While green bonds still represent a small percentage of capital raising activity, they have been continually rising in popularity over the past four years, widening the potential buyer pool for REIT securities and serving as an avenue for REITs to tap into investors looking for sustainable-oriented investments.

Fourteen REITs utilized green bonds in 2021 as a way to raise capital for ESG initiatives, resulting in aggregate gross proceeds of nearly $11.97 billion.

In 2021, proceeds from green bonds issued by U.S. REITs accounted for 15.5% of all REIT bond proceeds for the year, the highest level to-date. In comparison, green bonds accounted for 10.2% of bond issuance in 2020 and 7.1% in 2019.

Data center REIT Equinix Inc. raised the most capital through green bonds in 2021 with three offerings totaling roughly $2.33 billion in gross proceeds. On May 3, Equinix closed a $1 billion green bond offering, as well as two euro-denominated offerings in February totaling €1.1 billion, or approximately $1.33 billion.

Office-focused Boston Properties Inc. followed next, closing two green bond offerings during the year for $850 million apiece.

Multifamily REIT AvalonBay Communities Inc. meanwhile rounded out the top three, with two green bond offerings totaling $1.1 billion.

On the underwriter side, J.P. Morgan Securities LLC was the top underwriter of green bond issuances by U.S. REITs in 2021, at nearly $1.40 billion. BofA Securities Inc. and Citigroup Global Markets Inc. followed next, with $859.2 million and $827.9 million underwritten, while Goldman Sachs & Co. LLC and Wells Fargo Securities LLC rounded out the top five.

In total, 42 firms underwrote on REIT-issued green bonds in 2021.