What will change everything in 2011 and beyond?

A few 2010 events either changed or reinforced perceptions enough to influence sustainable finance in 2011 and beyond:

1. Positive Green Building Momentum & Performance

Confirming year-end data reinforces the value of building environmental certification.

• LEED-certified buildings have reached a footprint of 1 billion square feet worldwide, with another six billion square feet of registered projects in the pipeline.

• In the The Economics of Green Building, researchers demonstrate that green building economic performance was not affected by recent market volatility, that the economic premiums in the green properties studies remain substantial and energy efficiency does contribute to higher rents and values.

2. Quantified Credit Risk for Environmental Irresponsibility

• If your lender shrugs when you tell them that building environmental certification benefits them, too, send them a copy of Corporate Environmental Management & Credit Risk. Rob Bauer and Daniel Hann’s prize-winning study that demonstrated how US companies engaged in environmentally risky activities paid a premium for their bond debt of up to 64 bps per annum.

3. Innovative Structure Straddles Real Estate & Energy

• We covered Hunt Power’s use of the REIT structure to offer up to $2.1 billion in energy infrastructure finance via joint ventures, purchase and leasing. There are several energy and technology sectors that urgently need better ways to access capital than the market can provide. Look out for more novel, hybrid investment structures that bring commercial solutions to financing sustainability across buildings and other domains.

4. Regulatory Ramp Up Continues

• Carbon cap and trade has arrived in California, joining building energy disclosure requirements and Cal Green. Under new regulations adopted 20 December, greenhouse gas emissions of large industrial plants will be capped from 2012 forward. Given California’s legal requirement to reduce emissions by 15% from today’s levels by 2020, we will continue to see heavy action both within California, as well as California’s experience influencing how these issues are handled in other states and even within the Federal Government.

5. PACE: New Tools Equal New Perceptions

• We dedicated substantial coverage last year to tax-lien financing for energy efficiency. Professionals from diverse sectors joined forces to cheer on property-assessed clean energy’s brave fight…and boo the regulators as they killed most residential programs. New tools equal new perceptions. PACE’s major success has been how it helped build awareness and shape positive perceptions. Now practitioners realize that such structures are possible and urgently needed. That’s kicked off a lot more interest in getting green finance right from now on.  Policy makers are working on various versions of PACE 2.0 or other PACE-like enabling legislation. It’s hard to tell what progress they’ll make, but PACE’s potential helped focus commercial real estate and government on the market need for such structures in a way not seen before.

So, what kind of market do you think you’ll sell into?

With so much momentum already underway, what are the prospects for your building portfolio?  We think successful investors in the coming years will be good at continuously re-imagining and reinventing their businesses, often at highly local levels.

Which of these events carry the most weight for green real estate?

What’s missing from the green finance conversation that you think needs attention?

Photo credit: Muse by Oimax. If you are a fan of urban photography, check out Oimax’s 6,000+ photostream of stunning Tokyo architecture, scenes and objects.

Can private real estate make a bigger impact on housing affordability? Share your views.

Today I’ll be speaking at the NeighborWorks Symposium: Investing for Impact in Sustainable Communities and that provides a great opportunity for you to send in questions and thoughts on the topics they are covering.

I’ll add your questions to others I already have and will get the answers from speakers during the day — sharing them back on Twitter or via a blog post about the event later.

NeighborWorks has put together a unique event, with an agenda that sports quite a few sharp teeth.

Starting off with a keynote from Angela Blackwell, Founder and CEO of PolicyLink, the symposium dives deep into several interconnected aspects of housing affordability, with the goal of generating actionable ideas on next steps to improve the impact of investing in housing affordability and sustainable communities.

Symposium topics include:

• the proposition that greater investment in housing organizations is needed to assist the cause of affordability.
• the role of sustainable design in housing affordability.
• a look at our understanding of social returns from affordable housing and how can that knowledge stimulate greater private capital investment in the sector.

I am speaking on the last topic above, as part of a panel moderated by Nancy Andrews, of Low Income Investment Fund.  Since we are speaking in an open Q&A format, the specifics of our discussion on social returns will evolve from the input of all the speakers.

Tomorrow, I’ll speak about the tools from Galley Eco Capital’s work that non-profit housing groups can use to better engage private real estate investors on investing in rental housing and sustainable communities.

