Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable Properties7. What evidence is available of the magnitude and/or importance of the cost orbenefit to the specific subject property, in the context of other factors influencingthe property’s financial performance?• Regulator response• Space user response• Investor response• Market conditions• Geographic considerations• Mitigating factors8. Did the property/project sponsor consider the cost or benefit, and its potentialimplications on financial performance? Why or why not?Courtesy Wikimedia Commons, Banana Patrol110
Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesExhibit V-5GBFC Sustainable Property Cost-Benefit ChecklistI. Potential Building BenefitsA. Reduced Development Costs1. Government incentives2. Better private financing3. Downsizing of some systems (HVAC, etc.)4. Reduced number and magnitude of changeorders5. Reduced operational start-up costsB. Reduced Development Risks1. Reduce construction risk2. Reduce carry risk3. Reduce exit/take-out riskC. Increased Space User Demand: HigherRevenues1. Increased demand from space usersconcerned about enterprise value2. Increased demand from governmenttenants with mandated sustainability3. Increased demand from vendors/supplychain required by big customers (GE, Wal-Mart, etc.) to be more sustainable4. Increased demand from tenants with directtie to sustainability business—architects,engineers, consultants, contractors,lawyers, energy firms, product companies,etc. etc.5. Increased demand from tenants wanting to“do the right thing”D. Reduced Resource Use / Operating Costs1. Lower energy use2. Lower water use3. Reduction in sewage/stormwater run-off4. Reduction in building waste5. Reduction in construction/demolition waste6. Reduction in carbon footprint7. Lower emissions8. Lower property/casualty insurance costs9. Lower maintenance costsE. Improved Operations/Capital Costs1. Reduced cost of changing space2. Fewer tenant/occupant complaints3. Reduced frequency of capital expenditures4. Reduced tenant turnover/re-leasing5. More reliable functioning of systemsF. Reduced Cash Flow/Building OwnershipRisk1. Improved ability to meet future regulatoryrequirements2. Ability to capitalize on future governmentincentives3. Improved ability to meet changing spaceuser demand4. Improved ability to meet changing investordemand5. Prevent risk of loss of “social license” tooperate building6. Limit liability due to building related healthissues—sick building, mold claims7. Limit exposure to future compelling healthand/or productivity research8. Reduced risk of reliance on grid (terrorism)9. Increased flexibility/adaptability10. Reduced risk of building not operating asdesigned11. Limit exposure to energy/water costvolatility12. Reduced exit/take-out risk13. Overall reduced potential loss of value dueto functional, economic and physicalobsolescenceG. Public Benefits 701. Infrastructure cost benefits2. Environmental and resource conservationbenefits3. Land-use benefits4. Reduced climate change5. Economic benefits6. Security benefits70 Public benefits become private investor/landlord benefits whenthe investor/landlord can monetize the benefits through governmentregulatory relief, incentives, tax benefits, etc.111
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Appendix FSustainable Property Fina
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Appendix GSustainable Property Cost
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Appendix HDiscounted Cash Flow Anal
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Property Type: CBD OfficeSquare Fee
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Value Beyond Cost Savings - Green Building Finance Consortium

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