Sustainable Shopping

By Jeff Harder

Shopping center developer, owner, and operator Regency becomes a pioneer in the United States’ green bond movement.


More than seven years ago, when Regency Centers first announced a new emphasis on sustainability at its hundreds of shopping centers around the country, the publically traded real estate investment trust became an industry sustainability leader. Last spring, after living up to its early promises to go green, the 52-year-old company proved that it could be

The 40,000-square-foot Whole Foods store, located in the Regency LEED Silver shopping center, Market at Colonnade, in North Raleigh, met rigorous building and energy efficiency standards during construction and received the company’s sixth LEED Gold certification in the United States.

 a pioneer once again by becoming just the second institution in the United States to issue $250 million in so-called green bonds, an investment vehicle that’s helping carry out projects at Regency’s Leadership in Energy and Environmental Design LEED-certified shopping centers. And along the way, Regency has proved something else: Its pledge to go green is as firm as ever.

Regency had been in the business of owning, operating, and developing grocery-store-anchored shopping centers—322 at last count—for nearly half a century when it commenced a series of sustainability initiatives in November 2007. “We believe being environmentally and socially responsible is the right thing to do, and we’re committed to that—which can be really strange for a development company, right?” says Lisa Palmer, Regency’s executive vice president and chief financial officer. “But it’s important especially because we’re a development company. We impact the environment, growth in communities, traffic, whatever you look at.” At the same time, Palmer adds, the company’s leadership believed investing in sustainability would produce returns in quality.

Grand Ridge Plaza’s LEED Silver certification was awarded based on three major areas of reducing natural resource consumption—energy efficiency, water conservation, and waste reduction.

Across the country, Regency carried out large-scale sustainability measures with Mark Peternell, the company’s vice president of sustainability, leading the charge. Between 2008 and 2010, Peternell says, Regency retrofitted more than 100 properties—approximately a third of its portfolio—with smart-irrigation controls to reduce landscaping water consumption. The company also swapped in LED lighting fixtures at more than 35 sites, along with energy management controls to remotely dim or turn off lights to balance a reduction in energy loads with safety and security on the premises. Regency Centers also partnered with the U.S. Green Building Council(USGBC)

to establish criteria for LEED-certified shopping centers. Since 2009, about two-thirds of the company’s
developments and redevelopments—from Northgate Marketplace in Medford, Oregon, on one coast to the Market at Colonnade in Raleigh, North Carolina, on the other—have earned LEED certification. More recently, the company has begun calculating and reporting their properties’ sustainability performance with tools like the Global Real Estate Sustainability Benchmark and Global Reporting Initiative.


Lisa Palmer, Regency’s executive vice president and chief financial officer.

Palmer says that Michael Mas, Regency’s senior vice president of capital markets, pointed out green bonds—a financial product that harnesses proceeds to finance environmentally friendly investments and has been embraced among European investors in recent years—to company executives while they explored new ways to further their sustainability bona fides. “Mike knew this was a conversation we were having, and we thought, what better way to demonstrate our commitment to sustainability?” Palmer says. According to the Wall Street Journal, more than $32 billion worth of green bonds were sold in 2014—almost three times the amount sold the previous year ( But with few guarantees from bond issuers that investor money is being devoted to undertakings that are truly green, persistent concerns and growth exist side by side.

That’s why Regency’s definition of eligible projects is such a linchpin of the green bonds program: All of the money is used to develop, redevelop, and upgrade projects that possess or are in pursuit of LEED certification. By lending LEED’s third-party credibility to the program, it gives bond buyers peace of mind regarding how their money is being used. “Investors want to see verifiable evidence,” Peternell says. “That’s why LEED was so critical.”

In May 2014, after ironing out the details, Regency Centers issued $250 million worth of 10-year green bonds with a 3.75 percent interest rate, becoming the first nonfinancial corporate entity—and the second overall, after Bank of America—to offer the product in the United States. Bond buyers included a mix of conventional and sustainability-minded backers, and Peternell says that of the socially responsible investors (SRIs) that Regency approached, 80 percent participated in the bond offering. Later that summer, Regency announced that two properties targeted for funding from the green bonds program had received LEED designations. The first was East Washington Place, north of San Francisco Bay in Petaluma, California. The other was Grand Ridge Plaza, built as part of the Issaquah Highlands master-planned community outside of Seattle in Issaquah, Washington.


Mark Peternell, Regency’s vice president of sustainability.

Grand Ridge Plaza looks a lot different than the bland boxes beckoning a sea of cars that might come to mind when you think of the phrase “suburban shopping center.” Instead, the 35-store, 14-restaurant location is a walkable village, mixing plazas, street landscaping, and a network of wide walkways that welcome stroller-pushing families and cyclists funneling in from adjacent bike routes, while substituting supersized lots with diffused street parking. The grounds, punctuated by a Safeway grocery store, take advantage of smart-irrigation controls, energy-efficient lighting, recycled and locally sourced materials, and materials to maximize energy efficiency. Of the 320,000 square feet on the site, says Craig Ramey, Regency’s senior vice president and senior market office for the Northwest, roughly 168,000 feet earned LEED Silver certification last June.

As part of the transparency built into the program, Regency provides investors with annual reports—the first is due in May 2015—detailing how the funds have been applied at Grand Ridge Plaza and other LEED-certified centers under Regency’s purview. In the future, the green bonds could fund even more new developments and green projects at existing LEED properties. “Completing LEED-certified projects isn’t a new part of our strategy,” Peternell says. “But now, it’s a commitment that has a little more teeth because we have to fulfill our obligation to our investors.”

Behind the green bonds program as well as Regency’s broader push for greater sustainability, there’s a critical mass: Sustainable shopping centers like Grand Ridge Plaza reflect the expectations of a new generation. Communities place increasing importance on energy-efficient, waste-conscious, pedestrian-friendly retail. And when a shopping center goes above and beyond, it stops being a collection of stores, shelves, and sale displays, and it merges with the community itself. “It becomes a place where you can meet your neighbors, see your friends, and stay a while if you’d like to,” Ramey says. “It becomes more than just a place to go buy a six-pack of Diet Coke.”