ERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi A “MEDIUM TERM”...

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ERES 2010 MILANO ERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Morri, SDA Bocconi A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL PROPERTY APPRAISAL Arch. Antonella Mazzeo, Arch. Antonella Mazzeo, MBA, Luiss Business School MBA, Luiss Business School Prof. Giacomo Morri, Prof. Giacomo Morri, Director Master in Real Estate - Director Master in Real Estate - SDA Bocconi SDA Bocconi APPRAISER APPRAISER S S

Transcript of ERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi A “MEDIUM TERM”...

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISALAPPRAISAL

Arch. Antonella Mazzeo,Arch. Antonella Mazzeo,MBA, Luiss Business SchoolMBA, Luiss Business School

Prof. Giacomo Morri,Prof. Giacomo Morri,Director Master in Real Estate - SDA BocconiDirector Master in Real Estate - SDA Bocconi

APPRAISERS

APPRAISERS

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

A few questions in a today market

How to incorporate green issues into value in the mid term?

Does the conventional evaluating model fit the Green Property ?

How can we improve the conventional evaluating model in the mid term?

How to incorporate green issues into value in the mid term?

Does the conventional evaluating model fit the Green Property ?

How can we improve the conventional evaluating model in the mid term?

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

AGENDA

Green Issues and Value

An evaluating model in the mid term

A Case Study in Rome, Italy

Future Scenario

Green Issues and Value

An evaluating model in the mid term

A Case Study in Rome, Italy

Future Scenario

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

Sustainable Sites and Community Connectivity

Water and Energy Efficiency

Atmosphere

Materials & Resources

Indoor Environmental Quality

Innovation & Design Process

GREEN ISSUES AND VALUEGREEN ISSUES AND VALUE

* Categories by main sustainable certification processes

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

REVENUES (RENT)

EXPENSES

RISK

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

Saving money Saving money Risk Mitigation Risk Mitigation

Energy Saving

Water Saving

Space Saving

Productivity Increasing (?)

Insurance Saving (?)

Process Performance Optimization

Feature Performance Increasing

Building Performance Increasing

Market Performance Increasing

Financial Performance Increasing

GREEN ISSUES AND VALUEGREEN ISSUES AND VALUEA “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

How many comparables in Italy?

Energy EfficiencyEnergy

EfficiencyGreen

BuildingsGreen

Buildings

Number of

Buildings

SustainableBuildings

SustainableBuildings

EFFI

CIEN

CY

EFFI

CACY EC

ON

OM

Y

GREEN ISSUES AND VALUEGREEN ISSUES AND VALUEA “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

Does the traditional evaluating model match the Green Property ?

How to link

How to link

Rental Grow

Rental Grow

Depreciation

Depreciation

Risk Premium

Risk Premium

Cash flow

Cash flow

ToTo

GREEN ?

GREEN ?

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

CASH FLOW ANALYSIS 1 2 … … n-1 n

+ Base Rental Revenue

- Base Rent Abatements

BASE RENTAL INCOME

- Vacancy & Collection Loss

EFFECTIVE GROSS INCOME

- Operating Expenses

- Insurance costs

- Maintenance costs

- Real Estate Taxes

NET OPERATING INCOME

PVPV == CF CF / / (1+r) (1+r)ttPVPV == CF CF / / (1+r) (1+r)tt

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

PVPV == CF CF / / (1+r) (1+r)ttPVPV == CF CF / / (1+r) (1+r)tt

Past /Past /

PresentPresent

Mid termMid term

Past /Past /

PresentPresent

Mid termMid term

Value = Income / Capitalization rateValue = Income / Capitalization rate

Rent

Vacancy

Expenses

Rent

Vacancy

Expenses

ViewsFinishesFlexibility

ViewsFinishesFlexibility

Illiquidity

Investment

Urbanistic

Illiquidity

Investment

Urbanistic

UseLocationMaintenanceQualityTenantLease structureLast of lease contract

UseLocationMaintenanceQualityTenantLease structureLast of lease contract

LocationAmenitiesDesignAbility to attract tenant

LocationAmenitiesDesignAbility to attract tenant

Process performanceFeature performanceBuilding performanceMarket performanceFinancial performance

