How Energy Savings Generate Real Returns for REITs
When it comes to property management, keeping operating costs low is critical to success. For a REIT (real estate investment trust), in particular, any money spent on maintaining and operating a building is money that can’t be reinvested in real estate or returned to investors. Because of these tight margins, REIT managers are now turning to a previously overlooked source of unnecessary costs: their energy bills.
Utilities can account for up to 30 percent of a building’s operating costs. Across a REIT’s entire portfolio, electricity costs can account for millions or hundreds of millions of dollars every year. By investing in green technology, REITs can lower their costs, all while adding value for investors.
Energy Efficiency Return on Investment
Many of today’s socially-conscious investors view green investments as a moral obligation, but any investor—regardless of their views—can see the cost-savings benefits of improving energy efficiency. While investing in green energy improvements, like solar power, can help reduce energy costs, making improvements in efficiency is the best way to see a return on investment.
From better light bulbs and low-energy appliances to thermal mass, efficiency technology has come a long way in the last few decades. While using solar replaces the source of electricity, making efficiency improvements actually lessens the need for electricity in the first place. With just a few small building improvements, REITs can actually lower their utility use and pay less. Solar panels wear out and better technology comes along fast, but efficiency improvements will pay dividends for years to come.
Off-Balance Sheet Energy Savings
For most REITs, the biggest setback for installing building improvements is the up-front cost. Energy efficiency technology is expensive, and there is no guarantee that it will perform as expected. But, D.I. Pathways’ new monthly utilization agreement gives REITs a path toward meaningful reductions in energy costs without any up-front investment.
With D.I. Pathways, business owners can subscribe to energy-saving phase change material for a low monthly fee. The short-term, renewable agreement allows building owners to install removable phase change material. This special material can be easily installed and removed from a building’s walls or ceiling. As the building warms, phase change material absorbs the heat and then releases it as the building cools down. This cuts down on temperature swings and can greatly reduce heating and cooling costs.
To learn more about how REITs can benefit from phase change material, contact D.I. Pathways today.