The Impact of ESG Coverage, Evidence from Commercial Real Estate Green Asset Acquisition Activities

Most of the recent ESG literature has studied how ESG rating affects investing behaviour in the capital markets but has little focus on the commercial real estate market. We contribute to the recent ESG and real estate literature by examining how ESG ratings affect the commercial real estate market and how ESG and non-ESG firms’ property transactions behave differently in the acquisition of green buildings in the United States from 2009 to 2021. We find that companies (acquirers) with ESG coverage and a higher level of ESG rating have a strong preference for green buildings and are willing to pay higher property premiums (9.26%), especially after the local natural disaster shock and green building certification announcement.