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odyd

NextEra Energy Partners, LP (NEP)

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Different profile than SUNE's yieldcos. Big strong partner. Long stable DPS growth outlook. Thus offer less current yield, but PPS still down a lot recently, similar to TERP. Listing yesterday's news again here:

Partners, LP completes the acquisition of natural gas pipelines in Texas: http://finance.yahoo.com/news/nextera-energy-partners-lp-completes-104500531.html

NextEra Energy Partners expects the NET Midstream acquisition to contribute adjusted EBITDA and CAFD of approximately $145 million to $155 million and $110 million to $120 million, respectively, on an annual run rate basis as of Dec. 31, 2015. If certain expansion projects are completed as planned, the acquisition is expected to contribute adjusted EBITDA and CAFD of approximately $190 million to $210 million and $135 million to $155 million, respectively, on an annual run rate basis as of Dec. 31, 2017.

NextEra Energy Partners expects the Jericho acquisition to contribute adjusted EBITDA and CAFD of approximately $40 million to $45 million and approximately $20 million to $25 million, respectively, on an annual run rate basis as of Dec. 31, 2015. See Definitional Information below for definitions of adjusted EBITDA and CAFD for the NET Midstream and Jericho acquisitions.

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EBITDA and CAFD numbers on the gas pipeline does not look that attractive...much lower than 9% cash on cash yield that solar/wind projects have typically! Also I am not sure about economics of the gas pipeline and how contracts work there...some diversification if one wants...

Also did you have a look at the legal structure? I really didn't understand how much class A shareholders get and how do I look at the equity BV on balance sheet.

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EBITDA and CAFD numbers on the gas pipeline does not look that attractive...much lower than 9% cash on cash yield that solar/wind projects have typically! Also I am not sure about economics of the gas pipeline and how contracts work there...some diversification if one wants...

Back of envelope.. The 2.1b cost seem to include expansion capex that would allow 200m EBITDA. If this is constant over the 20 year contract period it is around 7% unlevered IRR before tax assume no residual value. If residual value of assets are higher (pipes carrying gas should live longer than panels and inverters..?) than typical for PV plant that might add more to the IRR than in a PV plant calculation.

The Jericho Wind farm acquired from sponsor looks expensive though.

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Also did you have a look at the legal structure? I really didn't understand how much class A shareholders get and how do I look at the equity BV on balance sheet.

I need to learn more. This was more of a shoot first ask later move. To mitigate uninformed risk i diversified my 38% portfolio stake in yieldcos among 7 companies who all lost a lot of PPS and offered high yield now.

Also it was a trading thing. Since August 24 my non-yieldcos are up a lot while the yieldcos are down a lot since then. I'm playing that spread with this move, but hopefully I can ride it a bit and add to my non-yieldco share in the long run.

 

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Parent's help is everything  to the market. Moody's view contradicts ours. Similarly we thought here that FW acquisition was expensive and difficult to carry, Moody's upgraded all TERP debt and raised the profile to positive at the time, when stock was in $40s. Moody's upgrade is a mastery of obvious, stating problems, but stating future outcomes comes from other skills and should be clearly separated.

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I bought some NEP today. Reporting on April 28th should be getting into a dividend soon, maybe 0.32 per share. Aiming for 1.41 2016Q4 (payable in February 2017). I have a feeling they could try harder than that and yield could be better.

I think that as soon as SUNE is done, yieldcos will get back to normal evaluations. NEP, PEGI I find as the most attractive ones leaving room to go up in equity.

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Interesting fact and PG6 can probably comment on this. Distributions paid by NEP are called as non-dividend. They are also called as the return of capital.  In my tax-free account, it does not matter but for those who pay taxes, this would be a taxable gain.

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