Revenue. According to the guide, many tenants today are willing to pay a premium for green spaces, as leasing green real estate demonstrates a commitment to sustainability and provides tenants with an opportunity to attract the best employees and improve productivity. Lenders should recognize that buildings that enable owners to demand greater rents are inherently less risky and more valuable. For underperforming properties, investment in green features may result in better positioning of the asset in the marketplace.

Occupancy. Green buildings can also result in higher building occupancy. Savings may be generated as a result of tenant retention and the corresponding reduction of lost rent, reduced retrofit costs, lower vacancies and improved lease terms.

Operating Expenses. The most straightforward value proposition for green buildings is lower utility bills. Energy savings from green certification requirements, such as LEED and ENERGY STAR, reduce operating expenses and increase net operating income. Energy cost savings, and increased net operating income, should indicate to a lender that an owner has a greater ability to pay outstanding loans. Additional operation savings can be achieved by installing more durable components, such as LED lights.

Risk. Green buildings can offer protection against changing consumer preferences, increasing energy prices and local green building ordinances. Major insurers are also beginning to offer discounts for green buildings.

Practice Note, Green Buildings: Laws and Practices.

Practice Note, Owning and Leasing Green Real Estate.

Legal Update, Tax Extensions Benefit Green Buildings and Renewable Energy.