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Buildings With Less Energy Efficiency Show Higher Risk Of CMBS Default

San Francisco's Financial District.

A new study conducted by the University of California at Berkeley and Lawrence Berkeley National Laboratory suggests there is a strong correlation between poor energy efficiency in commercial real estate buildings and the likelihood of default, Trepp reports.

The report was conducted in six metro areas, including Boston, Chicago, Minneapolis, New York, Philadelphia and Washington, D.C., between 2000 and 2012. The findings suggest mortgage lenders should be incorporating measurement tools in order to assess a building’s energy consumption profile prior to issuing any new loans, because the profile is indicative of building maintenance and the overall energy efficiency of a property.

Buildings that are less energy efficient or have higher energy costs have been found to be statistically and economically associated with commercial mortgage defaults and would therefore be less attractive to lenders.