Leave No Stone Unturned Strategically Managing and Leveraging Assets

Hans Kogel, P.Eng, CIHCM Director Asset Management Windsor Essex Community Housing Corporation (CHC)

Regeneration Forum – May 9, 2016

Regeneration is transformational

Sustainable

Mission, Vision & Strategy Plan

Transformational Change

Regeneration

Sound Planning Practices Integrated plan

Who do we need to engage?

What assets do we consider?

STAKEHOLDERS: Community, Residents, Investors, Municipality, Suppliers/Contractors', Energy/Utilities

CORPORATE CULTURE: Capital, Corporate Services, Finance, Operations, CEO

Regeneration Planning - Time Well Spent Planning

Study

Key elements of Planning: 1. Guiding documents 2. Scope & Objectives 3. Information & Data

Financing & Approvals

Execution 1 year

1 year

Key Elements of Study: • Outcomes • Goals • Process

6 – 10 months

Study - Required Outcomes Implement strategic plan

Maximize stakeholder value

Optimize equity utilization

Solve asset and program problems

Create strong communities

Study - Required Outcomes Achieve sustainability

Environmental

Affordability

Financial 20% NOI improvement within

5 year period

Study – Financial Goal Impact of 20% improvement to Net Operating Income (NOI)

Current

5 Year Period

Total revenue+ $21,400,000 $22,791,000

Total Expenses $38,400,000 $36,480,000

NOI -$17,000,000 -$13,689,000

NOI Improvement $10,200,000 $3,400,000

NOI Improvement/Year $680,000

Revenue Improvement 6.5%

Expense Improvement 5.0%

NOI Improvement Goal -$13,600,000

+ Excluding operating and capital subsidy

Regeneration Study Process Steps • Subset of data PROCESS DEVELOPMENT

• Mathematical model DATA COLLECTION &

ANALYSIS

• Model optimization & comprehensive data set DATA QUALITY AND

METHODOLOGIES TEST

• Modeling & evaluation MODELING AND OPTIMIZATION

• Reporting REPORTS

Comprehensive Data Set

Asset Data Set • Asset Data • Energy audits • Designated substance audits • Retrofit funding schedule &

agreements • Official plan, zoning, land use planning • Site planning information & constraints • Characteristic data

Financial Data • Operating financials • EOA data • Encumbrances • Property valuation • Financing

Complete Development Data Set

Housing Data • Needs assessments and reports • Waiting list • Service level standards • Consultations • Internal reports

Corporate Data • Strategic plan, Vison,

Mission • Tenant surveys • Program agreements • External audits • Shareholder agreement • Internal reports

Data Management Aged data

Inaccurate data

Incomplete data

Plan to address data quality

Volume

Content

Format

Plan for capturing and transferring data

Data mining resource(s)

