SAN FRANCISCO, Sept. 28, 2023 (GLOBE NEWSWIRE) -- Sunrun (NASDAQ:RUN), the nation's leading provider of residential solar, storage and energy services, today announced it has closed the securitization of leases and power purchase agreements, known as Sunrun's solar-as-a-service offering, and raised additional subordinated non-recourse financing.
"We are pleased with Sunrun's record-setting transaction, placing the largest ever residential solar securitization for the industry and subsequently raising additional non-recourse financings, " said Danny Abajian, Sunrun's Chief Financial Officer. "Sunrun's execution demonstrates our non-recourse, asset level financing strategy provides attractive capital to fuel growth, with strong advance rates, allowing unit-level cash generation over time without increasing leverage at the parent level."
The securitization transaction was structured with two pari passu tranches of A- rated notes (the "Class A-1" and "Class A-2", respectively and together the "Class A") and a single class of BB+ ("Class B") rated notes. The $440mm Class A-1 notes were marketed in a public asset backed securitization whereas the $275mm Class A-2 notes were privately placed. The Class A-1 and A-2 notes were both priced with a coupon of 6.60%. Strong investor demand for the Class A-1 notes resulted in a spread of 240bps and a yield of 6.78%, while also enabling the Class A-1 notes to be upsized by $100mm to $440mm. The spread of 240bps represents an improvement of 25bps from Sunrun's 2023-1 asset backed securitization in May 2023. The Class A-1 and A-2 notes represent an advance rate of approximately 67.4% of the securitization share of the aggregate discounted solar asset balance (i.e., contracted cash flows available for debt servicing) using a 6% discount rate. The Class A-1 and A-2 notes have an expected weighted average life of 6.53 years, an Anticipated Repayment Date of July 30, 2030 and a final maturity date of January 30, 2059.
Similar to prior transactions, Sunrun raised an additional subordinated subsidiary-level non-recourse financing totaling $253mm (secured, in part, by the distributions from the Class B notes), after the securitization transaction closed, which increased the cumulative advance rate obtained by Sunrun.
The terms associated with the securitization and subsequent subordinated non-recourse financing, taken together with related tax equity proceeds, upfront incentives, and customer prepayments, net of transaction fees and required cash reserves, are equivalent to a cumulative advance rate that is consistent with the company's prior commentary of approximately 79% to 84% of the company's contracted Subscriber Value metric using a 6% discount rate. Sunrun obtained actual net proceeds ...