How do I get leaner and greener assets?

Most asset owners are aware that higher NABERS ratings and more efficient buildings deliver higher valuations, higher rental returns, stronger occupancy and improved tenant satisfaction.* Independent opinion states that energy prices are set to rise by as much as 80% over the next six years** and properties that are energy efficient will provide confidence in yields.

Government Program for upgrading your assets

There is a new program supported by the Federal Government via Low Carbon Australia that enables building owners to upgrade their buildings using a highly attractive financing structure that can, in many cases, provide a cash flow positive project that will enable you to implement an energy, water or waste efficiency upgrade.

The program is called "Environmental Upgrade Agreements" (EUAs) and is a loan from an authorised funding provider that is forwarded to an energy service provider, such as Dalkia. The loan is payable to the financier by the property owner but the mechanism for doing so is through a statutory charge levied by the Council. The benefits of this structure include:

• Lower cost, fixed, and long dated loan (currently 10 years fixed);
• No security registered on title, protecting other lines of credit;
• Capital costs can be shared with tenants without burdening tenants with out of pocket costs;
• Lower compliance costs compared to traditional loans;
• If the ownership of the land transfers, the financing remains with the land.
• In general, equity yields should be maintained or increased with improved financial returns on the asset, and protection from energy price rises.

Dalkia's Approach

Dalkia has developed a complete, turnkey approach to delivering EUAs that includes design, build, asset management and guarantees. This maximises return on investment, ensures tenant satisfaction and minimises owners risk.

BENEFITS OF THIS APPROACH

An EUA enables you to pass on the costs of the upgrades to a tenant in a net lease scenario, but only if costs are less than or equal to the reduction in their energy bill. The Dalkia approach provides energy guarantees and reporting to ensure that costs are transparently transferred to tenants, minimising risk and disputes.

In a typical energy efficiency project, there is a natural erosion of savings over time due to operational degradation, design attrition or equipment disrepair. The Dalkia solution guarantees that there will be no savings erosion thereby maximising return on investment while minimising risk of a decreasing yield.

Although an EUA is a loan, security attaches to the land and not the building owner. This means that if the building is sold the loan is passed on with the building. Dalkia enables you to provide security to the new owners so that the project return, reporting and costs are all completely assured.

There is no point investing in energy efficiency if you end up with higher asset management costs or equipment breakdowns. These will not only increase expenditure, but also reduce energy savings. Dalkia's solution ensures that both asset management and energy efficiency is optimised from design with a performance guarantee.

Dalkia works with property owners and property managers in a transparent, open book manner to develop ideal solutions that minimise risk.





What is an EUA?