Dear Credit Union Partners:
As we enter the second quarter of 2021 with optimism for economic recovery and embrace our warmer spring weather, Extensia Financial and AVANA Companies aim to share new projects with you to increase your volume of high-quality lending opportunities, and diversify and enhance your portfolios. We have also done our own ‘spring cleaning’ in the form of a paperwork overhaul, having redesigned both our credit memos and ATLRs to provide more detailed information and increase efficiency.
In terms of new participation opportunities, one area in which we specialize and see an abundance of high-credit-quality projects is within the solar energy sector. Since 2016, Extensia’s parent company, AVANA Companies, has been committed to financing solar energy initiatives throughout the United States in an effort to contribute to the expansion of sustainable, clean energy. This rapidly growing industry has consistently produced opportunities that provide attractive yields and predictable cash flows, along with favorable environmental outcomes — leading to numerous benefits for communities across the country.
As these types of participation opportunities may be new to some, we will break down a recent transaction that serves as an example of participation investments you can access through the AVANA family of companies.
Spotlight on Distributed Energy for Rural Texas
A recent project with Lone Star Solar enabled a rural electric cooperative, Heart of Texas, to complete its very first distributive energy project. This cooperative provides electricity to rural areas of Central Texas and had previously been dependent on one supplier. Conveniently located adjacent to the Heart of Texas headquarters, this solar farm was built by experienced developer Eric Ma in the town of McGregor, Texas.
This transaction is particularly notable because it not only has attractive investment characteristics, but also financed renewable power that provided critical electricity access when the Texas grid was seriously destabilized by Winter Storm Uri. The new source of solar-generated electricity, completed just weeks prior to the weather event, enabled thousands of rural Texans to maintain power during this devastating storm in which the grid operator, ERCOT, was unable to maintain and restore power for large swaths of the state.
Project Size: 1.3 MW
Total Project Cost: $1,584,000
Solar Installation Loan Size: $1,419,000
Solar Installation Loan Interest Rate:8.00%
Permanent Financing Sources to payoff AVANA:
$663,000 Tax Equity
$997,000 (net proceeds) USDA Guaranteed Permanent Loan at 4.00%
Projects like this are community-based, and support rural and suburban populations by solving problems that have not historically been a priority for most developers. Typically, AVANA Companies engages in multiple projects of similar size with the same developer, leading to plentiful financing and investment opportunities. These opportunities are very much like long-term leases with a credit tenant as they have reliable and predictable cash flow that is contracted out for years. They can be structured as USDA or conventional loans, and offer flexibility in both terms and investment size. Further, these investments have low risk and produce a better yield than opportunities in many other asset classes.
If you would like to discuss our projects with Lone Star Solar or others in our overall portfolio, we would be pleased to share additional details with you. Further, if you have interest in the Extensia and AVANA teams providing an educational presentation on the solar industry and its investment opportunities, please reach out to me at email@example.com.
With thanks for your partnership,
Chief Credit Officer