Solar real estate investment fund SolaREIT announced that it closed a $100 million solar lease securitization with asset manager Nuveen.
The former claims this to be the “[l]argest securitization ever in mid-sized and commercial solar land sector by a REIT” and stated that the deal would provide “much needed liquidity to solar developers and landowners.”
“This investment confirms the strong interest from the largest and most progressive institutional investors in this sector,” SolaREIT managing director Gautam Chandra said in prepared remarks. “Community and commercial solar is in real need of increased financial options and access to more capital. No two projects are exactly the same, and for too long developers and landowners had very limited options in structuring effective solutions.”
It’s far from the first time Nuveen got involved with solar. Last year it pledged to make current and future real estate assets carbon neutral by 2040 and partnered with solar provider Safari Energy.
SolaREIT says that it “provides investors with predictable, risk mitigated investments with upside, and offers developers and asset owners a way to reduce project costs.” The company works with landowners and developers to provide liquidity to those who land under solar assets and to provide stable revenues to investors.
SolaREIT launched in 2020 after obtaining a first funding round.
An additional approach it announced last year is lease monetization, in which landowners receive an up-front lease payment, allowing them to keep their property while gaining liquidity.
Securitization deals effectively create bonds sold to investors. In return, the investors expect ongoing payments with interest over time. The underlying assets are supposed to provide the cash flow, whether mortgage payments or income from some use of the assets, like revenue from power generation.
Solar and other green plays that can trace improvement in environmental conditions will likely become a hotter commodity as more CRE investors see ESG as crucial, with a report from Colliers stating that “sustainability is no longer a ‘nice to have.’” Over time, ESG will become an important part of defining core assets.