Headquarters U.S. Air ForceFly – Fight – Win

Mr. Dennis Guadarrama

AFRPA/SAU Division Chief

15 February 2011

The Power of EUL:Air Force Enhanced Use Lease

Program Overview

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Overview

Purpose/Future Vision Key Program Progress Approach Client Advocacy Targeted Marketing Action Plan Overview Timeline to Goal Key Takeaways: What this Means to You

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The Power of EUL

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Vision:

Use the Power of EUL to deliver $5B in return to the Air Force Developed a Plan

A comprehensive business-focused approach to portfolio development

AF Leadership support

Leadership ‘champions’ support opportunity development and advocate program’s value

Project Execution

Builds on current successes by identifying high-value opportunities and diversifying portfolio

Long-term strategy

Focused on building partnerships fostering best returns and mutual benefit

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Approach Identify and Prioritize Opportunities

Identify Hot Markets

Map Hot Markets to

States

Map to Bases and MAJCOMs

Evaluate Client Advocacy

Prioritize Opportunities

Identified hot markets using four criteria:

Renewable portfolio standards

Superior physical resources

Good price of electricity

Job growth

Identified hot market states

Commercial Real Estate still on road to recovery

Primary focus on Renewable Energy

Identified the number of bases by state

Examined supply and demand at each base

Estimated value of potential projects

Prioritized opportunities at each of the bases by revenue

Assessed AF client advocacy across MAJCOMs and bases

Identified existing advocates at bases and MAJCOM

Assessed where current projects could lead to future interest

Coordinate strategies with FOAs and A7Cs

Prioritized opportunities across MAJCOMs and bases

Prioritized list will be used to develop phased approach

Need concurrence on prioritization criteria: market,state-driven, or client

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Opportunity Identification/Valuation Opportunity Prioritization

= Complete = In-Progress 4

Incentives?Resources?

Potential opportunities?

Land available?High revenue

potential?

Existing project champions?

Concurrence on priorities?

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Client Advocacy Strategy

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2. Deploy campaign

3. Project marketing

4. Lifecycle PA support

5. Build on success

1. Establish branding,

messaging

Overarching Campaign (Program) Project Specific Advocacy Long-term

Internal: 1̶ Goal: Increase awareness and build advocacy for EUL

1̶ Demonstrate SAF/IE support

1̶ Problem statements: What problem does EUL solve?

1̶ Include Developer engagement

1̶ Partnership w/FOAs

1̶ MAJCOM/ base outreach

1̶ Media engagement

1̶ Events (ADC, REWNA)

1̶ Work closely with external stakeholders

Developer Engagement:

1̶ Industry Forums1̶ Social media/web1̶ Trade media1̶ Direct email

PA collaboration w/ installation, MAJCOM, developer

Media engagement to promote opportunities

Developer Industry Days

Ensure external market understands the project

Hill/Edwards: Regional

or ‘super’ Industry Days to promote full slate of projects

PA guidance developed in collaboration w/ stakeholders

Key messaging

Media opportunities

Celebrate success• Lease signing• Ground

breaking• Economic

Impact• Relationships

Stakeholder testimonials as evidence of EUL success

Marketing team visits to MAJCOMS/ installations

Continued event participation

Education and training

Goal: Introduce EUL to the next generation of real property officers and asset managers

We must communicate the $5B Plan to all stakeholders – Internal and External

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Mount a rigorous business

development effort to ensure deal success

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Infuse Industry best practices in to

program using Think Tanks and Industry

forums

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• There has been a lack of proper due diligence

• Need for upfront analysis

• Reduce risk of deal failure

• Early, up-front due diligence efforts applied to MAJCOM studies to identify opportunities

• Developed screening tools to identify/analyze hot markets

• Implemented project management principles (performance metrics, charters, risk management)

• Need to be more in-line with commercial business practices

• Continuous dialogue and trust

• Held highly successful EUL Industry Day in Boston Aug 09

• Hosted three Think Tank sessions focused on portfolio driven analysis of real estate and energy markets

• Collaborated with industry to build the Business Development and solidified the approach for $5B plan

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Streamline existing process and educate

stakeholders

Build partnership with other FOAs to expand

success

1

2

• Process is too long

• Unclear roles and responsibilities

• Adaptability to project needs is critical

• Demonstrated streamlined process through execution of Edwards AFB EUL

• Held focus groups to define roles and responsibilities; educated over 100 developers and AF personnel over the last 18 months (EUL 101 training, Industry Forum)

• EUL/PPA governance is needed

• Partnering with FOAs is critical for success

• Established Renewable Energy Project Development Subpanel

• Charter with AFCESA and AFCEE, developed process to evaluate renewable energy projects for execution

• Working with AFCEE to leverage Natural Infrastructure

Key Program Initiatives

Program Initiative Industry Feedback Action Taken

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Action PlanPortfolio Evolution

