Better Buildings Challenge for Real Estate Investor Owners
Average Annual Percent Improvement (AAPI)
In May 2014 I attended the Department of Energy’s annual Better Buildings Summit
in Washington DC. During the opening session of the summit Better Buildings
Challenge members were recognized as industry leaders for their commitment to
reduce energy use, share innovative solutions and showcase project success
profiles.
As a member of the Commercial Sector Market Solutions Team since 2011 The JBG
Companies had participated in several of the Better Building Alliance programs
focused on reducing energy use through education and technology solutions.
However, the Better Buildings Challenge, a 10 year commitment to reduce energy
consumption by 20%, did not seem realistic for JBG as there is no way to measure
energy use across an ever changing portfolio of real estate investments. During
the Commercial Market Sector discussions the Better Buildings teams explained that
a solution for this issue had been developed. The Average Annual Percent
Improvement (AAPI) method of participation is described below.
When President Obama launched the Better Buildings Challenge (BBC) in 2011
leading U.S. companies, universities, school districts, multifamily organizations, and
state and local governments were asked to step up to the challenge of
committing to energy use reductions of 20% or more over 10 years. At the time,
many real estate investment owners did not feel comfortable accepting this
challenge due to the simple fact that portfolios (and associated energy use) are
constantly changing as buildings are bought, sold, and redeveloped. Currently
commercial real estate makes up only 11% of the total floor area committed to the
Better Buildings Challenge – with only 14 CRE firms across the country being BBC
Partners.
Through the collaborative nature of the Better Buildings program this issue was
brought to the attention of BBC leadership and an alternative was developed to
allow participation from investor owners with significant portfolio changes (typically
greater than 5% of total committed square feet per year, on average). It is
understood that comparing a Baseline Energy Use Intensity (EUI) and Current EUI for
a portfolio of vastly different buildings does not compare apples-to-apples, and
therefore Partners with high building turnover now have the option to track the
average annual percent improvement across their portfolio, rather than their
By: Jessica Long, Sustainability Manager, The JBG Companies
July 2015
cumulative percent improvement since a baseline period. Partners will commit to
achieving at least 2% average annual improvement, which is consistent with 20%
improvement over 10 years.
The average annual percent improvement is computed for each property over the
specific time period for which it was held by the BBC partner, there for each
building will have varying baseline and current time periods. Buildings in a
company’s current portfolio will have baseline EUI based on 12 months of data up
to three years prior to the Partner’s enrollment date and properties purchased or
added to the portfolio will have a baseline EUI of 12 months following the
acquisition or delivery date. The current EUI will be the most recent 12 months of
data available for each property. If a property is sold, it remains in the portfolio with
a current date set as the month before it was sold.
Below are three examples of properties using the average annual percent
improvement method. The average annual percent improvement across the
portfolio is then computed based on the individual values for each property,
weighted by the baseline energy of each property.
Property
Portfolio
Manager
Baseline
Portfolio
Manager
Current
Acquisition
Date
Disposition
Date
Current
Source
EUI
(kBtu/
ft²)
230
% Imp.
Since
Baseline
Years in
Portfolio
Average
Annual
% Imp.
None
Baseline
Source
EUI
(kBtu/
ft²)
250
Hold
12/31/2009
12/31/2012
1/1/2000
8%
3
2.7%
Acquisition
6/30/2011
12/31/2012
7/1/2010
None
198
193
2.5%
1.5
1.7%
Disposition
12/31/2009
12/31/2011
1/1/2000
1/1/2012
275
245
11%
2
5.5%
In addition to energy reduction commitment of 2% per year for 10 years, Better
Buildings Challenge Partners agree to provide information on a showcase project
which highlights a project that is successfully demonstrating superior energy
efficiency, and an implementation model, which shares technical assistance and
proven solutions to energy efficiency.
The JBG Companies has committed to the Better Buildings Challenge using the
AAPI approach with a baseline period of 2011 for the majority of the portfolio.
Through the first three years an average annual percent improvement of 2.7% has
been demonstrated.
By: Jessica Long, Sustainability Manager, The JBG Companies
July 2015
For more information on how your company can participate using this method
contact Jon.Gimber@icfi.com and if you are interested in becoming a Better
Buildings Challenge Partner please send an email to
betterbuildingschallenge@ee.doe.gov.
By: Jessica Long, Sustainability Manager, The JBG Companies
July 2015