Join Us at the Green Building Finance and Investment Forum West
Have you heard about the upcoming Green Building Finance & Investment Forum? We’re posting the fast facts here for those readers who have been asking via blog comments and direct emails to us about the details.
What: Green Building Finance & Investment Forum - West
When: 2-4 March 2009 (Monday through Wednesday)
Where: Hyatt Regency, San Francisco
Why We Recommend This Conference
Produced by Infocast, and sponsored by Galley Eco Capital, this conference is for commercial real estate professionals focused on the investment and finance side of sustainable and triple bottom line real estate — green real estate investors, developers and their capital sources.
The particular value of this meeting comes from the amount of attention paid to authenticity and high quality, pragmatic info: all the speakers are on the ground pacesetters who are actively advocating for green real estate and doing deals in the space. The audience is well-informed and outspoken in their comments and critiques. We work very hard to structure a program that delivers lots of specific drill-down as well as quality networking.
For a primer on the type on content that you can expect from this forum, check out our detailed summaries of this past September’s Green Building Finance and Investment Forum East, held in New York.
Galley Eco Capital is sponsoring this forum for the third time. We do it because we greatly enjoy the relationships and business that has come from the community of professionals that repeatedly visit this forum. They are sharp, positive and keep us all on our toes.
In addition to keynotes by Sam Adams, Mayor of Portland and Dave Williams, CEO of ShoreBank Pacific, our own Lisa Michelle Galley will chair the meeting and will also present during the workshop titled Designing, Developing and Financing Bright Green Communities.
Other forum topics include:
- Financing Energy Efficiency Retrofits
- Portfolio Owners & Pension Fund Perspectives
- Triple Bottom Line & Green Real Estate Investment Funds
- Brewery Blocks: A Case Study in Maximizing Investment Value
- Green Leases
Please contact us if you would like to to meet with us during this event.
We look forward to seeing you there.
Waiting for Stimulus Bill Funding to Green Your Commercial Property?
Commercial property investors are so busy stabilizing their weakened portfolios, that it’s no wonder that the news of an impending stimulus package makes everyone hopeful.
Over the past few days we have received several summaries of the announced House Stimulus bill that is being proposed by the Obama administration. We found a brief, quick summary of the Stimulus Bill here that you can take a look at.
The news for green real estate finance and investment?
The federal government’s focus within this bill is on several sectors closely tied to federal contracting, community and private residential activities. But not much of anything for investment commercial real estate (sigh). Particularly, not for the greening of your commercial real estate assets.
Residential housing does garner some funding. But when you do some basic math, you can quickly estimate that it does not translate into larger dollars per homeowner (i.e. questionable effect at that level).
Is this wrong?
Remember, commercial property owners with federal and state tax liability may still qualify for federal incentives to offset the cost of energy efficiency retrofits, depending upon the level of energy demand reduction that they achieve. That is in addition to any other utility rebates and state incentives their projects qualify for — such as renewable energy, for example.
Of course, it would have been better if the federal government had included funding for green or energy efficient retrofits to commercial real estate now that so many property owners are on board with greening their properties.
But apparently we’ll have to see if the directing of funding to these other sectors may indirectly help markets where green properties operate.
Your thoughts? Do you think that the proposed Stimulus Bill should contain specific funding for the greening of commercial real estate?
Green Real Estate Finance & Investment Celebrates and Anticipates New Agenda
How are you spending your inauguration day?
No one here at Galley Eco Capital is bashful about taking personal time to celebrate the Obama inauguration and mark the day our national leadership moved decisively towards a more sustainable economy.
USA Today confirmed that the celebration sentiment is nationwide:
But because of the special historic significance of Barack Obama’s swearing-in, some employers accept that Tuesday won’t be business as usual…About 5% of businesses are closing altogether, according to the Society for Human Resource Management. That is more than those that close on Election Day and about the same as those closed the day before Thanksgiving.
Green real estate was bolstered in 2008 on Barack Obama’s promise of an agenda that focuses on a green economy. No one really knows what a green economy is, actually. Everyone knows, however, that commercial real estate is at the center of it.
So what’s different now that our national leadership favors green buildings and energy efficiency?
Two thoughts:
- Less excuses for the laggards. There will be less collective sympathy for property owners who are not employing a green strategy to their portfolio’s. I think some owners will be surprised by how quickly that sentiment will start to materialize. Also, those that have already been on the green learning curve will be accelerating their pace ahead of the pack — capital markets willing.
- More focus on the nuts and bolts “how-to” instead of the “maybe if” of energy efficiency retrofits on exisiting buildings. We think there will be an explosion in on the ground best practices for property owners that want to retrofit or green their existing properties. Our particular focus this year will be on financial and underwriting best practices that help the owners to realize the best returns on their energy efficiency retrofit or green development investment. More about that later.
In the meantime, soak in the history we’ve all created. And don’t be shy about sharing with all of us your thoughts on the following question:
What’s your green real estate burning question in 2009?
Share your thoughts. Great answers will be published here and shared with the rest of the (rapidly growing) Green Journey crowd.
Enjoy the day!
Part 6: Starting A Green Real Estate Fund?
If commercial real estate has truly embraced going green, why bother with green real estate funds?
In Part 6 of our Special Series on the Green Building Finance & Investment Forum - New York, co-sponsored by Galley Eco Capital, we talked shop with established and emerging green real estate fund managers. We wanted to learn why investors and development partners want these funds, and the do’s and don’ts for building a green fund.
The panel, moderated by our own Lisa Michelle Galley, featured the perspectives of industry pacesetters Deborah La Franchi of Strategic Development Solutions, John Hirschfeld of Class Green Capital Partners, Raymond McGaugh of Kiwanja Capital Partners, and Leanne Tobias of Malachite LLC.
