Early adopters sign up to Building Upgrade Finance
The Property Council is pleased to announce that the first two commercial buildings in South Australia to undergo environmental and energy efficiency upgrades using the newly legislated Building Upgrade Finance (BUF) mechanism have been funded in Edinburgh Park at Salisbury and within the Adelaide CBD.
BUF assists commercial building owners to improve the energy, water and waste efficiency of existing commercial buildings through long-term loans that are secured via a statutory charge over the land holding also allows upgrades to heritage buildings and the installation of renewables and other storage solutions.
Owner of Angas Securities House John Culshaw
and Your DC
are among the first asset owners to utilise the mechanism to facilitate upgrades through DEWNR’s early adopter program and implemented by Cminus Sustainable Spaces
and Property & Consulting Australia.
The BUF mechanism took effect on 1 August 2017 and helps owners undertake upgrades in order to reduce their buildings’ energy consumption, emissions and make significant savings on their energy costs.
Through tying an upgrade loan to the property – rather than the owner – with payments collected by Council through a statutory charge similar to rates, the property owner is able to more easily access long-term finance without cash flow uncertainty, freeing up their cash for other investments.
Tenants benefit from reduced utility costs and improved quality and amenity of buildings while the owner benefits through potential capital uplift via improved NABERS ratings and increased attractiveness and amenity for their tenants. In a competitive market, BUF upgrades are an effective tenant attraction and retention tool.
Your DC will use the finance for the installation of a 199kW solar PV unit to generate 290MWh of power per year whilst being cash-flow positive each and every year. The solar energy solution is forecast to deliver electricity to the property at an effective cost of just over 4c per kWh over the life of the system, equating to a rate that is less than 25% of the site's current grid electricity tariffs. The solar system will reduce the building’s greenhouse gas emissions by 3,728 tonnes, equivalent to taking more than 800 cars off the road.
John Culshaw will install a 30kW solar PV unit, an external green wall, upgrade lighting to LED and install a power factor correction system in his 26 Flinders Street building. He has praised the high level of collaboration that was demonstrated to deliver one of the first BUF agreements in South Australia, saying that “I was able to prosecute the agreement through the ongoing support of the Property Council, DEWNR, ACC, Cminus, Eureka Real Assets and many other committed contractors.”
Both building owners have praised their respective Local Councils – the Cities of Adelaide and Salisbury – for their timely participation in the initiative and are delighted with the cost savings achieved and improved amenity and efficiency of their buildings.
Salisbury Building Consortium (the owner of Your DC) CEO, Scott Hicks said the upgrade is “cash flow positive from day one, it was an absolute no-brainer for us. Data centres are one of the highest consumers of power per square metre and sustainability is very important to us. This program means that when the sun is shining our customers’ computers are running on solar.”
It is anticipated that both Marion and Onkaparinga Councils will endeavour to make BUF available to their constituents early in 2018.
Fairlie Delbridge, Managing Director of Cminus Sustainable Spaces, said “we look forward to providing comprehensive case studies of both 26 Flinders Street and Your DC as soon as both upgrades are complete.”
“It has become apparent there is a strong appetite for BUF in the property sector because it has a variety of benefits for building owners and tenants alike,” she said. “Of particular interest has been the ability for building owners to access well priced, longer term capital that has little effect on business CAPEX because it sits with the property rather than the owner and the ability for building owners to utilise a tenant pass through mechanism to service the debt.”
The Property Council of Australia looks forward to continuing to advocate and advance the access to BUF for its members.