Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesExhibit II-3Sustainable Property Investment DecisionsBUILDCore & ShellMajorRenovationTenantImprovementsBUYAcquireSustainableBuildingAcquireConventionalBuilding & RetrofitOPERATESustainableOperations &MaintenanceSustainableRehab/RetrofitLease Structure/Tenant PlanTenantImprovementsLEASESustainable orConventionalBuilding?SustainableTenantImprovementsGreenLease?FINANCEConstructionMezzaninePermanentEquipment /ESCOsF. Property TypeIn the real estate investment field, much of the underwriting, modeling, and data collectionis driven by property type. Sustainability is not a property type, but rather a combinationof sustainable features that may or may not be present on any property.The real estate sustainability sector has had a bumpy start relative to an understanding ofthe importance of property type to underwriting and valuation, as well as certification.LEED and other certification systems have largely ignored property type differences,resulting in difficult implementation issues and related problems. Most resources andinformation were focused on large office buildings. Today, leading property-specific tradeassociations and other organizations have improved their information availability byproperty type.From an analytic perspective, and when interpreting data from past sustainable projects, itis critical to make proper adjustments to the financial analysis and data collection to reflectspecific property characteristics.G. Geography/Other FactorsGeography—property location—has many important implications when underwritingsustainability. Government regulations and incentives will vary dramatically by country,14