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FAQs - Transcend Equity - Energy Savings with Commercial Office Spaces

Posted by Transcend Equity in Dallas-Fort Worth-Arlington, TX on Apr 03, 2008

Who is a good candidate for your MESA solution?
MESA is designed for multi-tenant commercial office portfolios with a minimum aggregate square footage of 250,000 square feet.

• What services are provided under MESA?
Transcend Equity is an operating expense that replaces your current utility bills. During the term of MESA, Transcend Equity will pay for all utilities consumed in the buildings. Additionally, Transcend Equity will continuously monitor all building systems in order to optimize system efficiency while maintaining tenant comfort and enhancing your staff’s effectiveness.

• How does MESA increase dividends?
By reducing the amount of your capital directed to recurring capital expenditures, MESA increases Funds Available for Distribution (FAD) to shareholders.

• How does MESA increase real estate investment yield?
During acquisition, MESA reduces the initial capital invested by our clients in procuring assets. During the hold period, MESA increases cash flow generated by reducing ongoing capital expenditures. During disposition, MESA eliminates retrade and increases NOI generated by the property. In all three cases, MESA boosts investment yield.

• Why can’t I do this myself?
Typically, traditional procurement methods reduce yield, require cost recoveries (which are financially restrictive and annoy tenants) and saddle you with all of the performance risk.

• What improvements are typical?
Typical improvements include the replacement and/or modification of major mechanical, electrical, lighting, and control systems. All of the improvements are directed towards optimizing building performance, improving tenant comfort and enhancing operating staff effectiveness.

• The thought of “comprehensive building improvements” sounds disruptive. How can I be sure our tenants will not suffer discomfort or interruptions while building improvements are underway?
We fully understand and are sensitive to the concerns of both your tenants and your operating staff. We complement our financial and real estate expertise with extensive experience managing non-intrusive improvement projects in occupied buildings.

• How does my hold period play into MESA?
MESA will have a positive impact regardless of hold period. At acquisition, MESA can reduce your basis by eliminating capital expenditures identified during due diligence. At disposition, MESA can eliminate re-trade issues and create additional income at termination, both increasing your proceeds at sale.

• What happens if I sell the building?
MESA can be assigned to the new owner or terminated at your convenience.

• How does MESA increase proceeds at sale?
At the termination or expiration of MESA, the owner will experience a significant decrease in operating expenses producing a corresponding increase in NOI. The capitalized value of this NOI increase will increase proceeds at sale.

• How do I get started?
Contact us. We will arrange a brief discussion that will help us both understand if your portfolio is a fit for the MESA solution. If we mutually agree the potential exists we will schedule a Discovery Meeting. In the Discovery Meeting, we will explain MESA in greater detail and request information we require to assess MESA’s applicability to your portfolio.

• What information do you need to assess whether MESA may be a fit for my portfolio?
At a minimum, we will need the following information about your assets on a per building basis:
1. Rentable square footage
2. Annual gross energy expenditures
3. Actual occupancy
4. Building age