth-friendly projects.