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May 2, 2001
- For Immediate Release
Los Angeles, CA - RealEnergy, the fast-growing new energy company for the commercial
real estate industry, today announced that it has received equity commitments
for $50 million to further advance its plan to bring on-site energy generation
technologies to commercial properties in strategic urban and suburban
markets. Initially, the company will install on-site energy systems in
a group of 20 Class A office buildings throughout Southern California.
RealEnergy owns and operates the systems it installs, requiring no capital
investment by the owner. The systems provide energy cost reductions, and
in certain applications increased power reliability.
The investment, believed to be the first major institutional financing
dedicated to distributed generation installations in the U.S., is led
by two Los Angeles-based companies, GFI Energy Ventures and Global Innovation
Partners, and includes the California Public Employees Retirement System
(CalPERS), Los Angeles-based Arden Realty, San Jose-based Divco West Properties,
Detroit Edison, and CS First Boston, among others.
RealEnergy, which was represented in the transaction by Los Angeles-based
Chadwick, Saylor & Co., Inc., will receive an immediate $20 million B
round funding in order to begin installation of its distributed generation
technology, with an additional $30 million in C round funding as the new
energy systems are deployed.
"This commitment is a major statement by a deeply experienced energy
technology investor and some of the most powerful and respected owners
and operators in the commercial real estate world. It's time for our industry
to take a proactive approach to incorporating environmentally responsible,
reliable on-site power generation technologies in assets wherever possible,
and as quickly as possible," said Daniel M. Cashdan, Chairman and
CEO of the Los Angeles-based energy company.
According to Cashdan, the first of the 20 new on-site power plants is
expected to begin producing electricity within four to six weeks, with
the remaining going online within the next few months. The installations,
the first major distributed generation systems to be undertaken on a large
commercial real estate portfolio, will use clean, natural gas-burning
internal combustion engines to initially produce about 40% to 50% of each
building's energy needs, he said. Cashdan said that this initial deployment
of on-site power generation systems is the first of many distributed generation
systems RealEnergy expects to undertake in coming years. He added that
the company will continue to target parts of the country that need power
solutions quickly because of high, volatile energy costs and uncertain
levels of system reliability.
"Most major commercial buildings already have natural gas piped into
the building, so whether we choose micro-turbine, fuel cell or internal
combustion technologies, the installations should have an immediate impact
on reducing energy demand," he added. "All of the buildings
in this round of installation should have significantly reduced power
demands on the Grid System in time for California's anticipated energy
crunch this summer."
Cashdan said that unlike highly-regulated, diesel burning generators now
being installed by municipalities around California, RealEnergy's systems
more than meet the stringent requirements of California's various air
quality management districts. "Our power plants are allowed to produce
electricity 24 hours a day, every day, and we can even sell excess power
back to the grid during non-peak periods." (Systems that do not meet
these air quality requirements are limited to as few as 200 hours of operation
per year). "Every kilowatt of demand we subtract from the grid is
a kilowatt that can be channeled to homes, schools, and hospitals,"
he said. According to Cashdan, these initial 20 on-site power systems
will free up enough "grid" power for approximately 5,000 homes.
The participants in this financing own or control over a billion square
feet of commercial space in the United States. The first properties to
receive the new systems are owned and managed by significant industry
leaders like CalPERS, Arden, Divco West, Elkor, RREEF, Commonwealth Partners
and others, and are scattered throughout California. The portfolio includes
both mid-rise and high-rise office communities, including the World Savings
buildings in Los Angeles and the Imperial Bank Tower in San Diego.
"We are delighted to bring our expertise in energy markets and energy
technology - as well as our financial resources - to bear on behalf of
RealEnergy and, by extension, the property owners and energy consumers
of California. These technologies are ready and, obviously, the market
need is acute. Once the business concept is demonstrated in the crucible
of the California marketplace, we look forward to a broader roll-out,"
said Lawrence D. Gilson, Chairman of GFI Energy Ventures. "This investment
will be made through our $554 million OCM/GFI Power Opportunities Fund,"
he added.
"The utilization of RealEnergy's on-site energy generation service
in office buildings is a very attractive alternative to the purchase of
power from traditional utilities," said Richard Magnuson, Executive
Managing Director, Global Innovation Partners. "RealEnergy has the
opportunity to provide clean, reliable, and economically efficient power
to businesses throughout California and other energy constrained markets,"
he added.
"We are pleased to invest in this endeavor. We think distributed
generation is a win in several ways," said Michael Flaherman, Chairman
of the Investment Committee for CalPERS. "Two of the most important
are how it can potentially enhance a property's investment potential and,
at the same time, make it more environmentally friendly."
About RealEnergy:
Los Angeles-based RealEnergy Inc. designs, owns and operates permanent
on-site power generation systems, in both large properties and significant
property portfolios, for commercial real estate owners and corporations.
The company researches and selects only systems that provide clean, reliable
electrical energy for tenants, using technologies that empower owners
with better control and energy efficiencies. RealEnergy's website is www.realenergy.com.
About GFI Energy
Ventures LLC:
GFI Energy Ventures LLC has been an equity investor in established, industry-leading
companies serving the energy market since 1995. GFI has originated over
thirty investments in companies that provide the systems, software, equipment
and services needed by participants in the competitive energy market.
GFI oversees a portfolio of companies with market value in excess of $2
billion and is the co-general partner with Oaktree Capital Management,
LLC of the $554 million OCM/GFI Power Opportunities Fund, L.P. GFI's Website
is: www.gfienergy.com.
About Global
Innovation Partners LLC:
Global Innovations Partners, LLC is an international private equity fund
which invests in capital-intensive growth companies. The firm focuses
on businesses within the telecommunications, internet infrastructure and
alternative energy sectors. In partnership with the California Public
Employees Retirement System (CalPERS) and CB Richard Ellis Investors,
Global Innovation Partners closed on its first fund of $526 million of
committed capital in March of 2001. For more information on Global Innovation
Partners, please visit the group's website at www.gipartners.com.
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