Seattle fund fuels efficiency

G2B Ventures' Aaron Fairchild

G2B Ventures, a Seattle-based a real estate fund, is looking to energy efficiency as a way to boost return on investment. In March 2009, G2B Ventures launched its $50-million Efficient Real Estate Fund. Though it is taking longer than the company hoped to raise capital, G2B Ventures is planning to make its first investments outside the fund before the end of 2009.

The business model of the Efficient Real Estate Fund is simple: Identify and purchase distressed homes with values significantly below the area’s median value, determine their Energy Performance Scores (EPS) using software developed by Earth Advantage Institute, implement energy efficiency measures, perform a second EPS evaluation and return the house to the market as a rental or for sale.

“Green is extremely ill defined. … Because the retrofit is bookended by audits, you get a very accurate measure of what green means in this house,” says Aaron Fairchild, managing partner and co-founder of G2B Ventures.

It might seem to be an odd time to launch what G2B Ventures claims is the nation’s first energy efficiency real estate investment fund. But with Seattle’s median home prices down, current market conditions are perfect for what the firm is trying to accomplish, according to Aaron Fairchild, the firm’s managing partner and co-founder.

He says a two percent investment in efficiency upgrades typically yields between four percent and six percent more in home value when it is re-sold or rented. “If you are a fund manager not doing this in a market that values efficiency, then you are not living up to your fiduciary obligation to the shareholder,” he says.

G2B Ventures, which is planning to buy real estate only in Seattle, plans to hold and rent the homes it buys for about 3 years. The fund is close to reaching the $5-million mark, at which point it would open escrow. Within the next year G2B Ventures plans to apply for federal debt funding and plans to take advantage of any available energy efficiency tax credits and rebates . G2B Ventures will also plans to take part in an energy-retrofit funding program being developed by ShoreBank Enterprise Cascadia.