Does commercial real estate need pure green real estate funds?
The panelists highlighted the following advantages of a green-specific fund strategy:
- Green real estate funds align capital more clearly with mission. Increasing numbers of of institutional investors, especially pension funds, are adopting a double and/or triple bottom line (TBL) focus - meaning they measure economic, ecological and social returns on their investments. Green real estate funds allow them to allocate capital to sustainable investments at their targeted market rate of return. For Raymond McGaugh and Kiwanja Capital, a green, urban redevelopment investment strategy resonates better with their investor audience.
- JV development partners are seeking a green fund’s concentrated expertise. It’s not just investors that are looking for green real estate, potential JV partners are looking toward green capital sources. Strategic Development Solutions recently surveyed over 400 developers to gauge whether a green-specific fund would satisfy their equity needs. The response was very positive, even among the groups that had never worked with green before. The results make sense: there are many experienced, smart development groups that need to gain the organizational capacity to develop green properties cost effectively, or risk becoming obsolete. Partnering with capital sources committed to sustainability, that can also educate them is a cost-effective method of gaining this capacity.
“Developers would love to have a capital source to help them up the green learning curve.“-Debbie La Franchi, Strategic Development Solutions
- Green funds benefit from the superior financial performance of green assets. Green real estate assets benefit from lower operating costs and reduced performance risk. A “mixed” fund that invests in both green and conventional real estate assets dilutes the positive green impact on returns. For Leanne Tobias of Malachite LLC, this is the most important reason for an all-green fund: “If you are going to spend the time to create a new investment platform, why would you not build a vehicle that will maximize the benefit from green-specific performance enhancements?”
Best practices for building a green real estate fund
Already raising your own green fund or planning on contributing capital to one? Here’s first hand advice from the panelists:
- Your team must have sustainability expertise. The fund absolutely must have in-house staff that is knowledgeable of green construction and design, and is experienced working with both LEED and Energy Star rating systems. For John Hirschfeld of Class Green Capital Partners, this means staff that understands sustainable construction and can “get through the green clutter“, identifying the financial implications of green components for a potential investment, and bring these figures into the financial engineering of both the asset and the fund.
- Pay attention to both the leasing team and lease structure. Work with your JV partners to ensure that the leasing team for your investments understand the marketing benefits of green assets, and can adequately convey these benefits to the marketplace. (Our note: also make sure that their asset managers know and understand the value of green). It’s also crucial that your partners are using the right lease structure, so that the financial benefits of going green are accruing to the investors, not just the tenants.
- Establish the right partnerships. Seek partners that can help you maximize the returns from your green fund. As an example, Strategic Development Solutions has a partnership with Johnson Controls, who evaluates the green construction and design for each fund investment. Strategic partners look at the fund’s activities from a different lens, ensuring that no important details have been overlooked and that potential returns are not left on the table.
- Proper reporting is crucial. Reporting obligations are critical components of a successful green fund. Your triple-bottom line investors will require reports that show the environmental impacts of your investments- how much energy and carbon emissions is your investment portfolio actually saving? Your JV partners and their vendors will have to accurately track energy and water usage. In addition, don’t forget about appraisers: there aren’t many green comps out there yet, and if you want to maximize the value of your assets, you need accurate and robust reporting of energy performance and green-leasing advantages to build the case for higher valuation.
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If you liked this post and would like to receive more, please subscribe. Don’t forget to read the other installments of our Special Series on the Green Building Finance and Investment Forum - New York. As always, we welcome your comments.
Pension Funds Green Agendas Continue — You Prepared?
Are you on top of your institutional investors’ green agenda?
Today’s post focuses on a “state of SRI” article sent over by Green Journey reader and blogger, Ari Frankel.
It hints rather loudly to American real estate investors and developers that they need to step up their green investment and development programs — or else find themselves less competitive with funding from the ‘Big Money’ institutional investors.
Seems that an increasing number of pension funds worldwide are pushing for a more explicit environmental agenda within their investment holdings, according to the New York Times earlier this week. Nothing new there, for the deep green crowd, but great to know, in any event. And the Times gets kudos for being GPC — geopolitically correct — by citing the leadership of several European and one American pension fund in green investing (such factoids hammer at the “reinvent the green wheel” bias we have here in the US). It points to the United Nation’s Principle’s of Responsible Investment (to which we are a happy signatory) as now representing 381 members and $14 trillion in assets.
The Times also asks the necessary question of whether Big Money is really creating positive environmental and social change. For example, they point out that no one really knows if the pension funds’ efforts are really creating the impact they profess to seek. Or if all of the funds with a green agenda as committed as they claim (gasp!) .
HOWEVER, it was pretty surprising that the usually sharp, pro-SRI NY Times failed to dedicate one pixel of ink to the corporate watchdogs like CERES or BSR — THE acknowledged leaders in pushing corporations and institutional investors to adopt ESG (environmental, social, governance) principles within their business and investing activities. CERES has an extensive list of tools and publications documenting their efforts to educate the investment community on the value a green agenda brings. And you can take a lookat our previous coverage of CERES’ video on their engagement work as well.
Nonetheless, good takeaways and a not-so-subtle warning are there between the lines for commercial real estate. The point? Simply, most of these Big Money investors have some amount of their funds allocated to real estate. If they haven’t tailored their real estate investment criteria towards green real estate, yet, then they are bound to do it soon.
Sooner or later, you are going to call on your pension fund investors for your normal performance meetings and, in addition to the regular good dialogue, you are going to be handed more requests – possibly in the form of more compliance reporting, audit checklists, risk assessments, engagement meetings, what have you.
Will you be ready?
