Dana Holmes Director of Sales & Marketing Alliance Data Systems Joan Maxwell Chief Operation Officer Palladium International Outsourcing Submetering & Billing in Multi-family Housing Industry

Multi-family Industry Billing Market Total Submetering Market (Apartment Complexes) 33.6MM units x $4.00 per month$1.34 Billion Addressable Water Submetering Market MM units$720 Million

Multi-family Industry Trends 1.Nationally multi-family market is growing at a 1% annual rate. 2.Vacancy rate hit 10.7% in 1 st Quarter of 04’ and has dropped to 6.6% in 3 rd Quarter 04’. 3.New construction is at a 10-year low and is expected to pick up over the next 5 years. 4.Target growth areas are the Sunbelt and Southwestern United States.

 Individual meters installed behind utility master meter paid by property owner.  All traditional utilities can be submetered and billed.  Water & Sewer  Gas  Electric  Traditional utility metering devices & AMR are utilized for submetering applications.  Hexagram  Inovonics What is Submetering

Typical Outsourced Submetering Services  Install and maintain metering devices.  Read meters on a monthly basis.  Calculate resident charges.  Prepare billing statement.  Print & mail statement.

Typical Outsourced Submetering Services (cont.)  Provide customer care to residents.  Process payments.  Report to property mgt. and owner.  Deposit payments in owners account. $3.00 to $4.00 Typical cost to provide services per unit/per month.

Owner Value: Increased Property Value  Increased property value: (400 unit apartment = $96,000 annually)  Rapid ROI – Less than 18 months ($125 - $225) per unit.  Increased net operation income.  Reduced operational expenses and eliminates a major uncontrollable cost.  Energy and environmental conservation.

High Resident Value Proposition  Residents only pay for what they use.  Fair and equitable distribution of utility expenses.  Residents also benefit from conservation.  Allows for control over their expenses.

Energy Conservation Value Proposition  Residents report leaks quickly.  Residents use 30% to 45% less when paying for usage (NAA Study).  Provides detailed information on usage for property.

Energy Conservation Value Proposition  EPA supports Submetering as a form of conservation (12/03).

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