This article originally appeared in Australian Financial Review
The push by commercial landlords into renewable energy has gathered pace, with fund manager Real Asset Management leasing the rooftops of nine of its neighbourhood malls to renewable energy specialist Solar Bay.
The deal will generate a fresh income stream for RAM while lowering costs for current and future tenants.
RAM owns 13 neighbourhood centres — 11 of them within its $300 million unlisted retail fund — as well as a medical centre and office building on behalf of high-net worth individuals, and family offices in the Asia-Pacific region. Nine of them — Keppel Bay Plaza, Ballina Central, Yeronga Village, Coles Tanilba Bay, Mowbray Marketplace, Springfield Fair, The Hub Westlake, Miami Day Hospital, North Lakes and Coomera Square — will have their current energy network replaced with Solar Bay systems.
RAM’s head of real estate, Will Gray, said the deal with Solar Bay would generate income equivalent to adding an additional speciality tenant in each mall.
He said the deal would primarily benefit smaller tenants in its malls, which don’t have access to the cheaper energy deals negotiated by Coles and Woolworths.
“Over time Coles and Woolworths will also dovetail into the solar platform,” Mr Gray said.
He said the transaction was also part of RAM’s “continuing drive to look for mechanisms to reduce the carbon footprint across our $420 million diversified real estate portfolio”.
Solar Bay’s deal was negotiated by Mark Stowe and Josh Bush of Colliers International, “By utilizing the power of solar electricity, landlords can increase their income and are more attractive when it comes to retaining tenants,” Mr Bush said.
Solar Bay’s chief investment officer, Andrew Archibald, said on a portfolio basis the solar systems will provide over 40 per cent of the centres’ total power consumption.
The RAM deals follow many other commercial landlords in retail, office, industrial and rural investing in renewable energy infrastructure or striking leasing deals with providers.