Insights into LEED and Green Building Design and Operations

Transcription

1 Insights into LEED and Green Building Design and Operations

2 Today s Speakers Daniele Horton, LEED AP+ O&M Sustainability Manager Thomas Properties Group dhorton@tpgre.com Mika Yagi, LEED AP+ BD&C, CGBP, CEPE, CSBA, EPA Certified Renovator Sustainable Design Specialist Gensler Mika_Yagi@gensler.com Robert Barnes, LEED GA Senior Counsel Fulbright & Jaworski L.L.P. rbarnes@fulbright.com

3 Insights into LEED and Green Building Design and Operations Robert Barnes, LEED GA Senior Counsel Fulbright & Jaworski L.L.P.

4 What is a Green Building? Efficiently uses energy and conserves water, land and materials. Preserves and enhances occupant health. Reduces waste and pollution.

5 Leadership in Energy & Environmental Design (LEED) LEED is a privately-administered program; intended to quantify the sustainability of construction. U.S. Green Building Council (USGBC) creates LEED rating systems and publishes LEED reference guides. Green Building Certification Institute (GBCI) administers LEED professional accreditation exams and issues LEED certifications for buildings.

6 Why LEED? LEED is the most well-known of various sustainable rating systems (other include Green Globes, GreenPoint and EnergyStar). Govermental authorities or private developers/tenants may require it. Sometimes governmental incentives (tax incentives, expedited permits) Contra: Cost.

7 LEED Certification Categoies Four levels of LEED certification, each with greater levels of efficiency and sustainability: Certified (base level) Silver Gold Platinum

8 LEED Accreditation vs. Certification vs. Registration Individuals are accredited (e.g., as an Accredited Professional; see below). Buildings are certified (e.g., as LEED Silver). Buildings must first register with the USGBC to begin the certification process.

9 Project Types Covered by LEED Construction: New construction: Brand-new construction or major renovations including HVAC, building envelope and interior rehabs. Core and shell: Projects only involving the building envelope and the mechanical/electrical/plumbing base systems, and less than 50% of the interior i space build-outs. Homes: For new residential or major rehabs (more than three floors). Neighborhood Development: Designed to address smart growth, urbanism and green building for overall neighborhood design. Also: Schools, healthcare and retail.

10 LEED Project Types, Cont d. Interiors: Both commercial and retail. E i i b ildi Ai d i Existing buildings: Aimed at on-going operations of any existing building but not individual spaces/premises.

11 LEED Credit Categories Sustainable Sites (SS) Water Efficiency (WE) Energy & Atmosphere (EA) Materials & Resources (MR) Indoor Environmental Quality (IEQ)

12 Sustainable Sites (SS) Aimed at site selection and siting of building itself. Preference for re-using previously- developed sites. Protecting undeveloped land. Storm water management. Reducing heat island effect. Minimizing light trespass/light pollution.

13 Water Efficiency (WE) Reduce potable water used for irrigation. Reduce sewage and potable water used for sewage conveyance. Reduce total potable water usage (including sewage conveyance). Reduce process water (i.e., used in mechanical systems such as cooling towers).

14 Energy & Atmosphere (EA) Maximize energy efficiency. Encourage use of renewable energy sources. Reduce greenhouse gas emissions s and ozone depletion. Tools include commissioning (baseline study to confirm that systems were installed and operate as intended), ongoing measurement and verification.

15 Materials & Resources (MR) Reduce waste (including construction waste). Use sustainable construction materials. Create sustainable purchasing programs. Life-cycle analysis assesses environmental impact over the entire life of a product. Life-cycle costing assesses cost of installation, operation and maintenance over the life of the product.

16 Indoor Environmental Quality (IEQ) Aim is to improve indoor environment, including air quality and lighting, for reduced liability, reduced absenteeism, increased tenant satisfaction. Sick Sc Building gsyndrome: do health and dcomfort o effects linked to time spent in building, but where no specific illness or cause identified. Building Related Illness: Symptoms or diagnosable illnesses related directly to airborne building contaminants (e.g., asthma, allergies).

