ARTICLES
Green Premium Myth:
A Case Study of the Financial Implication of Green Design on Shareholder Value
By Sherman Indhul |Director |Bsc.QS (Hons), ProjM, Mcom |metalabs (Pty)Ltd
Article at a Glance
Premium - considering that at a 2% premium the saving to the property owner over the life of the property is in excess of R 122 million, of which 78 million or 64% relates to energy saving. This translates into an annual saving of over R6 million on operating expenditure of which R3.6 million is attributed to energy.
Further to this the study finds that the 2% capital cost premium of R 2,88 million can be offset by the saving on operating expenditure within the first year of operation. Therefore shareholder value increases from year one of operation. It is found that Return on Net Assets (RONA) is higher due to the impact on profit margin and when placed in a hypothetical simulation it is clear that the case study will enhance a property portfolio by offering a superior revenue stream whilst reducing the risk profile of the portfolio.
Hence, based on the findings of this study a capital cost premium is well worth the expenditure due to the long term sustainability of shareholder value created from a superior revenue stream influenced by lower operating expenditure.
Green projects now tax-incentivised
2009/02/26
This Property24 Article can also be read here
This year's Budget Speech was uneventful from a tax perspective.
One area, though, that did receive some attention from such a perspective was the environment. A number of initiatives were announced to address environmental challenges, most specifically climate change.
The extent of the environmental challenges facing South Africa was emphasised, as well as the particularly severe impact that they can have on poor communities (for instance those sited close to industrial areas). The international trend towards the use of market-based instruments to address environmental challenges was referred to as precedent for the proposed initiatives.
The first proposed incentive is additional income tax allowances for energy efficient equipment. These allowances may be as high as 15%, but they will be conditional upon proof of resulting energy efficiencies. Such efficiencies will be measured over a two- or three-year period and will have to be certified by the Energy Efficiency Agency. The additional allowances are intended to complement provisions in environmental legislation that require the elimination of inefficiencies in the use of energy, water and raw materials.
Mar 13 2009 07:05:45:313PM
Global warming is accelerating beyond the worst predictions and is threatening to trigger "irreversible" climate shifts on the planet, warn hundreds of leading scientists.
Copenhagen - Global warming is accelerating beyond the worst predictions and is threatening to trigger "irreversible" climate shifts on the planet, hundreds of leading scientists warned.
Saying there is no excuse for inaction, the nearly 2 000 climate researchers meeting in Copenhagen urged policy-makers to "vigorously" implement the economic and technological tools available to cut emissions of heat-trapping greenhouse gases.
They issued their stark message on Thursday, at the end of a three-day conference aimed at updating the findings of a 2007 report by the Intergovernmental Panel on Climate Change before UN talks in December on a new global climate treaty.
BE PRO-ACTIVE! ELECTRICITY BILLS COULD BE CASHFLOW TRAPS!
In July 2009 the South African media announced that Eskom Holdings signed a loan agreement of 530 million Euro, about 6.1 billion Rands, for its’ capital expansion program.
Since 2007 many have said that electricity may increase in the next few years by as much as 60%. With Eskoms new loan developments it all makes sense why such assumptions could turn out to be very accurate, or even a very low estimate.
It was also mentioned that the loan is supposed to be paid back over a period of 12 years, but that said, it looks like consumers will start paying for this immediately because it appears that Eskom has hopes of finalizing an integrated funding model by the end of its current financial year and has, in the interim, requested a 34% tariff increase from the National Energy Regulator of South Africa (NERSA) for 2009/10.
In addition to this quite large step, in February it was announced that the government approved guarantees totaling R175.87-billion over five years in support of Eskom's capital expansion programme.
What does all this mean for the consumer of electricity, landlords and managing agents? In effect, it means that Eskom is seeking approval of more electricity tariff increases from the National Energy Regulator (NERSA) which in turn means everyone will pay more for electricity. This is not the first time that Eskom has asked for tariff increases and probably not the last time for the near future either.