Commercial Investment Real Estate March/April 2013 - Page 39

EAC Payback vs. Straight Payback Method EAC Payback $200,000 new boilers perform as expected Total energy & repair savings Tenant(s)’ gain $30,000 per year for 25 years $10,000 per year for 10 year cost recovery period $100,000 Landlord reimbursed $16,000 per year for 12.5 year cost recovery period Total $200,000 $20,000 per year for 10 year cost recovery period $200,000 $30,000 per year for 12.5 years remaining life $375,000 Total Year 1–12.5 period of straight-line pay- back to landlord 12.5–25 equipment life after landlord is reimbursed $200,000 new boilers underperform by 33% Total energy & repair savings Tenant(s)’ gain $20, 000 per year for 25 years $4,000 per year for 12.5 year cost recovery period Total $50,000 Total 1–12.5 period of straight-line pay- back to landlord Total energy & repair savings $33,000 per year for 25 years $20,000 per year for 10 year cost recovery period $200,000 12.5–25 equipment life after landlord is reimbursed $200,000 new boilers overperform by 10% 1–10 period of straight-line pay- back to landlord $16,000 per year for 12.5 year cost recovery period Total $200,000 $200,000 new boilers overperform by 10% $20,000 per year for 10 year cost recovery period $200,000 $33,000 per year for 12.5 years remaining life $412,500 Total 1–12.5 period of straight-line pay- back to landlord 11–25 equipment life after landlord is reimbursed $13,000 per year for 10 year cost recovery period $130,000 Landlord reimbursed CCIM.com $20,000 per year for 15 years remaining life $300,000 $33,000 per year for 25 years $17,000 per year for 12.5 year cost recovery period Total $212,500 Landlord’s gain 11–25 equipment life after landlord is reimbursed $200,000 new boilers underperform by 33% $20,000 per year for 12.5 years remaining life $250,000 Year Year 1–10 period of straight-line pay- back to landlord $0 per year for 10 year cost recovery period $0 $16,000 per year for 12.5 year cost recovery period Total $200,000 Landlord’s gain $30,000 per year for 15 years remaining life $450,000 $20,000 per year for 25 years Landlord reimbursed Tenant(s)’ gain $200,000 new boilers perform as expected $30,000 per year for 25 years $14,000 per year for 12.5 year cost recovery period Total $175,000 Landlord’s gain Straight Payback 12.5–25 equipment life after landlord is reimbursed $33,000 per year for 15 years remaining life $495,000 1–10 period of straight-line pay- back to landlord 11–25 equipment life after landlord is reimbursed March | April | 2013 37