Featured Partner: Insight Real Estate
Newest Center Partner Offers First 100% Green REIT
by Michael Mack
Posted December 17, 2008
The MIT Center for Real Estate is pleased to welcome its newest industry partner, Insight Real Estate, LLC, a Chicago-based investment firm that creates innovative real estate investment products.
Developed by Rob Hannah, best known as a founding father in the Tenant in Common industry, Insight is launching the first-ever 100% green Real Estate Investment Trust (REIT). This new investment product, called Green Realty Trust (GRT), is the first REIT to invest solely and exclusively in LEED or EnergyStar certified properties – with a special focus on the conversion of existing buildings.
"We're on the front end of the curve," Hannah said in a recent interview with CoStar News. "This is a new and unique opportunity to do well both from a business and from a personal standpoint."
Although a handful of other REITs include a percentage of green properties in their portfolios, GRT is the first to go wholly green, setting a high bar for what is clearly a market trend as the industry responds to the world's demand for environmental solutions.
The built environment is responsible for over a third of the world's energy consumption and CO2 emissions. With the green movement now affecting most every aspect of the real estate industry, environmentally-minded investment products are springing up to capitalize on the demand for green properties.
Most of these products currently focus on LEED certification for new construction (LEED-NC) because certification is relatively straightforward. Developers can meet green standards from the very beginning of the construction process.
But the number of LEED-NC buildings is limited. Ninety-nine percent of the nation's building stock is made up of structures that are already built or near completion, and new construction – especially in today's market – has slowed.
That's where Hannah comes in. By focusing on the greening of existing buildings, his new REIT greatly widens the pool of investment properties, and also limits the number of direct competitors.
The green conversion of existing buildings is not without its challenges. Investors may need to wait a decade or two to fully reap profits from the conversion process – a longer time horizon than many are willing to wait. And green retrofits can be complex, especially with tenants in place.
But Hannah is President and CEO of TSG Real Estate, one of the nation's best known Tenant-In-Common sponsor firms – recently named #83 on the Entrepreneur Magazine’s “Hot 100” list of companies. He knows well the challenges and opportunities related to commercial buildings.
A pioneer in the Tenancy in Common industry, Hannah founded the Tenant in Common Association, and was instrumental in the development of IRS Revenue Procedure on TIC Compliance 2002-22, which gives public guidance on the issue of tenancy in common ownership.
To help him navigate Insight's new green venture, Hannah is bringing some old hands on board. "Insight’s management team includes senior real estate professionals with an average of over 30 years of experience in acquisitions, asset management, dispositions, development, leasing, property management, and portfolio management," Hannah said.
In addition, Insight's board of advisors is composed of leaders in the green building sector who will help with the evaluation of potential investments. "Our advisors will play an active role in evaluating green properties for our portfolio," Hannah said. "They'll assist us in managing our portfolio to ensure continued compliance with evolving green building certification criteria."
Green Realty Trust is externally managed by Insight Green REIT Advisor, LLC, a subsidiary of Insight. The Trust is a $1.5 billion publicly registered common stock offering and an $800 million preferred stock offering. "This will enable Green to invest globally, and to make a significant impact on the reduction of carbon emissions from the built environment," Hannah said.
The MIT Center for Real Estate has long been a proponent of innovative solutions to the world's climate concerns. We are delighted to welcome Insight Real Estate, LLC, into our family of industry partners.