Commercial Mortgage Loans - Want a Commercial Construction Loan? Go Green!

Like it or not, environmentally conscious, or "green"the property. Lenders know that green means
principles have come to dominate the field ofefficient and, when they evaluate a project for
commercial real estate development and commercialfinancing they want to be assured that the funds
mortgage lending. Green building and sustainablethey invest will be used cost-effectively and that the
design are now the standard in new commercialbuilding will be economically viable.
construction and residential developments. And, withEnvironmentally sound buildings can cost substantially
local and national governments getting greener all theless to operate than comparable buildings that
time, look for energy and resource efficiency todisregard such efficiencies and tenants and their
become mandatory, with green mandates beingclients report higher customer satisfaction rates when
placed directly into building codes. Funding sourcesdoing business in them. To a lender, whose capital is
such-as banks, Wall Street brokers, insurancesecured by the building, this translates into higher
companies and hedge funds, are following suite andquality collateral and makes their investments more
these principles are rapidly becoming a part of thesecure.
commercial mortgage industry.As a commercial real estate investment banking
The US Department of Energy's Center forprofessional, I can attest to the fact that developers
Sustainable Development recently reported that 40%who choose designs that are not green will find it
of the entire world's energy supply is used byvery difficult to raise capital or secure loan approvals
buildings. That's a huge number. And, in the Unitedfor their projects. We are in the midst of a sever
States, construction accounts for our largestliquidity crisis; construction money is in short supply.
manufacturing sector, representing a staggering 13%Lenders are giving priority to green development
of US GDP and nearly 50% of total wealth creation.leaving very little capital available for conventional
Even tiny percentage gains in efficiency can amountconstruction.
to massive over-all energy savings.The Federal Government's LEED (Leadership in
Both institutional and private lenders as well as theEnergy & Environmental Design) rating system
REIT, (Real Estate Investment Trust) hedge fundawards silver, gold and platinum certification to
and private equity industries have all embraced thebuildings that reduce waste and save energy and
environmental building movement. Green is the colorlower costs. LEED certification is almost (although not
of money and green is the color of commercialofficially) a mandatory requirement in-order-to get a
mortgage construction lending now into the future.big construction project funded today.
Lenders love green construction because good forBeing green is no longer just the passion of the
profits as-well-as being good for the planet. Energyactivist anymore; it is the new emerging standard in
costs money, resources cost money and cleaning upcommercial construction as-well-as commercial real
messes' costs money. Saving energy, savingestate finance. Investors and developers who need
resources and sustaining a site all save money, duringcommercial mortgages will do well to pay attention to
construction and throughout the operational life ofthis trend.