AEP - C1 - Week 1 Slides
Transcript of AEP - C1 - Week 1 Slides
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CERTIFICATEPROGRAM
Developed by:
With generous support from:
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ENERGY TECHNOOG!E"#ND RE# E"T#TE "TR#TEGY
CO$R"E !N"TR$CTOR: Honey BerkTechnology Specialist, CUNY Building Performance La
CUNY !nstitute "or Uran Systems, City College #f Ne$ York
CO$R"E %
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RE# E"T#TE "TR#TEGY #ND
ENERGY DEC!"!ON": P%&T '
WEE& %
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WEE& %: L(%&N!N) #B*(CT!+(S
Describe the diferences between operational andspeculative real estate value
Explain what the term energy eciency means in thecontext o this course
Name three actors that support the business case orincreased value through energy eciencyimprovements
Illustrate how cash ows through a real estate asset
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WEE& %: RE#D!NG"
The Real Estate Game, Poorvu !illiam "# $%arvard&'D(#
)hapter *+ ,he &ame
)hapter -+ .sing Numbers in /eal Estate
0Investment /eturns rom /esponsible PropertyInvestments1 Pivo 2 3isher $-445(#
0&reen Noise or &reen 6alue71 3uerst 2 8c9llister$-4**(#
0:ease;
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1. Cash Flow: Properties withstrong >nancial perormanceand higher net operatingincomes $N?I( generally havea higher value
2. Capital Appreciation:
Properties in strong mar@etsand with strong mar@etpositions can increase invalue over time
Discussion
/eview the AEP Portfolio
#)hoose two properties anddiscuss the value o each withregard to cash ow capitalappreciation#
HOW !" '#$E RE#!(ED !N RE# E"T#TE)
!mage credit assimo Catarinella, -ia .ikimedia Commons/
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,he term ener! conser"ation #easure $ECM% has
been used in slightly diferent ways in various contexts# 3or
9EP we de>ne an energy conservation measure as+
&The in"est#ent o' resources in e(uip#ent)
#aterials) or practices 'or the purpose o'
achie"in re*uce* ener! consu#ption.+
WH#T DO WE *E#N
+Y ENERGY CON"ER'#T!ON *E#"$RE")
!mage credit Tony Boon, -ia .ikimedia Commons/
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HOW DO ENERGY CON"ER'#T!ON *E#"$RE"
#DD '#$E)
Operational ,alue-FinancialPer'or#ance
*# /educe energy costsAofset increases
-# /educe maintenance expenses
B# Increase net operating income $N?I(
peculati"e ,alue-Mar/etPer'or#ance
C# .pgrade building uality
# Increase tenant retention and rentpremium
F# 9ddress mar@et demand or
sustainable space
G# 9dvance sustainability goals 2positively impact companyHsreputation
# Improve employee productivity
!mage credit "istarol, -ia .ikimedia Commons/
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Reulator! Co#pliance
*# 3acilitate compliance with a growing patchwor@ oederal state 2 local statutes regulations andordinances
-# Position the property rom ederal state 2 local
incentives and tax credits or energy;ecient buildings
En"iron#ental Footprints
B# /educed use o nonrenewable energy resources
C# :owered organiJational carbon outputs
HOW DO ENERGY CON"ER'#T!ON *E#"$RE"
#DD '#$E)
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E0ERG TAR properties ha"e:
-#GK higher N?I
#-K higher rents
*#BK higher occupancy rates
*-#5K lower per s# t# energyexpenses
*4K sales price premium
ith #ore 3oor area an* ener!
use than an! other 4uil*in t!pe)
o5ce 4uil*ins o6er reat
potential 'or positi"e i#pact.
Discussion
Draw on your
experience+ %ave you
seen these @inds o
results in your
company portolio7
%ow about in other
properties across
your state or
metropolitan region7
WH#T !" THE ECONO*!C C#"E ,OR EC*")
Sources0 '/ !n-estment &eturns from &esponsile Property !n-estments0 (nergy (fficient, Transit1oriented and Uran
&egeneration #ffice Properties in the US from '22314556, Pi-o 7 "ischer, #ctoer 4553
4/ "uerst, "ran8 and c%llister, Patrick 9)reen Noise or )reen +alue: easuring the Price (ffects of (n-ironmental Certificationin Commercial Buildings,; School of &eal (state and Planning, Henley Business School, %pril 4
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E7ercise
.sing a property rom the AEP Portfolio calculate
the net operating income
$N?I( using the Excel
cash ow model# 'ee how
N?I changes when you+
*(6ary energy costs andsources
-(9dLust or net vs#
grossAhybrid leases
B(8odiy other
assumptions#
HOW DOE" C#"H ,OW THRO$GH
# RE# E"T#TE #""ET)
Real Estate Income:
Total 8ase Rent 9Escalations ,acanc! Allowance ;
Inco#e
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E7ercise
.sing a property rom
the AEP Portfoliocalculate the netoperating income$N?I( using the Excelcash ow model# 'eehow N?I changeswhen you+
*( 6ary energy costsand sources
-( 9dLust or net vs#grossAhybrid leases
B( 8odiy otherassumptions#
Re"enueE7penses
= ?perating expenditures $?PEM(= )apital expenditures $)9PEM(= ,ax liabilities= 3ines or ees
Inco#e 9 Re"enue E7penses ;0OI
$0et Operatin Inco#e%
HOW DOE" C#"H ,OW THRO$GH
# RE# E"T#TE #""ET)
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HOW DO ENERGY CO"T" ,!T !NTO
+$!D!NG C#"H ,OW)
Ener! CostConsi*erations
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WEE& %: !N1CL%SS (>(&C!S(S
)hoose at least two properties rom the 9EP Portolio andcalculate their net operating incomes $N?I( using the attachedExcel document# $,he spreadsheet is embedded with awor@able cash ow model#(
Next experiment with variations in the >gures that you use as
the basis or calculation $e#g# energy costs water costsreplacement reserves etc#( and observe how N?I changes withvariations in your assumptions# !hich items might be reducedwith ew negative conseuences7 %ow might doing so afectthe buildings pro>tability7
!rite up your observations and submit your write;up $as a!ord document( and the saved Excel spreadsheets or bothproperties through the )ourse 8odule below#
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WEE& %: H#(.#&?
In *;- pages consider 3uerst 2 8c9llisters Lournal articleO&reen Noise or &reen 6alue7O as well as your readings romPoorvus The Real Estate Game#
= !hat does the research say about green real estate7 Isevidence o a price premium persuasive7
= !hat are two @ey added expenses associated with thegreen certi>cation o a property7
= 9re some certi>cation ramewor@s more valuable thanothers7 !hat actors may be at issue7
= %ow might green real estate >t into Othe gameO that
Poorvu describes in the >rst chapter o his boo@7