ANNAPOLIS, Md., Oct. 20, 2014 /PRNewswire/ -- Hannon Armstrong
Sustainable Infrastructure Capital, Inc. ("Hannon Armstrong," "we," "our" or the "Company;"
NYSE: HASI), a leading sustainable infrastructure investor, today
announced a $144 million investment
in a portfolio of 10 operating wind projects owned by an affiliate
of JP Morgan Chase & Co ("JP Morgan"). The transaction enables
Hannon Armstrong to participate in
the priority cash flows associated with these wind projects.
Hannon Armstrong also raised
$115 million of new fixed-rate
non-recourse debt from Bank of America, N.A, using the investment
as collateral.
"We have acquired a seasoned and diversified portfolio of cash
flows from unlevered operating wind projects, where we will receive
our projected return on a preferred basis, relative to the project
owner-operators," said Hannon Armstrong
President and CEO Jeffrey
Eckel. "This transaction continues our focus on senior
positions in the capital stack and should create additional
investment opportunities for Hannon
Armstrong. Additionally, this investment should enable us to
achieve core earnings of $0.25 in the
fourth quarter and, in anticipation of further 2015 earnings
growth, to support the declaration of an increase in our December
dividend to $0.26 per share."
Highlights
- Wind investment covers 10 projects, in five states,
representing over 1,200 megawatts (MW) of gross generating
capacity, all placed in service between 2004 and 2008
- Projects have no debt, hence the vast majority of the free cash
flow (after operating expenses) is distributed to the investors,
including Hannon Armstrong, until a
preferred return is achieved
- Power is sold into a variety of markets, including some
merchant markets, with merchant risk significantly mitigated by a
preferred return mechanism
- Projects operated by leading wind industry owner-operators:
EDPR, Invenergy, E.On and EDF
"We continue our focus on seeking market opportunities where we
can be senior in the capital stack—whether it is through this
preferred investment, our typical senior debt investments or owning
the underlying land in a given project. These opportunities are
where we see the most value in the grid connected renewable energy
business," continued Eckel. "This transaction adds diverse,
attractive risk-adjusted returns in operating grid connected
renewables, complements the growth opportunities in distributed
energy assets and supports our sustainable yield."
The Transaction
Hannon Armstrong has contributed
$144 million in cash to a newly
created limited liability company ("NewCo") with no debt,
liabilities or employees. The cash will be used to acquire four
separate existing limited liability company investments from JP
Morgan. These four investments are in holding companies owned
and operated by leading wind developers. The holding
companies, in turn, own and operate the 10 projects. Reznick
Capital Markets Securities, LLC acted as an advisor to JP
Morgan.
The preferred membership interests are structured in a typical
wind partnership "flip" structure where NewCo, along with a number
of other large institutional investors, receive a pre-negotiated
preferred return consisting of a priority distribution of the
project cash flows along with tax attributes. Once this
preferred return is achieved, the partnership flips and the project
owner receives the majority of the cash flow and the
institutional investors will have an ongoing residual
interest.
Hannon Armstrong will own 50% of
NewCo and share in the cash flow and tax attributes according to a
negotiated schedule. As part of the transaction, Hannon Armstrong borrowed $115 million of fixed-rate amortizing
non-recourse debt from Bank of America, N.A. using Hannon Armstrong's interest in NewCo as
collateral.
"We saw an opportunity to fix out interest rates on a
non-recourse basis," said Hannon
Armstrong's Chief Financial Officer Brendan Herron. "We continue to take advantage
of the historically low interest rate environment by increasing our
fixed-rate debt while also increasing leverage."
About Hannon Armstrong
Hannon Armstrong (NYSE: HASI)
makes debt and equity investments in sustainable infrastructure
projects. The Company focuses on profitable projects that increase
energy efficiency, provide cleaner energy, positively impact the
environment or make more efficient use of natural resources.
Hannon Armstrong targets projects
that have high credit quality obligors, fully contracted revenue
streams and inherent economic value. The Company, based in
Annapolis, Maryland, has elected
to be taxed as a real estate investment trust (REIT) for federal
income-tax purposes.
Forward-Looking Statements
Some of the information contained in this press release are
forward-looking statements and within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. When used in this
press release, words such as "believe," "expect," "anticipate,"
"estimate," "plan," "continue," "intend," "should," "may,"
"target," or similar expressions, are intended to identify such
forward-looking statements. Forward-looking statements are subject
to significant risks and uncertainties. Investors are cautioned
against placing undue reliance on such statements. Actual results
may differ materially from those set forth in the forward-looking
statements. Factors that could cause actual results to differ
materially from those described in the forward-looking statements
include those discussed under the caption "Risk Factors" included
in our Annual Report on Form 10-K for our fiscal year ended
Dec. 31, 2013, which was filed with
the U.S. Securities and Exchange Commission (SEC), as well as in
other reports that we file with the SEC.
Forward-looking statements are based on beliefs, assumptions
and expectations as of the date of this press release. We disclaim
any obligation to publicly release the results of any revisions to
these forward-looking statements reflecting new estimates, events
or circumstances after the date of this press release.
Investor Relations
410-571-6189
investors@hannonarmstrong.com
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SOURCE Hannon Armstrong Sustainable Infrastructure Capital,
Inc.