Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesPrinciple Three: Sweat the details when applying research to property level decisions.The most important guidance in interpreting and applying any of the four types ofsustainable property market performance research to property level decisions is to sweat thedetails.For example, if an attempt is made to apply statistics/modeling-based financial analyses toa property level decision, it is critical to fully understand the data, sample size issues,control factors, and other details. At best, these types of studies will provide generalconfirmation for financial assumptions that should be derived from more property-specificmethods, and may affect the risk or uncertainty of a particular financial assumption.(Expanded Chapter IV, Section F-2 provides significant additional background oninterpreting and using statistics/modeling-based studies.)Sweating the details does not only apply to statistics/modeling-based financial studies butalso to surveys and expert-based financial analyses. For surveys, to properly apply theresults, it is critical to understand the date the survey was conducted, the specific contextfor the survey, the specific types of respondents, the date the survey was administered, thegeographic regions and property types that were discussed, and the quality (lack of bias inits structure) of the survey questions and vehicle. 55For expert-based financial analyses, it is particularly important to understand potentialresearcher bias, the nature of researchers’ expertise, and the depth and comprehensivenessof the analytic procedures that they performed in coming to their conclusions.3. Presentation of Market Performance Evidencea. Expert-Based Financial AnalysesReal estate valuers or market analysts typically conduct Expert-Based Financial Analyses.The basis for conclusions in these studies is typically drawn from specific analyses ofbuildings, following a process that is similar to a traditional market analysis process,although typically more cursory. Key studies of this type draw general conclusions basedon detailed property-by-property analysis of a portfolio of properties. Strong singlepropertycase studies, if independently done by a specialist using appropriate practices,would be considered Expert-Based financial research.In Expanded Chapter IV, we review and present the findings from six important Expert-Based Financial Analyses:55 The sustainability and real estate industry would benefit if organizations conducting surveys with the intent ofassisting investor decision-making disclosed these and other details when reporting survey results, or provided linkswhere such detailed information can be obtained. Such information should also be provided to the media.80