Engaging CommercialTenants and Occupants inEnergy EfficiencyJune 6, 2018

Today’s Speakers Cindy Jacobs, Senior Advisor, EPA ENERGY STAR Daniel Egan, Vice President, Head of Sustainabilityand Utilities at Vornado Realty Trust Will Teichman, Senior Director of StrategicOperations at Kimco Realty Corp. Sam Stockdale, VP Global Real Estate atJPMorgan Chase2

Ideas and Examples from ENERGY STAR Successes in Sustainability:Tenants and Landlords TeamUp on Energy Efficiency CaseStudy Report 8 Great Strategies to EngageTenants Energy Efficiency CompetitionGuide Bring Your Green to Workwww.energystar.gov3

EnergyEfficiencyImprovementAct of 2015 Focused on significant potential forenergy savings and environmentalbenefits through greater efficiency intenant spaces Directed EPA to develop recognitionfor efficiency tenant spaces as partof a “voluntary programwithin Energy Star to promoteenergy efficiency in separate spacesleased by tenants.”


Pilot: Charter Tenants Launched in fall of 2017 with office tenants EPA worked with Charter Tenants (andlandlords where involved) to test conceptand implementation DOE labs (PNNL and NREL) providedanalytical support More interest than anticipated Over 140 spaces started in pilot Close to 50 have completed all the steps forENERGY STAR Charter Tenant Spacerecognition

How Did Charter Tenants EarnRecognition? Met 5 criteria and completed an application providedby EPA1. energy useMeterLight efficientlyPurchase efficient equipmentShare Data Had a Professional Engineer or Registered Architectverify the information and stamp the application Submitted the completed, stamped, and signedapplication to EPA7

Next Steps June 12: Announcement of ENERGY STARCharter Tenant Spaces Assess results of pilot and determine effortneeded for market-scale recognition Work with DOE/labs to improve and refineanalysis Stay tuned forupdates

Engaging Commercial Tenants and OccupantsDaniel EganVice President, Sustainability & UtilitiesVornado Realty Trust12

Vornado Sustainability TimelineVornado Sustainability TimelineEarly 2000s: Vornadodevelops electricitysubmetering network tovisualize and manageenergy consumption.20072003: Vornadoacquires BMSLLC as cleaningsubsidiary,commences BMSGreen Cleaningprogram in 20072007: Merchandise Martgains LEED SilverCertification in Chicago(largest LEED Certifiedbuilding in USA).200820092008: Vornadoestablishes corporatesustainability program,commitment to energyefficiency, resourceconservation.20102009: Vornadocommissions 6.2megawattcogeneration plant atOne Penn Plaza.2011201220132009-2012: 28 Million SquareFeet of space LEED Certifiedin New York City,Washington, San Francisco.2011: Vornadoinstalls 1 megawattsolar panelinstallation on theroof of Bergen TownCenter in Paramus,NJ.201420152014: 450 millionissued in GreenBonds; proceeds togo towards energyefficiency andsustainability work.20162012-present: Vornadolaunches Energy EfficiencyCapital Expenditureprogram, dedicating fundingto projects whose energyand resource conservationhave a measurable reductionto operating expense.13

Submetering Legislation in VNO MarketsCalifornia: Title 24New York: Local Law 88 Newly installed electrical service must be Commercial spaces over 10,000 SF mustequipped with metering that measures bothbe submetered if direct meter service is notinstantaneous consumption and demandavailable.readings. Landlords must present tenants with Electrical power distribution systems toconsumption information on a monthlypermit disaggregation of loads downstreambasis.from the service meter14

Submetering and Energy EfficiencySplit Incentive: When tenants donot pay their own electricity, theyare not financially incentivized toreduce consumption.The Need to Collaborate:Without a transactionalrelationship in place, Landlordand Tenant often do not interacton energy consumption.Resolves SplitIncentiveIssueBrings TogetherLandlord andTenantElectric RentInclusion--Direct MeterX-SubmeterXXRecognized Best Practice:Submetering for electricity is arequirement to achieve EnergyStar for Tenant designation.15

Portfolio Investment in Submetering16

Beyond Just Billing35.0Usage (kWh) Average Prior to InstallWeek Post InstallLeft: Lighting Retrofit Project, Before andAfterRight: Steam valve repair, before andafter17

Tenant Behavior Impacts Landlord Goals18

It’s all about Tenant Engagement!19

Empower your Tenants with Relevant DataLeft: Customized Tenant Baseline Report forNYC 80 x 50 PlanRight: Submeter Billing Notification20


Engaging Commercial TenantsW ill TeichmanSr. Director of Strategic OperationsKimco Realty Corporation

KIMCO SNAPSHOT Kimco Realty Corporation 50 year old Real EstateInvestment Trust (REIT) One of North America’s largestowners and operators of open-airshopping centers 545 employees, headquartered inNew Hyde Park, NY NYSE: KIM, S&P 500 Index Launched formal sustainabilityprogram in 201123

NATIONAL PORTFOLIO, LOCALLY MANAGEDOver 500 shopping centers (84 million square feet)across the top U.S. metropolitan markets:Over 8,000 leasedtenant spaces, including:24

INDUSTRY CONTEXT: LEASE NORMSAs of 2009, U.S. commercial building stocktotaled 84 billion square feet, broken outinto the following sectors:Within these sectors, owners generallyadhere to the following lease structures:Gross LeaseNet LeaseIndustrialMulti-FamilyRetailOfficeHealth Care Gross and net leases represent extremes ona continuum of potential lease forms In a gross lease:Source: Slicing, Dicing and Scoping the Size of the U.S.Commercial Real Estate Market, Florance et al, CoStar2010 Tenant pays a fixed all-inclusive rent that covers thepremises, utilities, maintenance, etc. Landlord bears responsibility for most maintenance andbuilding improvement activities In a net lease: Tenant pays a base rent, then pays operating expenseseither directly or through a “pass through” charge Landlord only maintains common areas, and relies ontenant charge recoveries to recoup capital project costs25

