Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable Propertieswill be available in the Consortium’s Research Library and Industry Links, which havebeen organized consistent with the GBFC Sustainable Property Performance Framework. 13The analysis of risks and best practices outlined in this chapter supplement GBFC’sSustainable Property Cost-Benefit Checklist and risk analysis frameworks presented inChapter V: Sustainable Property Financial Analysis. The underwriting of risk and riskmitigation is also fully covered in Chapter VI: “Sustainable Property UnderwritingGuidelines.”It is important to understand when reviewing the contents of this section that conventionalprojects also fail and underperform. Accordingly, while this chapter focuses on sustainableproperties, it should be understood that sustainable properties do not necessarily have adisproportionate level of problems.1. Research MethodologyThe content for this chapter was generated through a process of interviews, literaturereviews, and feedback from Consortium members and other industry experts. We started byconducting initial interviews with a handful of experienced sustainable buildingprofessionals. We built on our initial interviews and literature review through interviewswith a mix of sustainable property investors and developers and green building serviceproviders and consultants. We also generated insights by “reverse engineering” some of theleading best practice guides. We reference our work and provide hyperlinks to our sourcesand other research that complements our work. Our conclusions are most applicable tosustainable buildings in the United States, but lessons learned should have broadapplicability outside the US.B. GBFC Sustainable Property Performance FrameworkGBFC’s Sustainable Property Performance Framework provides a new structure fororganizing and evaluating property performance to enable improved financial analysis,valuation and underwriting. A graphic presentation of the framework is shown below inExhibit IV-1 and presented in more detail in Appendix C.13 GBFC’s Research Library (www.GreenBuildingFC.com) provides a searchable database of key performance-relateddocuments indexed and organized according to the structure of the GBFC Sustainable Property Performance Frameworkintroduced in this chapter. Index codes 15.1 to 15.10 mirror the structure of Chapter IV, providing a source location toidentify and access new process, feature, building, market, and financial performance evidence.32
Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesExhibit IV-1GBFC Sustainable Property Performance FrameworkProcessPerformanceFeature/SystemPerformance• Energy/Water• IndoorEnvironmentalQuality• Materials andResources• Sustainable SitesBuildingPerformance• DevelopmentCosts• Resource Use• Location andAccess• OccupantPerformance• SustainabilityCompliance• Flexibility/Adaptability• Public BenefitsMarketPerformance• OperatingCosts• Regulator/Utility Demand• Space UserDemand• InvestorDemand• BrokerRecognition• AppraiserRecognition• LenderRecognitionFinancialPerformance• Integrated Design• Contracts/Legal• Services Quality& Capacity• Energy UseForecasting• Regulation & CodeCompliance• Commissioning• SustainableCertifications• Measurement andVerification• Occupant andStaff Training• Recognition ofMarketDemand• Determine KeyInputs• CalculateResults• RiskAssessmentThe genesis for GBFC’s Sustainable Property Performance Framework was our interviewswith scores of sustainable property service providers, investors and developers. In askingrespondents about their experience with failure and underperformance in their sustainableproperty practice, we received a wide range of responses, including such comments as:• “The integrated design process was not implemented correctly”;• “We failed to address responsibilities appropriately in contracts”;• “Our service providers either were too busy or did not have the specificqualifications needed”;• “The daylighting solution seemed to bother occupants more than make themhappy”;• “Improper design of the underfloor air ventilation system resulted in temperatureinconsistencies and occupant complaints”;• “We exceeded our cost budget”;• “Energy use was significantly greater than forecast”; and• “We did not achieve the sustainability certificate that we had hoped for.”We began to see a pattern where failure or underperformance occurred with specificprocesses, specific features or systems, or at the building level. This differentiation between33
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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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Value Beyond Cost Savings - Green Building Finance Consortium

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