Energy Finance for Real Estate: New Tools. New Capital. New Markets

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June 7, 2011
June 8, 2011

Organized by the ULI Center for Sustainable Development as part of the Climate Change, Land Use and Energy (CLUE) Initiative

This ULI policy and practice forum explored how emerging energy-efficiency finance mechanisms create new pathways to access capital markets in the service of making existing buildings in the United States more energy efficient. Whether PACE or other state and local bonding initiatives, extensive legislative activity at all levels of government is seeking to reconfigure the financial landscape for funding energy efficient building retrofits. How are these initiatives impacting the commercial and multi-family real estate markets? Which state and local governments are emerging as innovative leaders? How are capital markets assessing risks and opportunity of energy-related investments? How can these energy-efficiency initiatives be brought up to scale and into alignment with energy demand reduction goals? The forum engaged legislative experts, owners, investors and leaders and shared best practices for financing energy efficiency in the here and now.

Sessions included:

  • Reality Check on Commercial Real Estate [and Energy Efficiency] Today
    Is commercial real estate overcoming market barriers or is it entrenched in survival mode? From green leasing to energy service contracts, building commissioning, and competitive performance benchmarking, owners are reducing operating costs and maximizing building performance. Is energy efficiency an operations expenditure or a capital expenditure? What is the state of the existing energy efficiency investments in real estate? Can we accept or work around the “human element” of building operations and monetize gains in efficiency?
  • New Tools, New Rules for Market Transformation
    Initiatives at all levels of government are seeking to overcome market barriers and mainstream energy efficiency investments in real estate. Whether tax incentives, PACE, or revolving loan funds, new tools are being created to stimulate the marketplace. Is it enough to go to scale? What finance models are emerging? How are emerging public policy frameworks creating new business models for real estate?
  • Implementing Finance Strategies
    Is the energy efficiency “tail” able to wag the building retrofit “dog” in the marketplace? How are finance strategies being implemented in the context of existing market barriers? Where do public and private finance tools have the potential to add the most value?
  • Making Energy Districts Work
    From tax increment finance (TIF) to special assessments for districts, investments in energy efficiency need not end at the building envelope. Can energy efficiency be valued across a real estate district? Is leadership the role of owners, business improvement districts, municipalities, or utilities?
  • Bankers Roundtable: Unlocking the Capital Markets
    How do these strategies complement or collide with existing debt markets? Where is the “back end” of these deals? Who will buy energy efficiency bonds and at what return? How does the professional capacity and credit rating of local government introduce risk into this market?