Data Quality

Evaluation Model

1 Create Baseline Model

2. Evaluate Results & ID Target

Development

3. Conduct Development

Investment Analysis

4. Introduce Cost Saving & Revenue

Generating Initiatives

5. Run Model With

New Inputs

6. Evaluation of Results

7. Go to 3. Optimize Further if Needed

Evaluation Model

1 Create Baseline Model

2. Evaluate Results & ID Target

Development

3. Conduct Development

Investment Analysis

4. Introduce Cost Saving & Revenue

Generating Initiatives

5. Run Model With

New Inputs

6. Evaluation of Results

7. Go to 3. Optimize Further if Needed

1. Asset Data

Revenue Data Expense Data

Qualitative Factors

Evaluation Model

1 Create Baseline Model

2. Evaluate Results & ID Target

Development

3. Conduct Development

Investment Analysis

4. Introduce Cost Saving & Revenue

Generating Initiatives

5. Run Model With

New Inputs

6. Evaluation of Results

7. Go to 3. Optimize Further if Needed

2. Evaluation Criteria Profitability

FCI Suitability

Mission Impact ( Core Business) Energy Intensity

Designated substance intensity

Development Evaluation

Index Criteria Rating Weighted Value

1 Operational Profitability 8 32

2 Facility Condition Index (FCI) 7 24.5

3 Suitability 6 24

4 Core Business 9 31.5

5 Energy Intensity 7 21

6 Designated Substance Intensity 8 16

7 Community Impact 9 18

8 Financial Opportunities 8 40

TOTAL 77% 207

123 Sample Street, Anytown, ON

Development Evaluation

Index Criteria Rating Weighted Value

1 Operational Profitability 2 8

2 Facility Condition Index (FCI) 3 10.5

3 Suitability 4 16

4 Core Business 5 17.5

5 Energy Intensity 1 3

6 Designated Substance Intensity 6 12

7 Community Impact 3 6

8 Financial Opportunities 2 10

TOTAL 31% 83

321 Sample Street, Anytown, ON

Outcomes - Development Evaluation Ranking of development

1. Preserve – strengthen

2. Renovate – rejuvenate

3. Develop – pioneering

4. Dispose - liquefy asset Tota

l Wei

ghte

d

Val

ue

Outcomes - Development Evaluation Renovate Capital needs (asset plan) Energy efficiency Program change Improve amenities & services Cost reduction & revenue

increase Functional issues

Preserve Improve sense of

community Cost reduction & revenue

increase Implement mixed use

approach (program change)

Improve services & amenities

Outcomes - Development Evaluation Dispose Designated substance survey Ready asset for sale Timing

Develop Retrofit Demolish & build new Land acquisition & build new Program Energy efficiency Improve amenities & services Cost reduction & revenue

increase Functional issues

Evaluation Model

1 Create Baseline Model

2. Evaluate Results & ID Target

Development

3. Conduct Development

Investment Analysis

4. Introduce Cost Saving & Revenue

Generating Initiatives

5. Run Model With

New Inputs

6. Evaluation of Results

7. Go to 3. Optimize Further if Needed

3. Re-development cost data set • Operating and maintenance • Capital repairs • Capital financing • Design & construction • Land and asset acquisition • Demolition, hazardous matl’s

abatement & envir. assessment

Evaluation Model

1 Create Baseline Model

2. Evaluate Results & ID Target

Development

3. Conduct Development

Investment Analysis

4. Introduce Cost Saving & Revenue

Generating Initiatives

5. Run Model With

New Inputs

6. Evaluation of Results

7. Go to 3. Optimize Further if Needed

4. Define New Programs

Cost saving measures Revenue Generating Actions

Time Right For Transformational Change

Plan your journey Leverage your resources Astute asset and resource management

Thank you For more information:

Please contact Hans Kogel,

Director Asset Management hkogel@wechc.com

Eval. Criteria Rating Matrix

Feasibility Criteria Analysis & Evaluation

Index Criteria W.F (1 - 5)*

Rating: 0 Least profitable on a NOI / unit basis

5 50% median on a NOI / unit basis

10 Most profitable on a NOI / unit basis

Rating: 0 Area = 10% X 30 years = 300 (Poor condition)

5 Area = 7.5% X 30 years = 225 (Fair condition)

10 Area = 5% X 30 years = 150 (Good condition)

Rating: 0 Significant issues both internal and external to the housing provider

5 Issues exist but a realistic path to resolve is possible

10 No issues both internal and external to the housing provider

Rating: 0 Nothing to do with core business, mission or mandate

5

10 Center of core business, mission or mandate

Rating: 0 high energy intensity

5

10 Low energy intensity

Description and Rating Scheme (0 - 10)

How profitable is the development?

How large is the area under the FCI curve? (Sum of FCI for each year for 30 yrs)

How suitable is the development / site for re-development?

1Operational

profitability4

2Facility Condition

Index (FCI)3.5

What is the proximity to core business, mission or mandate?

What is the energy performance of the asset in kWh/sq m?

Energy intensity 3

This analysis and evaluation criteria matrix is intended to identify how well the current assets are performing relative to the criteria below. If the asset(s)

or development are doing well, then a high score will be achieved. If the assets are performing poorly, a low score will be result. The lower the score,

the "riper" the development is for re-development.

Suitability for

Redevelopment4

4 Core business 3.5

5

3

Strategic Plan