Page 58 - The Green Building Bottom Line The Real Cost of Sustainable Building

NARRATING VALUES, SHAPING VALUES, CREATING VALUE 37

(IRR) is 22.5 percent, which is above the company’s threshold return (or hurdle rate)
for investments of 15 percent. When a company weighs the pros and cons of a partic-
ular deal, it typically wants to know, among other things, if the project makes finan-
cial sense. In the case of Green, Inc., it wants to know this: If we engage in a process
of values-shaping, is our investment of time and money and human capital worth it,
or would we be better off investing our time and money and human capital elsewhere?
The answer here is, yes, the investment is worth it. Had Green, Inc. decided to remain
a conventional real estate company and not engage in a values-shaping process, it
would have simply seen returns at or around its hurdle rate of 15 percent.
In actuality, the value creation to be realized by Green, Inc. is significantly higher
than the analysis provided above. I’ve simply been extremely conservative in my use
of assumptions, not taking into account a number of other value-added elements that
do, in fact, elevate the value of a values-oriented company. We see savings from our
energy- and water-management programs; our insurance premiums and cost of con-
struction financing are lower than those a conventional development company would
face; and our own pipeline of development business is greater than that projected by

4 4 5 6 7 8 9 10 TOTOTALSALS
10
450,000
450,000
450,000
0 0 450,000 450,000 450,000 450,000 450,000 2,250,000
450,000
2,250,000
450,000
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 67,500 10,125 1,519 228 79,372
228
1,519
79,372
10,125
67,500
1,519
0 0 0 0 67,500 10,125 1,519 79,144
10,125
79,144
67,500
77,625
0 0 0 0 0 67,500 10,125 77,625
67,500
10,125
67,500
67,500
0 0 0 0 0 0 67,500 67,500
21,300
21,300
21,300
21,300
213,000
21,300
21,300 21,300 21,300 21,300 21,300 21,300 21,300 213,000
21,300
21,300
2,766,640
550,672
538,800
550,444
471,300
548,925
21,300
21,300
21,300 21,300 471,300 538,800 548,925 550,444 550,672 2,766,640
4 5 6 7 8 9 10
10 TOTOTALSALS
(5,420)
(4,734)
(5,799)
(5,065)
(3,864) (4,135) (4,424) (4,734) (5,065) (5,420) (5,799) (212,926)
(212,926)
(3,864)
(4,135)
(4,424)
(16,000)
(16,000)
(40,000)
(40,000)
(40,000)
(400,000)
(40,000)
(40,000)
(40,000)
(40,000)
(40,000) (40,000) (40,000) (40,000) (40,000) (40,000) (40,000) (400,000)
(79,801)
(91,771)
(45,626)
(105,536)
(60,341)
(69,392)
(609,112)
(45,626) (52,470) (60,341) (69,392) (79,801) (91,771) (105,536) (609,1 12)
(52,470)
(4,000)
(4,000)
(48,000)
(4,000)
(4,000)
(4,000)
(4,000) (4,000) (4,000) (4,000) (4,000) (4,000) (4,000) (48,000)
(4,000)
(4,000)
(10,000)
(10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (100,000)
(100,000)
(10,000)
(10,000)
(10,000)
(10,000)
(10,000)
(10,000)
(1,386,037)
(165,335)
(151,190)
(128,125)
(138,866)
10,605)
(103,490)
(103,490) (1 (110,605) (1 (118,765) (128,125) (138,866) (151,190) (165,335) (1,386,037)
18,765)
(89,305)
352,535
410,675
399,254
(82,190) (89,305) 352,535 410,675 410,059 399,254 385,336
385,336
(82,190)
410,059
0.683
0.683 0.621 0.564 0.513 0.467 0.424 0.386
0.621
0.467
0.513
0.386
0.424
0.564
(56,137) (55,451) 198,997 210,741 191,296 169,322 148,564
169,322
148,564
(55,451)
198,997
210,741
(56,137)
191,296