Frequently Asked Questions
Why does Carbon Lighthouse provide income to Landlords?
- Carbon Lighthouse provides income to landlords in 2,100 buildings in 46 states to overcome the landlord-tenant split incentive.
- In most commercial leases, landlords pay for projects that reduce opex but tenants get the savings. The landlord can usually recover their investment at cost or a small return, but this is not enough upside for landlords to prioritize investing time and millions of dollars.
- This is resolved when we provide income. Now, landlords earn an above-market return on investments benefitting both them and tenants. The more projects the landlord invests in, the more income they get and the more tenants save.
- Over the past 15 years, our customers have invested more than $70,000,000 in opex saving projects.
- The average return-on-cost landlords have achieved is 62%.
How do you pay income?
- The system works like an escrow. Whatever the measured savings at a property are, they go into the escrow.
- For example, if the measured savings at a property are $100,000 per year, the first $50,000 get paid to the landlord as rebates. Next, we get paid a fixed service fee. The remaining dollars, typically ~45% of the total savings, then go to the tenants.
How do you measure the savings?
- We measure the savings in two ways. At each individual piece of equipment in the building - e.g. at each pump, fan, compressor, boiler, lighting circuit, etc. -and in the monthly utility bills.
- Our software reads the data from each building every fifteen minutes, and whenever it detects a problem that would waste >$1,000 / year it automatically emails the site team. This email says exactly what the problem is, which equipment is responsible, and has a Carbon Lighthouse engineer cc’d to help troubleshoot.
How long until I receive my first rebate check?
- Expect your first rebate check within 3 months for buildings with well-resourced site teams and contractors.
- As the landlord completes more projects that reduce operating costs, the annual rebates increase.
- Within the first year, most landlords should expect to receive $40,000/yr in income.
How long is the rebate agreement?
- Our standard rebate agreement is 10 years, with two 5-year extensions optional at the landlord's discretion.
- The contract may be cancelled by the landlord at any time.
- Nearly all landlords prefer a long agreement since they cap the value of the income stream at disposition.
Where do the opex savings come from?
- Most opex savings come from upgrades to the existing building control system, or through the installation of new controls at the central equipment.
- These are primarily low-cost programming changes to reduce simultaneous heating and cooling and ensure equipment is operating efficiently. Fixing of root cause issues is often involved, e.g. a valve is leaking, a damper is stuck, etc.
- If a building has not yet completed an LED lighting retrofit, savings from lighting upgrades are realized as well.
What types of buildings does this work in?
- The best fit buildings are multi-tenant commercial office and outpatient medical facilities, between 30,000 - 150,000 square feet. The average return on cost to landlords for these assets has been 62% over the past 15 years.
- Any commercial building >20,000 square feet is a potential fit, and we have successfully worked in buildings as small as 10,000 square feet, though landlord returns tend to be lower.
How much does it cost?
- For budgeting, a typical building controls upgrade costs $65,000 and generates $40,000 per year in income.
- The landlord pays the $65,000 to their preferred HVAC controls contractor directly.
- Carbon Lighthouse charges a fixed monthly fee that varies depending upon property size, starting at $250/month.
When do we pay for your hardware?
- Our hardware is billed when you decide to move forward with your first cost-saving project.
- This structure allows you to evaluate the specific projects available at your building before incurring any significant cost.
- This one-time hardware charge covers the installation of our long-term data monitoring in your building.
What are the steps?
- Pre-qualify your portfolio. Start by making a free account here, and upload the list of buildings you control. Our software will automatically provide you with expected financials by building, based on trailing results from similar buildings. If the financials look good, we will then help you rule out buildings that are a poor fit for non-financial reasons.
- Sign agreement. Once you’ve selected 5-10 buildings for a pilot, we sign an Access Agreement with you. Our engineers will get data from your assets and work with your property teams to identify and quantify high-return, hvac controls projects. All you do is select which projects you want.
- Implement projects. As your preferred contractors complete these projects, Carbon Lighthouse continues to increase the amount of income we provide. Within the first year most landlords receive annual income of $40,000 per property from us.
Who else is doing this?
- Since 2010, we’re fortunate to have worked with hundreds of landlords in 2,000+ buildings in 46 states.
- Our customers collectively control more than $2,000,000,000,000 in Assets Under Management and include private equity firms Goldman Sachs and Blackstone, and REITs such as Ventas and American Healthcare REIT.
- For video and other testimonials see here.
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