Triple Net Solar:

Property owners and managers are constantly looking for ways to increase income. For commercial real estate (CRE) property owners with Triple Net (NNN) Leases, you have an exciting opportunity to raise income with commercial solar. Generating independent power with commercial solar and selling to tenants grows income and adds to the property’s value and marketability.

The system will ideally utilize available square footage whether it’s rooftop, carport, canopy solar or land … To offset as much energy as possible, based on a tenant profile, space available and state regulations.  The goal is to maximize the property owner’s ROI and reduce the tenant’s costs.

It starts with planning the array placement, then moves to engineering, permitting, installation, and monitoring as needed.  Most CRE owners want a “turnkey” operation as it provides the highest level of functionality. Once the system is operational the sun generates power throughout the day offsetting the building’s usage.  If the building needs more power than the system is currently generating, it supplements from the grid. For added electricity savings, energy storage can be commissioned and is ideal for supplying power when the sun is not shining.

For property managers with several tenants, onsite metering and third-party software make it easy to portion out electricity usage and bills. It is important to go with a professional’s recommendation when choosing this service.

What are the benefits…

…For the property owner?
Generating electricity with commercial solar provides building owners an extra channel of income. There are several ways to divvy up and charge tenants. Each increases the building’s income.  CRE owners also gain more property value.  Adding new sustainable technology increases a building’s value in several ways, most tangibly by increasing annual income which is then divided by the cap rate thus growing property value.

Annual Income w/o Solar $100,000.00
Cap Rate: 10
Value:    $1,000,000.00

Annual Income w/Solar $120,000.00
Cap Rate: 10
Value:    $1,200,000.00

* If Solar adds $200k in value than a cost of Solar anywhere < $200k would provide a positive ROI!

…For the property manager?
– Sustainable green buildings are more attractive to prospective tenants.  This adds a competitive advantage over
  competitors.
– Solar provides an opportunity to extend leases… This increases the Net Present Value (NPV).
– Renewable energies with energy storage will reduce tenant complaints primarily caused by electrical outages.

…For the tenant?
–  The marketability of a commercial solar system translates well to consumers.  Tenants have the option to
   externally market their “social responsibility” to consumers.
–  According to the Building Owners Managers Association, millennials will make up 75% of the workforce by 2025.
   Furthermore, 59% of millennials are more apt to be attracted to sustainable businesses over the alternative.
–  Over half of Fortune 500 companies have pledged to shrink their carbon footprint. As such companies will seek
   real estate in line with their green initiatives.
– In some cases, building owners will sell electricity back to the tenant at a slightly lower rate than IOU’’s. This
  lowers the tenants’’ operating costs giving them more cashflow to grow their business.

…Financing?
– Commercial solar and other renewable technologies are more affordable than ever. Installed solar costs have
  decreased on average 10% each year since 2001.
– With federal tax credits, accelerated depreciation, bonus depreciation, and other incentives, investing in solar is a
  fraction of the upfront cost compared to 15 years ago and competes well for capex dollars for other alternatives.
– For businesses that don’t want to make an upfront investment, smart financing options are available.
– PACE: Property Assessed Clean Energy Financing is growing in popularity with more and more states offering the
  option.  Commercial PACE is tied to the property and does not rely on the owner’s creditworthiness, while
  providing a clear delineation in a split incentive investment.