Policy Statement on Environmental Sustainability

STORE Capital Corporation (“STORE Capital”) is a net-lease real estate investment trust.  We acquire single tenant operational real estate from business owners, and then lease the properties back to the business owners under net-leases, substantially all of which are triple-net. Under a triple-net lease, the tenant is solely responsible for operating the business conducted in the building subject to the lease, keeping the building in good order and repair, remodeling and updating the building as it deems appropriate to maximize business value, and paying the insurance, property taxes and other property-related expenses.  Under the triple-net lease model, therefore, it is the tenant, and not STORE Capital, that controls energy usage and decides when and how to implement environmentally sustainable practices at a given property.


While we do not control the business operations at our properties, as the property owner, we nevertheless recognize that the operation of commercial real estate assets can have a meaningful impact on the environment – particularly with respect to resource consumption and waste generation – and on the health of building occupants. At STORE Capital, we believe that being conscious of, and seeking to address, environmental impacts within our control, and supporting our tenant customers to do the same in their businesses, plays a role in building and sustaining successful enterprises.


We are committed to operating our business responsibly, guarding our valuable reputation and creating long-term and sustainable value for our company through a robust business model and attentiveness to all our many stakeholders.  STORE Capital is committed to playing an important role for middle market and larger companies across America in order to help them succeed, while making a positive impact on our collective communities, both today and for future generations. 


As part of our attentiveness to environmental concerns, we intend to:

  • Continuously seek to understand the environmental risks and opportunities associated with our business practices;
  • Undertake initiatives to promote greater environmental awareness among our employees and to evaluate opportunities to enhance our processes; and
  • Promote awareness and engage with our tenants regarding sustainability practices and solutions.


Activities at STORE Capital’s Headquarters


As of September 30, 2018, we employed a total of 98 persons, all of whom operate from an approximately 27,000 square foot leased office suite on the first floor of a commercial office building in Scottsdale, Arizona.  At our corporate office, we engage in various actions that are designed to reduce our environmental footprint. These actions include:

  • Using energy-efficient, motion-activated lighting and programmable thermostats throughout our office;
  • Reducing or eliminating our employees’ use of plastics during the workday by providing reusable flatware and drinkware, as well as eco-friendly disposable utensils and flatware;
  • Participating in local and municipal carpool/transit/air quality programs, including a county-level travel reduction program;
  • Engaging in the recycling of paper and other office products, and seeking to develop partnerships with neighboring businesses for an enhanced recycling program; 
  • Defaulting our printers to double-sided printing to reduce paper usage; and
  • Striving to be paperless through the widespread use of computer tablets and laptop computers.


Activities in Developing Our Property Portfolio


STORE Capital’s business principally involves acquiring commercial real estate properties from business owners and then leasing those properties back to the business owners under triple-net leases.  The properties we acquire are subject to both state and federal environmental regulations. As a result, we are very conscious of environmental risks associated with our tenants and with prior users of the real estate we own.


Our commitment to environmental sustainability and the mitigation of environmental risks in connection with the development of our property portfolio begins before we acquire a real estate asset and is evident throughout the property acquisition process.


Assessing.  When assessing a target property, we follow standard pre-acquisition property due diligence procedures that include the following: 


  • Engaging a STORE-approved, nationally-recognized and insured independent environmental engineering firm that is qualified to perform environmental site assessments in accordance with the most current standards published by the American Society for Testing and Materials.
  • Requiring, as a condition precedent to the acquisition, that the independent environmental engineering firm deliver a Phase I environmental assessment (a “Phase I”) identifying any recognized environmental conditions (“RECs”) affecting the property.  Generally, as part of the Phase I, the independent firm will: 
    • Visually inspect the property from the boundaries and selected interior portions of the property, focusing on general property operations, the existence of above-ground or visible underground chemical or waste storage, evidence of releases of hazardous substances, the existence of asbestos-containing materials and/or the possibility of vapor intrusion.
    • Analyze the physical setting of the property based on a review of U.S. Geological Survey topographical maps, Federal Emergency Management Agency flood maps, U.S. Department of Agriculture soil surveys and selected geological reference information.
    • Review historical information regarding the property – including aerial photographs, city directories, fire (Sanborn) insurance maps, prior reports (if any exist), property tax assessor files, property land title records and zoning records – to identify and document past uses of the property and adjoining properties.
    • Review regulatory records, including federal and state databases, for indications of RECs or other conditions or liabilities affecting the property.
    • Conduct interviews with personnel of the seller who have knowledge of the uses and physical characteristics of the property.
  • Engaging an independent firm to conduct a property condition assessment that includes information regarding sustainability practices at target properties.


