ENERGY MANAGEMENT• FINANCIAL ANALSIS• An Overview of Financial Performance

AGENDA

• The financial impact of energy costs on a company’s income statement is significant. The Hospitality industry experienced an increase of close to 60 percent in 2001.

• The increased energy cost affects the value of company assets and shareholder value.

• Financial Terms– Debt Service Coverage

Ratio/EBITDA

– Corporate Borrowing Rate

– Capitalization Rate

– EPS/FFO

• Key Ingredients– Income

– Repairs & Maintenance

– Rebates

HIGHLIGHTS

FINANCIAL INPUTSLighting Project

• Initial Cash Investment $240,000• Corporate Borrowing Rate 8.75%• Energy Savings $211,500• Repairs & Maint. Savings $42,600• Relamp Period 55 Months• Relamp Cost $105,000• Utility Rebates $72,000• Shares Outstanding 54,000,000• Capitalization Rate 11.0%• Share Multiple 9.5• Debt Capacity 5

FINANCIAL RESULTSExecutive Summary

• Initial Investment $240,000• Annual Energy Savings $211,500• Simple Payback 12.39 Months• IRR 4 years 129.31%• IRR 9 years 129.98%• EBITDA Impact $315,000• Debt $1,575,000• Portfolio Value Impact $2,860,000• FFO per Share Accretion $0.0058• Share Price Increase $0.0551