Hannon Armstrong Sustainable Infrastructure has announced a $144 million investment in a portfolio of 10 operating wind projects owned by an affiliate of JP Morgan that enable to participate in the priority cash flows associated with the project.
Wind investment covers 10 projects, in five states, representing over 1,200 megawatts of total generating capacity, all placed in service between 2004 and 2008.
It is a no debt project with vast majority of the free cash flow distributed to investors until a preferred return is achieved.
Power will be sold into a variety of markets, with merchant risk mitigated by a preferred return mechanism. The projects will be operated by leading operators like EDPR, Invenergy, E.On and EDF.
Company has acquired a seasoned and diversified portfolio of cash flows from unlevered operating wind projects, which will ensure a projected return on a preferred basis, relative to the project owner-operators, said, Jeffrey Eckel, president, CEO, Hannon Armstrong.
Company focuses on seeking market opportunities through preferred investment, senior debt investments or owning the underlying land in a given project. These opportunities provide most value in the grid connected renewable energy business. This transaction adds risk-adjusted returns in operating grid connected renewables, continued, Eckel.
Hannon Armstrong has contributed $144 million to NewCo with no debt, liabilities or employees, which will be used to acquire four separate company investments from JP Morgan.
These four investments are in holding companies owned and operated by leading wind developers, which in turn, own and operate the 10 projects.
The membership interests are according to a wind partnership flip structure where NewCo and investors, receive a return of the project cash flows along with tax attributes.
Hannon Armstrong will own 50 percent of NewCo and share in the cash flow and tax attributes. Hannon Armstrong borrowed $115 million debt from Bank of America, N.A. using NewCo as collateral.