Energy risk is becoming a core underwriting issue for real assets investors, with implications for inflation exposure, financing conditions, tenant affordability and long-term asset values, according to Hines.
The paper said energy can no longer be viewed only as an operating expense, particularly during periods of price volatility and inflation pressure.
Instead, Hines said investors should evaluate energy exposure from the start of underwriting, alongside vacancy risk, capital structure and tenant credit.
Energy risk can vary significantly by asset type, lease structure and geography, creating wider performance differences across real estate portfolios.
Assets with greater exposure to volatile energy costs may face pressure on operating margins, tenant demand and exit valuations.
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