Green finance in real estate: UBM Development focuses on ESG and timber construction
Discover how the international real estate developer is driving the green transition with sustainable capital market instruments and a new positioning.
Sustainability is becoming increasingly important in the dynamic environment of real estate development. We spoke to the international real estate developer UBM Development AG, which repositioned itself in 2020 and implements sustainable principles in an innovative way.
In this blog article:
- The UBM story: a timber future
- interview with the Head of Investor Relations & ESG
- Green finance as innovation driver- A sneak peek into the future
The UBM story: a timber future
Christoph Rainer, Head of Investor Relations & ESG at UBM Development, spoke to us about repositioning, sustainability, and the timeless building material timber.
Question: Mr. Rainer, what is the focus of UBM Development?
Christoph Rainer: In a nutshell, we develop real estate for Europe's major cities. We are headquartered in Vienna, but our activities extend to more than a dozen cities and metropolitan regions in four countries – Germany, Austria, the Czech Republic and Poland.
In line with our core strategy, the focus lies on green building and smart office in major cities such as Vienna, Munich, Frankfurt and Prague. With 150 years of experience, UBM offers all development services from planning to marketing from a single source.
Q: Sustainability obviously has a high priority – what did your journey look like so far?
CR: Future-oriented planning today must involve developing buildings that are sustainable, intelligent, and aesthetically pleasing and in which people feel comfortable. Ecological and social aspects play an important role in every decision.
We have been a member of the UN Global Compact since 2021, are committed to the UN Sustainable Development Goals and are an official supporter of the Task Force on Climate-related Financial Disclosures (TCFD). More than 30 green building certifications in recent years, the platinum rating from EcoVadis and the prime status from ISS ESG confirm our consistent focus on sustainability. I can highly recommend checking out our ESG report.
Q: UBM has transformed itself from Europe's largest hotel developer into an innovative timber construction developer. How did this reorientation come about?
CR: The Covid-19 pandemic has had a time-lapse effect here. Triggered by the pandemic, the importance of hotel real estate has changed permanently. In 2020, UBM therefore underwent a fundamental realignment with the aim of becoming the largest timber construction developer in Europe.
By focusing on timber construction, we have reinvented ourselves and are facing one of the greatest challenges of our time. We are using our scope for decision-making as a developer to make an effective commitment to reducing our carbon footprint. The fact that this approach pays off both ecologically and economically is an advantage for everyone involved.
Q: What makes timber construction so future proof?
CR: As a developer, our biggest lever for reducing our ecological footprint is the use of wood instead of steel and concrete – whereever it makes sense. Concrete and steel production alone is responsible for six percent of all CO2 emissions worldwide. Wood, on the other hand, grows back and binds CO2.
Ecological choice of materials, streamlined construction site logistics, modular construction and energy-efficient operation add up to particularly sustainable buildings. From design and construction to dismantling and recycling, we conserve resources. Wood also regulates room temperature and humidity and has excellent insulating properties.
Green finance as innovation driver
Financing the sustainable transition requires versatile and customized solutions. For UBM Development, they are based on three pillars: In addition to equity investors, the company also makes use of bond issues on the capital market for debt investors. As a third too, credit financing is also used – with a focus on switching to green financing.
Capital market instruments with sustainability focus
"Together with RBI, we issued the first sustainability-linked bond for the retail market in 2021. A real pioneering achievement following UBM's radical change in strategy," explains Christoph Rainer, "In total, we have already converted over a quarter of a billion euros on the capital market to green finance, which would not have been possible without the support of the RBI ESG team in particular."
Further issues followed: an ESG-rating-linked EUR 100 million hybrid bond and an earmarked green bond complete the sustainable profile.
A reliable partner in ESG issues
"Our ability to raise debt capital on the market with the help of RBI, even in difficult times, is a key competitive advantage for us," explains UBM CFO Patric Thate.
The green finance framework was another important building block in the implementation of UBM's strategy, which was developed together with sustainable finance experts from RBI in line with market best practices.
The framework applies to the issuance of green financing instruments, the net proceeds of which are used exclusively to (re)finance green projects with clear environmental benefits. It is based on the EU Taxonomy and has been reviewed by the ESG rating and research agency ISS ESG as part of a second party opinion.
From advisory on possible options to implementation and connection with rating agencies, RBI supports companies on the entire green transformation journey. "We are delighted that we were able to support UBM in its transition towards a greener future with our sustainable finance products and services," says Michaela Hörtnagl, Corporate Customers Real Estate at RBI.
A sneak peek into the future
Both timber construction and green finance will continue to be key topics for UBM Development.
"For us, sustainability is not only anchored in our group strategy 'green. smart. and more.' – sustainability is an attitude for us," confirms UBM CEO Thomas G. Winkler, "Timber is the greatest sustainable lever in the construction of buildings. Every cubic meter of wood binds one tonne of CO2 in the long term and only requires the sun as an energy source for its 'production'."
Current and upcoming projects include Vienna's LeopoldQuartier (Europe's first urban quarter in pure timber hybrid construction) and the development of the world's tallest timber skyscraper, the 113 meter Timber Marina Tower in Vienna. The building will comply with EU Taxonomy and ESG guidelines.
Christoph Rainer summarizes: "Our partnership with RBI continues. More and more of our real estate developments are qualifying for green loans. We also want to be pioneers in this area and are in active contact with our banks. If we think it through together, experience has shown that initial ideas and suggestions quickly become tangible and successful calculation models for an even greener future."
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