Stock Update (NASDAQ:SCTY): SolarCity Corp and John Hancock Announce $227 Million Cash Equity Financing


SolarCity Corp (NASDAQ:SCTY) announced that it has completed its first cash equity transaction with partner John Hancock Financial. John Hancock is investing $227 million in a diversified portfolio of residential, commercial and industrial solar power projects that collectively represent 201 megawatts of generation capacity.

SolarCity monetizes the majority of 20-years of underlying cash flows—including solar renewable energy credits (SRECs) associated with the projects—and retains ownership of the assets and continues to service the customers. SolarCity retains a minority share of annual cash flows throughout the contract term as well as 99% of post-contract cash flows. The transaction raised $3.00 of financing per watt of solar generation capacity for SolarCity including tax equity investments, upfront rebates and prepayments; a blend of $3.24/watt for residential projects and $2.35/watt for commercial projects.

“We’re proud to partner with John Hancock, one of the most trusted brands in insurance and financial services, on this 20-year investment in our residential and commercial solar contracts,” said Radford Small,SolarCity’s Executive Vice President of Global Capital Markets. “Cash equity enables SolarCity to monetize a high percentage of cash flows to maximize upfront financing proceeds. This transaction is an exciting addition and diversification of our long-term financing options for solar assets.”

“We are pleased to partner with SolarCity in this transaction which represents an excellent opportunity to acquire long-term, contracted cash flows in renewable energy,” said Recep Kendircioglu, Managing Director, Power & Infrastructure at John Hancock. “This investment further supports John Hancock’s commitment to clean energy and sustainability.”

The portfolio of assets included in the first transaction is a representative sample of SolarCity’s current customer base. The average FICO score of the residential customers in the portfolio is 744, and the commercial customers include a number of national brand retail locations. The projects were spread among 18 states with no single state representing more than 35% of the portfolio, and the vast majority of the installations were completed in 2015. (Original Source)

Shares of SolarCity closed yesterday at $29.55, down $0.77 or -2.54%. SCTY has a 1-year high of $63.79 and a 1-year low of $16.31. The stock’s 50-day moving average is $27.92 and its 200-day moving average is $32.07.

On the ratings front, SolarCity has been the subject of a number of recent research reports. In a report issued on April 12, Deutsche Bank analyst Vishal Shah reiterated a Buy rating on SCTY, with a price target of $49, which represents a potential upside of 65.8% from where the stock is currently trading. Separately, on April 11, Merrill Lynch’s Krish Sankar reiterated a Buy rating on the stock and has a price target of $40.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vishal Shah and Krish Sankar have a total average return of -21.0% and -7.0% respectively. Shah has a success rate of 29.9% and is ranked #3828 out of 3838 analysts, while Sankar has a success rate of 41.7% and is ranked #3538.

The street is mostly Bullish on SCTY stock. Out of 13 analysts who cover the stock, 7 suggest a Buy rating , 5 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $38.50, which implies an upside of 30.3% from current levels.

 

  • Bryan

    Solar leases and power purchase agreements are two of the most expensive ways to have solar on your roof. Simply add up the 20 years worth of escalating lease payments on a solar lease and you’ll typically find that you’ll pay up to three times what it costs to purchase a system outright.

    Today a name brand grid tie solar system with American made solar panels can be purchased and installed for less than $1.90 per Watt after applying the 30% federal tax credit. That’s less than 7 cents per kWh in many parts of the country.

    And good luck ever selling your home with a solar lease or PPA attached to it. Search the Internet for the term “solar lease scaring home buyers” and you’ll find many reports from homeowners and real estate professionals that are having great difficulties selling homes with solar leases and PPAs attached to them.