Transcript
ERES Conference 2015, Istanbul Universal Web Based Data Processing Model for Rental Housing Profitability Calculation of Energetic Retrofitting Jonas Hahn, Paul Bartsch, Sven Bienert, Dogan Kesdogan
26.06.2015
Agenda
1.
Introduction
2.
Methods and Key Performance Indicators
3.
Required and Suitable Input Parameters
4.
Information Technology and Data Processing
5.
Conclusion
2
Agenda
1. Introduction 2.
Methods and Key Performance Indicators
3.
Required and Suitable Input Parameters
4.
Information Technology and Data Processing
5.
Conclusion
3
Introduction
Existing buildings are a „low-hanging fruit“ to achieve European goals Ambitious targets with regard to energy and emissions are in danger of being missed Existing housing stock drives energy consumption and op.ex. significantly: 35 % of buildings are older than 50 40 % of energy consumption caused Consumption delta: up to 50 litres of heating oil per square meter
Energetic Retrofitting
Although perceived as beneficial (and often legally supported), energy-efficient buildings face a diffusion problem („energy gap“) A lack in transparency is identified as the main constraining factor
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Introduction
RentalCal will provide the necessary transparency to investors and home-owners
A Horizon 2020 project Aims to increase market transparency for energy efficiency investments Focus: rental housing industry Provision of a calculation/benchmarking tool for profitability assessment Fitting the specific requirements of energetic retrofits in a European environment
Central Research Interest/Idea: How to adequately assess the viability of energy efficiency retrofitting? (considering certain given restrictions/framework conditions)
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Agenda
1.
Introduction
2. Methods and Key Performance Indicators 3.
Required and Suitable Input Parameters
4.
Information Technology and Data Processing
5.
Conclusion
6
Methods and Key Performance Indicators
The international orientation is both a gain and challenge with regard to transparency creation Fundamental considerations:
Is every residential energy efficiency measure profitable?
Does every building age require a retrofit?
Are energy efficiency investments suitable for every investor profile?
Who should be the target group / user of the tool? Residential industry vs. small-scale investors vs. home-owners.
How would you consider split incentives (the user-investor dilemma)?
Is the owner or the object perspective leading to more appropriate results?
Which efforts must be made to integrate all aspects from very diverse financial, market, institutional and legal circumstances?
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Methods and Key Performance Indicators
Several methodological approaches were discussed (1/2)
Internal Rate of Return
Equity Multiple
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Annualized % value Dynamic method
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Re-Investment Pre-Requisite; fitting target group?
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High financial market orientation
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Comparability over time
Suitability limited due to re-investment constraint. Also, major parts of the target group are not aware of the concept. (Concept of Modified Internal Rate of Return accounts for pre-requisite issue)
Suitability limited due to conceptual proximity to financial investments outside real estate. Also, figure is not comparable between alternatives of diverging time horizon.
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Methods and Key Performance Indicators
Several methodological approaches were discussed (2/2)
Net Present Value
Equity Return (CFP Yield)
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Provides outperformance indication (however absolute €)
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Output format discounting, interpretation, unrelated to measure volume
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Comparability with other alternatives, intuitive result
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(cash orientation vs. Green Value)
Suitability limited due to high complexity in interpretation and required investor knowledge on profile-specific risk situation (discount rate).
The only aspect that is to be discussed using CFP is how non-cash components such as the Green Value are considered. Implementation in the form of an alternative scenario calculation is recommended.
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Methods and Key Performance Indicators
CFP results are intuitively understandable and reflect actual profitability very well Complete Financial Plan results are … easy enough to create transparency to whole target group, including private home-owners and small(est)-scale investors. … integral enough to comply with industry standards Side Calculations: Financing, Depreciation, Taxation Result: Final Equity Value Derivation: Equity Yield (% p.a.) Fundamental similarity to Modified IRR
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Agenda
1.
Introduction
2.
Methods and Key Performance Indicators
3. Required and Suitable Input Parameters 4.
Information Technology and Data Processing
5.
Conclusion
11
Required and Suitable Input Parameters
Profitability analysis must incorporate a huge variety of driving aspects
Typology I Building Stock incl. measure/component costs, energy savings, building typologies, depreciation
Profitability Analysis Typology II Market Conditions incl. legal framework/taxation, rents and market behavior
Typology III Investors incl. investment strategies, financial structures
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Required and Suitable Input Parameters
The data processing model depicts a complex interaction of a whole variety of input parameters
1.