The graphic for today’s post is the title page of my talk, which will contain a good dose of material on triple bottom line metrics as well as the role of innovation within the discussion.

After the event, I’ll post a short except from the presentation, to continue the conversation on the role of  social returns within private real estate investment decision and if it is truly possible improve the way we invest in housing affordability and communities within the US.

Got any questions that you’d like answered on the above topics? If you send them to me, I’ll ask panelists and speakers during the day as time permits.

In any event, I look forward to hearing about your views on the topic.

I can post the answers either on Twitter or on a blog post for everyone later when the conference is over.

Stay tuned!

Finally. A Green Building Finance Course for Non-Finance Professionals

Now you can pre-order the first ever green real estate finance course for non-finance professionals

A couple of days ago we kicked off the pre-order event for the new self-study version of the Competitive Edge Workshop 1: Communicating the Value of Green Building Using Principles of Real Estate Finance.

The first ever self-study course in green real estate finance for non-finance professionals

This all-in-one compact, dynamic course helps you communicate the value of your green building services to real estate finance and investment professionals.  It teaches you how you can present the value of your green building products and services to commercial property owners.

Plenty of in-depth, material to support your learning

• Screencasts of all presentations on DVD
• Course Pack - Study guide accompanying the presentations that provides backup information on presentation topics.
• Green Finance Research & Reference Guide - catalogs the key studies and references in the field.
• Green Finance Glossary - this is the only glossary with the most essential sustainability, real estate finance, investment and energy terms all in one guide. It simply doesn’t exist anywhere else.
• Sample Property Financial Analysis - based on an actual investment as an example of the kinds of financial analysis performed by commercial property investors.

50% price for only a couple more days

Everyone on our newsletter list gets 50% off the course when they pre-order now.  So you pay $149.95 now (vs the $299.85 regular price).  This special pricing will only last a couple more days. (If you are not on our list and buy the course now, you’ll get the 50% discount and will be automatically signed-up on our list.)

Get Free Bonus Gift

You’ll get  Financing Market Transformation, a unique collection of eight articles on the latest thinking and best practices in green real estate finance - donated by the most-respected leaders in the field, so we’re giving it away.

Learn at your own pace

This course gives you the competitive edge — everything you need and nothing you don’t

Buy the course now at:

http://www.galleyecocapital.com/green-building-resources/competitive-edge-green-finance-workshop/

Why colleagues are attending our Competitive Edge 3 workshop

I regularly talk with colleagues about how and why they are using green finance, to make sure our course content is at least meeting, if not exceeding, their needs.

Here are the perspectives of Jon Gibson and Rowan Edwards, who’ve already signed up for the upcoming Competitive Edge 3 workshop, Communicating the Value of Green Building Using Principles of Real Estate Finance.

The workshop is happening on June 24, 2010, here in San Francisco (download the course flyer here↓).

Why Jon and Rowan will attend this class

Jon Gibson, Hedge Fund Accountant, San Francisco

My background is in accounting for hedge fund portfolios, but I am transitioning into a green real estate finance position. I found the green finance series extremely valuable in helping me find my way; I have learned about the green real estate value proposition (the basic financial underpinnings), met many industry contacts-from architects and engineers to financiers, lawyers, and investors-who now serve as a network of resources, and developed a sense of the market. The guest speakers, drawn from a host of high-level public and private organizations, were exceptional.

The extensive (and high quality) handouts have allowed me to continue to learn and enrich myself long after the course was over. Lisa, George and the rest of the team (including USGBC-NCC) do a great job organizing, presenting and making sure each participant has several great takeaways.

Rowan Edwards, Sustainable Developer, San Francisco

My interest in Galley Eco Capital seminars is to find new ideas. As a sustainable business developer I am looking for new opportunities that may exist, not only in light of the current economic situation, but because innovative methods always seem to flourish and gain traction in times like these.

We have seen that other methods of financing exist like micro-financing (Grameen), and on the horizon, B-to-B micro lending. It is exactly this type of out -of-the-box thinking that creates new opportunities. It is this new way of thinking that would be the primary reason for taking the green real estate financing seminar.

