By Chanyaporn Chanjaroen
May 13 (Bloomberg) -- BlueGold Capital Management LLP and Galena Asset Management Ltd. extended their winning streak in the first four months, outpacing competing hedge funds and commodities.
Pierre Andurand’s $1.1 billion BlueGold energy fund rose 35 percent through April, two people with direct knowledge of the returns said, declining to be named because the data are confidential. Galena’s $430 million metals fund added 8.6 percent, according to David Mimra, London-based head of sales and marketing.
The Reuters/Jefferies CRB Index of 19 raw materials rose 6.1 percent this year, rebounding from its worst year in a half century, led by a 68 percent gain in gasoline. Assets in commodity-related indexes and exchange-traded funds advanced $18 billion to $172 billion in the first quarter, according to Barclays Capital.
“As commodity prices now appear to be bottoming, we are seeing an increase in investor interest” in funds not governed by index weightings, said Adam De Chiara, fund manager for Jefferies Asset Management’s commodities unit in Stamford, Connecticut.
BlueGold and Galena’s gains compare with an average four- month advance of 4.2 percent for all hedge funds monitored by Chicago-based Hedge Fund Research Inc. Hedge funds returned an average of 3.2 percent in April, the best performance in more than three years, according to Eurekahedge Pte.
Thai Kickboxer
The BlueGold fund was started by Andurand, a 32-year-old amateur Thai kickboxer, and Dennis Crema, 49, in February 2008. Both previously worked at commodity trader Vitol Group. BlueGold returned 209 percent last year. Andurand declined to comment.
Galena Asset Management, managed by Jeremy Weir, is the investment unit of Trafigura Beheer BV, the third-largest independent oil trader. The company started an energy hedge fund last month, headed by Claude Lixi, who traded oil options at Morgan Stanley.
Dwight Anderson, the commodities investor who liquidated his main Ospraie Fund last year after losing 39 percent, is planning a comeback with two new hedge funds set to open July 1.
The Ospraie Equity Fund will buy and sell stocks of commodity and basic-materials companies in industries such as chemicals, mining, paper and natural resources, Anderson said in a May 12 letter to investors. The Ospraie Commodity Fund will invest in commodities and related derivatives, according to the letter, a copy of which was obtained by Bloomberg News.
Hedge Fund
Clive Capital LLP made 3.4 percent in the first four months, according to investors. The London-based hedge fund, managing about $2.3 billion, returned 44 percent last year. The company declined to comment.
The $1.3 billion Merchant Commodity Fund, run by Singapore- based Aisling Analytics Pte Ltd., returned 2 percent in the first four months, according to investors. The fund was founded by former Cargill Inc. traders Michael Coleman and Doug King.
The rebound in commodities is attracting investors again, on optimism that the worst global recession since World War II is improving. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, reached a record of almost 1,128 metric tons last month, overtaking Switzerland as the world’s sixth-largest gold holding.
“We think the recession is over,” said Jan Loeys, head of global market strategy at JPMorgan Chase & Co., in an interview in Hong Kong. “Commodities, materials in particular, are going to be benefiting right now as investors actually start to get worried about future inflation.”
Consumer Prices
U.S. consumer prices will advance 0.9 percent in the fourth quarter and 1.7 percent in 2010, according to as many as 77 economists surveyed by Bloomberg.
Most of the funds outpaced returns from the CRB index. Copper has been the second-biggest gainer after gasoline, rising 51 percent, as China increased imports to bolster stockpiles.
Paul Touradji’s Global Resources fund returned 0.4 percent in the first four months, according to two people familiar with the matter. Armel Leslie, an outside spokesman for New York- based Touradji Capital Management LP, which manages $2.6 billion, declined to comment.
Vermillion Asset Management LLC’s $850 million Viridian commodity fund lost about 3.5 percent in the period, according to a person with knowledge of the result. The fund, founded by New York-based Drew Gilbert and Chris Nygaard, started trading in June 2005.
The Krom River Commodity Fund retreated 8.1 percent in the first four months, investors said, citing preliminary estimates from the company. The $550 million fund, started by Chris Brodie in 2006, returned almost 37 percent last year. The Baar, Switzerland-based fund manager declined to comment.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising prices and participate substantially in profits from money invested.
