Firm Capital Property Trust (TSXV:SUS)
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TORONTO, May 17 /CNW/ --
- Utility costs reduced by 50% - Prototype property receives Energy Star
Rating of 90 -
TORONTO, May 17 /CNW/ - ISG Capital Corporation (TSXV: SUS) ("ISG" or the "Corporation") is pleased to report that its proprietary greening methodology has
resulted in a 22% internal rate of return ("IRR") since inception on
the Company's prototype industrial property, a 200,615 square foot
distribution center on 19.98 acres of land in Ingersoll, Ontario (the
"Ingersoll Property"). The Ingersoll Property was purchased by ISG in
February of 2009 for $9,908,500 and the Corporation has recently
received an appraisal update letter from the Altus Group confirming a
valuation of $11,000,000 as at April 15, 2011.
A report prepared by Abraxas Energy Consulting ("Abraxas") confirmed
that utility costs at the Ingersoll Property dropped from a 36 month
average of $0.83 p.s.f. per year ending in July 2009 to $0.41 p.s.f.
per year as of February 2011, a reduction of approximately 50%. This
significant decrease in utility costs allowed ISG to work with its
tenant to increase net rent and cash flow and extend the term of the
lease while actually lowering the tenant's gross occupancy costs.
The Energy Star rating of the building has dramatically improved, moving
from 72 at acquisition to 90 after the ISG improvements. Savings were
realized by installing (i) a control system with software to accurately
control HVAC equipment and heat-flow and (ii) state of the art lighting
throughout the building. In total, the retrofits installed by ISG had
an initial capital cost of $158,983 ($0.79 p.s.f.), which was reduced
to a net cost of $83,759 ($0.42 p.s.f.) after subsidies. These
retrofits resulted in normalized savings of approximately $59,397 in
the first year alone.
ISG used the 12 month period beginning March 1, 2010 and ending February
28, 2011 (the "Data Period") for its data sample. During that time, the
proprietary heating automation system reduced natural gas consumption
from 234,693 M3 to 134,216 M3, representing a reduction in normalized
heating costs of $23,794. Similarly, the installation of energy
efficient lighting and control technology cut electricity usage from
833,677 kWh to 467,775 kWh equal to a normalized reduction in
electricity costs of $35,603. To determine the normalized heating and
electricity cost savings, Abraxas calculated baseline natural gas and
electricity usage for the three years prior to the start of the data
period. The actual electricity and natural gas usage over the
measurement period was then normalized against this baseline for rate,
climate and usage by Abraxas to ensure that the reported savings are
the result of the initiatives undertaken by ISG and not the result of a
drop in rates, differences in climate or changes in the facilities
operating schedule.
"We have exceeded our performance goals with our initial property. The
data is in and we have an evidence-based investment model which can now
be implemented across a portfolio of income producing properties" noted
David Ogden, ISG's President and CEO.
New Lease Agreement
As part of its overall methodology, ISG and its tenant the Hercules Tire
& Rubber Company ("Hercules") amended their lease to increase the base
rent, return it to a simple net structure and extend the term to
December 31, 2017. By dramatically reducing energy costs ISG was able
to increase the base rent - and related cash flow, while reducing the
overall occupancy costs for Hercules. In this way, both parties were
able to economically benefit from the implementation of ISG's greening
methodology.
Third party consultants were retained to verify the Corporation's IRR on
the Ingersoll Property assuming a disposition at the updated value in
May of 2011. Operating gains from ISG's energy saving initiatives and
the new property value produced an IRR of 22% from the date of
acquisition in February of 2009. This IRR was 37.5% higher than the 16%
level that would have been achieved without the ISG process.
"By taking our business model full circle from property acquisition,
through retrofit and finally resulting in an accretive lease amendment,
we have demonstrated how our proprietary methodology can add
significant value to the owners and tenants of industrial
properties. We are now focused on aligning ourselves with an operating
partner with a national platform capable of acquiring, managing and
growing free cash flow using our unique methodology on a portfolio of
income producing industrial properties", added Ogden.
About ISG
ISG is a publicly-traded commercial real-estate company (www.isgcapital.ca) focused on enhancing the environmental and financial performance of
industrial buildings. The company is committed to creating shareholder
value by incorporating environmentally and socially responsible
approaches in its growth strategy.
The TSXV has neither approved nor disapproved the contents of this press
release and does not accept responsibility for its adequacy or
accuracy.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/17/c5293.html
p David Ogdenbr/ President and Chief Executive Officerbr/ (416) 203-7538 or (877) 877-0213br/ ua href="http://www.isgcapital.ca"www.isgcapital.ca/a/u /p