NextEra Announces Agreement to Acquire 400-Megawatt Portfolio

Source: 4/19/2021, Location: North America

- Reaches agreement to acquire long-term contracted wind portfolio with high-credit-quality customers
- Provides attractive investment opportunity to deploy proceeds from second draw of 2020 convertible equity portfolio financing
- Acquisition supported by leveraging NextEra Energy Resources' best-in-class operating platform to reduce costs
- Anticipates year-end 2021 run-rate expectations for adjusted EBITDA and CAFD to be in the upper end of its previously announced ranges

NextEra Energy Partners, LP has entered into a definitive agreement with Brookfield Renewable, a global owner and operator of renewable power assets, to acquire a 391-megawatt (MW) portfolio of four operating wind assets located in California and New Hampshire for a base purchase price of $733 million, subject to closing adjustments.

"This transaction demonstrates NextEra Energy Partners' continued ability to execute its long-term growth plan," said Jim Robo, chairman and chief executive officer. "This acquisition of approximately 400 megawatts of long-term contracted wind projects with high-credit-quality customers further enhances the diversity of the partnership's existing portfolio. This portfolio is an attractive acquisition for NextEra Energy Partners and is supported by our ability to leverage NextEra Energy Resources' best-in-class operating platform to reduce costs and create value for LP unitholders. The assets are well-situated in strong markets with long-term renewables demand, providing long-term optionality for the portfolio. The transaction also provides an accretive investment opportunity to deploy the proceeds from the second draw of our 2020 convertible equity portfolio financing, illustrating NextEra Energy Partners' ability to leverage its value-enhancing financing structures to support long-term growth. NextEra Energy Partners remains on a trajectory to grow our LP distributions per unit by 12% to 15% through 2024, and, in our view, the partnership has never been better positioned to deliver unitholder value going forward."

Portfolio acquisition and financing details
The portfolio is comprised of four wind generation facilities, totaling 391 MW. Almost all of the portfolio's capacity is contracted with investment-grade counterparties and a cash available for distribution (CAFD)-weighted remaining contract life of approximately 13 years at the time of closing. The assets are located in markets with significant long-term renewables demand, supporting potential re-contracting or repowering opportunities after the initial contract terms. The assets included are:
- Alta Wind VIII, 150-MW wind generating facility in California.
- Windstar,120-MW wind generating facility in California.
- Coram, 22-MW wind generating facility in California.
- Granite, 99-MW wind generating facility in New Hampshire.

NextEra Energy Partners expects to acquire the unlevered portfolio for a base purchase price of $733 million, subject to closing adjustments. NextEra Energy Partners plans to fund the transaction with a combination of undrawn funds remaining from the 2020 convertible equity portfolio financing and existing debt capacity. The acquired assets are expected to contribute adjusted EBITDA and CAFD of approximately $63 to $70 million, each on a five-year average run-rate basis, beginning Dec. 31, 2021.

The transaction is subject to approval from the Federal Energy Regulatory Commission and New Hampshire Site Evaluation Committee, as well as expiration or termination of the waiting period under the Hart-Scott-Rodino Act. NextEra Energy Partners expects to complete the acquisition in the third quarter of 2021, subject to customary closing conditions and the receipt of regulatory approvals.

NextEra Energy Partners now expects a Dec. 31, 2021, run rate for adjusted EBITDA in the upper end of its previously announced range of $1.44 billion to $1.62 billion and CAFD in the upper end of its previously announced range of $600 million to $680 million, reflecting calendar year 2022 expectations for the portfolio at year-end 2021.

From a base of its fourth-quarter 2020 distribution per common unit at an annualized rate of $2.46 per common unit, NextEra Energy Partners continues to expect 12% to 15% per year growth in limited partner distributions as being a reasonable range of expectations through at least 2024. NextEra Energy Partners expects the annualized rate of the fourth-quarter 2021 distribution, which is payable in February 2022, to be in a range of $2.76 to $2.83 per common unit. These expectations are subject to the usual caveats and include the impact of incentive distribution rights fees, as these fees are treated as an operating expense.

Citi is serving as sole financial advisor to NextEra Energy Partners, and Pillsbury Winthrop Shaw Pittman LLP is acting as counsel to the partnership.

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