A London-based asset manager has entered the U.S. solar market by snapping up two development-stage, contracted projects in North Carolina with tax equity commitments in place from a syndicate of investors.
John Laing Group purchased the sponsor equity interest in the 50.2 MW Brantley Farm project Nash County and the 57.5 MW Fox Creek facility in Franklin County from Cypress Creek Renewables in August.
The British investor had previously limited its U.S. renewables investments to wind—most recently purchasing Akuo Energy’s 149 MW Rocksprings facility in Val Verde County, Texas (PFR, 9/29/17).
John Laing committed £30 million ($39 million) to buy the North Carolina solar project pair, both of which have 10-year power purchase agreements with Duke Energy Progress.
No financial adviser was involved in the deal, which was signed about a year before closing, PFR understands.
The projects already have financing in place and are expected to reach commercial operations by the end of the year.
U.S. Bank underwrote two separate tax equity investments in the projects in November and December of last year before syndicating them out to two other investors, Red Stone Equity Partners and Publix Super Markets.
Publix took a ticket in the $48 million deal for Brantley Farm, while Red Stone participated in the $41 million deal for Fox Creek.
U.S. Bank's syndication desk has been known to sell down 30% to 40% of the total tax equity commitment to third-party investors like Starbucks (PFR, 5/30).
The Brantley and Fox Creek projects are also understood to have debt financing in place, further details of which could not immediately be learned. Tax equity usually covers 35% to 45% of the total costs of similar projects.
An increase in the supply of third-party tax equity as well as a slow-down in utility-scale projects coming to market has meant that tax equity yields for so-called "vanilla" solar projects whose sponsors have strong balance sheets have been squeezed as low as 6%, deal watchers tell PFR.
Real estate-focused private equity firm Red Stone raised $9 million for renewable energy tax equity investments in 2017 and has financed the construction of 473 MW of solar energy installations since its inception 11 years ago, according to its website.
Spokespeople at U.S. Bank in St. Louis and John Laing in New York declined to comment while representatives at Cypress Creek in Los Angeles, Red Stone in New York, and Publix in Charlotte, N.C., did not respond to inquiries.