17 On-going Performance and Re- Certification For Operations and Maintenance, there must be a performance period ranging from one week to two years, depending on the credit category. New projects must agree to share water and energy usage data for a period of five years. Operations and Maintenance certification expires after five years, and may be re-certified.

18 Sample LEED Project Checklist (O&M)

19 LEED Professional Accreditation Green Associate (GA). Non-technical accreditation demonstrating green building expertise. Requires written exam and continuing education. Accredited Professional (AP). Accreditation for professionals involved in design and/or construction of specific category projects. Concentrations in Building Design and Construction (BD+C); Operations and Maintenance (O+M); Interior Design & Construction (ID+C); Homes (H); and Neighborhood Development (ND) Exam, continuing education and evidence of project experience. LEED AP Fellow. New; highest level; by nomination only. Available only to LEED APs who have made a significant contribution to the field of green building and sustainability at a regional, national, or international level.

20 Governmental Mandates for LEED Certification LEED initiatives found in 46 states and 14 federal agencies or departments. In California, 2004 executive order mandates 20% energy reduction in state-owned buildings by 2015 (from 2003 levels) and LEED Silver certification for all new and renovated facilities greater than 10,000 s.f. CALGreen: California green building code mandatory as of January 1, 2011; it requires new buildings constructed in California to be energy efficient and environmentally responsible.

21 Emerging Issues and Trends Increasing use of representations, warranties and covenants in leases, purchase and sale agreements and construction contracts. LEEDigation : Lawsuits can arise when projects fail to achieve LEED certification, don t ultimately save as much energy as predicted or do not reduce emissions as contemplated. High-profile pending lawsuit brought against the USGBC by mechanical systems designer Henry Gifford, claiming that the USGBC misrepresents energy performance of LEED-certified buildings and contesting a New Buildings Institute 2008 study that LEED buildings are on average 25-30% more energy efficient than national average. LEED Rating System upgrade scheduled for 2012, aimed at developing a performance-based rating system instead of prescriptive requirements. Effect of green building codes on private rankings such as LEED.

22 AUSTIN BEIJING DALLAS DENVER DUBAI GREATER PITTSBURGH AREA (WASHINGTON COUNTY) HONG KONG HOUSTON LONDON LOS ANGELES MINNEAPOLIS MUNICH NEW YORK RIYADH SAN ANTONIO ST. LOUIS WASHINGTON, D.C FULBRIGHT [ ] 23

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53 Thomas Properties Group Inc. Insights into LEED and Green Building Design and Operations Speaker: Daniele Horton Sustainability Manager Thomas Properties Group Thomas Properties Group, Inc Thomas Properties Group, Inc.

54 Thomas Properties Group Inc. Discussion Overview Greening Existing Buildings Making the case for green operations (Drivers & Benefits) Market Overview (Do green buildings make sense and dollars for investors?) LEED-EBOM Implementation Strategies LEED-EBOM Case Study 2011 Thomas Properties Group, Inc.

55 Thomas Properties Group Inc. Cutting U.S. Greenhouse Gas Emissions 80% by 2050 Building Retrofits Offer Lowest Cost, Highest Payoff Carbon emissions need to be cut 80% by US Buildings are responsible for 40% of CO2 emissions 40% of energy consumption, 13% water consumption and 15% of GDP per year, making green buildings a source of significant economic and environmental opportunity. CA has a Goal for 50% of existing commercial buildings to be retrofit to net zero energy by Thomas Properties Group, Inc.

56 Thomas Properties Group Inc. Why green existing building operations? U.S. Building Stock New Construction (1-2%) Existing Buildings (98-99%) 98-99% of the nation s building stock is made up of structures that are already built or near completion. Source: MIT Center for Real Estate, Rob Hannah, Insight Real Estate, LLC The Built Environment is Responsible For 2/3 of Total U.S. Electricity Consumption 1/8 of Total U.S. Potable Water (15 Bill Gallons/Yr) 1/3 of the WORLD s Energy Consumption 2/5 of the WORLD s Raw Materials (3 Bill Tons/Yr) 1/3 of the WORLD s CO2 Emissions! Square Feet (Billions) new replaced Source: Brookings Institution Report, Prof Arthur C Nelson 2011 Thomas Properties Group, Inc.

