Will Teichman, vice president of business operations at Kimco Realty Corp. (NYSE: KIM), participated in a video interview at Nareit’s ESG Forum 2019 at the Hyatt Regency Coconut Point in Bonita Springs, Florida.
Teichman said real estate companies exploring green lease options should begin by simply defining what a green lease means to their organization, and that a pragmatic approach for Kimco was to “incrementally improve our form lease, as opposed to tearing it up and starting all over.”
Teichman said Kimco focused on a fixed common area maintenance (CAM) initiative and tenant submetering in order to make its portfolio more sustainable. He said Kimco’s fixed CAM initiative addresses the split-incentive issue that commonly arises in triple net leases where one party pays for capital energy investments but the other benefits in the form of lower utility costs.
“Our fixed CAM initiative is really designed to close that gap by creating a structure for common area maintenance expenses, where tenants have a fixed guaranteed cost year-over-year in terms of what they’ll pay us,” he said. “In exchange for that fixed guaranteed cost, we have a guaranteed stream of revenues that we can use to offset investments in the common area.”
Teichman also said that Kimco is wrapping up a multiyear, multimillion-dollar investment in submetering more than 4,500 tenant spaces within its portfolio, and tenants will now be billed on actual consumption.
Teichman added that he is proud of the way Kimco, recently recognized as a Great Place to Work, has approached sustainability from an organizational perspective.