NextEra Energy Partners LP (NYSE: NEP) announced July 5 that it has completed the acquisition of approximately 285 MW of contracted renewables projects from a subsidiary of its sponsor, NextEra Energy Resources LLC.
Included in the acquisition are two modern wind facilities, commissioned in 2015 with General Electric technology. The acquisition expands the contracted renewable energy projects in NextEra Energy Partners’ portfolio to approximately 2,656 MW (excluding ownership interests in equity method investments).
“This transaction once again demonstrates the strong and visible runway for future growth opportunities from our sponsor, NextEra Energy Resources, which we believe is a core strength of the partnership’s value proposition,” said Jim Robo, chairman and chief executive officer. “The partnership’s already strong and flexible financial position for the year is further advanced by the addition of these high-quality projects expected to provide an attractive yield to investors. At the same time, the utilization of debt to fund a portion of the initial purchase price reflects the partnership’s flexible and opportunistic approach to financing.”
The acquired Cedar Bluff Wind Energy Center is an approximately 199-MW facility located in Kansas. Golden Hills Wind Energy Center is an approximately 86-MW facility located in California. Both are fully contracted under long-term power purchase contracts with strong creditworthy counterparties and remaining contract lives of approximately 20 years.
NextEra Energy Partners acquired the assets for a total consideration of approximately $312 million, plus the assumption of approximately $253 million in liabilities related to tax equity financing. The purchase price is subject to working capital and other adjustments. The partnership financed the transaction, in part, through proceeds of an issuance of a $100 million non-amortizing term loan at the holding company, with the balance of the purchase price funded with cash on hand and through a draw under a subsidiary of NextEra Energy Partners’ revolving credit facility.
The use of a term loan at the holding company to fund a portion of the initial purchase price is consistent with the partnership’s previously announced target for a long-term capital structure utilizing holding company leverage of approximately 3.5 times project distributions after project debt service.
NextEra Energy Partners expects the acquisition to contribute adjusted EBITDA, including grossed up (pre-tax) tax credits, of approximately $70 million to $80 million and cash available for distribution (CAFD) of approximately $29 million to $34 million, each on an annual run-rate basis as of Dec. 31, 2016.
NextEra Energy Partners is a growth-oriented limited partnership formed by NextEra Energy (NYSE: NEE) to acquire, manage and own contracted clean energy projects with stable, long-term cash flows. Headquartered in Juno Beach, Fla., NextEra Energy Partners owns interests in wind and solar projects in North America, as well as natural gas infrastructure assets in Texas.