Le mie ricette per la real estate communityEnvironmental, Social and Governance (ESG) priorities are already driving investment decisions, with brown discounts and green premiums expected to become a decisive factor in the valuation of assets by the end of this decade.
That was according to a panel of experts at the International Hospitality Investment Forum (IHIF) in Berlin.
Miguel Casas, managing director of Geneva-headquartered Stoneweg Hospitality, and Adrian Flueck, director asset management (Hotels) with Invesco Real Estate, both agreed ESG was already integrated into the companies’ investment strategies; while Gilles Clavié, CEO of AccorInvest, described ESG as the hotel owner and operator’s “growth engine”.
The Invesco UK Companies fund was relaunched as the Invesco Sustainable UK Companies fund earlier this year.
Although Casas said the market was not yet seeing green premiums or brown discounts, it was forecast to happen “anytime soon” and certainly “during the life cycle of our investments”. Stoneweg is already baking ESG commitments into its HMAs.
He said: “This decade is where we think this is going to be a mandatory matter, so we have to implement things. Or, if we’re unable to implement some things on the physical side, at least we create the business plan… for the incoming investor.
“The path is clear but still the definition of carbon neutral has its woes here and there. That doesn’t mean you do nothing until the definition is clear… it’s time for action.”
“Whilst it hasn’t been the determining factor of allocation to real estate managers, it’s definitely moved up the agenda,” said Timothy Abram, SVP European Acquisitions, Starwood Capital.
Starwood, which became a carbon neutral firm in 2020 and has approximately $115 billion of assets under management, is tracking ESG enquiries from its investors and received up to 40-50 on its last fundraise with the expectation for this to increase further for its next fundraise, expected to take place in the next 12 months.
All properties in ‘green luxury’ 1 Hotels brand, which is operated by Starwood Capital affiliate SH Hotels & Resorts and launched in 2015 in Miami, are carbon neutral. This ethos has since been expanded to its Treehouse sister brand at a lower price point, and Abram said the aim was to make the ethos available across price points.
Rather than measuring the ROI on ESG initiatives, he said the Group considers who will buy the asset and what will their requirements be five to seven years down the line, with the aim of creating institutional assets.
“We don’t want someone who can’t buy it in the future because it doesn’t meet their ESG assets,” he said.
“We definitely look beyond the numbers and look forward to where we’re exiting and where the environment’s going to be… we’re not scrimping at the margin.”
Source : IHIF- Katherine Price