Real Estate Fund Manager

Mission Aligned and Market Driven

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IMPACT INVESTING IN GREEN HOME DEVELOPMENT AIMS FOR PROFITABILITY ON A TRIPLE BOTTOM LINE

FOR IMMEDIATE RELEASE:

SEATTLE, Washington (December 22, 2015) – Green Canopy is excited to announce that we have eclipsed a major milestone with our second Impact Debt Fund. The Alder Fund is a Real Estate Impact Investment Fund that is managed by Green Canopy and designed to lend on the development of certified green and guaranteed efficient homes. It has now issued its last loan and will begin winding down – issuing distributions as loans repay over the next 6-9 months.

With the help of the Fund and all of its participants, Green Canopy completed 50 high efficiency homes across Seattle, reaping a total energy savings of 532,000 kWh per year.  “We have mitigated over a million pounds of carbon in the last two years by building Green Canopy homes. That’s the equivalent of planting nearly 30,000 trees every year,” says Sam Lai, the CMO of Green Canopy. “These are metrics that our investors look at when they consider putting their capital to work for a cause. Of course it is also about returns, but not just so.”

The Alder Fund launched in October of 2013 with $7.7MM. Of the 50 Green Canopy homes that were built, nearly 25% of them were sold at price points below $450k in an effort to attract middle and lower income buyers in the Seattle market. These pricing targets were set by Washington State Housing Finance Commission, who partnered on several projects with Green Canopy with the hopes of providing green and energy efficient homes to buyers who also qualify for the Commission’s down payment assistance programs.

“This Fund, which eventually lent over $29MM for the completion of 50 homes, has been especially prosperous, and is an indicator of what mission aligned and market driven capital can accomplish,” said Andy Wolverton, the Fund’s manager and CFO of Green Canopy Homes. “The Alder Fund’s success is certainly reflected in our triple bottom line – and brings more than just monetary returns to our investors.”

The return profile for the Alder Fund is 9-12% annualized - and so far it is on target to achieve that goal. Over 50% of the investors have reinvested in the Birch Fund, Green Canopy’s third Impact Investment Fund which began raising capital this summer. The Birch Fund is targeting a total raise of $20MM and hopes to increase the number of affordable homes for sale here in Seattle and in Portland.

FOR MORE INFORMATION PLEASE CONTACT:
Andy Wolverton
andy@greencanopy.com
O) 206.792.7283

Impact Alignment: Where Impact Product Meets Impact Buyers

Contributed by: Aaron Fairchild, CEO of Green Canopy, Inc.

I have often cited Daniel Goleman to explain a consumer’s desire to make an impact with his or her invested dollar. In Ecological Intelligence, Goleman explains that consumers will always buy what they perceive to be a less toxic or more environmentally friendly product given price parity with a competing product. While the consumer may not be buying the perceived “better” product to make a positive impact in the world, they are likely buying it because they view the product healthier or better for their family. 

This consumer behavior pattern offers a direct analogy for financial investors. It goes without saying that investors invest capital to generate a return. If an investor can invest in an opportunity that generates a similar risk-adjusted rate of return to competing investment opportunities yet the investment will also deliver outcomes that better align with their values, then the investor will likely choose to invest their capital in such a value-aligned opportunity. 

Enter Green Canopy. Our mission is transformational; our company was deliberately created with the mission to inspire resource efficiency in residential markets. We have two impact product offerings for consumers to buy.

Our primary impact product is our homes. We build homes that are more environmentally sustainable than what is required by city code and  have third party  audits  verifying our homes meet or exceed a local or national green building standard. In other words, a Green Canopy home is healthier for the planet, consumes less energy to operate (we guarantee that), and is simply a better home than the comparable code-built home. The kicker: we price our homes for sale on par with other homes on the market. We have to price our homes competitively with other homes because if we don’t, buyers would choose to acquire the less expensive yet comparably located and sized home. So buyers of our homes acquire a Green Canopy home at a competitive price that delivers outcomes that align with their needs and values. 

