NextEra Energy Partners LP has entered into a definitive agreement with Canada Pension Plan Investment Board (CPPIB) for the sale of its portfolio of wind and solar generation assets in Ontario.
NextEra is selling the assets for a total consideration of approximately $582.3 million, including the net present value of the operations and maintenance origination fee, subject to customary working capital and other adjustments, plus the assumption by the purchaser of approximately $689 million in existing debt. An affiliate of NextEra Energy Resources will continue to operate all of the facilities included in the transaction under a 10-year services agreement with CPPIB.
The transaction includes the sale of six fully contracted wind and solar assets with an average contract life of approximately 16 years and 10-year average cash available for distribution (CAFD) of $38.4 million. The portfolio has a combined total generating capacity of approximately 396 MW:
- Bluewater, a 59.9 MW wind facility;
- Conestogo, a 22.9 MW wind facility;
- Jericho, a 149 MW wind facility;
- Summerhaven, a 124.4 MW wind facility;
- Moore, a 20 MW solar facility; and
- Sombra, a 20 MW solar facility.
NextEra Energy Partners expects the sale to close during the second quarter. The transaction is subject to receipt of regulatory approvals and satisfaction of customary closing conditions, the company notes.
“We are pleased to reach this agreement with CPPIB for the sale of our Canadian portfolio, which we expect will be accretive to NextEra Energy Partners’ long-term growth,” comments Jim Robo, chairman and CEO. “The sale of these assets, at a very attractive 10-year average CAFD yield of 6.6 percent, including the present value of the O&M origination fee, highlights the underlying strength of the partnership’s renewable portfolio. As discussed during our earnings call in January, we expect the sale of the Canadian portfolio to enable us to recycle capital back into U.S. assets, which benefit from a longer federal income tax shield and a lower effective corporate tax rate, allowing NextEra Energy Partners to retain more CAFD in the future for every $1 invested. We expect to accretively redeploy the proceeds from this transaction to acquire higher-yielding U.S. assets from either third parties or NextEra Energy Resources.”
NextEra Energy Partners continues to expect a Dec. 31, 2018, run rate for adjusted EBITDA of $1.00 billion to $1.15 billion and CAFD of $360 million to $400 million, reflecting calendar-year 2019 expectations for the forecasted portfolio at year-end 2018.
Citi and CIBC Capital Markets are serving as financial advisors to NextEra Energy, and McCarthy Tétrault LLP and Gowling WLG (Canada) LLP are legal counsel.