Well, today's entry is long overdue. A while back, I wrote the first-part of a two-part series about green REITs. The purpose of this two-part series is to explore the idea of an all-green REIT and to speculate if there is room for this type of vehicle in the investment world. In the first article, I looked at Equity Office Properties, which isn't shy about investing in green real estate but you are hard pressed to find any mention of their green activities on their website or in their annual report (speculation was that if they marketed themselves as a green REIT, they would lose large institutional investors). This time around, I want to look at companies that make no apologies (to investors or the general public) for their investments in sustainable real estate.
The first company I want to look at is the Hines Real Estate Investment Trust. Hines REIT has already developed and built several green buildings. Among the buildings that Hines owns and manages, 70 are major U.S. office buildings that account for 22% of the total square footage of all non-goverenmental office buildins in the EPA's Energy Star Program. The Hines REIT was launched in 2004 and currently holds about 6 million square feet of office property throughout the U.S (it actually owns one of the buildings I used to work in when I was in San Francisco). The company has stated its intention of being committed to growing the portfolio over the next couple of years.
Another REIT making some headway is Liberty Property Trust (NYSE: LRY). Liberty Property Trust is one of a few REITs to focus on U.S. Green Building Council's LEED rating system instead of the EPA's Energy Star Program. As of June of 2006, Liberty had five LEED-targeted developments in progress and owns one of the first LEED Gold-rated office buildings in the U.S. with its Plaza at PPL Center in Allentown, PA.
To meet the demand for an instrument that invests in a diverse pool of fiscally, environmentally and socially responsible real estate, Jonathon Rose Company LLC launched the Rose Smart Growth Investment Fund--the first REIT devoted primarily to smart growth. The fund was launched with $100 million in initial capital-->raised from a network of affiliated planning and development firms.
Are REITs undervalued? Good question. Values for office space over the last couple of years have increased tremendously...what about the value of REITs...well, I am not 100% sure...if we take a 5-year look at Liberty's stock price (here), they have done well. I guess the question that still lingers in my head...public or private? Invest in public REITs that invest in various green properties or invest in the green property itself? Chime in...email me or comment.