NEWS - Commodites, Agriculture, Green Investment - NEWS
5/13/2009
Blue Marble Launches Cleantech Hedge Fund
May 8, 2009 FinAlternatives
Canadian asset manager Blue Marble Capital Partners is going ‘green’ with the launch of its first hedge fund. The firm has recently unveiled a cleantech-focused hedge fund that will invest in carbon credits and clean technologies.
The new vehicle, the Carbon Alternative Fund, will be managed by Trevor Giles.
Half of the fund, which will invest globally, will be focused on carbon credits and other carbon-related investments, while the remainder will be invested in public and private clean technology companies, or firms that provide raw materials for these companies.
Blue Marble was formed to provide investors with annual absolute return capital appreciation by managing investments that are expected to benefit from a global transition towards carbon constrained societies, the emergence of global carbon markets, and related transitory resource and commodity imbalances, according to the firm’s Web site.
The new fund is open to Canadian and other international investors, but is currently not open to U.S. citizens.
Blue Marble is also in the process of developing what it believes will be Canada's first carbon-linked note and its first carbon-linked bond.
Canadian asset manager Blue Marble Capital Partners is going ‘green’ with the launch of its first hedge fund. The firm has recently unveiled a cleantech-focused hedge fund that will invest in carbon credits and clean technologies.
The new vehicle, the Carbon Alternative Fund, will be managed by Trevor Giles.
Half of the fund, which will invest globally, will be focused on carbon credits and other carbon-related investments, while the remainder will be invested in public and private clean technology companies, or firms that provide raw materials for these companies.
Blue Marble was formed to provide investors with annual absolute return capital appreciation by managing investments that are expected to benefit from a global transition towards carbon constrained societies, the emergence of global carbon markets, and related transitory resource and commodity imbalances, according to the firm’s Web site.
The new fund is open to Canadian and other international investors, but is currently not open to U.S. citizens.
Blue Marble is also in the process of developing what it believes will be Canada's first carbon-linked note and its first carbon-linked bond.
Ionic, Miura Biggest Solar-Focused Hedge Funds
May 12, 2009 FinAlternatives
The hedge fund with the highest exposure to the solar sector is Ionic Capital Management, which holds over 21% of its $207 million of assets in U.S. solar companies, according to HedgeTracker.com, which last week released its list of Top Solar-Focused Hedge Funds.
Ionic’s positions were widely spread across six solar companies: Suntech Power Holdings ($18.3 million); LDK Solar Co. ($10.7 million); Energy Conversion Devices ($5.4 million); Trina Solar ($3.2 million); Solarfun Power Holdings ($3.2 million); and JA Solar Holdings ($2.4 million).
Notably, the hedge fund manager, which has a deep value investment style, had no exposure to First Solar, which was overwhelmingly the favorite among the other four managers on the list.
In fact, Tracer Capital Management, which held 10% of its assets in the solar sector, held all of its solar assets ($19million) in First Solar.
The largest investor on the list is Miura Global Management, a long/short equity manager, which held $86 million or 11.8% of its $726 million in assets in the solar sector. Miura’s positions include FLSR ($55.1 million), LDK ($30 million), and TSL ($0.7 million). Notably, over the 4th quarter of 2008, the firm closed out of four other investments it had in the solar sector, including Yingli Green Energy ($19 million), Solarfun Power ($3.3 million), JA Solar Holdings ($2.8 million), and SunPower Corp. ($2.7 million)
The other two solar-focused hedge funds named are technology-focused Crosslink Capital, which has 9.4% of its $332 million dedicated to the sector, and growth-focused Hellman, Jordan Management with 7.9% of its $216 million allocated to solar companies. For individual investors that don’t have millions to invest, Hellman, Jordan also offers a mutual fund, the Jordan Opportunity Fund.
While the hedge funds are the biggest solar-focused ones, according to the HedgeTracker.com, it is not known how well they are performing in these volatile markets.
The hedge fund with the highest exposure to the solar sector is Ionic Capital Management, which holds over 21% of its $207 million of assets in U.S. solar companies, according to HedgeTracker.com, which last week released its list of Top Solar-Focused Hedge Funds.
