The 2023 Global Real Estate Sustainability Benchmark scores, or GRESB scores, showed an improvement in ESG efforts for the majority of scored US equity real estate investment trusts.
GRESB scores capture information on ESG performance and sustainability best practices for real estate companies, covering more than 1,800 property companies, REITs, funds and property developers worldwide.
Looking at the US REITs that trade on the NYSE, Nasdaq or NYSE American, 67 participated with GRESB in 2023 and received a GRESB Participant Score evaluating their ESG efforts, with another five REITs — EastGroup Properties Inc., Four Corners Property Trust, RLJ Lodging Trust, LTC Properties Inc. and Easterly Government Properties Inc. — electing to use 2023 as their grace period, a system designed to allow first-year participants to familiarize themselves with the GRESB reporting and assessment process without their scores being made available to GRESB Investor Members.
GRESB participants are scored out of a maximum of 100 points, with 70 points stemming from a performance component that evaluates aspects such as energy consumption, greenhouse gas emissions, water and waste management and others. The remaining 30 points are scored based on the company's management, taking into account leadership, policies, reporting, risk management and stakeholder engagement.
GRESB also takes into account characteristics unique to different property types.
Of the 59 members also scored the year prior, 39 saw an increase in their GRESB Participant Score, while the other 20 logged decreases compared to the year prior.
By property sector, nine of the 12 residential REITs scored by GRESB saw a positive increase in their GRESB Participant Score for 2023, with the other three logging declines in their scores.
Meanwhile, eight shopping center REITs also increased their GRESB Participant Score, with only one showing a decrease. Similarly, five of the six industrial REITs also logged increases in their scores.
On the other hand, nine office REITs had decreases in their scores for 2023, with only four logging increases. Two of the three self-storage REITs also saw declines in their scores.
Despite the majority of office REITs showing a decrease in their GRESB Participant Scores for 2023, seven of the 10 highest-scoring REITs were from the office sector.
Office REIT Empire State Realty Trust Inc. had the highest score at 92.1, while multifamily REIT Veris Residential Inc. took the second spot with 91.9.
Two other office REITs, Hudson Pacific Properties Inc. and Boston Properties Inc., placed next with scores of 91.8 and 90.4, respectively, while Washington, D.C.-focused JBG Smith Properties and office REIT Paramount Group Inc. were both scored at 90.3.
Other REITs in the top ten included regional mall REIT Macerich Co. as well as office REITs Kilroy Realty Corp., Vornado Realty Trust and Brandywine Realty Trust.
On the other hand, diversified Gladstone Commercial Corp. was scored the lowest for 2023, with a GRESB Participant Score of 27.4. Healthcare REIT Community Healthcare Trust Inc. and shopping center REIT Whitestone REIT followed next with scores of 42.5 and 42.8, respectively.
Two self-storage REITs, National Storage Affiliates Trust and CubeSmart, rounded out the bottom five, scored at 49.7 and 49.8, respectively.
By property sector, office REITs scored the highest overall, with a median GRESB Participant Score of 88.4.
The regional mall REITs followed next at a median of 86.4, followed by the sole datacenter REIT at 82.6.
Self-storage REITs overall were scored at the lowest, with a median of 62.1.
In addition to the GRESB Participant Scores, GRESB also rated the public ESG disclosure for 126 of the public US REITs, expressed through an A to E sliding scale.
Forty-five REITs, or 35.7%, had their public ESG disclosure scored at an A, the highest rating, while 27, 21.4%, were scored at B.
Thirteen of the REITs, or 10.3%, were scored at an E, the lowest rating.
