Zirve Eki - ISTANBUL REstate

64 GYODER
Gayrimenkul Zirvesi 10
could cause that not to be there is if energy prices spike up
and then go down. Because if energy prices go down, this
area here means that I am not making that green line worth
of return. So you have to first say yourself, 'do energy prices
go down', probably not. And more importantly you can do
something that is rather financy called; you can hedge energy
cost. Most people playing in the energy's future market about
what? The upward trend in energy prices. So it is very expensive
to buy futures in energy when you are trying to bet about
what they are going up or not. You can buy a downward trend
future for almost nothing. Because nobody believes they are
going to go down also you they'll sell you that position for
next to nothing. So all of a sudden, you can make an argument,
a financial argument that says I can be guaranteed that I am
going to get those savings on that light bulb. Now if I came
to you as an investor and said how much would you pay me
for guaranteed cash flow? You would say well, what is the
certainty of getting that cash flow-it's guarantee? You mean
like the government? Yep. Well, you'll you pay something like
a government bond, right? So, what happens here is we have
done some analysis to suggest that these look like they are
going to about a double A to a triple A minus type of volatility.
Now that is finance talk. I know you are real estate folks but
this is going to matter, because this is going to mean how you
can get money in energy retrofits. A double way volatility sells
for 67 basis points over 7 years treasuries which currently
means someone would buy that cash flow stream of 3.7%
yield. But I just originated it; I created it with a 254% yield.
So you go do the math. You do a light bulb improvement. It
gives you 254% ROI, you take that and you sell it to a 3.7%
buyer. You do the math. It is thousands of percents of return.
And I assure you there private equity funds and hedge funds
talking to us about these kind of things right now. Is it easy?
No, you have to get lots of light bulbs. But the point is there,
which is the ability to monetize energy savings is going to be
important to this industry which is important to our carbon
15 Haziran 2010
offset in the world of real estate going forward. Okay, everybody
with it? I am going to now switch to what I call the big problem
and then I am going to wrap up. This is an initiative that we
started at the center for real estate at MIT. And we call it the
1K house. That is right. It is a shelter for a thousand dollars. So
what is the motivation here? This was the motivation. It was
three years ago when I was traveling India and I saw a family
of four come out of this essentially a cow-dung hut, and I
thought to myself who deals with this stuff. I don't, I am not
a housing person but it just kind of itched in the back of my
mind. And I ran into, when I got back to MIT, Nicholas
Negroponte who created the 100 dollar laptop that you've all
heard so much about, and that is what stuck in my mind when
I drove by this and took a picture, I said, the 1000 dollar house.
So I went over to other parts of MIT and said can anybody do
a 1000 dollar house? They laughed and said no you can't do
that. And till I went over to architecture, and met with the head
of the architectural group Yung Ho Chang, who is a very
prominent Chinese architect, who had been doing work in
Chengdu where the earthquake hit, where they were trying to
figure out relief housing in China. And he said, yeah, let's teach
a studio. And I said I am not an architect, I know nothing about
studios. He said that they don't know anything about real
estate, and I thought, 'well, this could be a lot of fun'. And
that is what we did. So this is what came out of the 1K house
studio. This is some motivation for, given the number of people
living in urban slums around the world and their projections.
This is what really got our attention, is that there is a billion
and a half people in the world today earning less than a dollar
a day. If you move that to five dollars a day, it is 2.5 billion
people in the word. So there is 2.5 billion people out of our
roughly 6 billion population on earth that make less than five
dollars a day. Where do they get sheltered? These are really
important issues. I don't have the answers but we are starting
with a little initiative to see if we can come up with some of
these answers. So, why would you do this? Well, one, you do