Gre

en P

rope

rty

Inve

stm

ent:

A T

riple

Bot

tom

Lin

eR

ole?

TB

LI E

urop

eP

aris

, Fra

nce

Nov

embe

r 15

, 200

7Le

anne

Tob

ias

Mal

achi

te L

LC+1

-301

-229

-155

8w

ww

.mal

achi

tellc

.com

lean

ne.to

bias

@m

alac

hite

llc.c

om

Cop

yrig

ht A

pril 2

007

Cop

yrig

ht A

pril 2

007

Cop

yrig

ht A

pril 2

007

Cop

yrig

ht A

pril 2

007

Why

Inve

st in

Rea

l Est

ate?

•D

iver

sific

atio

n: lo

w

corr

elat

ion

with

equ

ities

an

d de

bt

•S

tabl

e lo

ng-t

erm

yie

lds:

C

urre

nt in

com

e w

ith

appr

ecia

tion

pote

ntia

l

•E

xcel

lent

infla

tion

hedg

e

Gre

enpe

ace

US

A

W

ashi

ngto

n, D

C

Wha

t abo

ut

SR

Ialte

rnat

ives

?•

Rea

l est

ate

larg

ely

over

look

ed•

Unf

illed

mar

ket n

iche

$2

.3 tr

illio

n: U

.S.

€1.0

trill

ion:

EU

Min

imal

rea

l est

ate

optio

n•

Sin

ce 2

005:

new

ef

fort

to m

ake

prop

erty

inve

stin

g so

cial

ly r

espo

nsib

le•

SR

I nic

heis

bei

ng

defin

ed:

Res

po

nsi

ble

p

rop

erty

inve

stin

g

(RP

I)

Art

ists

for

Hum

anity

Epi

Cen

ter

Bos

ton,

US

A

Who

’s L

eadi

ng th

e C

harg

e?In

stitu

te fo

r R

espo

nsib

leIn

vest

men

t:--

Bro

ad o

utre

ach

to S

RI

& r

eal e

stat

e in

dust

ries

--P

erm

anen

t ins

titut

e pr

opos

ed: C

ente

r fo

r R

espo

nsib

le P

rope

rty

Inve

stm

ent

UN

EP

: Int

erna

tiona

l m

eetin

gs, r

esea

rch,

pr

opos

ing

glob

al

ince

ntiv

es fo

r gr

een

real

es

tate

link

ed to

Kyo

to

Pro

toco

lIP

CC

:R

eal e

stat

e =

clim

ate

chan

ge o

ppor

tuni

ty

Rou

nd H

ill H

otel

& V

illas

, Jam

aica

Wha

t is

RP

I? M

any

aspe

cts

•W

alka

ble

Urb

anity

(tra

nsit-

orie

nted

, wal

kabl

e, m

ixed

-use

dev

elop

men

t)•

Urb

an R

evita

lizat

ion

(e.g

. inf

ill d

evel

opm

ent,

brow

nfie

lds)

•E

nerg

y C

onse

rvat

ion

(e.g

. con

serv

atio

n re

trof

ittin

g, g

reen

pow

er

gene

ratio

n an

d pu

rcha

sing

, ene

rgy

effic

ient

bui

ldin

gs)

•E

nviro

nmen

tal P

rote

ctio

n(e

.g.,

wat

er c

onse

rvat

ion,

rec

yclin

g, h

abita

t pr

otec

tion)

•S

ocia

l Equ

ity a

nd C

omm

unity

Dev

elop

men

t(e

.g.,

affo

rdab

le h

ousi

ng,

com

mun

ity o

utre

ach,

hiri

ng a

nd tr

aini

ng, f

air

labo

r pr

actic

es)

•W

orke

r W

ell-B

eing

(e.g

., pl

azas

, ind

oor

air

qual

ity, c

hild

care

on

prem

ises

, ha

ndic

appe

d ac

cess

)•

Hea

lth a

nd S

afet

y(e

.g.,

prop

erty

sec

urity

, avo

idin

g ha

zard

s, fi

rst a

id

read

ines

s).

•Lo

cal C

itize

nshi

p(e

.g. a

esth

etic

s, m

inim

um n

eigh

borh

ood

impa

cts,

co

nsid

erat

e co

nstr

uctio

n, s

take

hold

er e

ngag

emen

t, hi

stor

ical

pre

serv

atio

n)•

Cor

pora

te C

itize

nshi

p(e

.g.,

regu

lato

ry c

ompl

ianc

e, s

usta

inab

ility

di

sclo

sure

, ind

epen

dent

dire

ctor

s, a

nd a

dopt

ion

of in

depe

nden

t vol

unta

ry

code

s su

ch a

s LE

ED

, Ene

rgy

Sta

r, G

reen

Sea

l, U

N P

rinci

ples

for

Res

pons

ible

Inve

stm

ent,

and

Glo

bal R

epor

ting

Initi

ativ

e.)

