Value Beyond Cost Savings - Green Building Finance Consortium

Appendix FSustainable Property Financial Analysis AlternativesA. Traditional Sustainability Financial Analyses 941. Simple Payback2. Simple Return on Investment (ROI)3. Simple Change in Asset Value: Direct Capitalization (CAV-DC)4. Simple ROI and General Cost-Benefit Analysis5. Life Cycle Costing (LCC)6. Value Engineering7. ENERGY STAR Building Upgrade Value Calculator for Office Properties8. ENERGY STAR Cash Flow Opportunity9. Life Cycle Assessment (LCA)10. Post Occupancy Analyses (POE)B. Traditional Real Estate Financial Analyses 951. Cost Management2. Discounted Cash Flow Analysis (DCF)• Change in Asset Value• Net Present Value• Internal Rate of Return3. After Tax Cash Flow Analyses4. Valuation5. Total Occupancy Cost (Cost of Ownership) Analysis6. Economic Value Added94 These models and analysis are those that have traditionally been used in the real estate industry to make energy efficiency/sustainability investment decisions for buildings,features, and equipment.95 Traditional real estate financial analyses are integrated models that endeavor to incorporate comprehensive cost, benefit, and risk information to generate return/value resultsbased on specification of financial model inputs such as energy costs, rents, occupancy, tenant retention, discount rates, etc.216