GRESB reporting season is upon us. For those on the front lines, it’s a time of stress and long hours.
For those in portfolio management and investor relations, all there is to do is hold their breath.
That’s because they know that the ultimate result of all that minutiae is a 1-5 star rating that can directly correlate to losing a fund in their LP, and their ability to access additional capital sources.
And so, particularly for portfolios where tenants pay utility bills directly, having a data coverage strategy is mission critical to the health of the business.
Because, while GRESB continues to tweak their scoring, one constant has been true and will continue to remain true for the foreseeable future: utility data coverage represents the largest bucket of available points in the scoring system.
Understanding GRESB Scoring and Ratings
When we talk about utility data coverage, we are straddling a number of the categories that GRESB lays out.
Utility data coverage points come from:
- Energy → 8.5 points
- GHG → 5 points
- Water → 4 points
- Waste → 2 points
That adds up to 19.5 points, more than any other category, by far.
Here’s why it matters.
There is a ton of room for improvement in triple net leased asset types, like industrial.
This is saying that the average portfolio got 8.86 of the available 19.5 points.
That missing 10.64 points represents a massive opportunity for those who can successfully increase data coverage.
That’s because the difference between star ratings is very narrow.
Let’s say a portfolio got a score of 80. In 2024, they’d be 3 star.
Add 10.64 points to that (or even 7.58 points) and suddenly it’s a 5 star rating.
The point is: there’s a direct line between increasing utility data coverage and increasing access to capital that can drive the next funding round, or offer better cost of capital.
What a Utility Data Coverage Strategy Looks Like
There is no one size fits all approach.
First things first. Any landlord-controlled utility bills should be automatically pulled into a software, scraped, and run through a quality assurance process.
In terms of tenant-controlled utilities, there’s no silver bullet. Maybe some assets have on-site personnel that can manually read meters on a mobile app.
Likely, at least some of the assets are located in jurisdictions that share utility data (though letters of authorization are often required).
There are often some tenants willing to enter their credentials to automate reporting of their bills, or manually upload them to a portal to be scraped like landlord-controlled utility bills.
And, of course, there will be many scenarios where shadow metering is the best option.
The takeaway is:
- If you’re not going to deploy shadow metering, at least understand the ways in which software can streamline and/or automate the process. Simply asking tenants to email their bills won’t be a viable strategy for much longer
- If you think that there’s a ceiling for data coverage in portfolios that have directly metered tenants, know that your peers are likely breaking through that barrier with shadow metering
The Other Variable in Data Coverage: Timing
GRESB calculates data coverage both by square footage and by days of the year.
So, obviously, we are well into 2025 and efforts today will not have an outsized impact on 2025 scores.
But zoom out. There is time evolved in evaluating technology providers, identifying and scoping an initial phase of assets to deploy in, onboarding the software and/or installing shadow metering, connecting data to Energy Star, and executing on a portfolio-scale rollout.
That can be done in 8 months, in time to have full data coverage in 2026 and beyond.
But delay can mean that only the initial deployment has been completed heading into 2026. Quickly, you’ll be in the same position today, and looking towards affecting the score of 2027 (reported in 2028).
That may be okay, except that GRESB ratings are relative. If peers push on ahead, ratings can drop even if scores stay the same.
