Taking Summit Plaza from Acquisition to Recapitalization: - PowerPoint PPT Presentation

Taking Summit Plaza from Acquisition to Recapitalization: Leveraging Operations, Utility, and Environmental Costs Redeveloped by: Belveron RE Partners & Low Income Housing Corp (LIHC) Summit Plaza Jersey City, NJ 483 Units Project Based Section 8 Site

Original Site and Current Site, etc.

Location, Location, Location 5 minute walk to Journal Square PATH 11 minute train to World Trade Center 22 minute train to Penn Station (34 th Street) Summit Plaza Transit Station

HUD Operation Breakthrough: Innovative Construction and Systems

Innovative Systems: 1970s Off Grid Living for 1,150 Residents

Innovative Systems: Labor Saving Pneumatic Trash Collector

Modular Construction 1.0 and Transit Oriented Development vs. Today 18 story construction with “concrete box” prefabricated slide-in-place modules

Deep Dive on Mechanical Due Diligence: Legacy Issues

Finding Root Cause: The First Day of the Next 40 years HVAC: Operating and Maintenance Cost Creative Thinking: Challenge Replace in Kind Mentality Holistic: Multiple Benefits from each Expenditure With Underwriting of Savings The Sum is Greater Than the Addition of the Parts Due Diligence Leads To Two Key Contractors and No GC

Environmental Clean Up Reduces Cost and Allows HUD Approval ISSUES • Active NJ DEP case • Annual Permitting and Testing • Title V Air Permit • Tanks, Tanks, Tanks RESULTS: • Clean Site • $65,000/yr Savings

The Legacy Amenity: Pool $666/day This: OR:

2018 Summit Plaza Resident Experience All This AND Net Savings $20,000/year Security Office with Window onto Site New Resident Infill New Services Lobby Coordinator Community Room

Rockport Mortgage Translated Vision to HUD • Rockport guidance during due diligence helped team quantify savings • Rockport Mortgage translated our vision to HUD • Quantifiable data provided to HUD resulted in no pushback from National Loan Committee • Two independent sources of documentation with such large amounts of energy and operational savings underwritten was very critical (Sparhawk Group and PSE&G) • Leveraged the energy and operation savings at 75% of expected savings • Emphasized prior track record of reducing operational expense

RESULTS Annual Operating Expense Savings, $ Millions Annual Operating Cost: Dollars Per Unit 16,000 2.0 $1.775 $14,000 14,000 $11,700 12,000 1.5 $10,300 10,000 $1.100 8,000 1.0 6,000 4,000 0.5 Base 2,000 Year $0 - - 2015 2017 2018 2015 2017 2018 2017 Actuals Base New 2018 Estimated Underwriting Loan Loan

Rough Waters: New Approaches, New Tools & New Crew

Think Outside “Replace In Kind” Step 1: Starting Point Original PSE&G Original Cost $1.5 million Utility Incentive $774,000 Incentive Project Savings/yr $129,000 Payback After 5.6 years Incentive Step 2: Owner Advocate + Due Diligence Expanded PSE&G Cost $3.6 million Expanded Incentive $2.3 million Owner Utility Infrastructure Incentive Savings/yr $382,000 Project Payback After 3.5 years Incentive

Think Whole Site AND Total Cost of Operation Step 1: Starting Point Original PSE&G Original Cost $1.5 million PSE&G Project Incentive $774,000 Savings/yr $129,000 Payback after 5.6 years Incentive $3.6 + $1.6 + $6 - $2.9 Incentive - $0.2 ITC = $8.1 Million NET Cost Step 3: Total Cost of Operation PSE&G + Owner Entire Owner Project: Cost $11.2 million Utility Infrastructure, Expanded Incentive $2.9 million Windows, Utility Incentive Water Conservation, Savings/yr $1.6 million Project Combined Heat and Power, Payback after 5.0 years Solar PV, Incentive Controls