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Current Project Pipeline Values

Category Project Type Value

Energy

Solar $ 242.0M

Coal $ 118.0M

Waste-to-Energy $ 82.0M

Cogeneration $ 40.0M

Real Estate

Mixed Use $ 166.1M

Industrial $ 48.1M

R&D $ 64.0M

Hospitality $ 22.0M

Medical $ 1.5M

Real Estate$301.3M

38%Energy$482.0M

62%

A:Current Pipeline ~$.78B

Targeted Project Strategy Values

Target Approach Example

Focused on hot market, high revenue, and vastly available land bases with high EUL success to date to generate surge of revenue

AFMC: Edwards, Hill (Solar, Geothermal)

Energy $3.6B100%

B:Mid-term~$3.6B

Portfolio Expansion Strategy Values

Innovation Strategies Description

Focused ExecutionDiversity portfolio with right mix of projects

Reinvestment and Cost Avoidance Dividends

Re-invest EUL proceeds into installation requirements generating cost avoidance and cost savings measures

New Assets

Natural Infrastructure and resources, equipment with excess capacity, available real property

New Execution ModelsMAJCOM IDIQs, PPA/EUL, Fence to Fence EUL, Performance-driven support (RESS)

New Technologies Nuclear, cogeneration, algae

Energy30%

Traditional Real Estate

10%

Innovation60%

C: Long-term~$3.7B

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ApproachTarget Strike Zones (Hot Market States)

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Hot Energy Market Characteristics: Superior physical resources, renewable portfolio

standards, and good electricity prices, jobs, and rates.

Hot markets

Other opportunity locations

88% of the AF EUL program future energy deals are located in Hot Market States

  States Opportunities

# of Projects

  California 19

  Utah 11

  Nevada 6

  Arizona 4

  Florida 4 

  Colorado  3

  New Mexico 2

  New Jersey 2

  Texas 2 

  Idaho 2

  Alabama 1 

  Virginia 1

  Delaware 1

  Georgia 1 

  Ohio 1 

  Illinois  1

  Mississippi 1

  Tennessee 1

  Alaska  1

Cumulative Total 64

Markets aligned to States w/ AF Installations

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Glide Path to $5B

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Comments• A: Current program at projected

NPV of $783M

• B: Estimated $3.6B focused on target strike zones (Hill & Edwards AFB)

• C: Estimated $3.7B attainable from diversifying the portfolio (cost avoidance, reinvestment, fence to fence analysis)

Targeting the $5B goal by focusing on 3 primary areas:A: Current Pipeline B: Mid-term C: Long-term

Program Glide Path NPV Potential

Current Pipeline(Executed & In Pipeline)

Grand Total

Targeted Project Strategy

Portfolio Expansion Strategy

$5B Goal Line

Stretch Goal

$8.08B$3.7B

$0.82

A

B

C

$0.78B

$5.0B$3.6B

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

NP

V (

$ in

Bil

lio

ns)

$8.0

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Targeted Marketing

Developed Marketing and Communications Team focused on: Building sustainable partnerships with developers and financiers Continue conveying a predictable, understandable, process for

transactions Partnering with state and local community stakeholders to:

Identify synergies with potential EUL projects and stakeholder expectations

Consistently communicate with Economic Development Offices, Local Universities, and City Council meetings

Educate and inform regulatory agencies on EUL benefits and processes

Sharing initial due diligence with development community Ensure synergies and identify potential local investors and/or grant

funding for specific initiatives Exploring new approaches to industry days

Regional, AF-wide Renewable Energy Forums

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Takeaways

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AFRPA is focused on reaching $5B Goal

Developed a plan

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Communications & Marketing

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• Developed three focus areas• Resources/Manpower through AFRPA, MAJCOM, and installations play critical role

in execution of the plan

• Targeted stakeholder engagement and marketing to build synergies• Sharing of due diligence to maximize probability of deal success

Long-Term Strategy

4• Ensuring projects remain financeable through a flexible, streamlined process• Strategizing on how best to spread the wealth across the Air Force• Focusing on investment strategies that will help the Air Force support the $5B goal

Project Execution

3 • Initiated long-term strategy planning with Hill and Edwards AFBs• Identified next wave of opportunities (Hill, Edwards, AMC)• Developed timeline to reach $5B• Set the stage for solicitations and HRO selections over the next 3 years

Leadership Support

2• Establish firm support and direction from HQ Air Force through MAJCOMs to

bases that EUL projects are a top priority• SAF/IE endorsement will increase advocacy and momentum of the program

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Contact

Delivering Value to the Warfighter, our People, and our Communities

Visit us at

www.airforceeul.com (external) www.afrpa.hq.af.mil (internal)

1-866-725-7617

Follow the

Air Force Real Property Agency

on Facebook

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Questions?

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