Spruce Power Holding Corporation (NYSE: SPRU) (“Spruce” or the “Company”), a leading owner and operator of distributed solar energy assets across the United States, today announced the acquisition of SS Holdings 2017, LLC and its subsidiaries (the “Spruce Power 4 Portfolio”) from a US-based private equity firm. The acquisition closed on March 23, 2023.
The Spruce Power 4 Portfolio features the customer payment streams from approximately 22,500 residential solar contracts under which customers purchase the clean electricity generated by rooftop solar home power systems. The contracts are supported by high-quality residential solar systems across 10 states that were originated by the homebuilder Lennar Corporation and its legacy residential solar platform, SunStreet, between 2013 and 2020. The acquisition expands Spruce into two new markets, Washington and Oregon, while providing additional customers in California, Colorado, Florida, Nevada, Texas, Delaware, Maryland, and South Carolina.
The Spruce Power 4 Portfolio has an average remaining contract life of nearly 15 years. Consistent with Spruce’s existing portfolio, underlying credit characteristics of the SEMTH Portfolio are strong with an average customer FICO score of approximately 740. The portfolio is expected to generate over $21 million of customer billings in 2023, and about $23 million of average annual billings over the next five years. Portfolio EBITDA, and contribution to Spruce’s annual Cash Available for Debt Service (“CAFD”), is expected to exceed $18 million annually during that time.
Christian Fong, CEO of Spruce Power commented, “This acquisition is the largest in Spruce’s corporate history. It grows our ownership of rooftop solar assets and contracts by about 44% overnight to more than 72,000 systems, demonstrating the power of our strategy to grow by acquisition while earning an attractive rate of return on our invested cash. Along with the $35 million we paid, we assumed $125 million of non-recourse project debt. With nearly $12 million in cash in the acquired business, our net Spruce balance sheet cash paid at closing was about $23 million. For future acquisitions, that leaves us with over $180 million of Spruce balance sheet cash. We expect this portfolio will make a large, positive and immediate impact on our financial and strategic outlook.”