Addressing.  Where we have identified RECs associated with a property, we seek to address these and other conditions in advance of any investment.  These actions may include, as conditions precedent to the acquisition (and at the seller’s expense):


  • Conducting additional environmental testing in the form of a Phase II environmental assessment;
  • Submitting the property into the voluntary compliance or clean-up program of the state where the property is located;
  • Purchasing an environmental insurance policy to insure against future contamination-related claims of the state or a third-party claimant; and
  • Remediating the REC in accordance with any state-mandated minimum requirements.


Even in cases where we do not identify a REC, we may take steps to mitigate environmental risks associated with the tenant’s business operations at the property.  We may also take additional actions in situations where a target property may be subject to risks associated with climate change, particularly as a result of being located in a geographic area susceptible to floods, hurricanes, tornados, earthquakes or other climate-related occurrences.  These additional steps and actions may include: 


  • Maintaining comprehensive environmental insurance coverage for specified properties in our portfolio to ensure that there are financial resources available to conduct safe and timely remediation in the event of an unforeseen environmental issue; and
  • Preparing for climate-related natural disasters by requiring our tenants to carry insurance, including fire, wind/hail, earthquake, flood and other extended coverage where appropriate given the relative risk of loss, geographic location and industry best practices.


Acquiring.  If we are satisfied with the results and outcome of our pre-acquisition due diligence process, we will acquire the property by executing a purchase and sale agreement in which the seller will make various representations and warranties about the property.  We will then enter into a lease with the tenant (which may be the seller or another third party) in which the tenant will agree to certain covenants and indemnities related to its continued use of the property. These covenants typically require tenants, among other things, to comply with applicable environmental laws and remediate or take other corrective action should any environmental issues arise.  


Pursuant to our standard acquisition process, we seek to manage and mitigate environmental risks that may be associated with our acquired properties. 


Engaging with Our Tenants


Despite owning our properties subject to triple-net leases, under which our tenants control all business operations at the properties, we will strive to positively influence the sustainability practices of our tenants. Effective encouragement of sustainability initiatives, particularly related to energy, water and indoor environmental quality, can lead to the adoption of practices that can drive business and real estate value appreciation, decrease operating costs and mitigate regulatory risks.  


In 2019, we initiated a tenant outreach program designed, initially, to gauge our tenants’ current sustainability practices, including their engagement in the types of practices described below.  We expect to continue this outreach program, with a focus on providing our tenants with education, ideas and support for property-level sustainability solutions, while encouraging them to engage in sustainable practices. Such sustainable practices may include:


  • Installing high-efficiency lighting and using smart energy management systems that track the flow of people in and out of a room and adjust lighting, heating and cooling based on factors such as use and occupancy; 
  • Saving water by installing low-flow faucets, toilets and urinals, replacing water heaters with tankless water heaters that can also reduce storage costs and waste, and ensuring that older water heaters and pipes are well insulated; 
  • Implementing energy-efficiency upgrades that require upfront investment but have measurable and positive near- or long-term payback;
  • Assessing building equipment, including HVAC systems, thermostats, hot water tanks, pumps, piping and air filters, to ensure that they are properly calibrated, clean, insulated if necessary and operating as efficiently as possible; 
  • Avoiding leaks in the windows, doors, walls, roofs and foundations of buildings, as well as using improved coatings, glazings and insulation materials to reduce the loss of heat in the winter and cool air in the summer, all of which are low-cost ways to save energy and lower building costs; and
  • Engaging professionals to install sensors, monitors and software that measure exactly how much energy a building uses and how that usage can be reduced.


Governance, Transparency, and Reporting 


The successful implementation of our environmental sustainability commitments depends on good corporate governance, internal focus and transparency about our efforts and progress. To achieve this, we have established a Sustainability Working Committee made up of a diverse group of management and employee representatives that serves as an internal working group focused on developing and furthering our sustainability efforts.  The efforts of the Sustainability Working Committee are overseen by a management-level ESG Committee that selects and coordinates our specific sustainability-related initiatives. In addition to working through these committees, we will endeavor to:


  • Regularly report to the Nominating and Corporate Governance Committee of our Board of Directors on our environmental initiatives and progress;
  • Engage with external stakeholders, including our institutional stockholders, to solicit feedback about our performance, disclosures and opportunities for enhancement; and
  • Externally report on our progress on these commitments on a regular basis.


Policy Governance


The Nominating and Corporate Governance Committee of our Board of Directors is charged with considering and advising the Board on environmental stewardship matters, reviewing and recommending appropriate environmental stewardship goals, policies and practices, and reviewing and monitoring key performance metrics relating to environmental stewardship matters.


In accordance with the foregoing, this Policy Statement on Environmental Sustainability was approved by our executive management team on October 29, 2019, and is overseen and reviewed at least annually by the Nominating and Corporate Governance Committee of our Board of Directors. This Policy Statement is maintained by our Chief Compliance Officer. Substantive revisions may be approved by our Chief Compliance Officer in conjunction with oversight by the executive management team and the Nominating and Corporate Governance Committee.