Ionic’s positions were widely spread across six solar companies: Suntech Power Holdings ($18.3 million); LDK Solar Co. ($10.7 million); Energy Conversion Devices ($5.4 million); Trina Solar ($3.2 million); Solarfun Power Holdings ($3.2 million); and JA Solar Holdings ($2.4 million).
Notably, the hedge fund manager, which has a deep value investment style, had no exposure to First Solar, which was overwhelmingly the favorite among the other four managers on the list.
In fact, Tracer Capital Management, which held 10% of its assets in the solar sector, held all of its solar assets ($19million) in First Solar.
The largest investor on the list is Miura Global Management, a long/short equity manager, which held $86 million or 11.8% of its $726 million in assets in the solar sector. Miura’s positions include FLSR ($55.1 million), LDK ($30 million), and TSL ($0.7 million). Notably, over the 4th quarter of 2008, the firm closed out of four other investments it had in the solar sector, including Yingli Green Energy ($19 million), Solarfun Power ($3.3 million), JA Solar Holdings ($2.8 million), and SunPower Corp. ($2.7 million)
The other two solar-focused hedge funds named are technology-focused Crosslink Capital, which has 9.4% of its $332 million dedicated to the sector, and growth-focused Hellman, Jordan Management with 7.9% of its $216 million allocated to solar companies. For individual investors that don’t have millions to invest, Hellman, Jordan also offers a mutual fund, the Jordan Opportunity Fund.
While the hedge funds are the biggest solar-focused ones, according to the HedgeTracker.com, it is not known how well they are performing in these volatile markets.
Citadel Capital of Egypt May Spend Up to $500 Million
By Mahmoud Kassem
May 12 (Bloomberg) -- Citadel Capital, an Egyptian private- equity firm that has $8.3 billion in investments, may spend as much as $500 million in industries including mining and agriculture in the second half as asset prices become more attractive in the Middle East and Africa.
“It could be as little as $50 million and as much as $500 million,” Hisham El-Khazindar, managing director and co-founder of the Cairo-based firm, said in an interview at his office on May 7. Expectations of sellers “are now at reasonable levels vis-à-vis the inflated expectations that may have existed a year, a year and a half ago,” he said.
Private-equity firms are struggling to raise funds as the credit crisis makes it harder to finance acquisitions. The firms have announced $26 billion of acquisitions this year, less than a quarter of the deals led in the same period a year earlier, according to data compiled by Bloomberg. The crisis is also making asset sales less lucrative.
Private-equity investors in the Middle East manage more than $25 billion, Dubai-based buyout firm Abraaj Capital Ltd. said in October. “There is no doubt that the fund-raising environment is more challenging for everyone,” El-Khazindar said. “Whether we’ve bottomed out already or we’re close to bottoming out, it’s very clear that valuations are compelling.”
‘Significant Opportunities’
Citadel, which controls 19 companies operating in the region, will tap the $900 million it raised in the second half of 2008 from investors mostly in the Persian Gulf to fund its spending, he said. The firm will probably use some of the money to finance existing businesses in other industries it works in such as energy, transport and financial services, and may buy distressed companies or publicly traded ones, El-Khazindar said.
“We like industries where we can create players that not only will be significant players at the local regional level but that will also be globally competitive,” he said. “When you look at Egypt, when you look at Algeria, when you look at Libya, when you look at Sudan but being mindful of sanctions etc., when you look at Ethiopia, Syria, Iraq, there are very significant opportunities.”
Citadel secured 250,000 acres of agricultural land on the Nile in Sudan in February on a 99-year lease basis at $0.5 per acre annually with full irrigation rights and will grow crops such as maize, sorghum and sugar, he said. Citadel’s mining company Asek Co. for Mining said this month it won a concession in Sudan to mine for limestone that will provide raw material for Citadel’s cement company.
Egypt, Saudi Arabia and the United Arab Emirates were the largest recipients of private equity investment in the Middle East for the past four years, according a report by the Gulf Venture Capital Association in March.
It’s unlikely that Citadel will take any companies public in 2009 and 2010 because of unfavorable market conditions, El- Khazindar said. The firm has also put its own plans to sell shares to the public on hold, he said.
