The Carlyle Group

Boosting NOI to improve asset value

For commercial real estate investors like The Carlyle Group looking to bolster margins and make building assets more attractive to buyers, net operating income (NOI) is king.

Clean energy projects can boost NOI while providing Environmental, Social and Governance (ESG) value to environmentally conscious investors and tenants. This is particularly important in eco-aware regions like San Francisco, where Carlyle owned 6000 Shoreline, a 140,000 square foot mixed office/life sciences lab.

Carbon Lighthouse partnered with Carlyle to apply Efficiency Production, our data-driven process of converting energy waste into guaranteed financial revenue. After collecting vast quantities of original data supplemented by utility, weather and other information, we modeled the building energy performance through our proprietary software, CLUES®, and helped make a business case for boosting NOI through clean energy action.

Thanks to the Carbon Lighthouse performance guarantee, Carlyle knew that we would deliver the promised value from their Efficiency Reserves, or cut them a check to make up the difference. This guarantee is further buttressed by Hartford Steam Boiler, a subsidiary of Munich Re, which underwrites all Carbon Lighthouse deals. Eager to lock in these guaranteed savings for the asset, Carlyle elected to invest in capital upfront.  

The project involved Carbon Lighthouse engineers identifying the interconnectedness of the  property’s lighting, heating and cooling systems and performing upgrades to them. Then engineers implemented advanced controls and ongoing monitoring for variances so they could work with ownership to take corrective action as the building changed.

The Technicals

With 6000 Shoreline full of life science labs, it was critical that we implement the efficiency measures without disrupting the tenants’ important work. Fortunately, Carbon Lighthouse only operates in the building engineering areas — often the tenants do not even know we are there.

Find out how much ROI we can produce.

Below are some of the key efficiency measures we implemented:

  • Upgraded internal and external lighting with high-efficiency LED lamps.
  • Implemented programming logic to enable dynamic optimized start sequence of air handling units (AHUs).
  • Implemented duct static pressure reset (DSP) strategy to more effectively control AHU fan speed and reduce energy consumption.

The Impact

  • Immediately cash-accretive.
  • Strong financial return on investment of 23%, as tracked through our data analytics.
  • Annual carbon elimination of 103 metric tons of carbon, the same as sparing the use of 238 barrels of oil.
  • Improved NOI.

Value at exit

A year after Carbon Lighthouse completed implementation, Carlyle sold 6000 Shoreline for a healthy profit.

Carlyle featured 6000 Shoreline in its 2018 sustainability report, and noted:

“Not only do solutions like these improve cost efficiency, but the physical upgrades also signal to tenants and prospective tenants that our property and property systems are best in class,” according to Dave Kingery, Managing Director, Carlyle U.S. Real Estate.

ClientThe Carlyle Group
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