The Lender Case for Going Green

 

I had a good time this afternoon with the USGBC Chapter BayLUG (Bay Area LEED User Group), along with Chris Bartle of Green Key Real Estate. I gave a banker’s perspective on green commercial real estate and Chris shared his expertise on the situation for green residential. My synopsis on financing green commercial real estate:

• Many real estate deals are sidelined now due to current capital market conditions

• The positive business case for going green is being heard by financial institutions. I receive a strong, constant flow of positive anecdotal evidence that green buildings deliver superior economic performance.

• Financing green buildings is hampered by poor integration of the players.

• While an investment in a green building creates much additional value overall, there is an uneven allocation of that economic upside among the different players — lenders are not seeing a tangible (read: cash) value-add for financing green, and so have been sluggish to establish green lending programs.

• More organizational and industry paradigm shifts are on the way as green buildings emerge as a preferred investment asset for institutional real estate.

How to move forward? As they say in Cameroon,

The questioner never loses the way…