With LEED and The Living Building Challenge gaining momentum, fostering a new language, and offering long-term value for all stakeholders, the time is at hand to capitalize on new innovative methods. I look to Galley Eco Capital to be the thought leader in this direction.

More About → Competitive Edge 3: Communicating the Value of Green Building Using Principles of Real Estate Finance

» Click here to find out more about the workshop and register today for early bird pricing!

» Click here to download the flyer↓

Please pass this on to a friend

Feel forward this post or the course flyer↓ to anyone in your firm or network who you feel would benefit from this course.

Questions about this course? Can’t make the date and want to buy the materials for self-study? Write and let us know!

Put Fortune 500 Product Innovations to Work for Your Green Initiatives

Now that the economy appears to be improving, we expect billions of dollars of fresh capital to flow into green development and energy efficiency retrofits over the coming years.

However, we also know that many firms are still hesitant to proactively green their portfolios and financial offerings. We think we know why and have new tools to boost their confidence.

These practitioners are saying something that the green building crowd simply can’t ignore. They feel they’re in a Catch-22: they know their companies are at risk if they don’t go green, but they don’t have a clear view of the possible results of committing their capital to green investments at a meaningful level.

Even though researchers have published studies indicating that green properties earn an average 3% higher valuation, or 16% higher net operating income, that still doesn’t mean that you are going to make that on your properties. It doesn’t mean that your particular tenants are going to pay you more rent on a given date. Nor does it mean that you will absolutely realize these results upon sale of your particular green assets.

The truth that leaves these firms skittish is that realizing the value-add of green depends on many variables for which no data exists. Not only must you do the right things, but the sub-market around your asset has to do (enough of) the right things, too, in order for you to be properly rewarded for your sustainability initiatives.

That’s a very hard disclaimer for many investors, lenders and governments to tell their shareholders and voting taxpayers.

So we’re stuck, right?

No, we’re not. There is a much better way.

What Real Estate Can Learn from the Fortune 500

We noticed that leading global players – players like VeriSign, SAP, Genesys, etc. – face similar issues as commercial real estate investors.

They also have the predicament of committing billions of dollars each year to create new or revamp existing products and services in an unclear business environment. The B2B product development gurus who work for these companies told us about the secret sauce of their success – what has made the difference between so-so and blockbuster products, even when the economy is tough.

It turns out that Fortune 500 companies reduce their investment risks within new/revamped product and service initiatives by using sophisticated “voice of the customer research” (VOCR) tools very early in the design process. These tools gather how customers perceive and experience their products and services, which is perhaps the most difficult information to obtain. It is also the most valuable for developing new products and services – particularly the kinds of products and services that are very new to an industry, like green building and energy efficiency.

The B2B product development gurus stressed that these techniques minimize capital at risk because the company obtains key insights up front on what might enhance their product’s success with their customers. Products and services can then be further developed to fit customers’ needs as closely as possible. Often times, these methods reveal data about unspoken or hidden needs customers have never clearly expressed, leading to innovative product breakthroughs.

Galley Eco Capital has carefully adapted VOCR tools to work specifically for the real estate finance and investment sector as well as municipalities engaged in energy efficiency and green building programs. They are available within a branch of special services called Real Estate Innovation Advisory®. REIA now offers special collaborative forums that power green initiatives by enabling investors, lenders and governments to collaborate with their customers on their green space, investments, and service offerings.

Join an upcoming Mini-forum at Competitive Edge Workshop #3

If you are attending Competitive Edge Workshop #3 on June 24, you’ll participate in a mini-version of an interactive Real Estate Innovation forum titled, What Real Estate Investors Think about Your Products & Services (And How You Can Communicate Their Value).

Whether you are a real estate practitioner, investor, service provider or government employee, you will have hands-on involvement in learning how owners perceive green building products and services. You will take away insights about interactive forums as well as specific content that is immediately applicable for your own business.

Understand Your Customers, Minimize Investment Risk and Boost Investment Value

If you don’t have the voice of your tenants, borrowers, partners and customers influencing the development of your green building space, products, services and offerings, then you are missing an incredible opportunity to bring more certainty to your capital programs. You could also miss the chance to find more breakthrough ways to do smarter green initiatives.

Call me today to talk about how Real Estate Innovation Advisory® Services can help you gain clarity about enhancing your existing products and services or get customer input on new ones.

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