Process performanceFeature performanceBuilding performanceMarket performanceFinancial performance

OperatingElectricity, heating, cooling, utilitiesMaintenanceHVAC and finishesCap ExConstruction costs

OperatingElectricity, heating, cooling, utilitiesMaintenanceHVAC and finishesCap ExConstruction costs

Add in = Add in =

Other RiskOther Risk

Rent

Vacancy

Expenses

Rent

Vacancy

Expenses

Health space planningOperating savingProductivity

Health space planningOperating savingProductivity

Reflecting brand & imageOperating & space savingReflecting brand & imageOperating & space saving

Maintenance savingMaintenance saving

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

CONVENTIONAL BUILDINGSCONVENTIONAL BUILDINGSCONVENTIONAL BUILDINGSCONVENTIONAL BUILDINGS

Green

Building

issues

Levers of

value

P.V.

Green

Building

issues

Levers of

value

P.V.

RevenuesRevenuesRevenuesRevenues

Finishes

Energy saving

Water saving

Less absenteism

Higher productivity

Finishes

Energy saving

Water saving

Less absenteism

Higher productivity

Healt space planning

(core and shell

dimension, windows

sizes, mechanical

ventilation rate)

Healt space planning

(core and shell

dimension, windows

sizes, mechanical

ventilation rate)

Process performance

Feature performance

Building performance

Market performance

Financial performance

Process performance

Feature performance

Building performance

Market performance

Financial performance

Lower vacancy

Better tenant

Lower vacancy

Better tenant

Maintenance saving

Insurance saving

Maintenance saving

Insurance saving

ExpensesExpensesExpensesExpenses RisksRisksRisksRisks++

Rent per AreaRent per Area Rentable AreaRentable Area RiskRiskStability of

Rent

Stability of

Rent

Maintenance &

Insurance costs

Maintenance &

Insurance costs

+ Rent - Discounted Rate- Expenses

CAP RATECAP RATE

NET OPERATING INCOMENET OPERATING INCOME

PRICEPRICE VALUEVALUE

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

BUILDING CASH FLOW ANALYSIS 1 2 … … n-1n

+ Base Rental Revenue+ Space saving - Base Rent AbatementsBASE RENTAL INCOMEADD:+ Energy Saving+ Water 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 )- Insurance cost- Maintenance CostsNET OPERATING INCOME

RENEWABLE ENERGY CASH FLOW ANALYSIS+

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

Building Features 6900 square meters office 1 story underground 4 stories

Building Features 6900 square meters office 1 story underground 4 stories

Building Performance energy efficiency 45% water efficiency 50% 70 more workers

Building Performance energy efficiency 45% water efficiency 50% 70 more workers

DCF Assumptions for the InitiativeDCF Assumptions for the Initiative

REVENUES (first year) REVENUES (first year) + traditional rent revenues : +10% office vacancy rate ( first year) + space efficiency saving 1% office vacancy rate (over years)

+ energy efficiency saving + water efficiency saving + productivity/ + absenteeism reduction (10%) + government incentives (for 5 years)(building energy , retrofitting, solar panel, HVAC)

COSTSCOSTS• maintenance• insurance

DCF Assumptions for the InitiativeDCF Assumptions for the Initiative

REVENUES (first year) REVENUES (first year) + traditional rent revenues : +10% office vacancy rate ( first year) + space efficiency saving 1% office vacancy rate (over years)

+ energy efficiency saving + water efficiency saving + productivity/ + absenteeism reduction (10%) + government incentives (for 5 years)(building energy , retrofitting, solar panel, HVAC)

