“The pressure is coming from a few different places. Of course the investors, but equal pressure is coming from pending regulation in the US,” shared Benjamin Hochron. “As fiduciaries, we’re obligated to protect the value [of assets] when those [regulations] eventually arrive… You also see the price of carbon going up exponentially and more tenants raising questions about the sustainability of the buildings they occupy” 

“LXP is mostly a triple-net REIT, so a lot of the time, the tenants operate and manage the buildings,” noted Leslie Moore. “There are a lot of sustainable initiatives going on, it’s just that the tenants are handling it. For us, we don’t see as much pressure from the tenants as we do the investors.”

“A lot of the demand is also coming from the end user — the consumer,” added Matt Christy. “They want to purchase products, services, and goods from companies that do have solid green footprints.” 

“Data is the absolute benchmark for your ESG sustainability program. If you don’t have good data, your reporting is going to reflect poor scores,” said Kelly Fleming. “I cannot stress enough the importance of an experienced third-party partner or internal staff who can collect that data… [Realterm is] enacting green lease language when we execute amendments, and that language allows us to bring our tenants to the table to discuss a sustainable plan and install things such as smart meters, so that we can collect consumption data without the concern of privacy issues. We want to make sure our tenants are on a sustainable path, willing to walk next to us in this journey, and provide that data needed for success.”

“One of the things we have been able to do is leverage consulting companies to access the data for us,” added Christy. “This has been a huge efficiency driver on our end, as we can access the data but we aren’t the ones processing or collecting it.”

“One would think it’s easy to install solar on top of buildings, but there are a lot of considerations and each market is different because of the cost of energy and local regulations,” shared Hochron. “You also have to consider the term of the tenant and the life of the roof… Out of a hundred buildings, it may only make sense for a handful. That needs to change because it’s such an important part of getting to net-zero.”

“In Europe, it might make more sense for us to install microturbines on some of our rooftops, or explore geothermal solutions as opposed to PV,” noted Fleming. “We’re taking a look at all of the options we have in terms of renewable energy. There are different solutions that make sense for different markets.” 

“Specific to industrial, this is a challenge when it comes to terms. [LXP] has found lease terms are shortening, [which is both] landlord and tenant driven,” said Moore. “When it comes to tenant engagement, there are some things that make financial sense for the tenant and then certain things don’t —  like if they have a five year lease and don’t know where they are going to be next.”