COVID-19 Has Provided Renewed Impetus for Property Companies To Issue Bonds

The pricing discount at issuance for European green real estate credits has recently been 5-7bps, according to Scope Ratings. There is a positive relationship between environmental ambition and pricing performance as bonds issued under Green Bond Frameworks which demonstrate a high degree of environmental ambition typically have a deeper discount. Unsecured bond issuance by real estate companies in Europe reached €60bn in August of this year with a higher mix of green issuance volume as increasingly higher environmental ambitions by large-scale institutional investors drive stronger green and sustainable issuance out of the real estate sector.

Green real estate bond issuance is becoming the norm as large-scale institutional investors show increasing preference towards sustainability. The EU Taxonomy and EU Green Standards have accelerated sustainable issuance by providing consistent environmental performance standards. Green issuance spans REITs, real estate investment managers and cross-sector investment managers, including:

• Segra (REIT): €500mn Green Bond, issued May 2021
• Gecina (REIT): €500mn Green Bond, issued June 2021
• CBRE Global Investors: €500mn Green Notes, issued January 2021
• AXA Investment Managers: €500mn Green Bond, issued June 2021
• Canary Wharf Group: €1.1bn Green Bond, issued April 2021
• MAS Real Estate: €3000mn Green Bonds, issued May 2021