Greenbuild 2017 - Boston GRESB Pace Financing Session - November 7 Integro & SRS : Slides 3-14 Enernoc : Slides 16-27

1. Commercial Property Assessed Clean Energy (C-PACE)
Financing Session:
Strategic Opportunity, Tactical Benefits &
Practical Implementation
November 7, 2017

2.  Keirstin Beck
 Principal,
 Real estate professionals that bridge the gap between “green”
improvements, specialty finance, and profitable investments
 Brian McCarter
 CEO,
 C-PACE Program Administrator in markets nationwide:
 CA, CO, CT, OH, OR, RI, UT, VA
Today’s Presenters

3. 3
New way to finance energy efficiency & renewable energy
improvements in CRE retrofits & new construction:
 100% financing (no out-of-pocket expense, soft or hard costs)
 Long term (up to 25 years)
 Lower energy costs
 Cash flow positive projects
 Combine with utility & tax incentives
 No personal guarantees
 Payment obligation can transfer upon sale (akin to sewer assessment)
What is C-PACE?

4. 4
 C-PACE is designed as an “open source funding model”
 Pre-qualified private capital providers fund eligible projects
 Owner may choose a preferred capital provider; OR
 Program Administrator can review pre-approved projects with pre-
qualified capital providers to determine funding interest
 C-PACE requires owners to receive consent of their mortgage holder
(C-PACE assessment lien is a priority lien akin to sewer assessment)
What is C-PACE? (Cont.)

5. 5
C-PACE available in 19 states; ~$500 million in projects to-date
C-PACE Market Nationwide

6. 6
C-PACE is a voluntary special assessment-based, private financing program
 Building owners choose to install eligible improvements
 Costs are spread over periods up to 25 years
 Repayment via a new “Special Assessment” bill from the local government
 Goal: energy savings $$ > the payments; Creating cash flow positive projects
 Finance payments can potentially be passed-through to tenants in NNN lease
 The repayment obligation and can transfer to the new owner upon sale
How C-PACE Works?

7. 7
 Eligible Property Types (C&I)
 Office
 Retail
 Hotel
 Industrial
 Healthcare
 Non-profit
 Multifamily (5+ units)
What’s Eligible?
 Eligible Improvements (examples)
 Automated building controls
 Boilers, chillers & furnaces
 Building envelope (insulation, windows)
 Combined heat & power (CHP)
 High efficiency lighting
 Hot water heating systems
 HVAC upgrades, VRF installs, controls
 Solar PV systems, incl. roof upgrades
 Pumps, motors, drives

8. 8
Owners can tap C-PACE financing to:
 Replace aging energy-consuming equipment & install solar PV systems
 Fund capital intensive building modernization projects that:
 Require NO owner out-of-pocket expense
 Generate IMMEDIATE positive cash flow
 Solve for short-term payback & fix-at-failure challenges
Existing Building Retrofit Benefits

9. 9
 Developers can tap C-PACE financing to:
 Construct more efficient buildings, i.e. lower operating costs
 Increase tenant comfort
 Include improvements often “value engineered” out of a project
 Potential benefits to developer:
 Reduce owner equity contribution or other high-cost capital
 No personal guarantees required
 No impact on working capital or developer’s credit
New Construction Project Benefits

10. 10
 Leverage energy savings to pay for necessary capital improvements
 Redirecting existing asset costs from utility payments to C-PACE
payments to improve underlying asset
 Accelerate company sustainability goals with improved building performance
 Reposition underperforming assets with C-PACE by addressing capital
needs
 Stabilize balance sheet with additional operation/maintenance savings,
improved building performance and reduction of impact from rising energy
costs
C-PACE for REITs