To contact the reporter responsible for this story: Mahmoud Kassem at mkassem1@bloom
May 12 (Bloomberg) -- Citadel Capital, an Egyptian private- equity firm that has $8.3 billion in investments, may spend as much as $500 million in industries including mining and agriculture in the second half as asset prices become more attractive in the Middle East and Africa.
“It could be as little as $50 million and as much as $500 million,” Hisham El-Khazindar, managing director and co-founder of the Cairo-based firm, said in an interview at his office on May 7. Expectations of sellers “are now at reasonable levels vis-à-vis the inflated expectations that may have existed a year, a year and a half ago,” he said.
Private-equity firms are struggling to raise funds as the credit crisis makes it harder to finance acquisitions. The firms have announced $26 billion of acquisitions this year, less than a quarter of the deals led in the same period a year earlier, according to data compiled by Bloomberg. The crisis is also making asset sales less lucrative.
Private-equity investors in the Middle East manage more than $25 billion, Dubai-based buyout firm Abraaj Capital Ltd. said in October. “There is no doubt that the fund-raising environment is more challenging for everyone,” El-Khazindar said. “Whether we’ve bottomed out already or we’re close to bottoming out, it’s very clear that valuations are compelling.”
‘Significant Opportunities’
Citadel, which controls 19 companies operating in the region, will tap the $900 million it raised in the second half of 2008 from investors mostly in the Persian Gulf to fund its spending, he said. The firm will probably use some of the money to finance existing businesses in other industries it works in such as energy, transport and financial services, and may buy distressed companies or publicly traded ones, El-Khazindar said.
“We like industries where we can create players that not only will be significant players at the local regional level but that will also be globally competitive,” he said. “When you look at Egypt, when you look at Algeria, when you look at Libya, when you look at Sudan but being mindful of sanctions etc., when you look at Ethiopia, Syria, Iraq, there are very significant opportunities.”
Citadel secured 250,000 acres of agricultural land on the Nile in Sudan in February on a 99-year lease basis at $0.5 per acre annually with full irrigation rights and will grow crops such as maize, sorghum and sugar, he said. Citadel’s mining company Asek Co. for Mining said this month it won a concession in Sudan to mine for limestone that will provide raw material for Citadel’s cement company.
Egypt, Saudi Arabia and the United Arab Emirates were the largest recipients of private equity investment in the Middle East for the past four years, according a report by the Gulf Venture Capital Association in March.
It’s unlikely that Citadel will take any companies public in 2009 and 2010 because of unfavorable market conditions, El- Khazindar said. The firm has also put its own plans to sell shares to the public on hold, he said.
To contact the reporter responsible for this story: Mahmoud Kassem at mkassem1@bloom
Citadel Capital of Egypt May Spend Up to $500 Million
By Mahmoud Kassem
May 12 (Bloomberg) -- Citadel Capital, an Egyptian private- equity firm that has $8.3 billion in investments, may spend as much as $500 million in industries including mining and agriculture in the second half as asset prices become more attractive in the Middle East and Africa.
“It could be as little as $50 million and as much as $500 million,” Hisham El-Khazindar, managing director and co-founder of the Cairo-based firm, said in an interview at his office on May 7. Expectations of sellers “are now at reasonable levels vis-à-vis the inflated expectations that may have existed a year, a year and a half ago,” he said.
Private-equity firms are struggling to raise funds as the credit crisis makes it harder to finance acquisitions. The firms have announced $26 billion of acquisitions this year, less than a quarter of the deals led in the same period a year earlier, according to data compiled by Bloomberg. The crisis is also making asset sales less lucrative.
Private-equity investors in the Middle East manage more than $25 billion, Dubai-based buyout firm Abraaj Capital Ltd. said in October. “There is no doubt that the fund-raising environment is more challenging for everyone,” El-Khazindar said. “Whether we’ve bottomed out already or we’re close to bottoming out, it’s very clear that valuations are compelling.”
‘Significant Opportunities’
Citadel, which controls 19 companies operating in the region, will tap the $900 million it raised in the second half of 2008 from investors mostly in the Persian Gulf to fund its spending, he said. The firm will probably use some of the money to finance existing businesses in other industries it works in such as energy, transport and financial services, and may buy distressed companies or publicly traded ones, El-Khazindar said.
