Doing Good While Doing Well
What Makes a Great Place to Work
Company culture is the backbone of any successful organization. According to a recent survey, 83% of respondents rated company culture as important when deciding where to work. When cultivated well, a positive company culture will unite people through a shared set of values, goals, attitudes and practices, and can create a real sense of community and belonging for employees, boosting productivity and decreasing turnover. W. P. Carey was recently certified as a Great Place to Work in 2022 thanks to the positive culture fostered by our team. In fact, 96% of survey participants said it's a great place to work – 39 points higher than the average U.S. company. What are the qualities that make a great company culture and ultimately a Great Place to Work? Learn W. P. Carey’s keys for success below. Cultivate a values-driven workplace In a values-driven workplace, employees find alignment between their personal values and the organization’s values, creating a unified and motivated workforce. At W. P. Carey, our four core values have formed the foundation of our culture: we invest for the long run, our people are critical to our success, we believe in Doing Good While Doing Well®and we value doing what is right. Our culture is nurtured by continually putting those values into action, from everyday business, to volunteer programs, to treating each other with dignity and respect. Management plays a critical role in maintaining a values-driven workplace, as they “walk the walk” and uphold our four core values through their leadership. Develop a collaborative and friendly environment W. P. Carey creates an environment where employees operate as a team. No job is too big or small and all voices matter. To that effect, W. P. Carey maintains an open-door policy – dialogue and discussion is not only welcome but encouraged. Collegial debate is critical to the success of the business. When making decisions, we will always move forward with the best idea, regardless of who brings it to the table. W. P. Carey maintains a relatively flat and lean organizational structure. The company is not focused on hierarchy and employees get to know everyone at every level. This creates a unique opportunity for employees to directly work with and learn from more tenured executives, which enables them to hone their skillset and grow in their role. Prioritize respect A respectful workplace prioritizes fairness, equality and inclusion for all employees. At W. P. Carey, employees understand the impact of their behavior on others and act accordingly, remaining mindful of personal differences and ensuring all opinions are heard. This creates an environment where employees feel valued and are comfortable actively expressing their ideas. W. P. Carey encourages employees to “bring your whole self to work” – meaning the company wants to get to know who you are outside of the office. Employees share their passions, talk about their hobbies and most importantly bring a sense of humor into the workplace. This builds real relationships and creates a supportive and uplifting environment where respectful collaboration is natural. Conclusion Building a strong corporate culture is not a passive activity. Unless you continue to cultivate it, culture won’t grow. It is also dynamic and should change over time to reflect the evolving beliefs and values of the company. Ultimately, investing the time and energy into building a positive culture is well worth the effort. Positive workplace culture boosts motivation and productivity, increases employee satisfaction, attracts new talent and reduces turnover. Perhaps most importantly, it turns a good place to work into a great one.
W. P. Carey's Approach to Sustainability
Net Lease REITs are unique because our tenants typically retain operational control of the property. This structure has enormous benefits for both landlord and tenant. The landlord is not exposed to operating costs or capital expenses and is able to own and manage a large and growing portfolio very efficiently. Meanwhile, the tenant retains operational control, enabling them to adapt the property to their specific operational needs. W. P. Carey prides itself on its proactive approach to asset management. Our goal is to create long-term relationships with our tenants, proactively working with their management teams to optimize their real estate to meet their evolving needs. In recent years, sustainability has grown to be a top priority for W. P. Carey and our tenant base alike. While the net lease structure has many benefits, it presents some challenges when it comes to helping our tenants reduce their carbon footprint. First and foremost, without direct operational control, it can be difficult for net lease landlords to access property-level emissions data in a scalable way. However, with real estate being one of the biggest contributors to global greenhouse gas emissions, net lease REITs must create the systems and processes to facilitate collaboration with our tenants to reduce the carbon footprint of the portfolio. To tackle the challenge, we employ a three-phased approach to quantify and reduce our portfolio’s global carbon footprint: Step 1: Data – Scalable systems to collect and analyze our portfolio’s carbon footprint data The first step – and perhaps the most challenging for net lease REITs in general – is to collect tenants’ energy usage data to accurately analyze and benchmark our portfolio. In 2021, W. P. Carey launched a program to leverage a suite of SaaS platforms to collect utility data in an automated and scalable manner. The data feeds into our proprietary business intelligence platform, enabling us to track energy usage, identify outliers and opportunities, and integrate with third-party benchmarking organizations. It also enables us to equip our tenants with tools to better manage and benchmark their own energy consumption. As of December 31, 2021, we’ve collected data from tenants representing over 30% of annualized base rent (ABR). In 