Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable Propertiescritical to separate the concept of public and private value when evaluating a sustainableinvestment decision from a private sector perspective. This does not mean that publicvalues and benefits cannot be considered by the private sector when making investmentdecisions, but only that such decisions should be made with a clear understanding of thedifferences between private and public values.D. ConclusionsRapid regulator, space user, and investor change regarding sustainability requiresunderwriters and valuers to increase their knowledge base and improve their practices toappropriately value and underwrite properties with sustainable features and certifications.Fortunately, due to the qualitative nature of traditional methods and practices, the realestate industry is well positioned to meet the challenges to underwriting and valuation.8
Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesChapter IISustainable PropertyInvestment DecisionsA. IntroductionChapter II is the second of the six-chapter book Value Beyond Cost Savings: How toUnderwrite Sustainable Properties. The message of this chapter is straightforward, butnecessary, given some confusion in the industry about the proper methods and data inputsfor making sustainable property investment decisions. Simply put: the type of decisionwill determine the financial analysis data and methods.As detailed below in Exhibit II-1, the level of decision, type of investor, investment type,property type, and geography will all influence how underwriting and valuation should beconducted for any particular sustainable property investment decision. The underwriter orvaluer needs to explicitly think through how their decisions will influence the analyticmethods they choose, the data they rely upon, and preparation of their work product.Exhibit II-1Investment Context Drives Underwriting MethodologyINVESTMENTDECISION/CONTEXTdeterminesMETHODOLOGYresults inDECISIONLevel of DecisionInvestor TypeAnalytic MethodsOrganizational ContextData RequirementsInvestment Decision Type:Property LifecycleUnderwriting Team:InternalThird PartyInvestment DecisionProperty TypeForm of OutputGeography/Other Factors9
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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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