Sou

rce:

Inst

itute

for

Res

pons

ible

Inve

stm

ent

Ear

ly C

onse

nsus

Em

ergi

ng

Aro

und

Key

Var

iabl

es•

Hig

hest

sco

ring

varia

bles

, Piv

o 20

06 e

xper

t sur

vey

:E

nerg

y ef

ficie

ncy/

con

serv

atio

nP

ublic

tran

sit/

tran

sit o

rient

edC

entr

al lo

catio

n/ li

vabl

e-w

alka

ble

Mix

ed u

se, h

igh

dens

ityW

ater

con

serv

atio

n, r

ecyc

ling

Day

light

/nat

ural

ven

tilat

ion

•C

onse

nsus

dim

ensi

ons

: E

nerg

y/en

viro

nmen

t P

ro-u

rban

siti

ng

Bre

wer

y B

lock

II

Por

tland

, Ore

gon

Gre

enR

eal E

stat

e:

The

Bes

t Im

med

iate

S

RI F

it?

Wha

t is

Gre

en R

eal E

stat

e?

•N

ew c

onst

ella

tion

of d

evel

opm

ent

prac

tices

: ad

dres

ses

RP

I ene

rgy,

en

viro

nmen

t an

dur

ban

sitin

g co

ncer

ns•

Env

ironm

enta

lly s

ensi

tive

sitin

g:

favo

rs u

rban

infil

l, tr

ansi

t-or

ient

ed•

Ene

rgy

and

wat

er s

avin

gs (

typi

cally

30

%-4

0%in

U.S

.)—

slow

s cl

imat

e ch

ange

•B

ette

r in

door

air

qual

ity

(IA

Q)

•M

ore

com

fort

able

tem

pera

ture

s•

Mor

e na

tura

llig

ht•

Hea

lthie

r fin

ishe

s: m

inim

izes

off-

gass

ing

of to

xins

•B

eing

app

lied

to

affo

rdab

le h

ousi

ng,

mar

ket r

ate

and

luxu

ry p

roje

cts

Rap

idly

Gro

win

g M

arke

t•

5% U

.S. m

arke

t, 20

06

•$1

1 bi

llion

built

, U.S

., 20

06 (

2%

non-

resi

dent

ial c

onst

ruct

ion)

•R

apid

gro

wth

pro

ject

ed:

$29-

$57

billi

on/y

ear

•10

% o

f U.S

. rea

l est

ate

by 2

010

•U

N a

nd o

ther

s ca

lling

for

inte

rnat

iona

l inc

entiv

es

Sou

rces

: McG

raw

Hill

Con

stru

ctio

n,

C

NN

Mon

ey.c

om

111

Sou

th W

acke

r D

rive

Chi

cago

, Illi

nois

Gro

win

g G

loba

l Exp

erie

nce

•W

idel

y ac

cept

ed

stan

dard

s•

LEE

D, E

nerg

y S

tar,

G

reen

Glo

bes

(U.S

., C

anad

a)•

BR

EE

AM

(U

K)

•H

QE

(F

ranc

e)•

CA

SB

EE

(Ja

pan)

•G

reen

Sta

r(A

U, N

Z)

•W

orld

Gre

en

Bui

ldin

g C

ounc

il: 1

0 na

tions

act

ive;

16

natio

ns d

evel

opin

g st

anda

rds

Mai

son

de T

ouris

me

A

les,

Fra

nce

Str

ong

Gre

en V

alue

Pro

posi

tion

•G

reen

firs

t cos

ts: b

ecom

ing

com

petit

ive

(1.5

%-

2%

prem

ium

, on

aver

age)

•G

reen

: sal

able

con

sum

er

amen

ity•

Gre

en:

fast

er le

ase-

up, t

op

tier

rent

s, o

pera

ting

cost

re

duct

ions

•G

reen

:hig

her,

mor

e pr

edic

tabl

e ca

sh fl

ows

•G

reen

: su

perio

r in

vest

men

t po

tent

ial

4 T

imes

Squ

are

New

Yor

k C

ity

Em

ergi

ng T

rend

s in

G

reen

•In

stitu

tiona

l in

vest

or in

tere

st•

Gre

enin

g ex

istin

g po

rtfo

lios

•G

reen

fund

sem

ergi

ng•

On

the

horiz

onG

reen

CM

BS

Car

bon

trad

ing

(mon

etiz

es g

reen

en

ergy

sav

ings

)

