Does Increased Investment in Responsible Properties Lead to Better Corporate Performance?

McGrath, Karen (2014): Does Increased Investment in Responsible Properties Lead to Better Corporate Performance?

Abstract

This paper investigates the impact that ownership of eco-certified properties has on the corporate performance of U.S. REITs. Given the financial benefits associated with individual eco-certified properties, ownership of such properties within an overall real estate portfolio should translate into better corporate operational performance. Utilizing OLS with robust standard errors, we analyze the 2011 property holdings for 66 U.S. equity REITs to determine the effect that LEED and Energy Star property ownership has on each firm’s funds from operation (FFO), and return on average assets (ROAA) in 2012. Indeed, we found that ownership of LEED certified properties had a positive impact on both FFO and ROAA, with ownership of Energy Star properties positively effecting FFO only.

• Item Type: MPRA Paper
• Language: English
• Keywords: sustainability, property investment, responsible investing, eco-certified, green labels, REITs
• Subjects: G - Financial Economics > G0 - General > G00 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R0 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R0 - General > R00 - General

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