Sunrun Closes Securitization and Raises Additional Subordinated Funding
The transactions result in the highest advance rate against the value of the underlying collateral asset in the history of the company, exceeding 100% of the gross productive assets contracted and reaching a new weighted average cost low capital
Financing sets new records, with record spreads against benchmark rates and a yield of 2.28% on senior tranches, and an improvement in the cost of subordinated finance
SAN FRANCISCO, September 30, 2021 (GLOBE NEWSWIRE) – Sunrun (Nasdaq: RUN), the leading national solar services, battery storage and energy company, today announced that it has completed the securitization of leases and contracts purchase of electricity on September 29 (“Sunrun 2021-2”). Sunrun also today announced the execution and closing of additional subordinated financing, which is indirectly secured by the Class B Notes issued to a Sunrun subsidiary in connection with the Securitization Transaction and by a portion of the Sunrun’s additional retained rights in the underlying guaranteed assets as part of the securitization transaction.
“I am pleased with Sunrun’s record project finance execution and continued improvement in our cost of capital, both for senior securitized notes and subordinate financing at the subsidiary level. With these transactions, we have reached records with the lowest cost of capital and the highest advance rates in the history of the company, in this case more than 100% of the gross productive assets contracted from the pool. securitized measured using a 5% discount rate, ”said Ed Fenster. , co-founder and executive co-chairman of Sunrun. “These financings underscore that Sunrun can not only finance growth, but also generate cash flow, despite billions of dollars in capital and operating costs.”
While the 2021-2 securitization transaction was structured with notes rated A- (“Class A”) and BB- (“Class B”), only the class A notes were sold to investors as part of the process. securitization. The Class A Notes have an initial balance of $ 447.1 million and have been valued at a yield of 2.28%, which is a deviation from the benchmark swap rate of 120 basis points at the time of establishing the price. This represents a 15 basis point spread improvement over the securitization issued by Sunrun in March 2021, which previously represented the lowest spread reached by Sunrun or Vivint Solar since its inception to date. Class A notes represent a prepayment rate of approximately 75% of the securitization portion of the aggregate discounted balance of solar assets (i.e. contractual cash flows available for debt service) in using a 5% discount rate. With a yield of 2.28%, the cost of debt for the Class A notes is approximately 160 basis points lower than the average cost of all of the Company’s securitized notes. The Class A Notes have an expected weighted average life of 6.3 years, an expected repayment date of January 30, 2029 and a final maturity date of January 30, 2057.
Sunrun reports the Gross Productive Assets (“GEA”) and the Contract Period of Gross Productive Assets (“CGEA”, also referred to as the Contracted Gross Productive Assets) for the Solar System Fleet, which represents the present value (using a rate of d (5% non-leveraged discount) of expected customer cash flows, less estimated O&M costs and distributions to tax equity partners in partnership rollover structures. GEA includes estimated renewals while CGEA only includes expected cash flows during the initial period of the customer contract. For the full definition of GEA and CGEA, please see our latest earnings press release or investor presentation, both available on our investor relations website at https://investors.sunrun.com.
Sunrun raised additional subordinated financing at the subsidiary level (secured, in part, by distributions of the Class B Notes) following the closing of the securitization transaction, which increased the cumulative advance rate obtained by Sunrun in this regard. which concerns assets within subsidiary funds. Taken together, Sunrun will realize the proceeds from the issuance of the Class A Securitized Notes and the Subordinated Funding, net of transaction costs, which represent more than 100% of the CGEA associated with the assets of the securitization transaction. The CGEA represented approximately 73% of the total GEA associated with the underlying assets. The subordinate financing will be financed in two drawings, with the first drawing being simultaneous at the close in September and the second drawing taking place in October.
Deutsche Bank Securities was the sole structuring agent and served as the associate bookrunner of the securitization transaction with Credit Suisse and BofA Securities. Truist Securities, KeyBanc Capital Markets, RBC Capital Markets and Citigroup were co-managers of the securitization.
This press release does not constitute an offer to sell or the solicitation of an offer to buy and there will be no sale of such securities in any jurisdiction in which such an offer, solicitation or sale would be illegal prior to the registration or qualification under securities laws. of such jurisdiction.
This communication contains forward-looking statements relating to Sunrun (the “Company”) within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995 . forward-looking statements include, without limitation, statements relating to: the Company’s business plan, its leading position in the market, its competitive advantages, its operational and financial results and measures (and assumptions linked to the calculation of these measures); the momentum of the Company in the company’s business strategies, expectations regarding market share, customer value proposition, market penetration, financing activities, financing capacity, product line and ability to manage cash flow and liquidity; and the growth of the solar industry. These statements are not guarantees of future performance; they reflect the Company’s current views with respect to future events and are based on assumptions and estimates and are subject to known and unknown risks, uncertainties and other factors that may cause results, performance or actual accomplishments materially different from expectations or projected results or implied by forward-looking statements. Risks and uncertainties that could cause the Company’s results to differ materially from those expressed or implied by these forward-looking statements include: the impact of COVID-19 on the Company, its business and operations; the successful integration of Vivint Solar; the Company’s management team and its ability to retract and retain key employees; the availability of additional funding on acceptable terms; changes in the retail prices of electricity produced by traditional utilities; global economic conditions, including slow or negative growth rates in global and national economies and weakening consumer confidence and spending; changes in policies and regulations, including net metering and interconnection limits or caps; the availability of discounts, tax credits and other incentives; the availability of solar panels, batteries and other components and raw materials; the Company’s ability to attract and retain the Company’s relationships with third parties, including the Company’s solar partners; the Company’s continued ability to manage costs associated with solar service offerings; the Company’s business plan and the Company’s ability to effectively manage the Company’s growth and workforce constraints; the Company’s ability to comply with the covenants of the Company’s investment funds and credit facilities; factors affecting the solar industry generally; and other risks and uncertainties identified in reports that we file from time to time with the United States Securities and Exchange Commission. All forward-looking statements used in this document are based on information available to us as of the date hereof, and we assume no obligation to publicly update these forward-looking statements for any reason, except as required by law. ‘required.
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