ProLogis (NYSE: PLD) is already very well known as a REIT in commercial space for warehouse-type of projects for storage, warehousing, distribution, and office parks. Now, it is going to be known as a solar player, and it may just be free money for shareholders. ProLogis has announced this morning a second rooftop solar project in Southern California, totaling 11.1 megawatts in a master agreement with the Edison International (NYSE: EIX) unit Southern California Edison.
The pact will provide approximately 100 MW of electric power to California’s largest utility through its rooftop solar program. Today’s announcement covers 2.5 million square feet of roof space across five buildings, and is the first phase. Edison will own and operate the system and all of the generated solar power will feed directly into the utility’s electrical system. ProLogis will receive roof rental income, as well as construction management fees.
This is the second rooftop solar project between the two companies, and will bring ProLogis’ total partnership with SCE to 13.5 MW of solar energy after the installation is completed.
This is not the first round for ProLogis, as it has solar projects which are either installed or are under construction on 32 buildings throughout the U.S., France, Germany, Japan, and Spain which will be a combined 10.6 million square feet of roof space and a total energy equivalent of 24.6 megawatts. As far as what lies ahead, ProLogis has more than 450 million square feet of global roof space which can accommodate solar installations.
ProLogis shares are up almost 10% at #12.20 on the news, although obviously much of the move is on “the risk trade being back” after the huge E.U. bailout this morning. The old adage is “nothing is free,” or at least “if it sounds too good to be true, then it probably is.” It turns out that the adage is not always true. This may end up being free money, and the REIT status will mean that almost all of the income will go right into shareholder pockets via dividends.
JON C. OGG