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TH Real Estate hosts GRESB Sustainability and Real Estate Lending event


On Wednesday 9 November TH Real Estate hosted the GRESB Sustainability and Real Estate Lending: The Opportunities Beyond Risk Management event. The breakfast seminar touched on many themes around how sustainability is being integrated into real estate lending strategies and the opportunities it provides for lenders.

Speakers, including Christoph Wagner (Director of Debt Strategies, Origination & Structuring), discussed the relative immaturity of sustainability in debt investment compared to equity investment due to the less influence that lenders have over asset management of secured properties. However, there was agreement that sustainability is rising up the agenda following a regulatory push, investor appetite, and some early indications that sustainability could lead to more secure debt investments (i.e. less risk of default). In short, sustainability had become a commercial reality.

Additionally, results from the latest GRESB survey were presented, demonstrating that strong improvements are being made with regards to operations, disclosure, and underwriting. However, there are still challenges in regards to monitoring portfolio sustainability performance of new and existing assets. The results demonstrate that some lenders were ‘leading the way’ with innovative ‘green products’ that address these challenges. Banks with significant existing loan portfolios are also devising creative ways to improve sustainability in their holdings.

Following a presentation on major market trends from the Better Buildings Partnership (BBP), the group discussed the appetite from the rest of the market to improve the focus on sustainability in lending practices, regardless of whether or not it could be accurately ‘priced in’ to investments. Even if tangible returns could not be calculated from a more ‘sustainable’ product, it enables lenders (via borrower engagement) to monitor loan portfolios and to create new business opportunities.

Notably, speakers raised the fact that the bulk of real estate lending is by banks but the engagement with sustainability issues within the debt space is being led by fund managers rather than banks, likely due to investor pressures.

The consensus from the event was that real progress had been made and many debt providers will now consider energy efficiency and MEES risk as standard. However, progress is evolutionary and change will not be swift until there is a more tangible link between sustainability and value.

TH Real Estate is a member of GRESB and was awarded 10 Green Stars in its latest benchmark. The TH Real Estate debt platform has participated in the first GRESB Debt Benchmark last year, as well as this year. The event was organised in partnership by BBP, CREFC Europe and GRESB.

Issued by Henderson Real Estate Asset Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. TH Real Estate is a name under which Henderson Real Estate Asset Management Limited provides investment products and services. COMP201600412

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