Eichholtz, Holtermans, Kok, and Yonder (2015)
Eichholtz, Piet, Roger Holtermans, Niles Kok, and Erkan Yonder. “Environmental Performance and the Cost of Capital: Evidence from Commercial Mortgages and REIT Bonds.” Working paper (University of Maastricht), December 2015.
From the authors' abstract: "There is an ongoing debate about the impact of environmental performance on a firm’s cost of capital, but most academic studies are hindered by methodological challenges... Using a sample of U.S. REITs, we investigate the spreads on commercial mortgages collateralized by real assets, some of which are environmentally certified. We also study spreads on corporate debt, both at issuance and while trading in the secondary market. The results show that environmentally certified buildings command significantly lower spreads as compared to conventional, but otherwise comparable buildings... At the corporate level, we document that REITs with a higher fraction of environmentally certified buildings are able to issue bonds at lower spreads, after controlling for a broad set of REIT and bond characteristics."