Real Estate Investment Trusts

Spirit Realty’s Greenstreet Helps Net Lease REIT “Hit the Reset Button”

Triple-net lease REIT Spirit Realty Capital’s (NYSE: SRC) relocation to Dallas from Scottsdale, Arizona, afforded the company an opportunity to reshape its human capital and corporate culture. The woman at the center of all that change is Michelle Greenstreet, the company’s chief administrative officer.

Greenstreet, a native of the Dallas area, says the firm is drawing on the diverse backgrounds of a new workforce to create a more collaborative and process-oriented identity.

“We had this unique opportunity to go in from a talent perspective and hit the reset button,” Greenstreet said.

Greenstreet joined Spirit Realty as chief human resources officer in 2015, around the time that the company announced its decision to set up shop in Dallas. (The bulk of Spirit Realty’s portfolio is located in Texas.) Thomas H. Nolan, Jr., Spirit Realty’s chairman and CEO, says he was looking for someone familiar with the Dallas area “who had a unique perspective on having built and grown businesses.”

Greenstreet, who holds an undergraduate degree from Texas A&M University-Commerce, boasts more than 20 years of experience in a variety of industries, including banking, technology and manufacturing. According to Nolan, Greenstreet “brought with her the competency and skill Spirit needed to redefine our brand and culture.”

The majority of Spirit Realty’s Scottsdale staff declined an offer to relocate to Dallas, so Greenstreet spent the first half of 2016 making new hires from what she describes as a “vibrant and dynamic” labor pool in the company’s new hometown. She explains that Spirit Realty made a concerted effort to recruit employees from diverse backgrounds to bring in fresh ideas and new expertise. More than 80 percent of the company’s current staff members were hired during that period, as the Arizona office officially closed in the fourth quarter of 2016.

Focus Shifts from Hiring

Now that the bulk of new hiring has occurred, Spirit Realty is focusing on tapping into that new talent and knowledge base to create “much more rigorous” processes with respect to customer relationships, the use of technology, and scale and leverage, according to Greenstreet.

Greenstreet and Jackson Hsieh, Spirit Realty’s president and COO, are overseeing an initiative to analyze every department’s role in transactions. The objective is to improve efficiencies and determine how best to interact with customers.

In a third quarter earnings call, Hsieh, summed up the changes underway: “The company has completely revamped its operations, and has a culture that is laser-focused on growth, asset management and shareholder value creation.”

As Spirit’s former chief human resources officer, employee engagement is an issue that Greenstreet has also championed. New employee-led groups discuss what they want the new Spirit culture to look like—everything from fun internal events to how they wish executives would engage with employees, she explained.

Employees have also provided input on the design of the new Dallas office, Greenstreet said. “We wanted to create a physical space that reflects our highly collaborative culture that breaks down silos and supports our fast-paced, heavy transactional work,” she noted. The new office space is more informal than before, Greenstreet explained. The new Spirit headquarters also has no executive suite, she added.

“We pulled all of the executives away from each other so we’d be forced to walk around,” Greenstreet notes. That makes them more visible in the daily flow of business, she said.

The new office environment is just one of the ways Greenstreet has helped transform Spirit Realty, according to Nolan. She has “forced us to take a look at our work flow, talent and stakeholders in new ways,” he says.

“You can see and feel the impact she’s made at every level of our organization.”

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Published at Wed, 15 Feb 2017 14:30:35 +0000

Hannon Armstrong Sustainability Specialist Says Economics Improving

Parker White, director of commercial real estate at Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Hannon Armstrong makes debt and equity investments in sustainable infrastructure projects. White explained that the types of projects Hannon Armstrong finances range from complex infrastructure to LED lighting retrofits.

Increasingly, Hannon Armstrong is seeing more “deep retrofits” and the integration of different kinds of projects, such as a rooftop replacement coinciding with a solar installation, White explained.

Meanwhile, as the cost of equipment has come down, the economics are improving at the fundamental level, White said. That is resulting in quicker payback periods and better returns for conventional equity investments. 

The biggest trend Hannon Armstrong is now seeing on the economic side is the introduction of financing, notably Property Assessed Clean Energy (PACE) opportunities.

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Published at Wed, 15 Feb 2017 16:29:00 +0000

Data Center REIT Equinix Working Toward Renewable Energy Target

Jennifer Ruch, manager of global utilities and sustainability at Equinix (NASDAQ: EQIX), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Equinix received the 2016 NAREIT Leader in the Light award in the Data Center category.

