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Three Top Professionals Bring Green Real Estate Investment to Wall Street
Let us say "Farewell" finally to the clichE that individuals promoting green buildings are tree huggers in Birkenstocks. Today's green real estate professionals are more likely to be top tenured industry professionals with an MBA or Law degree who see equal commitment to environmental stewardship, social responsibility and profit as the best way of doing business for a better global future and financial success.
Three such individuals who are spearheading this positive paradigm shift are: Wharton MBA and green real estate advisor Leanne Tobias of Malachite LLC, attorney Steve Howard, a partner at Thacher Proffitt, a preeminent global real estate finance firm and Michael Italiano, an environmental attorney and C.E.O. of the non profit Institute of Market Transformation to Sustainability (MTS) who is a co-founder of the US Green Building Council (USGBC), the organization which created LEED green building standards.
Tobias and Howard were both early converts to green building before it became the burgeoning market niche that it is today. Italiano, with his pioneering work with USGBC has helped bring green building to mass-market awareness. All three are once again on the cutting edge of "green" with their work to promote a potentially highly profitable and socially beneficial type of green building investment: green mortgage-backed securities and green real estate funds. Tobias, Howard and Italiano are focusing on Wall Street and they are confident that this socially responsible way of investing will be instrumental in bringing the green building movement into the mainstream.
To understand why 'green mortgage-backed securities' and 'green real estate funds' might be very appealing to Wall Street and investors, first take a look at how conventional mortgage backed securities and real estate funds work. According to Tobias, who has twenty years of institutional real estate investment experience, mortgage-backed securities (MBS) are pools of mortgages structured as bonds and sold to institutional investors in the capital markets. Real estate funds, in contrast, invest directly in real estate assets. Fund investors own shares of the fund and receive their pro-rata share of the income and appreciation from the assets held.
How does 'green' come into the picture and why is the greening of these traditional real estate investment vehicles so interesting to Tobias, Howard and Italiano? Green mortgage backed securities and green real estate funds are structured similarly to conventional mortgage-backed securities and real estate funds but only allow LEED, Energystar or similar green buildings and mortgages to qualify for the green real estate fund or green MBS. The selling points that Tobias, Howard and Italiano are sure will appeal to Wall Street are that these green investment vehicles are potentially a lower credit risk and demand for such green products is poised to go up dramatically. How so? A green building's energy use is significantly lower, so operating costs are lower. Building owners are more able to pay back mortgages and risk of default lessens. As energy prices continue to skyrocket, a building that uses less energy will become increasingly desirable.
