16 November 2012 – GreenBuild 2012, San Francisco — An investment grade green property index is close to completion, in a collaboration between the US FTSE Group, the National Association of Real Estate Investment Trusts and the US Green Building Council.
The index, in the final stages of implementation, is modelled to suit both institutional and retail investors, and will give investors a “structured and disciplined way to measure and model the risk and reward profile of green property, using the first codified, transparent definition of listed green property,” the USGBC said this week.
The index will provide investors with “new ways to incorporate principles of sustainability into their property selections and portfolios, and access this investment theme through index-linked financial products.”
It will be based on the market’s leading benchmark for US real estate, the FTSE NAREIT Index Series, using green data – LEED and Energy Star ratings – from USGBC.
The FTSE global REITs represents US$1.07 trillion of investment, with REITs making up 48 per cent of this.
The USGBC said the green property index would be based on the analysis of 13,126 LEED and 18,402 Energy Star projects that have received third-party certification based on their green achievements and performance1.
FTSE group chief executive officer Mark Makepeace said there was already significant interest in the indices.
“We’ve already received expressions of interest from many large asset owners concerned about their exposure to a rapidly changing sector directly affected by the transition to the low carbon economy.”
NAREIT president and chief executive officer Steve Wechsler the new indexes would be a milestone for real estate investment worldwide and would enable more real estate investors and managers to integrate sustainability factors into their strategies – “both as benchmarks and as the basis for investment products”.
USGBC chief executive officer and founding chair Rick Fedrizzi said: “Greater building efficiency can meet 85 per cent of future demand for energy in the United States and a commitment to green building has the potential to generate 2.5 million jobs,” he said.
“The sector has seen incredible growth and is projected to add $554 billion to the US economy each year. This partnership creates significant investment opportunities for those ready to participate in this growing market.”