57 Thomas Properties Group Inc. Green Operations last a lifetime! LEED-NC, CS & CI Design / Construction LEED-EB Operations (Life of Building) 30% - 40% 60% - 70% life cycle cost An Event An On-Going Process Capital Budgets Operating Budgets The [design and construction phase] may take 2 to 5 years in a life cycle that may last a total of 45 to 50 years for a commercial building. This becomes significant because typically 30 to 40 percent of the total life-cycle costs for a facility occur in these first two phases and 60 to 70 percent in the [operations] phase (in constant dollars). Source: National Institute of Standards and Technology 2011 Thomas Properties Group, Inc.

58 Thomas Properties Group Inc. LEED for Existing Buildings: A Rising Star Floor Area Forecast for LEED EB (millions of square feet) Existing Buildings are continuing to gain momentum and in half of all LEED certified space was certified in the LEED EB program with an 80% increase in the amount of EB certified space between 2009 and 2010 The total new floor area of LEED EB registered/certified space exceeded all other rating systems combined and is by far the largest LEED program Source: Rob Watson, Green Building Market and Impact Report Thomas Properties Group, Inc.

59 Thomas Properties Group Inc. Existing Buildings Retrofit 2011 Thomas Properties Group, Inc.

60 Thomas Properties Group Inc. Drivers & Benefits of greening Existing Buildings Drivers Marketability & Competitive edge Government Incentives Investor Demand Cost Savings as Owner/Operator Becoming the norm (obsolescence) Good Business Practice & Enhanced Reputation Economic Benefits: Lower operating expenses = potential increase in NOI lower insurance rates lower vacancy levels faster lease up, longer leases & lower tenant churn financial benefits of increased employee productivity Environment Reduce natural resources consumption Reduce carbon emissions Improved air & water quality Reduce solid waste 2011 Thomas Properties Group, Inc. Sustainability Triple Bottom Line Regulations Incentives Social Enhanced Occupant comfort Health Controllability of systems = increased productivity Minimize strain on local infrastructure Contribute to overall quality of life

61 Thomas Properties Group Inc. New policies and regulatory highlights Federal Laws, Regulations & Initiatives Energy Independence and Security Act of 2007 (EISA) Pending Senate Bill, Clean Energy Jobs and American Power Act (Kerry-Boxer) House passed the American Clean Energy and Security Act New Energy Legislation in Congress (ESIC Act) White House Better Buildings Initiative 179D Tax Deduction Reform EPA Greenhouse Gas regulations State & Local Laws & Regulations CA, AB 1103, Building Energy Usage Disclosure CA, Title 24 Part 11, Energy use in building CA, Executive Order #S CA, AB 32, Global Warming Solutions Act CA, SB 375, Reduced carbon development CA, AB811, On-bill energy financing CALGreen 1 Source: 2 Source: Source: 3 Source: Thomas Properties Group, Inc.

62 Thomas Properties Group Inc. Green Buildings & the Triple Bottom Line Office Redevelopment Green Property vs. Non Green Property Green Property Non Green Property Variance Square Footage 250, ,000 Purchase Price p/sf $200 $200 Vacancy Rate 50.00% 50.00% Lease Up Rate per year 8.00% 6.00% 2.00% Stabilized Occupancy 97.50% 93.00% 4.50% Rental Rates Top Tier Top Tier % 5.00% Operating Costs p/sf $10.00 $ $1.50 Capital Expenditures p/sf $12.00 $12.00 Green Capital Expenditures p/sf $12.00 $0.00 $12.00 Terminal Cap Rate 6.50% 6.75% (0.25%) Monthly Leveraged IRR, net fees 19.42% 12.82% 6.60% Monthly Unleveraged IRR,net fees 11.20% 8.67% 2.53% 2011 Thomas Properties Group, Inc. Campus El Segundo Concept Rendering Created by: DMJM Design Developed by Thomas Properties Group Building 8 Pre-Certified LEED CS Gold

