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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
Arch. Simone SpreaficoArch. Simone Spreafico Engagement Director, Engagement Director,
Investment,Investment, Advisory & Valuation DivisionAdvisory & Valuation Division
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
AGENDA
MARKET PERFORMANCE: THE LINK BETWEEN BUILDING
AND FINANCIAL PERFORMANCE
CURRENT VERSUS GREEN CONTRACTS
REAG & ECOMAG :A JOIN TO SATISFY ALL
STAKEHOLDERS
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
Energy Park = 57.500 square metersBeni Stabili Towers= 45.000 square meters
GREEN BUILDINGS: INSTRUCTIONS FOR USE
Porta Nuova= 360.000 square meters Laurentina = 6.500 square meters
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
ENERGY EFFICIENCY ENERGY EFFICIENCY BUILDINGSBUILDINGS
ENERGY EFFICIENCY ENERGY EFFICIENCY BUILDINGSBUILDINGS
SUSTAINABLESUSTAINABLEBUILDINGSBUILDINGS
SUSTAINABLESUSTAINABLEBUILDINGSBUILDINGS
GREENGREENBUILDINGSBUILDINGS
GREENGREENBUILDINGSBUILDINGS
ECONOMICS, FINANCIAL, ENVIRONMENTAL ECONOMICS, FINANCIAL, ENVIRONMENTAL AND SOCIAL EFFICIENCYAND SOCIAL EFFICIENCY
ECONOMICS, FINANCIAL, ENVIRONMENTAL ECONOMICS, FINANCIAL, ENVIRONMENTAL AND SOCIAL EFFICIENCYAND SOCIAL EFFICIENCY
ECONOMICS, ENVIRONMENTAL ECONOMICS, ENVIRONMENTAL AND SOCIAL EFFICIENCYAND SOCIAL EFFICIENCY
ECONOMICS, ENVIRONMENTAL ECONOMICS, ENVIRONMENTAL AND SOCIAL EFFICIENCYAND SOCIAL EFFICIENCY
ECONOMICS AND ECONOMICS AND ENVIRONMENTAL EFFICIENCYENVIRONMENTAL EFFICIENCY
ECONOMICS AND ECONOMICS AND ENVIRONMENTAL EFFICIENCYENVIRONMENTAL EFFICIENCY
GREEN BUILDINGS: INSTRUCTIONS FOR USE
•ENERGY EFFICIENCY•RENEWABLE
ENERGIES•POLLUTION REDUCTION
•HEALTH & SAFETY•INDOOR AIR
QUALITY•LOCAL MATERIALS•SPACE PLANNING
EFFICIENCY•PUBLIC BENEFITS
• RISK MITIGATIONS
•ENERGY EFFICIENCY
•RENEWABLE ENERGIES
•POLLUTION REDUCTION
•HEALTH & SAFETY•INDOOR AIR
QUALITY•LOCAL MATERIALS
•ENERGY EFFICIENCY
•RENEWABLE ENERGIES
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
HANDS ON GREEN BUILDINGS
Green Building Feasibility Study
Green Building Advisory
Green Building Risk Analysis
Costs - Savings Green Building Analysis
Green Building Financial Performance
HVAC Installation Quality Control
Sustainable Building Certification
Performance monitoring analysis on site construction
HANDS ON GREEN BUILDINGS
Green Building Feasibility Study
Green Building Advisory
Green Building Risk Analysis
Costs - Savings Green Building Analysis
Green Building Financial Performance
HVAC Installation Quality Control
Sustainable Building Certification
Performance monitoring analysis on site construction
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
•ENERGY AUDIT
•SUSTAINABILITY CERTIFICATIONS
• SUSTAINABLE DUE DILIGENCE
•ENERGY AUDIT
•SUSTAINABILITY CERTIFICATIONS
• SUSTAINABLE DUE DILIGENCE
•ECONOMIC ANALYSIS
• FINANCIAL ANALYSIS
• RISK ANALYSIS
•ECONOMIC ANALYSIS
• FINANCIAL ANALYSIS
• RISK ANALYSIS
SHOULD INVESTORS CONSIDER GREEN BUILDINGS IN THEIR PROPERTY DECISION?
