As Butcher notes, STAG is becoming a leader in using its rooftops for the greater good. Last fall, the company unveiled plans to allow homes and businesses in Maryland to buy low-cost solar energy generated from the large, brand-new roof installed on its Hampstead facility. It is one of three solar community projects it's developing in the state that will generate enough electricity to support 1,500 homes.
That's only one aspect of the company's solar initiatives. Butcher noted that: "STAG is on track to be placed in the top 10 real estate companies in terms of solar energy production as ranked by the Solar Energy Industries Association. We are committed to aggressively seeking opportunities for further solar array deployment elsewhere in our portfolio."
The company had completed eight installation projects across its portfolio, with 12 MW of capacity and had another four underway, which will add 13 MW. In addition, it's vetting 40 more opportunities that could add another 50 MW of solar capacity to its rooftops.
Why going green makes sense
An analyst on the call asked Butcher why his company is working to increase its solar presence. He noted several reasons why going green makes sense.
"One is certainly just the economics," stated Butcher. He pointed out that while the company receives an up-front payment on each lease it signs with a solar project developer, it recognizes them over the life of the lease -- typically for 15 to 20 years. That allows it to turn its roofs into instant cash while realizing the income over time.
The company has also started buying panels outright. It currently owns one system and aims to buy more in the future. With this approach, "we expect...to be able to get to carbon neutrality through that over some period of time," stated Butcher. That is "potentially a big benefit to us," according to Butcher, as it opens up access to green bonds, ESG equity funds, and other opportunities. Owning panels will also save the company money on electricity.
Further, simply having panels on its buildings makes STAG more attractive to tenants since that can help them fulfill their ESG desires and goals. In conclusion, Butcher said: "So [there are a] variety of ways that [going solar] will benefit us both from an immediate economic impact as well as a long-term good citizen impact."
A smart move
STAG Industrial isn't adding solar panels to its rooftops to gain notoriety. This move makes a lot of financial sense. It either receives an up-front payment from a project developer or owns panels that generate cheaper electricity. On top of that, going solar will open new opportunities, including access to lower-cost green bonds and making its buildings more attractive to tenants. Because of that, this move should benefit its investors over the long run, enabling STAG to generate additional value from its facilities.