Doc

ksid

e G

reen

Vic

toria

, Brit

ish

Col

umbi

a, C

anad

a

Cha

lleng

e:M

ost V

ehic

les

are

Priv

ate

Equ

ity•

Mos

t of t

he a

ctio

n is

in

priv

ate

equi

ty•

Gre

enpr

ivat

e eq

uity

:H

ines

/Cal

PE

RS

, Ros

e S

mar

t Gro

wth

Fun

d, o

ther

s pl

anne

d (T

hom

as

Pro

pert

ies,

AIG

, JP

Mor

gan,

B

ond

Com

pani

es)

•U

rban

priv

ate

equi

ty,

addi

nggr

een

: U

rban

Str

ateg

y A

mer

ica

(US

A)

Fun

d; M

cFar

lane

G

roup

; Can

yon

John

son

Urb

an F

und

Eco

urba

n M

ixed

Use

Pro

ject

Bar

celo

na, S

pain

Cha

lleng

e: F

ew P

ublic

Veh

icle

s •

Pub

lic v

ehic

les

are

few

.•

Inve

sta

Pro

pert

y G

roup

:$6

.2 B

B u

nder

m

anag

emen

t, A

ustr

alia

, pu

blic

ly tr

aded

; sus

tain

able

fo

cus.

•F

und

of fu

nd a

ltern

ativ

es:

For

war

d P

rogr

essi

ve R

eal

Est

ate

Fun

d•

Con

vent

iona

l RE

ITs

addi

ng

gree

n: L

iber

ty P

rope

rty

Tru

st, P

roLo

gis

. G

reen

sp

inof

fsin

futu

re?

Inve

sta:

31

Mar

ket S

tree

tS

ydne

y, A

ustr

alia

Cha

lleng

es:

Soc

ial E

quity

, Le

vera

ge•

Soc

ial e

quity

goa

ls: r

isky

, ha

rd to

impl

emen

t, ch

alle

ngin

g lo

catio

ns,

publ

ic s

ubsi

dy

requ

irem

ents

•A

fford

able

hou

sing

: su

itabl

e pr

imar

ily fo

r ta

xabl

e in

vest

ors

(ta

x cr

edit

driv

enre

turn

s)•

SR

I Mod

els:

TIA

A/C

RE

F,

Ent

erpr

ise

Com

mun

ity?

•Le

vera

ge: i

t im

prov

es

retu

rn; i

s it

appr

opria

te to

be

con

cern

ed w

ith th

e le

nder

’s S

RI r

ecor

d?

1400

Fift

h A

venu

eH

arle

m, N

Y

Wha

t Can

SR

I Inv

esto

rsD

o T

o D

rive

Mar

ket?

•S

tand

ard

defin

ition

s: L

EE

D, B

RE

EA

M, H

QE

, etc

. :

link

with

oth

er S

RI s

cree

ns•

Dev

elop

rea

l est

ate

expe

rtis

e an

d en

gage

the

real

es

tate

inve

stm

ent c

omm

unity

•G

et c

reat

ive

: Con

side

r em

ergi

ng m

anag

ers,

RE

IT

inve

stm

ent i

n pr

ivat

e eq

uity

and

pro

ject

-spe

cific

fo

cuse

s •

Rev

ise

fixed

inco

me

stra

tegi

es: G

reen

or

urba

n C

MB

S/R

MB

S.

Wal

l Str

eet w

ill fo

rm p

ools

if d

eman

dsh

own

•C

onsi

der

ener

gy r

etro

fit p

rogr

ams

for

cons

umer

s,

smal

l bus

ines

s

Tak

e-aw

ays

•R

eal e

stat

e is

a s

mar

t inv

estm

ent

•G

reen

rea

l est

ate

may

be

even

sm

arte

r•

Unf

illed

SR

I nic

he: a

mpl

e ro

om fo

r gr

owth

•

App

ly S

RI m

arke

t mus

cle

: mar

ket w

ill r

espo

nd

to in

vest

or d

eman

d•

Add

cap

acity

: hire

inte

rnal

rea

l est

ate

expe

rts

and

exte

rnal

con

sulta

nts

•B

e cr

eativ

e: e

xplo

re n

ew s

truc

ture

s an

d m

anag

ers–

man

y ar

e ea

ger

to w

ork

with

you

.

GR

EE

N P

RO

PE

RT

Y

INV

ES

TM

EN

T:

AN

EM

ER

GIN

G S

RI M

AR

KE

TLe

anne

Tob

ias

Mal

achi

te L

LC+1

-301

-229

-155

8

ww

w.m

alac

hite

llc.c

omle

anne

.tobi

as@

mal

achi

tellc

.com