Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesChapter IVSustainable Property PerformanceA. IntroductionMeasuring and understanding sustainable property performance is the foundation offinancial analysis, valuation and underwriting. While over 100 sustainable propertyperformance and certification systems were identified in Chapter III, all of them left outcritical performance information necessary to sustainable property financial analysis andvaluation.To address this deficit, we developed GBFC’s Sustainable Property Performance Framework,a new framework for organizing and evaluating sustainable property performanceinformation to directly support financial analysis, valuation and underwriting. GBFC’sFramework introduces Market Performance, the “missing link” of sustainable propertyperformance required to assess the financial implications of sustainable propertyinvestment.In the rest of this chapter, we present our assessment of sustainable property performanceusing the categories identified in GBFC’s Sustainable Property Performance Framework:• Process Performance;• Feature Performance;• Building Performance;• Market Performance; and,• Financial Performance.We present evidence of both positive and negative performance as well as best practicesthat have been developed to address problems that have arisen. Presentation of failure andunderperformance evidence, and related sustainable building risks, will not scare investors,but actually significantly increase sustainable investment due to improved confidence bycapital sources in their ability to appropriately price and mitigate risk.The performance assessment presented in this chapter, by its nature, is a point in timeassessment, and by no means comprehensive given the huge volume of sustainableperformance research available worldwide. Future reports and performance information31