Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable Propertiesare most concerned about their short holding periods and getting paid for investments theymake when they sell completed projects.Within the investor, lender, corporate and development markets there is substantial furthersegmentation of investment goals and objectives. There are dozens of different types ofequity investors including low risk, and low return, “core” investors and high-risk, andhigh return, “opportunistic” investors. Lenders are also highly differentiated by propertytype and risk. Land acquisition and construction lenders take the most risk, whilepermanent lenders with loans on well-leased existing buildings are most risk-adverse.While the debt and equity markets have simplified, and tightened substantially since 2008,it is critically important to understand the goals, objectives, and underwriting andvaluation criteria of capital sources before seeking capital.Courtesy Wikimedia Commons, S. TomaszE. Investment TypeThe focus of the sustainable property investment market historically has been on newdevelopment. With the dramatic increased interest in sustainability by investors during thelast few years, and with the enhancement and maturity of existing building rating systems(e.g. LEED, and LEED Commercial Interiors, etc.), sustainable property investmentdecisions now span the breadth of real estate decisions, as shown below in Exhibit II-3.The particular analytic models, data requirements, and sustainable certifications varydramatically depending on the specific type of investment decision being made.Importantly, the menu of sustainable features and sustainable certifications will also varysignificantly based on the specific decision being made and certification sought. Careshould also be taken in evaluating sustainable property research and data that the state ofproperty life cycle is clearly specified in order to assess its applicability.13