Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesExhibit VI-4Existing Building Underwriting Checklist1. Preliminary Compliance with Investment GuidelinesProperty Type/Sub-TypeSize/ValueLocationAgeConstruction Type/QualityFloor plates/Elevators/Parking, etcMarket ConditionsLoan to Value/CostDebt Service Coverage RatiosInternal Rates of ReturnLoan to Replacement CostVacancy/Credit LossIncome, Occupancy, and Expense CalculationsTenant Quality/Lease StructureTenant Improvement/Leasing Commission Allowance2. Owner/OperatorCredit Analysis-ReferencesProperty Type/Operations ExperienceExperience with Subject PropertyFinancial Strength-Net WorthJudgment, Liens, Bankruptcies, Legal searchBank Statement ReviewOwnership FormIndemnifications, Guarantees, Carve outsDisclosures3. Property ManagementProperty Type Specific Management ExperienceEmployee/Tenant TrainingTrack RecordManagement Agreement ReviewLeasing Agreement ReviewList of Employees and CompensationEmployee Agreements/LawsProperty Management BudgetSecurity Deposit Verification4. Property CharacteristicsAge and Physical Characteristics (site Inspection)Functional Design/ObsolescenceLocationParking RatiosAccessTenant Profile (primarily MF), Quality and MixGround LeasesGov. Regulations/Permits/LicensesBrand/Franchise AgreementsProperty Certifications/Performance Assessments178
Value Beyond Cost Savings: How to Underwrite Sustainable Properties5. Property Operations/Cash Flowa. Operating Cash Flow History-Verification• Operating Statements• Rent Roll• Historical Occupancy/Collection Losses• Tenant Sales Data (retail only)• Expense Recoveries• Other Income• Estoppels (verification)b. Lease Structure and Review• Lease Abstracts/Major Lease Review• Standard Lease Agreement• Signed Non-standard Leases• Objectionable Provisions Assessmentc. Operating Expenses• Owner vs. Tenant Paid Expenses• Utility Expenses• Real Estate Taxes• Personal Property Taxes• Maintenance and Repairs• Landscaping/Groundkeeping• Management Fees• Property Service Contracts• Operating Leasesd. Capital Expenses/Escrows and Holdbacks• Replacement Reserves• Tenant Improvements• Leasing Commissions• Capital Expenditurese. Operating Cash Flow Forecast-Verification• Local Market Analysis/Forecast• Comparable Property Assessment• Lease Rollover Analysis• Large Lease Expiration Assessment• Re-Lease Risk Analysis• Review of forecasted rent changes, tenant retention, rollover vacancy,future occupancy assumptions, concessions, etc.6. InsuranceProperty and CasualtyLiabilityBusiness Interruption7. Third Party ReportsAppraisal ReportProperty Condition/Quality: Engineers ReportPest Inspection ReportEnvironmentalLegal, Title and SurveyGovernment RegulationsTax Consultant ReportInsurance-Risk Management ConsultantSustainability Related Third-Party InvolvementA key value of the checklist and our select comments on underwriting changes is toreinforce the point that sustainable property investment decisions involve much more than179
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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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