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Alternative Energy - Tuesday, April 28, 2009

Making Green While Going Green

With President Obama looking to spend $150 billion on alternative energy over the next 10 years, investors are looking for ways to grow, and green, their money. Instead of simply recommending the usual public companies like First Solar (FSLR:NASDAQ) and NextEra Energy Resources (FPL:NYSE), we decided to speak with Douglas Culkin, President of the National Apartment Association and get his take.

Why Mr. Culkin? His 51,000-member association is hosting the First Annual Green Conference in Phoenix. Starting today, landlords (definitely not slumlords) will be listening to presentations on whether or not to green a building, the potential ROI for greening, and pioneering green apartment complexes.

We spent a few minutes with Mr. Culkin trying to get some insight as to the future of being a green landlord and how investors can profit from this quickly growing trend.

1. What are the largest green trends you have seen in the rental industry over the last year?

A big trend in green apartments is that renters are shopping for it. A recent Apartments.com survey found that 60 percent of renters said they search for apartments that offer environmentally friendly amenities and 25 percent are willing to pay more rent. Apartment companies are meeting that need in a few ways. An increasing number of new apartment developments are being built to green standards, such as LEED for Homes and the new ANSI National Green Building Standard, which has standards specifically for apartment buildings. Companies are also renovating existing buildings to green standards and retrofitting them with water- or energy-saving features.

2. Which areas of the country are at the forefront of green rentals?

Urban coastal areas, such as Washington, D.C., New York, and California, are on the forefront, but we’re starting to see innovative green apartment developments in central states like Texas, as well.

3. Generally speaking, what is the ROI for "greening" an apartment building?

Most companies we’ve spoken with are still quantifying the numbers, but the return comes from several factors. Green apartment communities can see higher retention and lease rates from residents seeking eco-friendly amenities. They may also be able to share in some of the cost savings from lower utility rates, even if it’s the resident paying the bills. Developers will likely see more efficiency in green construction projects, and some companies are even finding that a green mindset improves employee retention.

4. Which companies are offering green products specifically aimed at the rental market?

Among the companies offering utility management and submetering services are ista North America, Minol USA, National Exemption Services, NWP Services Corp., AUM, Comptrol Technologies, Conservice Utility Management and Billing, and Fluidmaster. Valet Waste and Waste Management Concierge offer recycling resources. PPG and Sherwin-Williams market low-VOC paints.\

5. Finally, if you had $25 million of venture capital, which green companies would you invest in?

Among the many apartment companies working on innovative green projects: Gables, UDR, and Laramar all have exciting initiatives.