In 2015, Equinix announced a long-term target of 100 percent renewable energy usage. In a step toward reaching that goal, Equinix subsequently made two large wind energy purchases in Texas and Oklahoma, she noted. Ruch stressed that Equinix has already achieved its goal of a 100 percent commitment to renewable energy in Europe.

With a utility fee that exceeds $300 million per year, Equinix can have a substantial environmental impact when it commits to renewable energy, Ruch said.

As for possible challenges, Ruch pointed to Asia. She described the market there as “tough,” due to its different regulations and lack of third-party suppliers. Equinix is currently working with non-governmental organizations (NGOs) to sort through some of the issues, she said.

Equinix is also looking at creating better design standards for its data centers that take advantage of local conditions, like deep water lake cooling in Toronto and solar panels where possible, Ruch said.

Also on Equinix’s agenda is the worldwide deployment of fuel cells, Ruch noted.

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Published at Mon, 13 Feb 2017 21:11:39 +0000

BlackRock Incorporating ESG Risk into Valuation System

Sherry Rexroad, chief investment officer at BlackRock Global Real Estate Securities, joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

BlackRock is making more of an effort to engage with companies on environmental, social and governance (ESG) issues, according to Rexroad.

“Things are furthest along with the governance piece,” she noted. However, BlackRock is also seeking to incorporate environmental and social aspects into the valuation process.

“We’re trying to incorporate the risk into our valuation system, as well as what the potential impact to cash flows can be. A lot of people in the investment community are moving in that direction, and that’s why you’re seeing such a demand for better environmental data,” she observed.

Rexroad also commented on the issues created by having multiple sources of ESG data.

“I really can’t find the right data source,” she said. Rexroad pointed out that much of the available ESG data is set within the parameters of a particular vendor’s template, “and it creates a huge burden for the REITs to provide the data correctly.”

BlackRock is looking at ways to improve its incorporation of data from the Global Real Estate Sustainability Benchmark (GRESB), which is “probably most accurate in the eyes of the REITs,” Rexroad said. However, BlackRock also receives ESG data from a number of other providers, and in some cases, the data is not reviewed by the companies, according to Rexroad.

Rexroad said she sees a “huge opportunity” for investors and companies to try to create a more unified template for data collection.

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Published at Tue, 14 Feb 2017 14:49:53 +0000

Simon Property Group Study Highlights Sustainability Benefits of Brick-and-Mortar Shopping

Mona Benisi, senior director of sustainability at Simon Property Group, Inc. (NYSE:SPG), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Benisi discussed a study conducted last year by Simon Property in conjunction with Deloitte Consulting examining the environmental impact of all material, energy and fuels attributable to a product in its lifecycle. According to the study, online shopping has a 7 percent greater environmental impact versus brick-and-mortar shopping every year.

Benisi also noted that the study concluded that customers travel to the mall in groups, which lowers the environmental impact per product bought. Additionally, the last mile of online delivery is very fuel intensive.

Benisi said the study should encourage consumers to think carefully about their shopping behavior.

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Published at Tue, 14 Feb 2017 14:44:11 +0000

Australian REITs Collaborating on Sustainability Goals

Bruce Precious, national manager for sustainability and property services at Australia’s The GPT Group, joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

GPT is one of Australia’s largest diversified property groups.

Precious described the Australian real estate market as a “very condensed” version of the United States. However, the percentage of property owned by REITs is probably much higher in Australia than in the U.S., he said. Another difference between the two countries is that most Australian REITs are headquartered in one city – Sydney.

These circumstances have fostered a strong collaborative environment among Australian REITs, Precious said.

“Sustainability goals need so many stakeholders and market participants that the only way we can influence the market is when the industry works together,” he observed.

Some of the longer-term sustainability projects that are now underway in Australia include the transformation of the waste market and the development of rewards for carbon-neutral buildings, Precious said.

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Published at Fri, 10 Feb 2017 17:20:27 +0000

Blackstone’s Entry Energizes PNLR Market

In the latest episode of The REIT Report: NAREIT’s Weekly Podcast, Tony Chereso, president and CEO of the Investment Program Association (IPA), talked about the latest developments in the public non-listed REIT (PNLR) market.

Chereso discussed the impact of private equity firm Blackstone’s entry into PNLRs. He noted that the Blackstone Real Estate Income Trust (BREIT) has raised significant capital via wirehouses and independent broker-dealers.

