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

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  • McGrath, Karen

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.

Suggested Citation

  • McGrath, Karen, 2014. "Does Increased Investment in Responsible Properties Lead to Better Corporate Performance?," MPRA Paper 57767, University Library of Munich, Germany, revised 05 Aug 2014.
    • Handle: RePEc:pra:mprapa:57767
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    Cited by:

    1. Annie Tubadji & Vassilis Angelis & Peter Nijkamp, 2016. "Endogenous intangible resources and their place in the institutional hierarchy," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(1), pages 1-28, February.

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    More about this item

    Keywords

    sustainability; property investment; responsible investing; eco-certified; green labels; REITs;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

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