“We like industries where we can create players that not only will be significant players at the local regional level but that will also be globally competitive,” he said. “When you look at Egypt, when you look at Algeria, when you look at Libya, when you look at Sudan but being mindful of sanctions etc., when you look at Ethiopia, Syria, Iraq, there are very significant opportunities.”
Citadel secured 250,000 acres of agricultural land on the Nile in Sudan in February on a 99-year lease basis at $0.5 per acre annually with full irrigation rights and will grow crops such as maize, sorghum and sugar, he said. Citadel’s mining company Asek Co. for Mining said this month it won a concession in Sudan to mine for limestone that will provide raw material for Citadel’s cement company.
Egypt, Saudi Arabia and the United Arab Emirates were the largest recipients of private equity investment in the Middle East for the past four years, according a report by the Gulf Venture Capital Association in March.
It’s unlikely that Citadel will take any companies public in 2009 and 2010 because of unfavorable market conditions, El- Khazindar said. The firm has also put its own plans to sell shares to the public on hold, he said.
To contact the reporter responsible for this story: Mahmoud Kassem at mkassem1@bloom
May 12 (Bloomberg) -- Citadel Capital, an Egyptian private- equity firm that has $8.3 billion in investments, may spend as much as $500 million in industries including mining and agriculture in the second half as asset prices become more attractive in the Middle East and Africa.
“It could be as little as $50 million and as much as $500 million,” Hisham El-Khazindar, managing director and co-founder of the Cairo-based firm, said in an interview at his office on May 7. Expectations of sellers “are now at reasonable levels vis-à-vis the inflated expectations that may have existed a year, a year and a half ago,” he said.
Private-equity firms are struggling to raise funds as the credit crisis makes it harder to finance acquisitions. The firms have announced $26 billion of acquisitions this year, less than a quarter of the deals led in the same period a year earlier, according to data compiled by Bloomberg. The crisis is also making asset sales less lucrative.
Private-equity investors in the Middle East manage more than $25 billion, Dubai-based buyout firm Abraaj Capital Ltd. said in October. “There is no doubt that the fund-raising environment is more challenging for everyone,” El-Khazindar said. “Whether we’ve bottomed out already or we’re close to bottoming out, it’s very clear that valuations are compelling.”
‘Significant Opportunities’
Citadel, which controls 19 companies operating in the region, will tap the $900 million it raised in the second half of 2008 from investors mostly in the Persian Gulf to fund its spending, he said. The firm will probably use some of the money to finance existing businesses in other industries it works in such as energy, transport and financial services, and may buy distressed companies or publicly traded ones, El-Khazindar said.
“We like industries where we can create players that not only will be significant players at the local regional level but that will also be globally competitive,” he said. “When you look at Egypt, when you look at Algeria, when you look at Libya, when you look at Sudan but being mindful of sanctions etc., when you look at Ethiopia, Syria, Iraq, there are very significant opportunities.”
Citadel secured 250,000 acres of agricultural land on the Nile in Sudan in February on a 99-year lease basis at $0.5 per acre annually with full irrigation rights and will grow crops such as maize, sorghum and sugar, he said. Citadel’s mining company Asek Co. for Mining said this month it won a concession in Sudan to mine for limestone that will provide raw material for Citadel’s cement company.
Egypt, Saudi Arabia and the United Arab Emirates were the largest recipients of private equity investment in the Middle East for the past four years, according a report by the Gulf Venture Capital Association in March.
It’s unlikely that Citadel will take any companies public in 2009 and 2010 because of unfavorable market conditions, El- Khazindar said. The firm has also put its own plans to sell shares to the public on hold, he said.
To contact the reporter responsible for this story: Mahmoud Kassem at mkassem1@bloom
5/01/2009
Le pari mondial de la croissance verte
lemonde.fr, Antoine Reverchon, le 2 février 2009
Aide fiscale aux énergies renouvelables et à l’amélioration de l’efficacité énergétique des bâtiments, rénovation du réseau électrique, subventions à la recherche et au développement de produits et de services moins polluants dans l’industrie et les transports, normes environnementales plus sévères… L’une, l’autre ou plusieurs de ces mesures se retrouvent dans le plan de relance de 819 milliards de dollars (639 milliards d’euros) voté par la Chambre des représentants américaine le mercredi 28 janvier, et dans le plan de relance de 26 milliards d’euros adopté par le Parlement français le lendemain, dont les mesures devaient être détailléees le 2 février par le premier ministre, François Fillon.
