Developers attempting to launch sustainable-design projects and landlords who wish to complete energy-efficient property upgrades in the coming year face looming challenges that range from tight credit to slower returns on investment, experts say.
Across the nation, green development has suffered from the credit crunch along with conventional commercial real estate projects, according to attorney Mary Anne Sullivan, partner in the Washington, D.C. office of law firm Hogan & Hartson. Earlier this year, one of her clients arranged financing with Lehman Brothers for a renewable energy project only to have the loan fall through a month before closing when the lender went bankrupt.
“I’ve seen among my own clients the funding for several projects disappear very close to an anticipated financial closing date because of the economic crisis,” says Sullivan, who is a co-chair of her firm’s climate and clean energy working group. “It’s clearly having an impact on the ability to fund projects.”
As recently as early November, lenders were still shocked into a state of immobility by the credit crisis and weren’t interested in discussing new loan applications, according to Ezra Green, chairman & CEO of Clear Skies Solar, a Long Island, N.Y.-based designer and installer of solar photovoltaic systems. “You couldn’t get them to answer the phone,” Green says.
Yet Green believes the high cost of capital that has accompanied the credit crunch will ease in 2009...
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