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99 St Georges Terrace gets Ecosave makeover uplifting NABERS from Zero to Four Star Rating

99 St Georges Terrace - 4.0 Star NABERS Rating as a result of Ecosave Services Agreement

A scheme to finance environmental upgrades of CBD buildings has been rolled out at 99 St Georges Terrace.

The 13-storey office building, which had a NABERS energy rating of zero, ageing plant and was 75 per vacant, had building upgrades worth $751,350, expected to save $140,000 a year in energy and maintenance costs when it is fully leased. The 13-storey building was built in 1971 on the corner of St Georges Terrace and Howard Street and is owned by Singapore-based investors.

And, building manager Colliers International’s sustainability manager Patrick Jeannerat said, the upgrade for a 4.0 star NABERS energy commitment, was completed for “zero-dollar upfront cost”.

Under a scheme by Ecosave, an energy services company that finances building upgrades and guarantees energy savings, 99 St Georges Terrace got new heating, ventilation and air-conditioning systems with a metering upgrade that reduces the base building energy consumption 50 per cent.

The plant and equipment upgrades were funded via a 10-year Ecosave Services Agreement.

BSA, an Australian Securities Exchange-listed building maintenance and construction services company, carried out the work.

The savings on energy costs are diverted to pay for the cost of the building upgrade.

The three-way collaboration between Colliers International, Ecosave and BSA meant that new tenants could move into 99 St Georges Terrace confident that they would have “well-controlled comfort, energy efficiency and outgoings”, Mr Jeannerat said. “Since the upgrades were completed, three new tenants have signed leases and negotiations for other leases are under way, so the returns to the building owner are already improving.”

It was often difficult to get owners to pay for building upgrades because they had to pay the cost, via extra debt, and tenants got the energy savings.

Mr Jeannerat said there were a number of funding models on offer. “New funding schemes to be run by WA local governments, similar to schemes already in place in Victoria, NSW and South Australia, are also being considered to finance building upgrades,” he said.

“In coming years we are expecting these upgrades to be a timely solution for other buildings in Perth that are short of capital for upgrades but want to improve occupancies and values.”

After a site assessment, Ecosave recommended a new HVAC plant and metering upgrade which would reduce the base building’s energy consumption by 50 per cent. An arrangement to fund the plant and equipment upgrades using a 10-year Ecosave Services Agreement (ESA) was also put in place.

 

Essentially, savings on annual energy costs and on repairs and maintenance, exceed the monthly fees for the ESA, generating a positive cash-flow from the outset.

As part of the service agreement, Ecosave also guaranteed a 4.0 Star NABERS Energy rating once the building’s occupancy exceeds 75 per cent. Until then, the building is being marketed with a 4.0 star NABERS Energy Commitment Agreement.

Commercial building owners have been reluctant to upgrade their properties mainly because of the split-incentive issue where tenants naturally benefit from building upgrades at the owner’s expense, often with significant debt and capital outlay.

The Ecosave Services Agreement overcomes this hurdle entirely, by eliminating the up-front capital required for building upgrades.

Ecosave’s Group Managing Director John Harriott said the Ecosave Services Agreement (ESA) solution is favourable for the client because typically debt-funded plant and equipment upgrades can be a hefty impost on the investors’ debt profile reflected in the balance sheet and can therefore affect future borrowing potential, not to mention risk profile.

The ESA is fundamentally different to lease-based agreements or other liability-ridden instruments typically used for capital equipment. The ESA can be treated as an off-balance sheet operating expense item. That’s because we are essentially providing energy efficiency services to meet or overachieve a guaranteed savings target, and we are not limited by what equipment we use over the service period to achieve these savings.

Mr Harriott said.

“Ecosave carries the long term financial and performance risks while the client benefits from immediate building upgrades at zero-up-front costs and no debt incurred”


To find out more about this project, or to discuss how Ecosave can assist with self-funded environmental upgrades for your commercial building – call 1300 55 77 64 or submit an online enquiry here

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