SolarCity Corp (NASDAQ:SCTY) announced that it raised $305 million in its second cash equity transaction. A private investment fund affiliated with Quantum Strategic Partners Ltd. and advised by Soros Fund Management LLCprovided the equity investment in a portfolio of residential, commercial and industrial solar projects. The transaction also included a fully amortizing, 18-year loan that was syndicated to five high-quality institutional investors.
By placing the equity investor and lender group separately, SolarCity was able to achieve a pre-tax, weighted average cost of capital for the transaction of 7.4%, a significant improvement over its first cash equity transaction. The transaction and terms demonstrate the exceptional quality of SolarCity’s distributed solar assets.
The syndication of a long-dated, fully-amortizing loan is believed to represent a ‘first of its kind’ for distributed solar assets, creating another valuable financing tool for SolarCity. The loan was rated investment grade by a leading credit rating agency, and the financing is non-recourse to SolarCity. Bank of America Merrill Lynch acted as the sole syndication and structuring agent for the transaction.
SolarCity monetizes its underlying cash flows in cash equity transactions, but retains ownership of the assets and continues to service the customers. SolarCity held $5.2 billion in solar energy system assets on its balance sheet at the end of its most recently reported quarter on June 30. Those assets are contracted to create $3.1 billion in future payments on a net present value (NPV) basis1, and SolarCity expects to continue to execute additional transactions in the future with high quality investors to monetize its contracted cashflows.
The portfolio of projects in the transaction announced today collectively represents 230 megawatts of solar generation capacity spread across 15 states. The vast majority of the installations were completed in 2015 and 2016.(Original Source)
Shares of SolarCity are currently trading at $17.12, up $0.35 or 1.85%. SCTY has a 1-year high of $58.87 and a 1-year low of $16.31. The stock’s 50-day moving average is $22.99 and its 200-day moving average is $24.07.
On the ratings front, SolarCity has been the subject of a number of recent research reports. In a report issued on September 9, Axiom analyst Gordon Johnson maintained a Sell rating on SCTY, with a price target of $7.00, which reflects a potential downside of -58% from last closing price. Separately, on August 11, UBS’s Julien Dumoulin Smith reiterated a Hold rating on the stock and has a price target of $25.37.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Gordon Johnson and Julien Dumoulin Smith have a total average return of 11.2% and 1.3% respectively. Johnson has a success rate of 60.9% and is ranked #244 out of 4124 analysts, while Smith has a success rate of 45.2% and is ranked #1693.
Overall, 2 research analysts have rated the stock with a Sell rating, 10 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $15.50 which is -7.6% under where the stock closed last Friday.
SolarCity Corp. engages in the business of renewable energy services such as, solar energy products and services. It offers installation, ongoing monitoring and repair services of solar energy systems in the U.S. The company provides services to homeowners, businesses, schools, non-profits and government organizations.