63 Thomas Properties Group Inc. Green Building & the Triple Bottom Line Productivity Benefits Studies by Carnegie Mellon University have shown productivity increases in high performance buildings ranging from 0.4% to 18% Average annual cost for a U.S. office building worker (per square foot): Salaries $ Technology Mortgage / Lease Energy 2.35 Total $ % increase in productivity Saves $20.12 per s.f. 5% productivity increase in a 25,000 s.f. building Saves $500,000 per year 5% productivity increase in a 100,000 s.f. building Saves $2,000,000 per year! Source: Making the Case for Green Building - Environmental Building News, April 2005 Worker productivity gains are 10 times the cost savings from direct resource waste/load reductions Thomas Properties Group, Inc. Source: CMU Center for Building Performance & CA Sustainable Buildings Task Force 2004

64 Thomas Properties Group Inc. Financial Returns from Green Building Strong Payback Results Average payback of 1.4 years, ROI of 73% in the first year All 25 projects demonstrated strong positive returns across geographies and across levels of LEED certification Green Premiums Properties with green certifications demonstrate rental rate premiums ranging from 3.7-6% Premium values for energy-efficient real estate are supported by strong occupant demand in the face of a limited supply Green rentals: supply of green buildings perceived to be sub-optimal relative to demand Business Benefits Energy cost savings Decrease in operating costs Increase in ROI Increase in overall occupancy Rent increase Source: Urban Land Institute, 2010, Retrofitting Office Buildings to be Green and Energy-Efficient: Optimizing Building Performance, Tenant Satisfaction, and Financial Return 2011 Thomas Properties Group, Inc.

65 Thomas Properties Group Inc. Savings and ROI Associated with 25 LEED-Certified Retrofits City State Energy Star Level SF Cost Cost PSF Savings Payback ROI Walnut Creek CA 89% Gold 249,391 $88,808 $0.36 $96, months 108% Los Angeles CA 98% Gold 317,058 $58,437 $0.18 $33, years 56% Atlanta GA 87% Gold 410,357 $116,812 $0.28 $89, years 76% Minneapolis MN 91% Gold 621,193 $191,130 $0.31 $186, years 97% Los Angeles CA 90% Silver 587,022 $71,700 $0.12 $55, years 77% Fort Lauderdale FL 92% Gold 261,676 $108,641 $0.42 $77, years 71% Los Angeles CA 84% Silver 137,369 $51,084 $0.37 $13, years 25% Charlotte NC 75% Silver 324,305 $53,777 $0.17 $60,000 9 months 112% Charlotte NC 75% Certified 298,371 $52,910 $0.18 $58, months 110% Denver CO 79% Certified 263,716 $108,097 $0.41 $102, years 95% Vienna VA 83% Silver 346, $53,700 $0.15 $32, yrs. 60% Atlanta GA 82% Silver 625,071 $91,520 $0.15 $50, years 55% Oakland CA 80% Silver 273,355 $59,033 $0.22 $25, years 42% Dallas TX 89% Silver 1,113,575 $291,136 $0.26 $237, years 82% Billerica MA 74% Certified 353,242 $54,281 $0.15 $35, years 64% Greenwood Village CO 78% Silver 317,218 $68,530 $0.22 $30, years 44% Greenwood Village CO 82% Silver 115,408 $47,885 $0.41 $10, years 21% Denver CO 78% Certified 150,673 $48,766 $0.32 $15, years 31% Chicago IL 85% Gold 800,000 $114,950 $0.14 $75, years 65% Atlanta GA 73% Certified 312,000 $72,990 $0.23 $31, years 42% Dallas TX 78% Certified 515,388 $64,460 $0.13 $50, years 78% Atlanta GA 73% Certified 670,000 $57,950 $0.09 $40, years 69% Atlanta GA 73% Certified 670,000 $78,110 $0.12 $40, years 51% Sacramento CA 78% Gold 336,104 $88,853 $0.26 $90, months 101% Denver CO 87% Silver 435,672 $67,821 $0.16 $40, years 59% Avg. Sq. Avg. Avg. Avg. Avg. Avg. Feet Cost PSF Cost Savings Payback Yrs ROI 420,191 $86, $0.21 $62, % Source: Urban Land Institute, 2010, Retrofitting Office Buildings to be Green and Energy-Efficient: Optimizing Building Performance, Tenant Satisfaction, and Financial 2011 Thomas Return Properties Group, Inc.

