Retail REIT Installs PVs With Power Purchase Agreement
It’s a tough economy, especially for retail mall owners. With high unemployment and even higher under-employment, there is less retail spending and some stores, even anchor ones, are closing up shop, leaving gaps in buildings and in owners’ bottom lines.
At least one retail REIT, however, is weathering the economy well. Long before the economy took a dive, Glimcher Realty Trust, based in Columbus, Ohio, with 23 properties across the country, embarked on a mission to improve its financial statement by making improvements in energy efficiency and incorporating renewable energy systems and green practices.
A case in point is one of Glimcher’s largest malls, the 1.3 million square foot Jersey Gardens mall in Elizabeth, N.J., which will soon be crowned with a 4.8-megawatt photovoltaic array on its rooftop. This is the largest PV installation on a retail facility in the country. When it comes online this spring it will offset 11 percent of the mall’s power use. An investment of this size in the ebb-and-flow world of retail profit might be risky, but Glimcher’s strategy reflects the company’s pragmatic approach to new and emerging ideas, with ever the eye on value.
Selling the idea of sustainability portfoliowide, or the Jersey Gardens PV project in particular, is really not much of challenge, says Charlie Kretzer, director of operations for Glimcher. All of Glimcher, including senior management, supports the sustainability efforts. That is key, Kretzer says. “We wouldn’t have had the success we had without everyone’s support.”
Kretzer oversees the work of a network of mall and regional facility managers that report to him and to the senior vice president for property management, Armand Mastropietro.
The Jersey Garden project is an example of Kretzer’s careful approach to technology. How it goes, and so far it is going well and projected to do well, may determine the fate of other large PV installations.
The Jersey Gardens PV array capitalizes on a Power Purchase Agreement. Glimcher has contracted with one firm to own and install the array and another firm that will handle the sale of the power the array produces. The Power Purchase Agreement locks the Jersey Gardens mall into an electric rate that’s about the going rate for today for the next 20 years. So even though Glimcher as a REIT isn’t allowed to take advantage of the renewable energy incentives available, it also isn't out the capital expense of owning and installing the PV system, yet it is able to benefit from what will likely be lower cost electric power down the road.