It is observed that both cost and environmental impact are underemphasized criteria in the investment decision-making process of Institutional Real Estate Investment Funds (IREIFs). The limited adoption of Life Cycle Costing (LCC) and Life Cycle Analysis (LCA) within IREIFs' Performance Management Systems (PMS) hampers improved investment substantiation. This study aims to develop an LCC tool that accounts for environmental impact and to explore its potential implementation within an IREIF's PMS. The research question addressed is: 'How can an IREIF incorporate sustainability, defined here as both environmental and economic factors, into its decision-making process through LCC?' A double diamond design research approach led to the development of an Environmental Impact (EI)-LCC tool that monetizes environmental impact. This tool serves as a performance measurement instrument, offering insights into the environmental and cost implications of building elements over their lifespan. The study also discusses the tool's integration into an IREIFs existing Internal PMS as their Environmental, Social, and Governance (ESG) performance framework. Preliminary findings indicate that the EI-LCC tool, although in a nascent stage, has the potential to enhance the quality of sustainable investment decisions within IREIFs. The results provide a foundation for the tool's further development and broader implementation within the PMS of IREIFs.