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Connected RealEstate and CAPEX

Prepared by Rick Huijbregts (30 October 2006) v1

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Capital expenditures ("CAPEX") areexpenditures used by a company to acquire orupgrade physical assets such as equipment,

property, industrial buildings.

Wikipedia, 2006

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Total Cost of Ownership (TCO)

Design and

Construction Operations

+ve

-ve

Time

5500 Years

CAPEX

OPEX

REVENUE /PRODUCTIVITY

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Changing the TCO

Design and

Construction Operations

CashFlow

+ve

-ve

Time

MaintenanceRenovation

Decommissioning

Reuse

5500 Years

Reduce CAPEX

Simplified installation, reducedcabling, procurement options forbuilding systems

Reduce CAPEX

Simplified installation, reduced

cabling, procurement options forbuilding systems

Increase REVENUE

New business models, managedservices, intelligent building

premiums

Increase REVENUE

New business models, managedservices, intelligent building

premiums

Reduce OPEX

Simplified management,maintenance, operationalefficiencies, energy savings

Reduce OPEXSimplified management,maintenance, operationalefficiencies, energy savings

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Saving on CAPEXwith Connected Real Estate

The Benefits of Convergence:

Cabling & Cable Pathways

One cabling infrastructure versus eight or more

LaborReduced complexity, simplified installation

Equipment

Low-cost alternatives, non-proprietary

Single device to service multiple applications (e.g multi functional sensors) Project Management

Savings on design and implementation

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Saving on CAPEXwith Connected Real Estate

Continued

Consolidation of servers for the systems

Less hardware, less space, and reductions in software licenses

Reduced training of personnel

For standardized system management tools and platforms

System configuration

Less time to configure due to shared standardized databases

Wireless PoE (Power over Ethernet)

Limited need for separate electrical cabling

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BarbizonNew York City

14% Building Mgmt System

Access controls

Video Surveillance

A/V Intercom

Telephony and wireless

1 America PlazaSan Diego

The ShiresLeicester, UK

ExamplesCAPEX Cost savings due to Convergence

8.6%: Camera System

Card access

Parking w/ Validation

HVAC

Automation software

15% Electronic systems

Integrated Triple Play

Building Integration

Structure Cabling

Interoperable systems

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First costs for integrated systems (includingmanagement hardware and software, networkupgrades, web services, and reductions in devices)

were 56% less than non-integrated systems.

CABA, Continental Automated Building Association, Life Cycle Costing ofAutomated Controls for Intelligent and Integrated Facilities, April 2004

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Is investment in CBS (Cybernetic BuildingSystems) products and services by individual

owners and operators cost effective?

Chapman, RE, February 2001. How Interoperability Saves Money, ASHREA Journal

Most certainly YES: for every dollar investedapproximately $4.50 is returned. This equatesto an adjusted Internal Rate of Return of

approximately 20% per year

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Annual cost savingsof Integrated Systems

Svc Contracts, additions, remodeling 32% less

Energy cost savings $ 0.16 per SF

Improved load factor, coordinate supply 10% less

Maintenance, repair and replacement $ 0.20 per SF Savings related to productivity $ 0.39 per SF

Staff training, efficiency, IT support 82% less

Cable and cable pathways, MAC 39% less

Adapted from: National Institute of Standards and Technology, 2004.

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EnergyFairmont Hotels

34% Electricity saving Integration of:

Light

HVAC

Access

MaintenancePfizer UK

OperationsCisco Systems

ExamplesOPEX Cost savings due to Convergence

30% CCTV over IP Centralized Control

Intrusion detection

Temp, Leak detection

Monitoring

15% Annual maintenance Integration of:

70,000 building point

Centralized ops

Unified control system

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Summary: Value of Convergence

Value with integrated building systems

Value with non-integrated systems

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Commercial Benefits

Single network integrator

Efficient project hierarchy

Shorter lead times for design, deployment and testing

Single point of contact for contractual issues

Single point of contact for problem reporting and escalation

Demonstrable cost savings of between 20% and 30% acrossactive/passive infrastructure and control systems delivery

A defined delivery model that can be replicated across projects

Adapted from: Converged Building Technologies Group, Integrated Approach for InformationCommunication Technology (ICT) and Control System Infrastructures within Buildings, April 2005

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Technical Benefits

Ability to deploy equipment more efficiently

Single structured cabling infrastructure for maximum coverage, flexibility Future proofing

Common infrastructure resiliency

Common upgrade path

Common centralized management systems

Remote management capability

IT Security compliance

Open Systems Architecture based on IT standards

Adapted from: Converged Building Technologies Group, Integrated Approach for InformationCommunication Technology (ICT) and Control System Infrastructures within Buildings, April 2005

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Cost benefit analysis

($1.65)$6.94$8.60

$8,330,664$10,314,000Total

($2,190,936)Savings

$0.10 to $0.50 Per SF$72,000$72,000Electric Power Management System

$0.45 to $1.00 per SF$174,000$174,000Programmable Lighting Control

$1.50 to $2.30 per SF$456,000$456,000Building Automation System

$1.25 per SF$300,000$300,000Video Distribution

$1.00 per SF$240,000$240,000Access Control System

$1.30 per SF$312,000$312,000Video Surveillance System

Common Areas$57,600Telephone Network

Wireless in Common Areas$150,000Data Network

$2.50 to $3.50 per SF$3,600,000$3,600,000Cable Pathways

$1.50 SF for Com.Area;$4 to$6 per SF for other$5,160,000$5,160,000Cabling

NotesiBTraditional CapitalCostBuilding Technology System

Residential Space

21.1%

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Cost benefit analysis

$2,190,936Total

PM is 8% of Capex,savings is 30%$247,536Project Management

15-60% savings oncombined raceway$1,350,000Cable Pathways

7-16% savings with onecable contractor$593,400Cabling

NotesCapital Cost SavingBuilding Technology System

Residential Space