66 Thomas Properties Group Inc. Beyond First Costs The Dollars and Cents of Green Building Investment and Valuation Academic Study: Does Green Still Payoff? Looked at Performance of LEED, Energy Star Buildings Compared to Non-Green Buildings Used CoStar s 4.0 Million Properties Database Green buildings, defined as either Energy Star labeled or LEED certified at any level, published in the Journal of Real Estate Portfolio Management, in 2008 found strong evidence of both rental premiums but also faster absorption and lower cap rates/higher prices per square foot. Of 378 Class A commercial office properties sold in 2010: Rents continue to show premiums for LEED properties of several percent over non-green counterparts even though any of these came on line during soft markets. Source: Norm Miller, Ph.D. University of San Diego s Burnham-Moores Center for Real Estate - Future Build LA Presentation Oct Thomas Properties Group, Inc.

67 Thomas Properties Group Inc. Added Building Value Hard Value Fast Pay Back Easy Calculations, lighting Hard Value Longer Pay Back HVAC + Building Envelope Soft Value Reputation, better tenants, lower vacancy Reduced obsolescence, lower energy cost risk Future Proof 2011 Thomas Properties Group, Inc.

68 Thomas Properties Group Inc. Cost or ROI? Benefits of LEED & Green Buildings are increasing Decreased operating costs 8-9% 13.6% Increased occupancy 3.5% 6.4% Rises in rent 3.0% 6.2% Improvement in ROI 6.6% 9.9% Increased building values 7.5% 10.9% Source: McGraw-Hill Construction s 2009 Green Outlook 2011 Thomas Properties Group, Inc.

69 Thomas Properties Group Inc. Greatest Challenges to Implementing Energy Efficiency Strategies 2011 Thomas Properties Group, Inc. 70

70 Thomas Properties Group Inc. Green Building Operations TPG Implementation Strategies for greening your portfolio of properties using the LEED EBO&M Program 2011 Thomas Properties Group, Inc.

71 Thomas Properties Group Inc. Organizational Commitment Our mission is to make a positive and profitable contribution toward a sustainable future The company s sustainability programs strive to apply green building considerations in all aspects of our business including development, investments, leasing and operations. High Performance buildings fit our strategy because they (1) constitute a high quality product; (2) differentiate our products; (3) put us out ahead of pending government regulations; and, (4) appeal to tenants who are increasingly demanding sustainable work environments. TPG SUSTAINABILITY GOALS Reduce operating expenses Enhance marketability Improve occupant productivity Minimize environmental footprint Triple-bottom-line performance (people, profit, planet). Create platform value 2011 Thomas Properties Group, Inc. realsustainability = realpeople creating realvalue through realresponsibility

72 Thomas Properties Group Inc. Making progress toward greening our portfolio CAL/EPA Sacramento, CA LEED EB Platinum 950,000sf City National Plaza Los Angeles, CA LEED EB Gold 3,210,945sf 1835 Market Street, Philadelphia, PA LEED EB Silver 686,503sf One & Two Commerce Square Philadelphia, PA LEED EB Silver 2,065,182sf San Felipe Plaza Houston TX LEED EB Gold 1,067,886sf 300 West Sixth Street, Austin, TX LEED EB Gold 446,637sf Frost Bank Tower Austin, TX LEED EB Gold 599,646sf City West Building 4 Houston, TX LEED EB Certified 558,900sf Four Points Centre Austin, TX LEED CS Gold 300,000sf Pacific Financial Plaza Newport Beach, CA LEED EB Silver 283,385sf One building at a time More than 10 Million sf LEED Certified to date. 100% of Thomas Properties Group eligible buildings will be certified by Thomas Properties Group, Inc.