Mais au-delà des effets attendus à court terme sur l’emploi et l’activité, ce ” verdissement ” des plans de relance, que l’on retrouve en Chine, en Allemagne, au Japon, pose les jalons du basculement d’un modèle économique basé sur le pétrole et responsable du réchauffement climatique, vers un modèle gérant au mieux les ressources de la planète.
Barack Obama s’est inspiré du programme ” Repower America ” élaboré par Al Gore, l’ancien vice président de Bill Clinton, qui prévoit de mettre en place en dix ans un modèle énergétique rendant les Etats-Unis indépendants du pétrole, et donc des pays producteurs. La double signification de power (pouvoir et énergie) prend ici tout son sens. Il s’agit de changer de système économique et de résoudre un problème de sécurité nationale. En France, 35 % des investissements prévus par le plan ” anticipent sur l’application du Grenelle de l’environnement “actuellement discuté au Sénat, a affirmé Nathalie Kosciusko-Morizet, l’ex-secrétaire d’Etat à l’environnement.
Mais le risque est alors de voir l’argent public s’engouffrer dans des secteurs ou des technologies non viables. Ceci simplement parce qu’ils bénéficient d’un meilleur lobbying ou d’un effet de mode, redoute l’économiste américain Robert Bell (City University of NewYork M. Bell a mis en évidence les gaspillages engendrés par certains choix technologiques à Washington. De même, ajoute-t-il, des incitations fiscales, couplées au comportement mimétique des marchés financiers, peuvent conduire les investisseurs à créer une nouvelle bulle financière sur la ” green tech”.
Pour que les pouvoirs publics, mais aussi les agents économiques – entreprises, investisseurs et consommateurs – ne s’égarent pas dans un maquis de promesses parées des vertus de l’écologie, les économistes estiment que les prix des biens et services consommés doivent intégrer le coût de leurs effets réels sur le climat, via un prix par tonne de CO2. Seul ce ” signal prix “, indique Cédric Philibert, économiste à l’Agence internationale de l’énergie, peut inciter les industriels à investir dans des technologies propres, les investisseurs à mesurer le risque de leurs choix, les ménages à adopter un mode de consommation plus durable.
L’économiste britannique Terry Barker(Cambridge) a même mis au point un modèle économique montrant que plus le prix du carbone est élevé, plus les investissements massifs que cette contrainte entraîne génèrent une croissance forte, explique son collègue Patrick Criqui (université de Grenoble) . Mais les économistes se divisent sur l’instrument le plus apte à émettre le signal prix : le marché, où entreprises et Etats échangent les tonnes de CO2 au-delà ou en deçà des quotas qu’ils sont autorisés à émettre ? Ou bien la fiscalité, qui taxerait les biens et les services au prorata de leur teneur en carbone ? Les risques de volatilité excessive du prix de la tonne de carbone sur un marché d’autant plus imparfait qu’il n’inclut pas les émissions de l’Inde ou de la Chine font préférer la solution de la taxe carbone à certains. Le directeur de la recherche de la NASA, James Hansen, ou l’économiste Jeffrey Sachs se sont prononcés en sa faveur en attendant l’arbitrage de M. Obama, arguant du fait qu’une taxe fournit aux acteurs économiques un signal clair et constant.
M. Hansen préconise d’en reverser le produit aux ménages afin de relancer la consommation. Jean-Charles Hourcade, directeur du Centre international de recherche sur l’environnement et le développement (Cired), propose que qu’elle soit compensée par une diminution des charges sociales, afin de protéger la compétitivité des entreprises… et de relancer l’emploi. Mais commele fait remarquer Benoît Leguet (mission Climat de la Caisse des dépôts et consignations), ” les tentatives d’instaurer une taxe carbone ont toutes échoué ” face à l’hostilité à l’impôt.
