1

Low Capitalization Assets

These are assets that have a unit value (individually) below the capital cost threshold, set by the owner or by local statute, and only have material value as a group (collectively). 

Some common examples of low-capitalization assets include the following: 

  • Outdoor furniture (benches, bollards, bicycle racks, etc)
  • Fitness Equipment (treadmills, recumbent bikes, etc)
  • Interior Furnishings. 
  • Fire Extinguishers
  • Batteries (fire panel and generator)
  • Light Fixtures (exterior and interior)
  • Lamp ballasts
  • Fire alarm initiating devices, such as smoke and heat detectors
For example:
  • Each individual fire extinguisher will cost $150 to replace. However, there are 200 extinguishers in the building with a total value of $30,000

Low capitalization assets have the following general attributes:

  • Older buildings will not likely have a single baseline of placed in service dates and it may be difficult to track the age of the inventory.
  • The renewal is sometimes funded from the operating budget rather than the capital budget (see: capex-opex spillover).
  • Renewal is cyclical-phased in nature rather than block replacement.

Management of LC Assets:

Included below are some asset management principles associated with low-capitalization assets.

Some examples of major maintenance on low-capitalization assets, which have material value as a group:

In the case of portfolio owners, the owner may wish to have these aggregated throughout the portfolio rather than on a per facility basis in terms of their geographical proximity to any one particular building.

One challenge facing owners is how to efficiently finance the phased replacement of LC assets:
These types of assets are sometimes candidates for a failure replacement policy.
1
Fig. Fire extinguishers.

1  1
Fig. Fitness equipment.               Fig. Battery packs.

1
Fig. Smoke alarms and other initiating devices.

1
Fig. Light fixtures and ballasts.

See also:
Compare with:


(c) Copyright Asset-Insights, 2000-2013, All Rights Reserved - "Insight, foresight and oversight of assets"