Sunrun to Expand Assets Using Recently Secured Loan of $835 Million

The borrowing cost will be paid by the company’s earnings from assets


U.S.-based residential solar company Sunrun closed $835 million in non-recourse financings to expand its assets that will help the company maintain the growth trajectory across various segments in its business, including energy storage and diverse energy services that it offers to its customers.

Of the cumulative closure, Sunrun closed a $600 million non-recourse syndicated bank facility or senior credit facilities to support a 335 MW portfolio of leases and power purchase agreements. The facility consists of an amortizing loan of $575 million and a debt service reserve letter of credit worth $25 million.

The company said it closed an additional non-recourse subordinated financing worth $235 million concurrently with the senior credit facilities, which is secured by Sunrun’s retained equity interest in the underlying collateral supporting the senior credit facilities.

Additionally, the subordinate financing increased the total advanced rate obtained by Sunrun. The cost of the facility is consistent with Sunrun’s existing subordinated debt financing facilities, the company said

“Taking together tax equity proceeds and other upfront cash flows, including upfront rebates and customer prepayments, the senior loan, and the subordinated financing, Sunrun realized proceeds, net of transaction fees, that represent over 85% of the contracted subscriber value associated with the assets in the transaction, measured using a 5% discount rate,” the company said.

The company said that the senior loan and subordinated financing will be funded in two draws, with the first draw concluding in December last year. The second draw is likely to be hosted during the first quarter of 2023.

“These financings highlight that Sunrun’s 15-year track record of strong asset performance and deep relationships across multiple capital markets provide stability and predictability, even with escalating interest rates. The Senior Loan priced at an initial credit spread 100 basis points below the recent Solar Loan asset-backed securitization transactions observed in the sector while delivering a cumulative advance rate above our prior guidance range of 75%-85%,” said Sunrun’s Chief Financial Officer Danny Abajian.

The company collaborated with Lunar Energy which specializes in a next-generation integrated home batteries, inverters, and software offerings during the third quarter of 2022, to electrify households by providing them with energy independence. Sunrun invested $150 million and owns a ~37% stake in Lunar Energy.

Last January, Sunrun retired its $250 million recourse lending facility and arranged a larger $425 million facility at enhanced terms and longer tenor than the company’s prior term extensions. The new recourse lending facility reflected improved terms, including a higher valuation for operating assets, in conjunction with an increased advance rate against Sunrun’s project backlog.


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