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
THE INVESTORS MAY CONSIDER BOTH:BUILDING FEATURES OUTCOMES AND FINANCIAL OUTCOMES
• SUSTAINABLE SITES
• WATER EFFICIENCY
• ENERGY & ATMOSPHERE
• MATERIAL & RESOURCES
• INDOOR ENVIRONMENTAL QUALITY
• INNOVATION & DESIGN PROCESS
• DCF ANALYSIS
• TANGIBLE AND INTANGIBLE
REVENUES
• POSITIVE AND NEGATIVE RISKS
• PAYBACK, IRR AND ROI
• SENSITIVITY ANALYSES FOR
DIFFERENT STAKEHOLDERS
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
MARKET PERFORMANCE: THE LINK BETWEEN BUILDING AND FINANCIAL PERFORMANCE
BUILDING PERFORMANCE
FINANCIAL PERFORMANCE
MARKETPERFORMANCE
REGULATORS SPACE USERS
INVESTORS
REGULATORS SPACE USERS
INVESTORS
Analysis on 59 LEED* USA Existing Buildings
IRR minimum = 11%
maximum PBP = 9 years
Implementation costs= 0,08$ sf
Sales price premium: 5,8%-31% Energy Star
Sales price premium: 9,9%-35% LEED
Analysis on 59 LEED* USA Existing Buildings
IRR minimum = 11%
maximum PBP = 9 years
Implementation costs= 0,08$ sf
Sales price premium: 5,8%-31% Energy Star
Sales price premium: 9,9%-35% LEED
* Envision Realti, June 2009
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
And in ITALY?
IN USA THE MOST LEASES ARE ON A FULL SERVICE BASIS POTENTIAL GROSS INCOME
+ Base Rental Income
+ Operating Expenses
+ HVAC and electric Income
+ Others
POTENTIAL GROSS INCOME
- Vacancy & Collection Loss
- Property Management
- Operating Expenses
-- Municipality Taxes
-- Agency
TOTAL OPERATING EXPENSES
POTENTIAL GROSS INCOME
+ Base Rental Income
+ Operating Expenses
+ HVAC and electric Income
+ Others
POTENTIAL GROSS INCOME
- Vacancy & Collection Loss
- Property Management
- Operating Expenses
-- Municipality Taxes
-- Agency
TOTAL OPERATING EXPENSES
AT THE MOMENT CONTRACTS ARE BASED ON THE AREABUT IN FUTURE THEY CAN BE ALSO ON UTILITIES BASIS
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
A GOOD THING TO DO IS TO CHANGE THE RENT AND LEASE UP CONTRACTS
PROPERTY RENT ON AN AREA
BASIS
PROPERTY RENT ON AN AREA
BASIS
PROPERTY RENT ON A FULL
SERVICES BASIS
PROPERTY RENT ON A FULL
SERVICES BASIS
REAL ESTATE ENTREPRENEUR
RENEWABLE ENERGY ENTREPRENEUR
REAL ESTATE ENTREPRENEUR
RENEWABLE ENERGY ENTREPRENEUR
AT THE MOMENT IN FUTURE
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
LEASE CONTRACTS MAY GAIN BENEFITS FROM BETTER BUILDING PERFORMANCE
AND FINANCIAL PERFORMANCE
CON
TRACT
% OWNER
% TENANT
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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CASH FLOW ANALYSIS 1 2 … … n-1 n+ Base Rental Revenue - Base Rent AbatementsBASE RENTAL INCOMEADD:+ Energy Saving+ Water Saving+ Space saving+ Health and Worker Saving Costs (Productivity)+ Energy Producing+ Government Incentives(+ Green Certification sell)+ Turnover Vacancy- Capital expendituresPOTENTIAL GROSS INCOME - Vacancy & Collection Loss EFFECTIVE GROSS INCOME- Operating Expenses- Real Estate Taxes(+ Green Design, Construction & Contracts)- Property & Agency- Insurance cost- Maintenance CostsNET OPERATING INCOME
100%
ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
GREEN BUILDINGS: INSTRUCTIONS FOR USE
A case study in Rome CO
NTRACT
?% OWNER
? % TENANT
12
100 %
ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
GREEN BUILDINGS: INSTRUCTIONS FOR USE
IRR = 11%
ROI= 10%
Pay Back Period = 11 years
Implementation initial costs= 300 euro/s.m.
