NextEra Energy Partners LP has entered into an agreement with a subsidiary of NextEra Energy Resources LLC to acquire a geographically diverse portfolio of 10 wind projects and one solar project, collectively consisting of approximately 1,388 MW.
NextEra Energy Partners intends to initially finance the acquisition through a combination of $573 million proceeds from the sale earlier this year of its Canadian assets and capacity under an existing credit facility. Funds drawn under the credit facility are expected to be immediately repaid with a $750 million convertible equity portfolio financing with a fund managed by BlackRock Global Energy & Power Infrastructure.
The portfolio of wind and solar assets has a cash available for distribution weighted remaining contract life of approximately 18 years. The projects are as follows:
- Bluff Point Wind Energy Center, a 120 MW wind plant in Jay and Randolph counties, Ind.;
- Breckinridge Wind Energy Center, a 98 MW wind plant in Garfield County, Okla.;
- Carousel Wind Energy Center, a 150 MW wind plant in Kit Carson County, Colo.;
- Cottonwood Wind Energy Center, a 90 MW wind plant in Webster County, Neb.;
- Golden Hills North Wind Energy Center, a 46 MW wind plant in Alameda County, Calif.;
- Javelina II Wind Energy Center, a 200 MW wind plant in Webb County, Texas;
- Kingman I and II Wind Energy Centers, two wind plants with a combined generating capacity of 206 MW in Kingman County, Kan.;
- Ninnescah Wind Energy Center, a 208 MW wind plant in Pratt, Kingman and Sedgwick counties, Kan.;
- Rush Springs Wind Energy Center, a 250 MW wind plant in Grady and Stephens counties, Okla.; and
- Mountain View Solar Energy Center, a 20 MW solar photovoltaic facility in Clark County, Nev.
NextEra Energy Partners expects to acquire the portfolio for total consideration of approximately $1.275 billion, subject to working capital and other adjustments, plus the assumption of approximately $930 million in tax equity financing and $38 million of non-recourse project debt as of year-end 2018. The acquisition is expected to contribute adjusted EBITDA of approximately $290 million to $310 million and cash available for distribution of approximately $122 million to $132 million, each on a five-year average annual run-rate basis, beginning Dec. 31, 2018.
NextEra Energy Partners expects to complete the acquisition in the fourth quarter, subject to customary closing conditions and the receipt of certain regulatory approvals.
“The acquisition of these high-quality, contracted renewable energy assets demonstrates the continued execution of our plan to expand NextEra Energy Partners’ portfolio for the benefit of our unitholders,” states Jim Robo, chairman and CEO of NextEra Energy Inc. “This transaction replaces the Canadian portfolio that we divested earlier this year with higher-yielding assets in the U.S. that benefit from the lower effective corporate tax rate and longer tax shield. In addition, the transaction supports growing limited partner unit distributions in a manner consistent with our previously stated expectations of 12 to 15 percent per year through at least 2023.
“The portfolio financing is expected to be a very attractive, low-cost, equity-like product for NextEra Energy Partners,” he continues. “With the right to convert at least 70 percent of the portfolio financing into NextEra Energy Partners’ common units, the financing provides additional third-party confirmation of our growth outlook and high-quality, long-term contracted portfolio backed by strong counterparty credits. Without the need to sell common equity until 2020 at the earliest, other than modest at-the-market issuances, today’s transaction further enhances our financing flexibility.”