Value Beyond Cost Savings - Green Building Finance Consortium

Appendix GSustainable Property Cost-Benefit ChecklistPotential Property Costs Description of Cost Applicability Analysis 120Commission for the guidance of the public in conductingits affairs in conformity with legal requirements.” Conductthat is inconsistent with the positions in the EnvironmentalGuides may result in corrective action by the Commission,if after investigation, the Commission has reason tobelieve that the conduct violates prohibitions againstunfair or deceptive acts or practices.The Environmental Guides apply to all forms of marketingfor products and services: advertisements, labels,package inserts, promotional materials, words, symbols,logos, product brand names, and marketing throughdigital or electronic media, such as the Internet or email.They apply to any claim, express or implied, about theenvironmental attributes of a product, package or servicein connection with the sale, offering for sale or marketingof the product, package or service for personal, family orhousehold use, or for commercial, institutional orindustrial use. See the complete text of the EnvironmentalGuides.http://www.ftc.gov/bcp/edu/pubs/business/energy/bus42.shtm3. Exit/take-out risk Sustainable property developments, like all developments,are subject to exit or take-out risk. Take-out risk is the riskthat a construction loan’s balloon will not execute asplanned. Exit risk relates to the sufficiency of the price anowner would be able to achieve at the time of sale.Failure to execute a take-out could be due to rising interestrates, capital market distress, and/or sustainable propertyunderperformance in areas like those shown below:• Building envelope performanceConstruction contracts, warranties, escrow contracts,insurance documents, and other specialized legaldocuments also add risk, simply because they are newand may be untested by owners and developers.Appropriate legal representation and/or other specializedservices should be retained to mitigate these types ofrisks.The key issues in assessing the implications ofsustainability on exit or take-out risk for a specific propertyinclude those issues addressed above in the constructionand legal risk sections, but are even more heavily focusedon real estate market risk.The financial performance and value of a property is keyto exit/take-out risk. Permanent take-out loans willtypically have specific requirements relative to preleasing,pre-sales, or other specific targets that must be284