Sales Price premium: up to +16%
Rent Price premium : up to 8%
IRR = 11%
ROI= 10%
Pay Back Period = 11 years
Implementation initial costs= 300 euro/s.m.
Sales Price premium: up to +16%
Rent Price premium : up to 8%
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REAG Valuation Analysis on a few Italian Buildings
ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
MARKET
RISK OUT
BUILDING
PERFORMANCE
PROCESS
PERFORMANCE
REGULATION
USE
MAINTENANCE
LOCATION
RISK OUT
REGULATION
BUIDING
PERFORMANCE
PROCESS
PERFORMANCE
MARKET
USE
MAINTENANCE
LOCATION
What about INITIATIVE RISK for Office Property?
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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ERES 2010ERES 2010 Arch. Simone SpreaficoArch. Simone Spreafico
• RETURN ON “IMAGE”• HIGHER OCCUPATIONS RATE • HIGHER PIL• TERRITORY VALORIZATION• REQUALIFICATION OF OBSOLETE PUBLIC REAL ESTATE ( Project Financing) • FOREIGN CAP ATTRACTION
• RETURN ON “IMAGE”• HIGHER OCCUPATIONS RATE • HIGHER PIL• TERRITORY VALORIZATION• REQUALIFICATION OF OBSOLETE PUBLIC REAL ESTATE ( Project Financing) • FOREIGN CAP ATTRACTION
• IMPROVED MARKET VALUE•EMPLOYEE HEALTH• PRODUCTIVITY• SKILLED WORKERS RETENTION• SAVING OPERATING COSTS
• REDUCED INFRASTRUCTURE COSTS , PUBLIC GRANTS, FAVORABLE FINANCING AND TAX BENEFITS• ADDED VALUE RELATED TO HIGHER BUILDING PERFORMANCE BENEFITS AND FINANCIAL BENEFITS• VACANCY REDUCTION AND FASTER BUILDING OCCUPATIONS• BRAND AND RETURN ON IMAGE • DEVELOPMENT RISK REDUCTION• MAXIMIZING OF ROE AND FASTER PAYBACK
• LESS RISK IN THE LONG RUN• BETTER SURETY IN REFUNDABLE THANKS TO VACANCY REDUCTION• HIGHER TRANSPARENCY IN DOCUMENTATIONS THANKS TO GREEN RATING• HIGHER STABILITY IN REVENUES/DEBITS RATIO
• MORE STABLE RETURNS DUE TO LESS VACANCY IN THE LONG RUN • HIGHER VALUE IN COMPARISON WITH TRADITIONAL BUILDING• HIGH PROFILE COMPANY ATTRACTION• HIGHER SPACES FLEXIBILITY AND RATIONALITY • HIGHER TENANTS RETENTION• HIGHER BUILDINGS PRICE (sell/rent)• LESS OPERATIONAL AND MAINTENANCE COSTS• GOVERNMENT INCENTIVES
• MORE STABLE RETURNS DUE TO LESS VACANCY IN THE LONG RUN • HIGHER VALUE IN COMPARISON WITH TRADITIONAL BUILDING• HIGH PROFILE COMPANY ATTRACTION• HIGHER SPACES FLEXIBILITY AND RATIONALITY • HIGHER TENANTS RETENTION• HIGHER BUILDINGS PRICE (sell/rent)• LESS OPERATIONAL AND MAINTENANCE COSTS• GOVERNMENT INCENTIVES
• HIGHER PRODUCTIVITY FOR HIGHER INNER AIR QUALITY • HIGHER ATTRACTION OF SKILLED WORKERS• IMPROVED MARKET VALUE• OPERATIONS AND MAINTENANCE COSTS SAVING
• HIGHER EFFICIENCY AND MANAGEMENT CONTROL • SAVING CONSUMPTION• LESS CO2 EMISSIONS
WHO SHOULD INVEST IN GREEN BUILDINGS AND
WHY?
• NEW MARKET ENTERING• PARTNERSHIP• EUROPEAN FUNDINGS • GOVERNMENT INCENTIVES & BENEFITS• SUPPORT TO COMPANIES
PARTNERSHIP EUROPEAN FUNDINGS SUSTAINABLE CERTIFICATION LABELS
GREEN BUILDINGS: INSTRUCTIONS FOR USE
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