TAX / INSTITUTIONAL REGIME Deductability Structure
Rental Income - Tax Rate (Corporations) Rental Income - Tax Rate 3. (Individuals) Rental Income - Tax Rate (Other 4. Investor Profiles)
2.
1. 2.
Interest Level (Credit / Loan)
3.
10.
Interest Level (Cash) Reclamation of saved operating expenses in terms of rental income Additional Empirical Rental Premium Green Value Other Green-pay-backs: faster leasing, lower vacancy etc. Accounting-side Green Value Effect of non-reimbursable operating costs toward the owner Cap rates for rental housing
11.
Direct Subsidies
4.
5.
Value Added - Tax Rate
5.
6.
Specific Depreciation for Listed Buildings
6.
7.
Reclamation Procedures
9.
Depreciation Rates & Allowances Depreciation Basis
10.
Tax Shield Available?
8.
MARKET FRAMEWORK Centrally Organized Interest Discounts / Subsidized Financing Conditions
7. 8. 9.
BUILDING-SPECIFIC ENERGY-EFFICIENCY & COST
INVESTOR PROFILES 1.
Typical Holding Periods
2.
Typical return expectations Typical Loan To Value ratio (LTV) Typical Financing Amortization Deduction of Value Added Tax
3. 4. 5.
1.
Building Typologies
2.
Building Construction Cost Running Costs ex ante (operating expenses) Running Costs ex post (operating expenses)
3. 4.
5.
Energy Saving from Measure (note: distinction between final and primary energy)
6.
Reduced CO2 emission from Measure
7.
Energy Price Today
8.
Energy Price Projection
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Required and Suitable Input Parameters
The input parameters face material challenges and uncertainty over time Determination of all specifics within the European countries (typologies etc.) even regional climate? In parts, qualitative information must be translated into machine-parsable format How „cash-effective“ is a Green Value? (amount, timing) + 40%
Localized energy price projections for long-term investment horizons
EEX Strom Phelix Baseload Year Future (EUR); 2007-2015
Household Electricity Price Index; 2007-2014 14
Agenda
1.
Introduction
2.
Methods and Key Performance Indicators
3.
Required and Suitable Input Parameters
4. Information Technology and Data Processing 5.
Conclusion
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Information Technology and Data Processing
Service oriented architecture enables high graduate of flexibility to access data Network Architecture
Webservice
Client
SOAP
Database
Webserver
Client
Client
Front-End Tool is going to be launched at www.rentalcal.eu
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Information Technology and Data Processing
Workflow incorporates data from users and the database
Workflow as main feature will help user to navigate and collect input for decisions
User-given-data will be parsed by the workflow
Additional data from webservices and machine-learned patterns will initially guide the user interaction, while allowing highest possible flexibility
Augmented user information provides the input for calculation and analysis
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Information Technology and Data Processing
Object handled data secure both databases and web platform IT Security MVC (Model-View-Controller) concept will be realised by the application Database
Access to database only from the model after controller pushed a request Connection is secured via https and session keys
Access with Java Beans
Usability MVC
Clear design and a step by step workflow Most commonly used input as standard input for current user group Advanced view to manipulate the input also available via expert view Expert view in different modes (input field, workflow step, overall)
Request
Response Client
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Agenda
1.
Introduction
2.
Methods and Key Performance Indicators
3.
Required and Suitable Input Parameters
4.
Information Technology and Data Processing
5. Conclusion
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Conclusion
Next steps comprise Project Horizon: 3 Years starting in March 2015
Next steps Data Input Design for each delivering work package (technology/building typologies, legal framework, market/financials) Development of final methodology and gearing of Excel-based tool (1st step) Data Collection - Gathering and Validation – partially via primary data analysis Project partner meeting in October (Warsaw)
Continuous research results (on-going basis) Comprehensive dissemination activities in universities, through National Advisory Boards and amongst practitioners
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Thank you very much for your attention! Jonas Hahn, Paul Bartsch, Sven Bienert, Dogan Kesdogan Contact:
[email protected]
26.06.2015
