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Tenants join investors to raise pressure for ESG compliance

Developing and refurbishing buildings conform with high standards of sustainability is now the most important thing and investors are reluctant to invest in assets that do not comply have strong ESG credentials according to Professor Reinhard Walter, managing partner of Heidelberg-based developer and asset manager FOM Real Estate.

Funds that FOM Real Estate and FOM Invest have set up are focused on creating buildings or refurbishing older buildings to be suitable for an Article 8 fund.

Even buildings constructed in the 1970s and 1980s will not now be compliant, Walter told Real Asset Insight’s Richard Betts. “You won’t be able to lease them out in the future I think because tenants are looking at ESG as well,” he said.

He said that turning such assets around is a challenge that his company, as a new fund management business, is addressing.

He cited four older supermarkets that his company acquired. “Three of them we developed completely to ESG confirmation and one of them we just tore down and we will build residential units, about 300-350 units in the next four years.”

That project is in Duisberg in the Ruhr Metropolitan area but the company is now looking further afield in Europe. It is already present in the Netherlands but is looking to Austria, Switzerland and France.

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