Mynt Systems

Scope Of Work

Adding a new rooftop solar array to an industrial building at a net cost of $488K, increased the property’s net operating income (NOI) by over $125K per year. This was equivalent to $2.60 per sqft/yr in additional rent.

 

Compelling Financials

In 2021, Madrone Partners worked with Mynt Systems to convert a distressed cold storage facility into a state of the art commercial bakery, powered by renewable energy. By installing a solar array with a net cost of $488K, the team was able to increase the property’s net operating income (NOI) by over $125K per year (equivalent to $2.60/sqft/yr in additional rent). It was a compelling investment strategy for the owner, yielding an internal rate of return (IRR) of 20% and a simple payback period of 4 years - well within the term of the lease. Additionally, the renewable energy project secured a long term tenant by reducing their tenant’s operating costs and furthering their corporate mission of sustainability. The system offsets approximately 1 million pounds of CO2 emissions annually.

These types of returns are not limited to commercial food production. In fact, microgrid systems of this type are ideally suited for fully operational C&I facilities that house energy intensive business such as product manufacturing, component assembly, assembly, and cold storage. A similar microgrid project for a manufacturing facility in Fremont was recently sold with an additional $10.44M in asset value due to the renewable energy revenue. This was a 5.34X return on investment just 24 months after project completion.

 

Rapid Facility Upgrade

Producing 550,000 loaves a year, Beckmann's Bakery is a 37-year-old craftsman bakery specializing in old-world German-style breads, cakes, and pies. To create their new home, a 47,000 square-foot cold storage building was gutted, structurally reinforced, and reconfigured, to power all non-oven operations with on-site renewable energy. Peter Beckmann and the CEO, Beth Holland had a strong desire for their new facility to represent not only the most advanced food-making processes but also to also showcase their strong commitment to low carbon and green technologies.

During the 75 day demolition phase, a new "cool roof" was installed along with new air handling equipment and a 415-kilowatt solar system. This solar system was designed to produce 621,000-kilowatt-hours of energy, generating $125,000+ of energy revenue to the owner annually. Beyond the energy system, tenant improvements included a new 220-foot-long loading dock, 4 walk-in freezers and 14 1-million BTU ovens. The renovation was completed in just 113 days, while successfully navigating the challenges of the Covid pandemic.

 

Improvement to Transactability

Under the current arrangement, the owner agreed to stabilize the bakery’s energy costs for the term of their lease. However, because energy costs have continued to rise (rates jumped 20% in 2022 alone), the Landlord has the ability to re-lease the space at significantly higher rents due to the current equivalent of more than $0.30 /sqft/mo. of power being generated for free. This rent differential represents a double digit improvement over the market rental rates for comparable properties and is a lucrative factor in any re-leasing event.

Because of the value created by the additional ‘energy rent’, the property owner recognized that the tenant’s credit strength is not a barrier to future lease-up or transaction. Were the bakery to ever vacate the microgrid-developed space, the owner could rent it to a new occupant at a significantly higher rate. Alternately the additional revenue gives the owner greater control over leasing rates in a future soft rental market.