73 Thomas Properties Group Inc. City National Plaza Property Information Name: City National Plaza Location: Los Angeles, CA Type: Office Size: 3,687,789 GSF Two 52 Story Towers Year Built: 1972 Redeveloped: Owner: Thomas Properties Group Manager: TPG since 2003 LEED EB Rating: LEED EBOM Gold Sustainability Highlights LEED EB O&M Gold Energy Star Partner. 92 Energy Star Rating out of % more energy efficient than the national average Increased occupancy by 63% between 2003 and 2010 while total electricity consumption has increased by only 1.37% City National Plaza now uses 37.5 % less energy consumption on an occupied RSF basis Saved over $12 million in electricity costs since Thomas Properties Group, Inc. LEED EB Gold 92 energy star score 40% water savings 52% waste diverted from landfill 7

74 Thomas Properties Group Inc. City National Plaza Sustainability Policies and Programs in Place Building Exterior & Hardscape Mgmt. Plan Integrated Pest, Erosion Control and Landscape Mgmt. Plan Water Efficiency Program Cooling Tower Management Plan Refrigerant Management Policy Energy Efficiency Policy Sustainable Purchasing Policy Solid Waste Management Policy Lamp Purchasing Plan Smoking Policy Green Cleaning Policy Indoor Air Quality Program Indoor Integrated Pest Management Plan LEED Facts Thomas Properties Group Los Angeles, CA LEED for Existing Buildings 2008 Certification awarded May 27, 2010 Gold 54* Sustainable Sites 4/12 Water Efficiency 6/10 Energy & Atmosphere 19/30 Materials & Resources 6/14 Indoor Environmental Quality 12/19 Innovation & Design 7/ Thomas Properties Group, Inc. *Out of a possible 92 points

75 Thomas Properties Group Inc. City National Plaza Sustainable Features. LEED EB O&M Gold / 92 Energy Star Score High-efficiency Cooling Towers conserve Water & Energy (June 2008) Building automation system (BAS) controls key building systems, reducing building energy & maintenance costs Energy Efficient Lighting g & Occupancy Sensors (60 new floors) Low Flow Automated Plumbing Fixtures & Faucets (75 new floors) Resulted in 40% reduction indoor fixtures water use Recycled & Renewable Materials Specified for All Common Area Upgrades Heat Island Reduction with 100% of Parking Under Cover Transit oriented property diverting an average of 600 daily passengers to public transportation via its three environmentally friendly Natural Gas shuttle buses. Elevators Modernized with electronic controls allowed decommissioning of one elevator per bank (8 total) and elimination of DC generator motors High Efficiency Fan Motors with VFD S & Economizer Cycle Provides Fresh Air to Building ( ) High-performance filtration equipment increases indoor air quality Target 75% Diversion Rate from landfills for all Landlord Demolition Work Wet Seal Building Exterior to Stop Air Leaks Power Factor Correction Equipment (2006) Central Plant Upgrades Energy Efficient Chillers ( ) & Boilers (2009) Building Automation Controls ( ) 2011 Thomas Properties Group, Inc.

76 Thomas Properties Group Inc. City National Plaza Sample Energy Saving Projects Electrical System Upgrades Lighting upgrades with high-efficiency lamps, ballasts and occupancy sensor controls (base building + over 60 Floors of tenant space) Power Factor Correction equipment Heating and Cooling Technology Improvements Replaced Chillers Replaced Cooling Towers Installed High-efficiency fan motors and VFD s Replaced Boilers Other Improvements Building Automation Systems (BAS) Elevator modernization and motor controls Seal building exterior to eliminate air leaks + Green Tenant Improvement Guide & Educational Programs Requires efficient lighting & occupant sensors Metering Devices Truly Green Buildings require efficient green occupant loads and behavior: high performance design, construction and operations only takes you so far! 2011 Thomas Properties Group, Inc.

