Hannon Armstrong acquires $107m portfolio of assets for solar and wind projects

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Hannon Armstrong acquires $107m portfolio of assets for solar and wind projects

Hannon Armstrong Sustainable Infrastructure Capital Inc (HASI), a renewable-energy financing company, bought a US$107 million portfolio of land and leases for solar and wind projects.

The firm acquired more than 7,500 acres of land leased to three solar projects with a value of approximately $60 million and the payments from 11 additional land leases for a diversified portfolio of wind projects with a value of approximately US$27 million. In addition, another portfolio of 46 smaller streams of payments from land leases on wind projects was also purchased.The land and leases purchased support wind and solar projects developed or owned by high credit quality entities, including Southern Company, NRG Yield, First Solar and NextEra, with long term investment grade power purchase agreements from utilities such as SDG&E, PG&E, LADWP and SCE.

Jeffrey Eckel, Chief Executive Officer, stated:

We have acquired high credit quality, long duration lease streams that are senior to the project debt in some of the largest solar and wind projects in the country. This portfolio diversifies our asset mix while moving us toward our 2014 financial targets and adds another platform for originating new assets that fit well with our REIT structure.Strategically, this transaction is a terrific fit: It adds high credit quality assets at attractive risk-adjusted yields, grows our near term pipeline and increases our capacity to add distributed energy assets by expanding our REIT asset base. In addition to the long duration assets, we now will enjoy equity upsides from long-term land ownership, all the while taking the least risk in the project capital stack," added Ecke

The transaction is structured as a purchase of American Wind Capital Company, LLC with no debt, liabilities or employees. Existing employees and management will form a new company named AWCC Capital, LLC to originate additional transactions in which HASI has a right of first refusal to purchase additional transactions.

HASI has also expanded its existing credit facility by increasing its overall capacity by US$200 million. The new terms provide an increase in the maximum borrowings allowed at any point in time in the project finance facility from US$150 million to US$250 million, and an increase in the total maximum advances allowed under the facility from US$700 million to US$900 million. The amendment also expanded the eligibility criteria to reflect current market opportunities in distributed energy assets.

HASI 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.

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