Green Property BondsMarket Status and Sector Guidelines

© 2016 GRESB B.V. Greenbuild 2016 Los Angeles, CA

Dan Winters, CRE Head of North America

Green Bond Market Growth Continued year-over-year expansion

Market firmly established in 2013 (4x growth)

2014 expansion coincided with release of the Green Bond Principles Strong pace seen in 2016 YTD

1

0 5

10 15 20 25 30 35 40 45 50

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 as of 3Q

Asia-Pacific 12%

Europe 55%

Global 5%

North America

28%

Asia-Pacific 42%

Europe 29%

Global 2%

North America 27%

Geographic Diversification Early EU domination | rise of Asia Pacific and North America

Increasing number of issuers in North America and Asia Pacific Asia-Pacific demonstrating strongest growth in 2016

2

as of 3Q16

2015

Green Property Bond Issuance Real estate market share – trailing 4 years

Vasakronan issued first corporate green property bond issuer (2013)

YTD 2016 issuance has equaled 2015 total market volume (3Q16) 3

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2013 2014 2015 2016

REITs

Governments

Corporates

Non-Green Property

$ Billions

Green Property Bonds 2016 YTD Issuances

4

Mar

ket S

cope

Commercial Real Estate 10 issuers

Listed Real Estate Companies

Digital Realty Trust Unibail-Rodamco

Vornado

Muni / Corporate /Financial Services

55 issuers

Municipals Ille de France

University of Virginia Mass. Dev. Authority

Corporates Skanska Telus

Banks ABN AMRO

Dev. Bank of Japan TD Bank

GSEs Berlin Hyp Fannie Mae NWB Bank

Property Bond Issuers Corporates and financial institutions enter market

Corporate issuance is current driving force in green property market

YTD 2016 real estate issuance surpassed 2015 total market volume 5

0

2000

4000

6000

8000

10000

12000

2013 2014 2015 2016

Corporates Governments REITs $ Billions

Observations: Metrics Used Identifying eligible green projects in prospectus (pre-issuance)

6

Real Estate Companies

Mostly global building certification schemes At least 50% of issuers

use mix of local + global certification

rating systems ESG factors pursued are

broad-based

In Common Identify building

certification schemes and levels

Approx. 60% specify energy reduction / improvement goals

Majority have second opinions or similar

external review

Corporate / Financial Service Objectives / disclosures range widely to include:

3rd party certifications carbon reduction targets

social goals 1 in 3 issuers blend regional and global

green building schemes Energy ratings tied to country benchmarks

Building Certifications LEED is the most commonly specified building certification system

Commercial Real Estate   6 issuers (US focus)

  Wider range of certification levels   “Hedging on outcomes”

Corporate / Financial Services   35 issuers (global scope)

  Tighter range focused at high end   “Pushing the market”

Based on prospectus review 7

0 1 2 3 4 5 6 7

Certified Silver Gold Platinum 0 5

10 15 20 25 30 35 40

Certified Silver Gold Platinum

Real Estate Industry Guidance GRESB Green Bond Guidelines

8

  Developed as sector guidance complimenting the Green Bond Principles

  Provides framework for the full spectrum of real estate issuers and investors

  Drawn from GRESB Green Bond Working Group recommendations

  Property bond originators   Underwriters and placement firms   Green bond investors

Similarities with Green Bond Principles GRESB Green Bond Guidelines

9

Use of Proceeds

Project Evaluation /

Selection Process

Management of Bond

Proceeds

Investor and Stakeholder

Reporting

Used across multiple bond types:   Green Use of Proceeds Bond   Green Use of Proceeds Revenue Bond   Green Project Bond   Green Securitized Bond

Spans the full range of construction and real estate investment activities

Green Bond Application Guidelines used in all stages

10

Metrics / KPIs

Prospectus (pre-issuance)

Process: project evaluation

and selection

Reporting (post-issuance)

Description: actual use of

proceeds

Key updates in 2016 GRESB Green Bond Guidelines

11

Social factors and KPIs added to eligible criteria list

Implemented suggestions on ways to increase transparency and credibility -- company track record and ongoing monitoring

Guidance on relating entity’s sustainability targets to green bond framework

Reporting metrics and procedures to communicate environmental impacts and ESG exposure

1

2

3

4

Takeaways Green bond market prospects to 2020+

Green Bond market demonstrating consistent year-over-year expansion

Real estate sector is a rapidly growing green bond asset class

GRESB offers industry-tailored guidelines to assist bond market participants

GRESB Assessment provides benchmark and track record

GRESB Green Bond Working Group further evolves industry best practices

12

Case Study Discussion Vasakronan and Digital Realty Trust

13

Questions & Comments

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