The Cash Flow Opportunity Calculator helps inform strategic decisions about financing energy efficiency projects. This document provides an explanation of the calculations and methodology at work behind the calculator.
Do you have energy efficiency projects that have been postponed or rejected due to capital budget limitations, other projects with better returns, or lack of expertise? Yet, from your perspective the project should be a “no brainer” due to the immediate positive cash flows generated by the energy savings. Understanding your organization’s decision-making process, being able to effectively speak to the benefit of improved cash flow, and improving your financial literacy can greatly increase your probability of receiving approval for a project. The self-funding aspect of energy efficiency is often under-appreciated by senior management, and you want to be able to clearly address any questions, concerns, and benefits.
This study, co-authored by Co-Star and Burnham-Moores Center for Real Estate, provides some comparison data on ENERGY STAR and LEED certified buildings versus non-ENERGY STAR or Non-LEED certified office property from the entire United States using the CoStar data base. The results show the financial benefits of investing in sustainable real estate.
This paper from Maastricht University compares certified green buildings with nearby buildings and determines that buildings with green ratings command substantially higher rents and selling prices than otherwise comparable buildings. According to researchers, ENERGY STAR certified buildings command a rental premium of about 3%, have higher occupancy, and bring in a 16% premium on selling prices.
This report from the Green Building Finance Consortium demonstrates that investing in energy efficiency enhances value in your real estate portfolios. This report takes a look at the growing demand for more efficient buildings, sales prices, lease rates and occupancy rates. It also provides real estate investors with academic and industry research, key steps, and best practices for integrating energy efficiency across your portfolios.
This 2009 article from the National Electrical Manufacturers Association (NEMA) discusses why implementing energy efficiency projects contributes to an organization’s overall financial health and how ENERGY STAR tools and resources can help sell cost-effective energy efficiency improvements to decisionmakers.
This report defines responsible property investing (RPI) as including facets such as investing in ENERGY STAR certified properties, transit-oriented development, and redevelopment areas. It shows that investors could have purchased a portfolio consisting solely of RPI office properties over the past 10 years and had performance that was better, at less risk, than a portfolio of properties without RPI features. The paper then breaks down the ways that various RPI features impact income, property values, capitalization rates, price appreciation and total returns.
This report from the U.S. Green Building Council explains how high performing buildings show proven cost-effectiveness, boost employee productivity, enhance tenant health, reduce liability for owners, and increase a building's property value. Certification programs like LEED and ENERGY STAR are creating common benchmarks, support tools and opportunities for the public which offer market differentiation and create higher value for buildings.
This report from the Northwest Energy Efficiency Alliance (NEEA) documents commercial building retrofit, renovation, and upgrade projects that have demonstrated or predicted performance of 30% or better than the average for comparable buildings. These profiles explore successful approaches to deep savings and energy performance, owner motivation and areas of innovation in order to accelerate market adoption of energy efficient retrofits. This work is part one of a three-phase project to develop case studies that demonstrate deep energy savings.
This report from Maastricht University discusses the effects of the sustainability of commercial properties on their operating and stock performance. Investors considering incorporating the environmental performance of a building into investment decisions may benefit from this report. Using a sample of U.S. Real Estate Investment Trusts (REITs), the report estimates that an REIT's sustainability is positively related to return on assets, return on equity, and the ration of funds from operations to total revenue.