Norwegian fund putting $16 billion into socially-responsible real estate

The juggernaut Norwegian Global Pension Fund has just announced that it intends to significantly expand its real estate holdings globally.

According to the report in Responsible Investor, “Environmental, social and governance (ESG) factors including energy efficiency and water consumption are to be key planks“ within the criteria for new property investments.

The $16 billion investment amount represents 5% of the fund’s overall value and its manager, Norges Bank Investment Management (NBIM), indicates that the fund will need a few years to actually invest in ESG-screened real estate to achieve that level, as the allocation comes from portfolio shift created by cutting the fund’s bond portfolio.

How will they actually invest responsibly?

This is interesting, as there is no real consensus about reporting standards and measurements that constitute responsible investing in the institutional real estate field (see our previous posts and papers about Metrics for Responsible Property Investing, for more details).

NBIM will be required by the government to produce an annual report of the portfolio, including an “assessment of how it conforms to responsible management and the exercise of ownership rights. The bank will be allowed to hire external managers and outsource operational functions, with returns benchmarked against a customised version of the Investment Property Databank’s Global Property Benchmark.”

Overall, we are noticing increasing interest by foreign investors in US markets, as they believe that property values have nearly bottomed out. That, plus the growing requirement for green and socially-responsible properties can possibly spur a near to mid-term shortage in green real estate, even as property markets generally are expected to be in a slow recovery.

As we have seen in previous cycles, lots of capital seeking an asset in short supply can always create some interesting market action. From my point of view, the Norwegian Global Pension Fund is not alone in the direction they are taking. Expect to hear more on this point in the near future, as others get in on the action.

Key events on energy efficiency finance and triple bottom line investing

Meet us at the the following events. We’ll be presenting about:

- energy efficiency financing

- responsible property investment metrics for high performance portfolios

- taking the green economy to the next level

In the weeks ahead, Lisa Michelle Galley will be featured at a number of key industry conferences. The topics covered by Lisa and other leading voices in the sustainable investment community will highlight the  latest trends and provide a valuable forum to learn about innovative solutions to some of the most pressing challenges facing the green building and finance sectors.

Presentation on Energy Efficiency Financing

GSMI -The Sustainable Buildings Series: Retrofits

October 21, 2009; 11:15am – 12pm, Mission Bay Conference Center at UCSF
Lisa will cover the key considerations for different types of energy efficiency financing.  From there she will talk about how owners can more effectively coordinate their energy efficiency financing efforts across their portfolios. Lisa will be co-presenting with Peter Liu of New Resource Bank.

Presentation on Metrics for High-Performance Portfolios

Responsible Property Investing Council: 2009 ULI Fall Meeting
November 04, 2009 – Joint session of RPI and Sustainable Development Councils
Moscone Center South, San Francisco
Along with co-presenters David Wood, of the Responsible Property Investment Center and  Jean Rogers of ARUP, Lisa will offer fresh insights and recommendations developed in a year long study of the development and application of  responsible property investing metrics on institutional real estate portfolios. Lisa and Jean will discuss how the real estate investment ‘system’ has been impacted by sustainability.

Taking the Green Economy to the next level

Sustainable Industries Economic Forum in San Francisco
November 19, 2009; 9:30am -10:15am
St. Regis Hotel, San Francisco
Lisa will join a panel of industry leaders including Paul Hawken, author and CEO of the Pax Engineering Group, to discuss some of the most challenging aspect of successfully implementing triple bottom line solutions and how we can take the green economy forward. The event will offer valuable perspective on growing strategic partnerships as a core aspect of sustainable business.

If you would like to meet us at any of these events, please email us info@galleyecocapital.com

News about future events is available through our website.

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John Knott and Andrew Nelson Show RPI in Action

Greetings from the Miami International Airport Island Grill, which — given my options — is currently rocketing up my three item list of decent airport food!

I had the opportunity to attend a great talk by John Knott, of the Noisette Company,  here at the ULI Fall Meeting. Hearing him reminded me that there are a couple of great reports currently in circulation that Green Journey readers should be reading, if you haven’t already obtained them through your other channels.  They are must reads for all of us who want to use responsible property investing — incorporating applied approaches to social responsibility within our professional real estate activities.

Item 1: The Noisette Company Sustainability Report

John Knott and his company’s work with the Navy Yards Project is a great living case study in revitalization with social justice at its core.  Another cool point to keep in mind as you read is that the Noisette Company is a 100 year old family development business. Knott made it clear that the sustainable and socially conscious principles that they apply are not anything new-fangled or exotic, as many investors fear about sustainable real estate. The approaches are actually as old school as they come.

Item 2: RREEF Research Report: Globalization and Global Trends in Green Real Estate Investment

All of my USGBC-NCC colleagues out there remember the great talk RREEF’s Andrew Nelson gave about global greening trends at our chapter meeting earlier this month. Well, that upcoming report he alluded to is now finally out and official.  Download / read / apply / pass it along.

Check out our green finance interview on Sustainable Land Development Today

Lisa Michelle Galley talks about the current state of the green real estate capital markets within the article “Oases of Capital”, published by Sustainable Land Development Today.

An excerpt here:

“Galley favors the concept of responsible property investment — the triple-bottom-line approach — which is socially and environmentally progressive while generating market rates of return for investors. But the concept is new space for most people. It is a space literally forming before their eyes.”

Key points for the sustainable real estate community:

• In tough economic times, sustainable real estate sets itself apart in the eyes of institutional investors and communities because it delivers socially, environmentally and economically.

• An integrated finance strategy streamlines execution, reduces risk and boosts returns on sustainable real estate by combining real estate and  tax structuring know how with funding sources from incentives to tax strategies.

Finally, we recommend that you take a look at Sustainable Land Development Today, a very progressive publication for like-minded sustainability professionals. Tell them that we sent you!

ULI on the Financial Bailout as the Swedes Shake Their Heads Knowingly

Tired? I know, I know…

Staying on top of political theater and the daily collapse of banks can wear a body down.  Watching the never-ending series of CNN breaking news, checking your own bank’s solvency and reading the papers leaves nearly no time for work!

Well, we won’t tell you how to vote, but here’s a couple of items that might help you as you navigate the highly spun news on the financial bailout — or at least up your game at the next few cocktail parties.

And the green finance angle, you might ask? Well, because of our commitment to sustainability and responsible property investing, we monitor issues affecting the sustainability of communities, particularly their financial viability.  And with that, there are two items to help you in your thinking:

Item #1: Some nitty gritty on the bailout legislation impacting the housing market

We’ve been fans of  ULI’s blog, The Ground Floor, from the very beginning — way before they got their new cool lookin’ blog template.  John McIlwain’s post on the details of how the housing market could be assisted by the proposed bailout legislation spell out specific assistance actions that we do not normally hear about through the news media. He’s pulled out two core areas of focus, which depending on how they are implemented will determine whether we think the bailout was a good or bad idea. Those two areas are:

• program guidelines: this tells the entities getting assistance exactly when and how they should be creating programs and within what scope regarding their troubled assets. Specifically, these guidelines should contain:

(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.

• foreclosure mitigation efforts: entities dealing in mortgages and related securities are empowered to offer assistance programs for homeowners that can help to avoid additional foreclosures.  Well, its about time! But, of course, we’ll have to see how both these issues evolve through the legislative process. It ain’t over till its over.

Item #2: Swedes Say ‘Been There, Done That’

Now for something related, but different. Take a look at this New York Times article about how the Swedes approached a similar financial crisis a few years ago. The focus: when faced with the same problems, they took a very different course of action. And the results were both positive and, more importantly, sustainable.

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