basics of commercial real estate transactions · basics of commercial real estate transactions tony...

Basics of Commercial Real

Estate Transactions Tony Liou, Partner EnergyJohn Rockwell, Partner Energy

December 07, 2016

“PG&E” refers to the Pacific Gas and Electric Company, a subsidiary of PG&E Corporation. ©2010 Pacific Gas and Electric Company. All rights reserved.

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Homework Review

Multifamily Upgrade Program – Basics of CRE (Day 4) 3

Next Steps


Course Agenda

• Basics of Commercial Real Estate

• Introduction to Valuations

• The Proforma Process

• Investor Confidence Project (ICP)

• MUP Measures and Affects

5

Course Agenda

• Basics of Commercial Real Estate

• Introduction to Valuations

• The Proforma Process

• Investor Confidence Project (ICP)

• MUP Measures and Affects

6

Investor Confidence Project

(ICP)


Investor Confidence Project (ICP)

Multifamily Upgrade Program Partner Orientation 8

♦ Managing energy efficiency projects can be

challenging

♦ Following the ICP protocols are a solution

♦ ICP delivers reliable results

• Increase opportunities for internal and external

investment

• Improve building operating performance



♦ Breaking down barriers to EE finance



♦ Short-Term: Increase Deal Flow

• Increase Confidence in Savings

• Reduce Transaction Costs

• Streamline Origination Process

♦ Long-Term: Market Transformation

• Standardized Performance Data

• Project Finance Underwriting

• Enable Portfolios and Securitization


11Multifamily Upgrade Program Partner Orientation

Multifamily Upgrade Program

ECM Review


MUP Energy Measures

♦ Windows

♦ Roof/attic insulation

♦ Wall insulation

♦ Floor Insulation

♦ Cool roofing or radiant barrier

♦ Pipe insulation

♦ Duct sealing and insulation (as applicable)

♦ Space heating equipment

♦ Space cooling equipment

♦ Water heating equipment (including solar pre-heat)

♦ Water heating recirculation controls

♦ Refrigerators and dishwashers

♦ Indoor and outdoor lighting attached to the building


MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









Building Envelope

Improvements

MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









HVAC

Improvements

MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









Controls

MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









Plug Loads

MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









Lighting

MUP Energy Measures

♦ Windows


♦ Wall insulation



♦ Pipe insulation









LightingPlug Loads

Controls

HVAC

Improvements

Building Envelope

Improvements

MUP - Pro Forma Effects


♦ Cosmetic Improvements

• Windows

• Refrigerators and dishwashers

• Indoor and outdoor lighting

♦ Underwriting Modifications:

• Increased average rent

• Increased lease renewals

• Decreased absorption period

Revenue


Standard Subject Comp 1 Comp 2 Comp 3

Adjustment Property

Vista Springs

Apartment

Homes The Arbors

Highland

Meadows

Apartments

Square Footage Adjustment: $0.40

Location/Age/Appearance Enter $ amount adjustments for all Comps relative to Subject:

Location Adjustment $0 $0 $0

Appearance Adjustment $15 $15 $15

Age Adjustment $0 $0 $0

Interior Condition Adjustment $15 $15 $15

Standard

Project Amenities Adjustment Enter "Y" for all that apply for Subject & Comps. If not applicable, leave blank:

Balcony / Patio $15.00 Y Y Y Y

Carports/Podium Parking $20.00 Y Y Y Y

Parking Garage $50.00

Laundry Rooms $5.00 Y Y Y Y

Swimming Pool $10.00 Y Y Y Y

Sauna / Spa $5.00 Y Y Y Y

Fitness Center $10.00 Y Y Y Y

Secured Building $10.00

Community Room $10.00 Y Y

Tennis Court/Vollyball Court $5.00 Y

Hardwood Floors $10.00

Gated Community $20.00 Y Y Y Y

24-Hour Doorman/Security $20.00

On-Site Retail $5.00

BBQ Area $5.00 Y Y Y Y

Standard

Unit Amenities Adjustment

W/D Connections $10.00 Y Y Y Y

W /D Included In-Unit $40.00 Y

Central HVAC $20.00 Y Y Y Y

Microwave $5.00 Y

Dishwasher $20.00 Y Y Y Y

Disposal $3.00 Y Y Y Y

Refrigerator $25.00 Y Y

Cable TV Available $0.00 Y Y Y Y



♦ EUL or CapEx Improvements• Roof/attic insulation

• Cool roofing or radiant barrier

• Space heating equipment

• Space cooling equipment

• Water heating equipment (including solar pre-heat)

♦ Underwriting Modifications:• Lower utility expense

• Lower O&M expense

• Poor payback periods Expenses



♦ OpEx or Green Certification Improvements• Wall insulation

• Floor Insulation

• Pipe insulation

• Duct sealing and insulation (as applicable)

• Water heating recirculation controls

♦ Underwriting Modifications:• Difficult to underwrite

• Lower utility expense

• Lower O&M expenseExpenses

MUP Energy Measures

♦ Windows








♦ Wall insulation


♦ Pipe insulation




OpEx,

Green Certs

EUL,

CapEx

Cosmetic

In Closing


Asset Manager priority #1 is

dollars invested in the property


Real Estate Cycle drives

decision making


Pro Forma

is

the tool to communicate

financial understanding of the

investment


All ECMs effect utility expense,

focus on the next level of

property interaction


Questions

Multifamily Upgrade Program Overview33

MUP Administration Team

♦ Program Administrators: TRC

• Program Manager: Mike Maroney

• Technical Manager: Stephanie Berkland

• Marketing Manager: Melissa Buckley

• Website: www.multifamilyupgrade.com

• Phone: 866-352-7457

• Email: [email protected]

34

http://www.multifamilyupgrade.com/

mailto:[email protected]

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