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ULI Survey Shows Interest By Real Estate Executives in Responsible Property Investment Strategies

Posted on: Wednesday, 2 May 2007, 12:00 CDT

WASHINGTON, May 2 /PRNewswire-USNewswire/ -- A new survey of U.S. real estate executives shows considerable interest in responsible property investing, indicating a willingness within the investment and development industry to adopt a "triple bottom line" business approach that measures success in terms of economic, social and environmental value.

The survey, co-sponsored by the Urban Land Institute, was conducted between November 2006 and January 2007 by University of Arizona Professor Gary Pivo. It was sent to nearly 1,500 chief executive or real estate investment officers of U.S. pension funds with real estate holdings, real estate investment trusts (REITs), real estate operating companies (REOCs), fund managers and development companies.

More than 80 percent of the respondents indicated that their organization goes beyond minimum legal requirements to address social or environmental issues, and 90 percent agreed that pursuing social and environmental goals as a business strategy will be more important in the future. According to ULI Senior Resident Fellow Stephen Blank, the survey shows that more and more real estate executives are concluding that "you can do well by doing good" in terms of property investment choices. "We are seeing a definite shift in attitudes," he said.

Responsible property investing, called RPI, is an outgrowth of socially responsible investing that began within the corporate community several years ago. It is a broad movement encompassing far more than the financing and development of buildings that meet energy efficiency standards, Blank explained. "This goes way beyond buying 'green,'" Blank said. "RPI is about making a conscious decision to conduct all business operations in a way that contributes to the long-term well-being of the community and environment."

For example, he said a company applying RPI practices might be willing to invest in existing structures and retrofit them to cut energy use and reduce their environmental footprint; such a firm would also be apt to encourage environmentally responsible and community minded behavior by employees and tenants.

In the report, Pivo writes, "(RPI) encompasses a variety of efforts to contribute to ecological integrity, community development, or human fulfillment in the course of profitable real estate investing. A sustainable and responsible investor seeks to be an employer of choice, to improve neighborhoods, to conserve natural resources or to promote a more just society."

Conservation is the most widespread RPI management strategy now being implemented, based on the survey responses. Fifty-seven percent of the participants said they are promoting energy conservation, water conservation or recycling in properties they own or manage; 47 percent said they are engaging stakeholders with some connection to the properties, such neighborhood organizations, labor unions or environmental groups. Forty-four percent include references to community, human resource or environmental issues in their values or mission statement; and 43 percent pay attention to social or environmental issues in their strategic planning.

The respondents were queried on the level of their commitment to invest in property development that encourages restoration and revitalization, and which conserves both land and energy use. Sixty-three percent said they have invested in urban infill or redeveloped properties and 16 percent said they are considering such investments. Fifty-three percent have invested in transit-oriented development, and 15 percent plan to do so. Thirty-six percent have invested in green buildings; 31 percent have plans for this. Thirty-three percent have invested in brownfields; 16 percent are considering such investments.

More than 35 percent of the respondents said they are aware that RPI practices are beneficial in terms of increased efficiency and lower costs for overall business operations. More than 30 percent view RPI as providing a potential competitive advantage and are pursuing these practices primarily as a wise business strategy.

The main catalysts spurring RPI activities are concern for risk and return (with property investments enhancing social and environmental well-being presumably considered by some as more lucrative); opportunities to outperform competitors and gain a business advantage; and fulfillment of a moral obligation. Conversely, some of the same business concerns were also listed as barriers to involvement in RPI, including insufficient financial performance of the properties. Insufficient tenant demand and an overall dearth of properties fitting an RPI strategy were also cited as barriers.

Still, despite the perceived RPI obstacles, ULI's Blank noted that the survey indicates a growing willingness by the real estate community to begin or expand its participation in sustainable investments. "The tide is turning," he said. "This movement has exciting implications for the future development and growth patterns of our communities."

ULI is exploring the creation of a new product council that will focus specifically on sustainable and responsible investment activities, reflecting the Institute's mission to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.

To view the entire survey, go to http://www.uli.org/RPI. About the Urban Land Institute

The Urban Land Institute (http://www.uli.org/) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has more than 36,000 members representing all aspects of land use.

Urban Land Institute

CONTACT: Trisha Riggs of the Urban Land Institute, +1-202-624-7086,priggs@uli.org

Web site: http://www.uli.org/

Source: PRNewswire-USNewswire

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