NextEra Energy Partners LP (NYSE:NEP) said on Friday it has agreed to buy a 50% stake in a renewable energy portfolio totalling 2,520 MW and also entered into a convertible equity portfolio financing for USD 824 million (EUR 709m).
The growth-oriented limited partnership formed by NextEra Energy Inc (NYSE:NEE) is buying the portfolio interest from a subsidiary of NextEra Energy Resources LLC for a total consideration of USD 849 million plus NEP's share of the portfolio's total tax equity financings, estimated at USD 866 million at the time of closing.
The bundle includes the wind, solar and solar-plus-storage assets listed in the table below. They are either newly constructed or under construction and contracted with a strong and diverse mix of investment-grade counterparties, having a cash available for distribution (CAFD)- weighted remaining contract life of about 19 years.
| Name |
Capacity |
Power source |
Storage |
Location |
| White Mesa Wind |
501 MW |
Wind |
-- |
Texas |
| Irish Creek Wind |
301 MW |
Wind |
-- |
Kansas |
| Hubbard Wind |
300 MW |
Wind |
-- |
Texas |
| Cool Springs Solar |
213 MW |
Solar |
40 MW |
Georgia |
| Little Blue Wind |
251 MW |
Wind |
-- |
Nebraska |
| Dodge Flat Solar |
200 MW |
Solar |
50 MW |
Nevada |
| Elora Solar |
150 MW |
Solar |
-- |
Tennessee |
| Quitman II Solar |
150 MW |
Solar |
-- |
Georgia |
| Fish Springs Ranch Solar |
100 MW |
Solar |
25 MW |
Nevada |
| Minco Wind Energy III |
107 MW |
Wind |
-- |
Oklahoma |
| Ensign Wind Energy |
99 MW |
Wind |
-- |
Kansas |
| Borderlands Wind |
99 MW |
Wind |
-- |
New Mexico |
| Quinebaug Solar |
49 MW |
Solar |
-- |
Connecticut |
The transaction is seen to build on adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) by between USD 184 million and USD 194 million, and on CAFD by USD 58 million-67 million, each on a five-year average annual run-rate basis, as of December 31, 2022.
Subject to regulatory clearance, closing is planned for later in 2021 or in early 2022.
As per the convertible equity portfolio financing, it was entered into with Apollo Global Management. Chairman and CEO Jim Robo commented that it is the lowest cost in the partnership's history, “with a more than 250 basis points lower implied return to the investor in the buyout price than the first iterations of the structure in 2018 and early 2019.”
The financing is in conjunction with the newly-announced acquisition and the subsequent creation of a new portfolio to which the acquired one was contributed. NEP explained that the funds will provide it with the flexibility to periodically buy out the investor's equity interest in the portfolio between the five- and 10-year anniversaries of the deal at a fixed pre-tax annual return of about 5.6%.
Also today, NEP reiterated it expects to be in the upper end of its year-end 2021 run-rate adjusted EBITDA and CAFD forecast ranges of USD 1.44 billion-1.62 billion and USD 600 million-680 million, respectively. It noted, though, that these projections do not take into account contributions from the roughly 1,260 MW of acquisitions announced today and that they are included in the partnership's previously disclosed year-end 2022 expectations.
The existing run-rate expectations for 2022 remain unchanged, as well.
(USD 1.0 = EUR 0.860)
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Image by: NextEra Energy Resources LLC.