Our second impact product is our real estate fund offerings. We currently manage two debt funds that generate competitive returns for investors. If it were not for these funds, we would not have enough debt financing to build more environmentally sustainable homes at our current scale. Investors in these funds buy membership units that are designed to generate competitive rates of return and deliver outcomes that align with their values. 

I believe the United States has entered a relatively new era where the general market is looking for values-aligned solutions. I witness this daily in both of our product offerings. However, most consumers and investors remain price sensitive and will continue to be so. This is where many people believe the government and foundations can play a role. However, I don’t believe it is incumbent on the government or others to subsidize product offerings, or for that matter the market to simply accept the market-price mismatch. 

Entrepreneurs innovate. The role of being an entrepreneur is to figure out how to bring new product to market in such a way that the market is willing to pay for it. Government incentives and infrastructure are helpful catalysts and support structures for market change. But the role of efficiently bringing new product to market is ultimately the role of entre- and intra-preneurs. 

Additionally, foundations, the government and other mission-driven sources of capital can aid in providing lower cost of capital to kick-start product offerings and help stimulate demand (think of the Bullitt Center or the ZHome development). However, values alignment should not be seen as an impediment to bringing socially and environmentally impactful product offerings to market—it should be used as a competitive advantage. Sound business people focused on values-based product offerings will continue to innovate within the cost/price constraints of the market and ultimately bring more and more highly sought after product to meet consumer demand. Impact alignment and the balance between supply and demand are really just a matter of time and innovation.

Moving Past Infill Ill Will

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By Aaron Fairchild, CEO/Chairman of Green Canopy Inc.

The outcry against residential in-fill has reached a fevered pitch in Seattle. Neighbors are yelling at homebuilders, each other, the city, and anyone who will listen. The themes are relatively consistent; opposition to modern homes, bigger homes, added density, or the fact that projects are unaffordable to existing residents. Builders, on the other hand, are simply trying to build what the market demands – and that may well conflict. But, is the fevered pitch, and ill will around new in-fill developments in the Seattle area necessary, or is there a way to work together?

As someone on the front lines of the neighborhood hostilities trying to do business in a new way, I think there is.  By engaging with (and listening to) neighbors and being transparent about planning and decision-making beforehand, infill housing can become a welcome and community-forwarding endeavor. 

Having heard the angry outcry, and with a focus on continuing to build a human values-based business that contributes to communities, here are a few ideas for how this could be done: 

  • Listen, really listen, first. Changes within a neighborhood can be emotional for many. When you recognize that going in, even hearing concerns starts to build a trust pattern. While plans are still conceptual, hold a community meeting to receive input on the direction of your design.

  • Engage along the way. Especially with topics like sidewalk closures, site work, paint colors, etc. (We use Tumblr quite a bit on this front) Updating the community using a community blog demonstrates awareness that the developer is entering into an established norm of how the neighborhood functions. 

  • Acknowledge feedback and make Changes. When neighbors really see a result of their comments, whether as acknowledgement or in changes to the plan, trust is solidified, paving the way for the best possible relationship with the community throughout the construction process, and helping the new homeowner receive a much warmer welcome.


How is this good business? Engaging the community while building in close quarters with neighbors helps minimize angry calls and letters to the city, intense verbal discussions with subcontractors, and creates a much better work environment for everyone. By approaching our own projects in this manner, we’ve had neighbors bring us warm coffee, cookies, and offer to help. Our homebuyers are a welcome addition to the neighborhood versus being seen with skepticism and mistrust by association. All of this work helps create positive association with our company name and ultimately helps sell our homes.

In this day and age of transparency, builders really can’t “bulldoze” their way into a neighborhood.  If neighbors and builders alike can remain open to each other, listen and engage, we should all be able to learn together how to effectively rebuild our aging infrastructure, honor our past and lay the groundwork for a thriving future in Seattle.

This piece was written in response to a thoughtful article from Seattle Weekly entitled "Boomtown Brawls" by Nina Shapiro.