Manatt Partner Discusses Energy Efficiency Investment Challenges
"Accounting for Green"
Comstock's Magazine
February 2013 - Manatt's Clayton Gantz, a partner in the firm's Real Estate and Land Use Practice, discussed with Comstock's Magazine the financial challenges commercial building owners face when investing in energy efficiency.
Comstock's Magazine reports that commercial real estate lenders currently do not have the ability to properly distinguish the difference between energy efficient and inefficient buildings. To make up for the energy risk - the risk that higher energy costs can compromise a building owner's ability to make their mortgage payments - loans will be inflated.
Lenders presume building owners have the highest possible energy bills and charge higher interest rates on loans, even if the money is being borrowed to make improvements that will keep energy costs down. This situation can discourage building owners from investing in energy efficiency.
"There's a real challenge in convincing owners it's worth the time and money to undertake these kinds of improvements," said Gantz. "At the moment, energy costs are generally not huge dollars relative to the value of a building, per se. So a $500,000 expense to garner a 10 percent reduction in costs may not be on top of the list of pressing issues."
Read the article here.