Il préconise donc le développement de marchés carbone sectoriels et régionaux, la probabilité d’un marché mondial étant suspendue à un accord international qui sera long à venir. Mais il faudrait pour cela que les quotas attribués soient payants, afin que le carbone ait un prix dès la première tonne émise. Ce n’est pas le choix qui a été fait par l’Union européenne lors de l’adoption du paquet Energie-Climat le 12 décembre 2008 : la plupart des quotas seront gratuits. Ce qui, ajouté à la réticence à adopter une taxe carbone, fait douter l’économiste Olivier Godard, de l’Ecole polytechnique, de la réelle volonté des politiques de s’engager en faveur d’une économie verte. Faute d’une incitation par le prix, ni les entreprises ni les ménages n’abandonneront facilement leur addiction aux énergies fossile.
4/30/2009
The Investment Case for Sustainable Real Estate
22.04.2009 Sustainability is steadily gaining awareness in real estate. While the main focus is on energy savings, soft factors such as social responsibility and living comfort also have to be taken into account when carrying out cost-benefit analyses. Investment products such as funds or special mortgages have recently become available.
Sustainability has become a hot topic in real estate. In the past years, awareness with regard to environmental-friendly buildings has increased markedly. With global warming being on the agenda of governments across the globe, goals for the reduction of CO2-emissions have been adopted (the Kyoto-Protocol for example). Sustainability has also come to the forefront in the private sector, especially in light of the high energy costs witnessed in the past years. Beyond energy considerations, soft factors such as living comfort and corporate social responsibility play an important role in the increased availability of sustainable real estate assets.
Real Estate as Major Energy Consumer
Buildings account for a large share of energy consumption and thus of CO2 emissions. According to the MIT Center of Real Estate, real estate is the largest energy consumer in the US and responsible for over one-third of the world's energy consumption and CO2 emissions. It is estimated that buildings account for almost 40 percent of energy use in the US. It is thus sensible to focus on real estate when aiming to reduce energy use and costs. Over the past 10 to 20 years, national rating systems have emerged in numerous countries around the world. Each standard has specific requirements for a building to be qualified as "sustainable." Whilst an international standard currently does not exist, some rating systems such as the Swiss Minergie, the British BREEAM or the American LEED standards have found acceptance beyond the national borders. Certifications remain voluntary, but many governments have adopted regulations such as requirements for the energy use of new buildings and incentives such as tax advantages that favor sustainable real estate labels. Thus, environmental and political considerations clearly favor sustainable developments.
The Investment Case for Sustainable Real Estate
Demand for sustainable real estate has increased markedly over the past years, as the increase in Swiss Minergie certifications shows. Large institutional investors, including Credit Suisse, have committed to green building. Sustainable real estate also can offer investment opportunities from a purely financial point of view. On the one hand, green buildings are generally more expensive to construct than conventional ones and thus need additional up-front investments. On the other hand, the financial benefits of such buildings include lower energy, water, operations and maintenance costs, as well as improved indoor environment (including enhanced employee comfort, productivity and health).
Cost-Benefit Analyses
Various cost-benefit analyses for green buildings have been carried out. The 2003 report "The Cost and Financial Benefits of Green Buildings" by Gregory Kats, which analyzes the effects of green design on office buildings, provides one of the most comprehensive studies carried out to date. Based on a 20-year discounted cash flow model, it calculates that the average financial benefit of green buildings - approximately 62 dollars per square feet - by far outweighs the additional initial costs of approximately 4 dollars per square feet. The study estimates that energy savings alone are enough to recover the higher construction costs. But the study has some caveats. It attributes a majority of green buildings’ benefits to some socialized benefits such as increased employee productivity and health gains. It also assumes relatively low capital costs. The 2008 study "Doing Well by Doing Good? Green Office Buildings" by Piet Eichholtz found that US office buildings with a green certificates exhibit sales prices and rent levels that are respectively about 16 percent and 2 percent higher than identical non-green office properties.
Investment Conclusion
Hence, there is evidence that green buildings can be attractive investments in financial terms. However, as costs and benefits for sustainable real estate can vary markedly across regions due to the energy price outlook, subsidies, and the type of investors, Credit Suisse recommends evaluating green construction projects on a case-by-case basis. Investment products such as funds or special mortgages have recently become available to play this theme.
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