11. 11
Retail
Case Study – Simon Properties

12. 12© 2017 Integro, LLC
How C-PACE Works…
Office Building
1. Needs new Windows (Capital Needs
Item)
2. Install AHU
3. Install upgraded LED lighting
STEP 1: Energy Star Score- Establishes
Baseline
STEP 2: Energy Audit – Analysis of Building
to establish energy savings and costs of
upgrades
STEP 3: Take Energy Savings and Cost to
implement the improvements and establish
the amount of the PACE loan
STEP 4: Source loan provider
STEP 5: Secure 1st Lienholder Consent
STEP 5: Close PACE Loan
STEP 6: Implement improvements
STEP 7: Pay Property Taxes

13. 13© 2017 Integro, LLC
Denver
Office
Building –
Windows/
Glazing
*Colorado PACE does not have a
Savings to Investment Ratio (SIR)
so larger capital improvements
can also be addressed
13
Office - Denver
8/28/2017 Energy Score 77 After PACE Energy Score 92
Total Square Feet 144,500
Energy Use Current Energy Costs Current Cost $/sf Projected Energy CostsProjected $/sf Projected Savings $ / SF
Gas -$ -$ -$ -$ -$
LED Lighting -$ 66,759.00$ 0.46$
Air Handling Unit - 1 1,350.00$ 0.01$
Controls 5,764.00$ 0.04$
MAU-1 2,597.00$ 0.02$
Garage EF's 480.00$ 0.00$
Roof 1,691.00$ 0.01$
Glazing 1,613.00$ 0.01$
Garage Lighting 468.00$ 0.00$
Saved Lighting Maintenance -$ -$ 20,181.00$
$194,869 $1.34 -$ 100,903.00$ 0.70$
Hard Cost Cost
LED Lighting 438,673.00$
Air Handling Unit - 1 21,936.00$
Controls 55,261.00$
MAU-1 18,600.00$
Garage EF's 1,200.00$
Roof 32,264.00$
Glazing 897,000.00$
Garage Lighting 7,200.00$
Total Hard Cost 1,472,134.00$
Soft Cost Lender Legal 5,000.00$
Program Administrator 38,745.13$
Loan Fee 1% 15,158.79$
Other (MEP design, permits, engagement 57,533.00$
commissioning)
Total Soft Costs 116,975.96$ 0.81$
PACE Loan Total Loan Amount 1,589,109.96$ 11.00$
PACE Term 20
PACE Interest Rate 5.00% ($125,849.07)
Annual Assessor Fee (1,258.49)$
Annual PACE Payment 125,849.07$ 0.87$
Annual Energy Savings 100,903.00$ 0.70$
Assumed Increase to Op Expense 24,946.07$ 0.17$
Assumed Savings/Value
Assumed Xcel Rebate 75,000.00$
Total Hard Cost Improvements 1,472,134.00$
TOTAL VALUE ADDED 1,547,134.00$

14. 14© 2017 Integro, LLC
Denver
Office
Building
Needs New
Building
Controls –
Neutral NOI
14
Office Building
Denver - Energy Score 74 Energy Score After PACE 91
Total Square Feet 97,395
Energy Use Current Energy Costs Current Cost $/sf Projected Energy Costs Projected $/sf Projected Savings $ / SF
Electric 203,555.55$ 2.09 154,891.55$
Air Handling Unit -1 -$ -$ 0.10$ 9,800.00$ 0.10$
Building Controls 0.10$ 9,390.00$ 0.10$
Upgrade LED Lighting 0.20$ 19,444.00$ 0.20$
Lighting Maintenance 0.09$ 8,875.00$ 0.09$
Roof 0.01$ 1,155.00$ 0.01$
Natural Gas 948.00$ 0.01$ 948 -$ -$
Water -$ -$
204,503.55$ 0.01$ 155,839.55$ 0.50$ 48,664.00$ 0.50$
Cost Cost Per Square Foot
Hard Cost Air Handling Unit -1 47,782.00$ 0.49$
Building Controls 159,000.00$ 1.63$
Upgrade LED Lighting 84,056.00$ 0.86$
Roof 188,820.00$ 1.94$
Other -$ -$
Total Hard Cost 479,658.00$ 4.92$
Soft Cost Loan Origination 1% 4,796.58$ 0.05$
Program Administrator 2.50% 11,991.45$ 0.12$
Other (Project development fees, MEP 83,594.00$ 0.86$
Permits, Commissioning, Lender Legal)
Total Soft Costs 100,382.03$ 1.03$
PACE Loan Total Loan Amount 580,040.03$ 5.96$
PACE Term 20
PACE Interest Rate 5.60%
Annual PACE Payment 48,274.24$ 0.50$
Annual Assessors Fee 482.74$ 0.00$
TOTAL PACE LOAN PAYMENT 48,756.98$ 0.50$
Annual Energy Savings 48,664.00$ 0.50$
Assumed Increase to Op Expense (389.76)$ 0.00$
Current Property Taxes Current Assessment 248,310.62$ 2.55$
PACE Assessment 48,756.98$ 0.50$
New Property Taxes 297,067.60$ 3.05$
Assumed Savings/Value
Total Hard Cost Improvements 479,658.00$
Incentives/Rebates 95,423.00$
TOTAL VALUE ADDED 575,081.00$

