Ann: Best Buy US Expansion for LIFX, page-95

I thought a few here might have some interest in this info:

I have a mate who part owns and runs a property group with about $2.5b in assets under management.

He told me recently that he was going to trial BUD ohms in 3 of his buildings in Sydney. Various types, age and functionality.

I asked him why he was doing that now and not 12 months ago, when I mentioned it to him.

His answer was very interesting.

He said that in recent times there had been two significant changes in the Australian commercial and industrial property market.

12 month ago, he saw no financial benefit to him to monitor the building. He said the tenants where paying for their utility usage.

He saw no reason to instruct building mangers to do extra work for no financial benefit to his business, in fact, it was an extra cost to avoid.

Now tenants are increasingly asking for an all-inclusive price per square metre. So now its in his interest to monitor and control the buildings energy usage after the all-inclusive price is set to tenants.

For every dollar he can save in energy it adds to the businesses yield return per square meter and therefore adding directly to the total value of the building.

Depending on the size of the building a $20 per square meter saving in energy could add 0.05% to the yield and $10’s of millions to the value of the building.

The second reason for monitoring and reporting for him, is that an increasing number of investors and domestic and international fund managers are requiring carbon footprint information about their investments.

So if he doesn’t have this information, he is excluding an important part of the investment market when he wants to sell the assets.

He said Bud could continuously provide him with the required reports at a much lower cost than employing someone to do it.

The second part of the conversation was even more insightful as a Bud shareholder, who has been concerned by the slow ohm sales.

He commenced the process in October 2018. Had several meetings with his team and BUD team and the building managers employed by his business.

According to him, the meeting were very fruitful. It took 6 or so weeks to coordinate the 3 separate site visits with building managers, bud installers, key building personnel who had access to utility sources and Building management systems operators. After an initial visit, it has taken several weeks for BUD to prepare a scope of works and get them back to his company. They had several meeting on the subject and sent back feedback to bud and asked for certain changes. During this time some newer building with BMS already in place put up some resistance to Ohm accessing and processing their data. After weeks of negotiations this gets resolved and a final scope of works is agreed.

All of a sudden its Feb as everyone is away in Jan. Bud is given the go ahead to install the required OHMs, links etc and commence their paid 3 month trial.

I think this is where he is at the moment. Assuming all is good with the trial of those 3 buildings, they will expand to more. The whole process starts again.

The point is, that the time take from consultation to bud being able to announce a material ohm sale is much much longer than the majority, including me, had anticipated but it is happening.