COSTSCOSTS• maintenance• insurance

about € 1.900.000about € 230.000

about € 30.000about € 8.000about € 15.000

about € 190.000

about € 2.300.000about € 2.100.000

About € 45.000

-10%- we consider -

REVENUES from green

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

A CASE STUDY IN ROME, ITALYA CASE STUDY IN ROME, ITALY

REVENUES from renewable technology(incentives from GSE + direct sell + energy not paid to electricity deliverer)

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

Health space planning

Operating saving

Health space planning

Operating saving

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

Energy Building/HVAC "Standard"

CONSUMO ENERGIA ELETTRICA PER RAFFRESCAMENTO 131644 kWhelCONSUMO GAS NATURALE PER RISCALDAMENTO 25485 mc CH4l

Building/HVAC "di Progetto"CONSUMO GLOBALE ENERGIA ELETTRICA 145894 kWhelFABBISOGNO ENERGIA PRIMARIA 364735 kWhep

RIDUZIONE FABBISOGNO ENERGIA PRIMARIA 209031 kWhep

Building pre-retrofitting Costo Energia elettrica 15797,28 €Costo metano 16055,55 €Costo complessivo 31852,83 €

Building post-retrofitting Costo Energia elettrica 17507,28 €

ENERGY SAVING POST-RETROFITTING 14345,55 €

SAVING FOR ENERGY EFFICIENCY IMPROVING 45%

HEALTH SPACE PLANNING

Work Station pre- retrofitting 380 nWork Station post- retrofitting 450 nArea per employee pre retrofitting 10 mqArea per employee post retrofitting 7,6 mqSaving area per employee post- retrofitting 2,4 mqCost 250 € /mqArea per employee pre retrofitting 3800 mqArea per employee post retrofitting 2888 mqRentable area more available 912 mqRevenues more rentable area 228000 € Revenues pre retrofitting 950000 € Saving per more rentable area 0,24Increasing in space efficiency 18%

Add inAdd in

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

Productivity

Indoor Environmental

Quality

Productivity

Indoor Environmental

Quality

AN EVALUATING MODEL IN THE MID TERMAN EVALUATING MODEL IN THE MID TERM

Saving by Productivity

I talian average net salary 1300 €/employee/monthWork days 20 days/monthDaily salary 65 €/dayWork time (60 min. x 9 hour) 540 minuts/dayProductivity increasing 2,00% silver certificationImproved work time 550,8Income per minute 0,12 €/minutominutes more per employee 10,8 min/employeeeuro saving per employee 1 €/persona/giorno

euro saving per all employees 585 €/ 450 impiegati/ giorno

Total Euro saving / year 128700 €/ 450 impiegati/ anno

Number of employees 450work day/ year 220annual salary saving 585000

Saving on salary for productivity increasing 22%

Indoor Environmental Quality

Absenteism reductionabsenteism /year / employee 3costo di assenteismo l'anno 195Numero impiegati 450Costo saving 87750

Costo saving (20% ) 17550

Add inAdd in

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

A “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

A CASE STUDY IN ROME, ITALYA CASE STUDY IN ROME, ITALY

Evaluating a building with

the “add in” evaluating

model gives an extra

MARKET VALUE of

20%.

Evaluating a building with

the “add in” evaluating

model gives an extra

MARKET VALUE of

20%.

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

FUTURE SCENARIOFUTURE SCENARIOA “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

Green Buildings Green Buildings > Conventional Buildings> Conventional Buildings

Green Buildings Green Buildings < Conventional Buildings< Conventional Buildings

Long term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ≥ 10 years

EVALUATION MODELINGEVALUATION MODELING

RENTRENTUTILITIESUTILITIES

RENTRENT

UTILITIESUTILITIES

ERES 2010 MILANOERES 2010 MILANO Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi Arch. Antonella Mazzeo, MBA ; Prof. Giacomo Morri, SDA Bocconi

FINEFINEA “MEDIUM TERM” ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL

THANK YOU FOR YOUR ATTENTIONTHANK YOU FOR YOUR ATTENTION