TY - JOUR
T1 - Sustainability Disclosure and Financial Performance
T2 - The Case of Private and Public Real Estate
AU - Devine, Avis
AU - Kok, Nils
AU - Wang, Chongyu
N1 - data source:
- GRESB BV (ESG data)
- S&P Global Real Estate Database
PY - 2023/10/1
Y1 - 2023/10/1
N2 - The built environment carries an outsized environmental footprint, and aspects such as energy consumption impact the bottom line of commercial real estate (CRE) investors. A large portion of CRE assets are owned and operated by both private equity real estate (PERE) funds and listed property companies (REITs). Therefore, the extent to which these public and private entities integrate sustainability considerations into their investment and operating decisions may impact both the environmental and financial performance for the organizations as well as the environmental performance of the broader market. We provide a comprehensive analysis comparing the sustainability performance of REIT and PERE firms/funds, as well as an analysis of the relationship between sustainability and the financial performance of REITs. Results indicate that private and public CRE entities now seem on par in their integration of sustainability into firm/fund management and policies. However, the performance aspect of sustainability is stronger for REITs. Examination of REIT financial performance indicates that higher levels of sustainability disclosure are associated with enhanced operating performance and firm valuation, as well as a higher propensity for holding environmentally certified buildings.
AB - The built environment carries an outsized environmental footprint, and aspects such as energy consumption impact the bottom line of commercial real estate (CRE) investors. A large portion of CRE assets are owned and operated by both private equity real estate (PERE) funds and listed property companies (REITs). Therefore, the extent to which these public and private entities integrate sustainability considerations into their investment and operating decisions may impact both the environmental and financial performance for the organizations as well as the environmental performance of the broader market. We provide a comprehensive analysis comparing the sustainability performance of REIT and PERE firms/funds, as well as an analysis of the relationship between sustainability and the financial performance of REITs. Results indicate that private and public CRE entities now seem on par in their integration of sustainability into firm/fund management and policies. However, the performance aspect of sustainability is stronger for REITs. Examination of REIT financial performance indicates that higher levels of sustainability disclosure are associated with enhanced operating performance and firm valuation, as well as a higher propensity for holding environmentally certified buildings.
U2 - 10.3905/jpm.2023.1.534
DO - 10.3905/jpm.2023.1.534
M3 - Article
SN - 0095-4918
VL - 49
SP - 119
EP - 133
JO - Journal of Portfolio Management
JF - Journal of Portfolio Management
IS - 10
ER -