NRG Yield has completed its previously announced acquisition of three Right of First Offer (ROFO) assets from NRG Energy, Inc. for $349 million in total cash consideration, plus assumed project debt of $657 million (as of March 31, 2014) excluding adjustments for working capital. The acquisition, which totals 590 MW of operating capacity, includes the following assets:
- El Segundo Energy Center, a 550 MW fast-start, natural gas-fired facility in LA County, California;
- TA High Desert, a 20 MW PV solar facility in LA County, California; and
- RE Kansas South, a 20 MW PV solar facility in Kings County, California
“The completion of the first-ever drop-down from NRG Energy demonstrates NRG Yield’s ability to successfully transact with its strategic sponsor and lays the foundation for robust long-term growth,” said NRG Yield’s Chairman and Chief Executive Officer David Crane. “When coupled with both the pipeline of NRG Yield-eligible projects owned by our parent company, NRG Energy, and the recently announced Alta Wind acquisition, this platform-proving transaction gives us the confidence to raise our long-term dividend growth target for NRG Yield.”
Increasing Targeted Dividend Growth Rate
Primarily driven by positive year to date results and the closing of the first ROFO transactions, the company is now targeting an annualized dividend of $1.50 per share by the 4th quarter of 2014, which represents a 25% increase to NRG Yield’s initial annualized dividend of $1.20 per share. Further, with a pipeline of nearly 2.1 GW of assets identified by NRG as being eligible for drop-down and giving effect to the pending acquisition of the 947 MW Alta Wind portfolio, NRG Yield is also raising its 5-year target dividend per share compound annual growth rate to 15-18% from 10-15%.
Updating Financial Guidance
As a result of the completed acquisition, NRG Yield is raising its full-year 2014 Pro-Forma Adjusted EBITDA guidance to $410 million, from $292 million, and Cash Available for Distribution (CAFD) guidance to $140 million, from $115 million. The Company is also reaffirming 2nd quarter Adjusted EBITDA guidance of $75 million and CAFD guidance of $22 million.
This updated Adjusted EBITDA and CAFD guidance excludes any impact associated with the recently announced Alta Wind acquisition, which is expected to close by the end of the 3rd quarter.