“Blackstone has a great reputation and has reminded the market and advisers that these assets can play an important ingredient in a well-diversified portfolio, particularly for investors seeking yields and low correlation to the traditional equity markets,” Chereso said.

Blackstone’s entry into the space has reinvigorated capital raising for PNLRs, especially for daily NAV products, according to Chereso.

“We expect that we will see capital raising improve exponentially over 2016,” he said.

Chereso also commented on the President Donald J. Trump’s intention to roll back regulations for the financial sector, such as his directive to the Department of Labor to review its so-called Fiduciary Rule. Chereso said the IPA supports Trump’s executive order with regard to that specific rule.

The IPA believes “certain aspects of the Fiduciary Rule, if revisited, could have a very positive impact in regards to financial advisers to be able to continue to provide professional advice to certain segments of the investment community.”

“Over time, inflation leads to increased rents and healthy capital gains on real estate investments, and, therefore, inflation will ultimately increase the value of REITs and other real estate equities,” he said. “The prospect of inflation is not a death knell for REIT investing at all.”

(Subscribe to the The REIT Report via iTunes.)

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Published at Fri, 10 Feb 2017 16:32:49 +0000

Washington REIT Collecting Real-Time Energy Data

Matthew Praske, energy and sustainability manager at Washington REIT (NYSE: WRE), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Focused exclusively in the Washington, D.C., metro region, Washington REIT owns and operates a portfolio of office, retail and multifamily real estate.

Praske addressed the importance of setting benchmarks for sustainability initiatives. He noted that Washington REIT benchmarks itself against its peers both informally and through formal methods, such as the Global Real Estate Sustainability Benchmark (GRESB).

Praske also highlighted the success of Washington REIT’s partnership with energy intelligence software company EnerNOC. With EnerNOC’s metering in place throughout the majority of the portfolio, Washington REIT can monitor energy consumption in real-time. That data is then used by property teams to set benchmarks for each building, Praske said.  Efficiency gains made throughout the portfolio saved the company $400,000 during 2016, he noted.

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Published at Thu, 09 Feb 2017 19:54:12 +0000

Office REIT Kilroy Piloting Green Janitor Program

Sara Neff, senior vice president for sustainability at Kilroy Realty Corp. (NYSE: KRC), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Kilroy was a 2016 NAREIT Leader in the Light award winner in the Office category.

Neff commented on Kilroy’s Green Janitor Education Program, which involves 30-hours of training and a series of tests. She described the program as an “out-of-the-box pilot that exemplifies our sustainability programs.”

“Janitors are the eyes and ears of a building,” Neff said. In particular, she pointed out that janitors have the ability to report energy and water waste as well as noncompliance with recycling practices.

As for finding new sustainability projects to pursue, Neff expressed optimism that “human ingenuity” will result in continued advances in the field.

“It’s such a large market, and there are so many people who are trying to innovate in this space,” she said.

Looking ahead, Neff said the concept of building “resilience,” or how a building can withstand disruptions such as hurricanes, is likely to be on the sustainability radar. Further out, the importance of understanding the supply chain will also emerge, she added.

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Published at Thu, 09 Feb 2017 15:58:34 +0000

Boston Properties Adapting Sustainability Reporting

Ben Myers, sustainability manager at Boston Properties, Inc. (NYSE: BXP), joined REIT.com for a video interview at NAREIT’s 2017 Leader in the Light Working Forum at the Hilton Austin in Austin, Texas.

Myers said Boston Properties continues to adapt its methods of sustainability reporting. Recently, the company has adopted a Global Reporting Initiative (GRI) index.

“I’m hopeful that indices like GRI…will help lead our industry toward a consolidated framework. It’s what we need, it’s what investors need and it will certainly reduce the confusion in the marketplace around sustainability performance,” he said.

Myers pointed out that all of Boston Properties’ master lease forms are green leases. Some of the clauses contained in the leases include the ability to pass through capital expenditure that reduces operating costs as well as costs for LEED or ENERGY STAR certifications, he noted.

Myers also noted that Boston Properties is on target to meet its energy use and water and waste targets. The company will shortly be reporting results that capture sustainability performance for about 37 million square feet of assets in Boston, New York, San Francisco, Washington, D.C., and Los Angeles, he said.

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Published at Wed, 08 Feb 2017 19:08:26 +0000