15. 15
Questions & Answers

16. © EnerNOC, Inc. All rights reserved. www.enernoc.com
November 7, 2017
Navigating the New Energy Economy

17. 17© EnerNOC, Inc. All rights reserved. www.enernoc.com
Click to edit Master title styleEnerNOC is Now an Enel Group Company

18. 18© EnerNOC, Inc. All rights reserved. www.enernoc.com
Click to edit Master title styleThe Enel Group’s Global Reach

19. 19© EnerNOC, Inc. All rights reserved. www.enernoc.com
Click to edit Master title styleAssembling Capabilities: Enel’s Acquisitions in 2017
January
2017
August
2017
October
2017

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Click to edit Master title style
Source: The Economics of Grid Defection, The Rocky Mountain Institute, 2014
Confluence of Challenges Facing Energy Providers

21. 21© EnerNOC, Inc. All rights reserved. www.enernoc.com
Source: Commercial and Industrial Energy as a Service Applications and Deployment Models: Global Market Analysis
and Forecasts | Navigant Research, 2017
“To operate a decentralized
grid and otherwise adapt to
these changes, utilities
must open new channels
of interaction with
customers that want to
install DER and intelligent
controls, participate in DR
programs and join new
markets, and generally flex
their power of choice.”
– Navigant Research
Transforming the Business Case
C&I businesses are looking to capitalize in this new environment

22. 22© EnerNOC, Inc. All rights reserved. www.enernoc.com
Source: Clean Disruption of Energy and Transportation, Tony Seba, 2014
When a market disruption occurs…
 It leverages new technologies
 It eliminates efficiencies
 It is inevitable
“The age of film photography did not end because we ran
out of film.” – Tony Seba, 2014
A Familiar Opportunity
Where have we seen this before?

23. 23© EnerNOC, Inc. All rights reserved. www.enernoc.com
Challenges
 Fragmented suppliers
 Financing capital projects
 Volatile energy prices
 Maintaining productivity
Opportunities
 Investor demand
 Sustainability pressure
 Creating value from assets
 Improving resiliency
Ample Opportunity, Complex Challenges

24. 25© EnerNOC, Inc. All rights reserved. www.enernoc.com
 Assembling energy
expertise and
technological
capabilities
 Leveraging Enel
Group’s extensive
global resources
 Connecting C&I
businesses to new
energy opportunities
Enabling Customers to Create Value and deliver outcomes
Partnering with our customers to provide energy management as a service “EaaS”

25. 26© EnerNOC, Inc. All rights reserved. www.enernoc.com
 What: Networking, drinks, snacks
 Where: Row 34, 383 Congress Street, Boston, MA 02210
 When: 6 pm
Join us Tonight: Greenbuild Kickoff Happy Hour

26. © EnerNOC, Inc. All rights reserved. www.enernoc.com
Regional Sales Manager
EnerNOC
kmcsweeney@enernoc.com
Kevin McSweeney