INDUSTRY CONTEXT: RETAIL ENERGY USEEnergy Use at a Typical GroceryAnchored Shopping CenterLandlord Site infrastructure oftendedicates a single utilitymeter to each tenant Net Lease dictates that insituations where they don’tcontrol their meter, tenantsreimburse landlord for thisexpense15%85%Tenants Common area energyexpenses are included inCommon Area Maintenance(CAM) charges26

ApproachIssuesDRIVING SUSTAINABILITY IN OUR BUSINESSEnergy & ng TenantsWasteBuilding Materials18.2%27

ENGAGING TENANTS – CONSTRUCTION STDSOverview Developed a standard spec for tenant buildouts, as a part of Kimco’s green leasing effort Spec has two levels:Base Low or no-cost environmentally preferable materialsand construction processes Energy Star and Water Sense products standardPremium (LEED Ready) Increased lighting and HVAC efficiency requirements Specs set to payback within typical 5-yr lease term28

ENGAGING TENANTS – SUB-METERINGGoal: Sub-meter 100% of tenantelectric, gas & water by YE 2018.500Properties 325 (65%)In Scope9,000units 4,600 (50%)In ScopeOverview Most properties in Kimco’s portfolio were builtby another developer In many cases, retail properties are “mastermetered” (tenants share a meter) due to costconsiderations, local/utility norms, etc. Pro-rata share (of sq ft) billing is the standard Sub-metering our tenants leads to: Tenant access to performance data Fair tenant billing based on actual consumption,leading to improved Kimco recoveries Economic incentive for tenants to conserve29

ENGAGING TENANTS – OPERATIONSTenant Sustainability Tip SheetOverviewSCORE Partnership 85% of utility consumption occurs inside oftenant spaces at open air retail centers After paying rent and payroll, retailers expendan additional 5-10% of sales to cover utilities,maintenance, marketing and other expensesFixed CAM By helping our tenants improve the efficiency oftheir operations, the total cost of occupancy atKimco centers is lower and tenants have agreater likelihood of succeeding30

FOR MORE INFORMATIONCorporate Responsibility Sitehttp://kimcocr.com2016 Corporate Responsibility port2016/pdf/1007/viewContact Info:Will TeichmanSenior Director of Strategic OperationsKimco Realty [email protected]

ENERGY STAR AmbassadorsProgramEngaging Tenants and Occupants in Energy EfficiencySam Stockdale, Vice President, Global Real Estate

Commitment to SustainabilityIn July 2017, JPMorgan announced its commitment to sourcerenewable energy for 100% of its global power needs by 2020. ENERGY STAR Ambassador Program Opportunity to engage & educate branch managers andclients about Energy Star and our new operational sustainability commitment JPMC’s commitment to achieving the 2020 goal hinges on three fundamental strategies thatfocus on reducing its existing global energy footprint:1)Improving Building Energy Efficiency 2)Installing On-site Renewable energy sources 3)LED retrofit programsBMS installationsInstallation of Thermal energy blanketsSolar Panels InstallationFuel Cell TechnologyExecuting Power Purchase Agreements (PPAs)5

Reconciling the Big Picture with LocalInitiatives1) Improving Building Energy Efficiency LED retrofit program: In 2016, JPMC announced its LED lighting installation initiative inpartnership with Current (General Electric). About 4,500 Chase branches will be installed with LEDlighting, which equates to a total of 1.4 million light bulbs installed—cutting lighting energyconsumption by 50 percent, or the equivalent of taking nearly 27,000 cars off the road To date, 2,500 branches have been retrofitted with LED lighting fixtures Retail Building Management Systems (BMS) program: JPMC plans to install BMS across nearly4,400 retail branches to synchronize lighting, heating, ventilation, air conditioning and irrigationsystems with operational control The BMS sensors, software and lighting controls will reduce electric and gas consumption of Chase branchesby 15 percent and water consumption from irrigation systems by 20 percent Installation of thermal blankets: Installation of thermal energy blankets above the ceiling tiles inmore than 1,700 retail branches2) The Result of these programs led to our ability to achieve 108 Energy Star certifications atbank branches across the country6

Generating Excitement aboutUpcoming Initiatives2) Installing On-site Renewable energy sources Solar Panel Installation: Development of on-site solar power generationfor up to 1,400 bank-owned retail and 40 commercial buildings globally Fuel Cell Technology: JPMC is planning to install large capacity fuel celltechnology across multiple US sites, starting with Chase Metrotech Center inBrooklyn, New York3) Executing Power Purchase Agreements (PPAs) JPMC executed a PPA to secure renewable energy for nearly 10% of its energyuse from a 100.5 megawatt wind farm in Erath County, Texas The firm intends to execute additional PPAs to further offset its global energyfootprint7

Upcoming WebinarsDateWebinarWednesday, June 20, 1:00 pm EDTPreparing for EPA's ENERGY STARmetric updatesTuesday, June 26, 1:00 pm EDTPortfolio Manager web services: August2018 schema changesWednesday, June 27, 1:00 pm EDTSuccess stories on energy efficiencycompetitionsRegister at

Questions and Discussion9

After paying rent and payroll, retailers expend an additional 5-10% of sales to cover utilities, maintenance, marketing and other expenses By helping our tenants improve the efficiency of their operations, the total cost of occupancy at Kimco centers is lower and tenants have a greater