Record EUA deal signed in Melbourne

The latest Environmental Upgrade Agreement (EUA) signed in Melbourne demonstrates the power of the innovative finance mechanism.

The owners of former Ansett building at 499-501 Swanston Street have signed off on a $7 million environmental upgrade making it the 5^th and largest EUA deal signed in Victoria.

Signed in late August, the agreement between the City of Melbourne, The Australian Environmental Upgrade Fund and the owners of the 19-storey building, is a true testament to the success of the innovative 1200 Buildings program and EUA.

The whopping $7 million deal trumps other EUA projects in Melbourne, which have so far hovered around the $1 million mark (view our case studies).

So what’s the big deal?

Thanks to EUA finance, the Swanston Street building occupants will enjoy a full upgrade to its plant room, chillers and boilers and a solar film for the windows to lessen the load on air-conditioning. $2.5 million of the $7 million EUA will fund new lifts that will include “regenerative braking” – an energy recovery mechanism – and smart controls that will drive lift allocations and save energy.

With the upgrades, carbon emissions will reduce by an estimated 606,700kg per year and cut more than $80,000 off the building’s energy bills.

The environmentally beneficial parts of the project were financed through an EUA. The remainder of the overall $40 million project was funded with traditional property secured finance.  This EUA project is one element in the process of repositioning an entire building asset.

Projects can be partially funded using longer term finance,  which has the potential to  enhance cashflows to a building owner while at the same time removing  partial re-finance risk and diversifying funding streams to a building.

More aware.

With the help of EUA finance, property owners are starting to understand the commercial opportunities presented by this mechanism, to enhance commercial outcomes of their projects and buildings.  This level of understanding continues to grow in the market.

Building owners and tenants are becoming aware that by working proactively together, an EUA is an opportunity to capture money that is currently being wasted and apply that to direct benefits to themselves – they get to occupy better performing buildings.

Joining this market, the owners of 501 Swanston Street mark a new era of confidence and awareness in environmentally friendly and appealing buildings that are regarded highly among buyers and tenants.

Perhaps what is most intriguing is the very fact that the joint venture owners, under 501 Pty Ltd, were previously unfamiliar of the retrofit market. According to PDG Corporation principal, Vince Giuliano, the EUA will enable a higher order of environmental outcomes than might otherwise have been achieved.

“It brought forward works we may not have been able to do and as part of the major upgrade efficiencies we’re doing it now,” he told The Fifth Estate. Read the full story from the building owner’s perspective.

The other aspect that the owners of 501 Swanston street are proud of, is that through doing this work, they have a list of potential customers queuing up to become a tenant in their building, which isn’t too bad within a climate of growing vacancy rates.

Taking the plunge into the energy efficient building market is proving trust and assurance in the EUA that is developing among property owners.

Are you ready to take the plunge?  

Contact Sustainable Melbourne Fund to find out how you can obtain EUA finance.