Introducing the Sustainable Australia Fund
We have some big news... We've grown beyond our Melbourne home and are now preparing to work with businesses across Australia to achieve their environmental upgrades. The Sustainable Melbourne ..
Sector: Commercial office refurbishment
Address: 401 Collins St, Melbourne VIC 3600
Environmental upgrade: Improve the building NABERS rating from 2.5 to 3.5 stars
Key drivers: Improve appeal and value of asset
Interaction with SMF: Engaged SMF to finance EUA under a fixed rate arrangement
How can you safely secure funds to convert an old, undesirable office location into a newly refurbished building – one that will attract a strong, long-term tenant?
401 Collins St is an iconic art-deco building in the heart of Melbourne's banking district. Built more than 80 years ago in 1936, it has aged significantly and lacks modern features. That was until Impact Investment Group acquired the property in 2014 with the intention of transforming 401 Collins St into a prime blue-chip address.
Restoration began in 2017. Finance was sourced from several lenders and comprehensive environmental works were undertaken including chiller replacement, pipework insulation, an outside air system upgrade, a toilet exhaust system upgrade, a BMS upgrade, and electrical sub metering.
The funds for these environmental works were sourced via an EUA (Environmental Upgrade Agreement), while the funds for other renovations were sourced via a traditional bank loan. This combination of two lenders provided diversity to Impact’s capital stack at an affordable rate.
“EUAs provide a low-cost capital option.” - Roni Karika, Senior Asset Manager
EUAs reduce bank loan and equity requirements, minimise long-term financial risk, and increase short-term cashflow.
Since completing the renovations, Impact has successfully tenanted the building to co-working franchise WeWork on a 15-year contract. In addition, power bills for the property have reduced. Electricity has dropped by 32%, and gas has dropped by 16%.