2022, we intend to further expand this program throughout our portfolio. Step 2: Engagement – Systematic tenant outreach and collaboration The next step is to proactively engage with tenants to jumpstart actionable conversations that lead to projects that reduce carbon footprint. At W. P. Carey, each asset manager is responsible for a portfolio of tenants across all property types and regions. Our asset managers develop long-term relationships with tenant management teams, providing a direct and ongoing dialogue about the tenant’s business and how they can operate more effectively in their real estate. These conversations have created direct opportunities to pursue sustainability projects that both lower tenant operating costs and enhance W. P. Carey portfolio value. Step 3: Action – Targeted sustainability projects that lower carbon footprint The final step is to act on the insights and identify property-level sustainability opportunities within the portfolio. Sustainability projects fall within five key areas: renewable energy opportunities, building energy retrofits, existing building green certifications, new construction green certifications and tenant energy audits. In addition to the primary goal of reducing carbon footprint, collaborating with our tenants to invest in sustainability projects has several key benefits. For the tenant, a more efficient building reduces operating cost and helps reduces the tenant’s scope 1 and 2 emissions. For W. P. Carey, sustainability projects provide an enormous addressable opportunity set of accretive investments within our existing portfolio. These projects enable us to extend leases, enhance criticality of properties and improve the overall value of the portfolio. Conclusion Reducing the carbon footprint of a global net lease portfolio is an enormous long-term challenge. However, by developing a scalable, technology-driven approach to collecting data and engaging with tenants, we can systematically identify sustainability opportunities that are beneficial to the planet, attractive to tenants and improve our broader portfolio. At W. P. Carey, we’re committed to scaling up this effort and being an innovative sustainability leader in the net lease industry.
The Importance of ESG for Net Lease REITs
Nearly three-quarters of institutional investors are factoring ESG into their investment decisions, up 18% since 2019 according to a recent report. As the importance of responsible investing continues to grow and more investors evaluate companies based on ESG-related criteria, REITs are recognizing both the benefits and necessity of a holistic ESG strategy. Despite the increased focus, the net lease industry has lagged behind. In a recent WMRE survey focused on the net lease sector, only six percent of respondents said ESG was a significant factor in their investment decisions. While net lease REITs have developed robust governance policies and social initiatives, environmental has been more difficult to address—largely due to the triple-net lease structure whereby tenants are responsible for the day-to-day operations of the property, including energy usage and environmental practices. While net lease REITs don’t directly control property operations, there is an enormous opportunity to work with tenants to reduce their environmental impact and implement sustainability initiatives to support the ‘E’ in ESG—here’s how. Integrate ESG into underwriting ESG criteria can be integrated into the underwriting of new investments both at the property and tenant levels. In assessing properties, factors to consider are the types of energy used, equipment age and waste management standards. Most importantly, considering not only the current state of the building, but what improvements can be made in the future, is critical. On the tenant level, it’s important to understand the company’s broader ESG goals and ensure they are committed to reducing their carbon footprint. For build-to-suit investments—where REITs fund the construction of a new facility— taking a proactive approach to engaging with tenants on sustainable design decisions early in the process is crucial and a great way to turn a conventional investment into a green one. Source sustainability projects from within Net lease REITs can source sustainability-focused opportunities from their own portfolio. REITs with industrial properties are particularly well suited to working with tenants on sustainability projects that improve carbon footprint, reduce operating expenses and enhance asset quality. Such projects include, renewable energy opportunities, green building certifications (ie. LEED, BREEAM), building efficiency retrofits or energy audits. By identifying owned properties best suited for certain projects and proactively reaching out to tenants, net lease REITs can build a steady pipeline of sustainable investments while helping tenants decrease operating costs and advance their environmental goals. Finance investments through green bonds As more investors look to increase their allocation to ESG-related investments, public net lease REITs may be able to secure attractive financing to fund their pipeline of sustainable investments through the issuance of green bonds. Green bonds are designed to support strategies and initiatives that have a positive environmental benefit and can help net lease REITs appeal to a wider investor base and raise the capital needed to fund green investments. In closing Implementing environmental initiatives as part of a broader ESG strategy is possible for all REITs, net lease included. At W. P. Carey, we take a proactive approach to reducing our global carbon footprint, partnering with our tenants to reduce their environmental impact and meet their own ESG goals. These initiatives are not only beneficial to the planet, but to a REIT’s broader portfolio. Green buildings generally increase property value, drive higher rents, attract higher-caliber tenants and often improve renewal outcomes, which can all lead to enhanced cost of capital and accelerated growth.