77 Thomas Properties Group Inc. 2003/2010 Electrical Consumption 2011 Thomas Properties Group, Inc. 78

78 Thomas Properties Group Inc. Energy Savings CNP 2003/2010 Electrical Consumption Annual Energy Savings (1) 2003 Baseline Year 2004 Total (Savings) / Increase $ 451, Total (Savings) / Increase $ 263, Total (Savings) / Increase $ (957,382) 2007 Total (Savings) / Increase $ (1,916,812) 2008 Total (Savings) / Increase $ (2,847,644) 2009 Total (Savings) / Increase $ (2,997,323) 2010 Total (Savings) / Increase $ (4,319,955) 2003 / 2010 Total Energy Savings $ (12,324,203) 2011 Thomas Properties Group, Inc. (1) Annual projected savings based on the calculated consumption for the current year occupancy using the 2003 baseline kwh p/ occupied rsf consumption rate at the current year utility rate if energy saving improvements had not been implemented 79

79 Thomas Properties Group Inc. City National Plaza Financial Analysis for Energy Saving Projects Net Present Value & Internal Rate of Return (Energy Saving Projects) (1) Net Investment Cost (2) $ 10,924,712 Return On Investment (ROI) - 15 Year 375% Net Present Value (NPV) - 15 Year $19,195,627 Internal Rate of Return (IRR) - 15 Year 32.1% Potential Impact on Net Operating Income (NOI) $ 4,319,955 Potential Impact on Asset Value $ 61,713,643 LEED EB Certification Costs PSF Hard Costs $ 230,000 $0.06 Soft Costs (USGBC + Consulting Fees (3) ) $ 50,000 $0.02 Total Costs $ 280,000 $0.08 (1) Based on Energy Star s Building Upgrade Value Calculator for Office Building (2) Rough Estimate (Includes base building capital improvement s+ estimate for energy saving projects at tenant spaces that resulted in energy savings) (3) Does not include Internal Staff Time 2011 Thomas Properties Group, Inc. 80

80 Thomas Properties Group Inc. Impact on Asset Value Existing Building Retrofits & Operations can translate into reduced waste and added building value Higher market value (or valuation) Over time green buildings may Provide better terminal cap rates TPG retrofitted City National Plaza and has continued to successfully manage the dayto-day operations. CNP high efficiency retrofit measures saved over $12,000,000 since It resulted in $4,319,955 million savings in 2010 alone. LEED EBOM is an important process in driving improved asset value. The near future of commercial real estate will rest to a much greater extent in the hands of the facilities manager's ability to achieve green measures and LEED EBOM in their buildings. The increasing default rate and other macro-economic forces will favor buildings that have reduced operational costs and better retention. Both factors are achievable through energy efficiency retrofits & LEED EBOM certification. Those owners that empower their facilities team to move forward quickly and effectively will reap the rewards. Greg Reitz, Rethink Development Corp 2010 Annual Savings $4,319,955! Assuming a 7% Cap Rate avoided costs! = $ 61,713,643 additional value 2011 Thomas Properties Group, Inc. 81

81 Thomas Properties Group Inc. It s not just about Asset Value & ROI! CLIMATE CAPITALISM 1. First principle: using resources as efficiently as possible, is cost-effective and the best way to address our more immediate needs while delivering premium ROI s 2. Second: Efficiency buys time, but unless that time is used to redesign how businesses are run, no amount of efficiency will solve our long term needs or enable us to create a truly sustainable economy. 3. Finally: Business as usual has degraded ecosystems and communities around the world. To reverse this we will need to change how we define success. We need to put a value on Ecosystem services to implement a capitalism that can deliver enduring wealth, well-being and sustainable growth. Excerpted from "Climate Capitalism: Capitalism in the Age of Climate Change," by L. Hunter Lovins and Boyd Cohen, published in April Thomas Properties Group, Inc.

82 Thomas Properties Group Inc. Thank you Daniele Horton 2011 Thomas Properties Group, Inc Thomas Properties Group, Inc.

83 AUSTIN BEIJING DALLAS DENVER DUBAI GREATER PITTSBURGH AREA (WASHINGTON COUNTY) HONG KONG HOUSTON LONDON LOS ANGELES MINNEAPOLIS MUNICH NEW YORK RIYADH SAN ANTONIO ST. LOUIS WASHINGTON, D.C FULBRIGHT [ ] 85