Identifying Root Needs and Causes

Identifying Root Needs and Causes

Root Causes: Right Sizing For Savings

Creative Solutions Reduce Capital Cost and Operation Cost

Documented Operations Savings: $481,000 per year, $1,000 per unit 2015 Purchase Order for Operations and Maintenance MECHANICAL 483 Units 2015 Sum of Estimated Labor Savings Eliminated Heating Remaining Plmb & Contractor Building Service Description Purchase Estimated Materials invoice labor $110 vs $225/hr New Budget Budget per unit Repairs *1 Heat Repairs Orders *2 *3 Prestige 625 plmb/heat repairs $42,014 $21,175 $20,838 $4,168 $16,671 $8,669 $12,170 Prestige 627 plmb/heat repairs $53,810 $16,762 $37,049 $7,410 $29,639 $15,412 $21,636 Prestige 700 plmb/heat repairs $159,286 $90,624 $68,662 $13,732 $54,930 $28,563 $40,099 Prestige 730 Bldg 730, all 2015 $318,815 Prestige 730 Sprinkler Engineering $55,000 Prestige 730 Sprinkler Permits $44,000 Prestige 730 New DHW $123,519 Prestige 730 only plmb/heat repairs $96,296 $26,894 $69,402 $55,521 $28,871 $26,650 Prestige other $5,404 $1,980 $3,424 $1,712 $890 $822 Prestige central plant mixed capital & operating $73,436 $23,406 $50,030 $25,015 $13,008 $12,007 Mechanical Total without capital projects $356,809 $180,840 $249,404 $183,487 $95,413 $80,555 $167 ELECTRICAL 2015 Sum of Lighting Eliminated Heating One Time Install GFI Contractor Building Service Description Purchase Fixture/Lamp New Budget Repairs *1 Cost *5 Orders Savings *4 Statsi All work $234,785 Statsi 700 new sprinkler panel 700 $111,344 Statsi 730 new sprinkler panel 730 $13,696 Statsi All work Non-capital projects $109,745 $4,593 $31,986 $31,986 $41,180 $85 Universal All buildings Non-capital projects $97,858 $23,258 $74,601 $154 Electrical Total without capital projects $207,603 $27,850 $31,986 $31,986 $115,781 $240 SUPPLIES 2015 Sum of Eliminated Toilets As All supplies for consumables, Contractor Building Purchase All Will Be Replaced New Budget repairs and unit turns Orders *6 HD Supply All $121,053 $8,878 $112,176 $232 Total of 2015 Purchase Orders/Invoices, no capital projects $905,334 $424,292 $878 Projected Annual Savings $481,041

Monthly Power Cost: 291 Units, 2 Buildings, plus Central Plant 2015/2016/2017 70,000 60,000 50,000 Cost ($/month) 40,000 30,000 20,000 10,000 - February March April May June July August September October November December January

Electric Power Demand: 291 Units, 2 Buildings, plus Central Plant 2015/2017 900 800 700 600 Demand (kW) 500 400 300 200 100 0 June July August September October November December May 2015 Demand 2017 Demand 2015 Demand Trendline 2017 Demand Trendline

Site Wide Water and Sewer Savings 2015/2017 April 1 to December 31, 34% Savings, $325/unit annualized savings $80 $70 $60 Cost ($/unit-month) $50 $40 $30 $20 $10 $- January February March April May June July August September October November December Percent 4% 24% 41% 42% 46% 30% 42% 45% 40% 50% 39% 39% Savings

Cooling Tower Water Savings: 6.4 gpm/24/7 for four summer months! 2015/2017 $12.00 $10.00 Cost ($/unit-month) $8.00 $6.00 $4.00 $2.00 $- June July August September Month Percent 49% 53% 64% 79% Savings

Gas and Electric Savings: Not Weather Normalized, 2015/2017/2018 $300 $250 Cost ($/unit-month) $200 $150 $100 $50 $- May June July August September October November December January Percent 40% 33% 29% 36% 36% 52% 48% 40% 40% Savings 2017/2015 49% 145% 197% 93% HDD %

More Savings to Come: February 2018 Daily Electric Power Usage (Feb 5, 2018) 350 Building… Cogen Power 300 250 200 Usage (kW) 150 100 50 0 0:00 4:00 8:00 12:00 16:00 20:00 0:00 Time

Holistic Approach is Greater Than The Sum of Parts $3.6 + $1.6 + $6 - $2.9 MM Incentive - $0.2 ITC = $8.1 million NET Cost PSE&G + Owner Entire Owner Project: Cost $11.2million Utility Infrastructure, Expanded Windows, Incentive $2.9 million Utility Project Combined Heat and Power, Savings/yr $1.6 million Solar PV, Controls Payback 5.0 years Portfolio HUD Water Year Manger Energy Benchmark Benchmark 2015 2 10 2017 30 33 2018* 87 63 * - Projected Use Based on 2017 Savings

Thank You! Amy Johnson Matthew Holden, P.E. Portfolio Management President Belveron RE Partners Sparhawk Group amy@belveronpartners.com mholden@sparhawkgroup.com 303 888 4350 207 650 1172