Dear Credit Union Partners:
The beginning of 2021 has been productive within AVANA Companies as we have worked diligently to remedy the past-due ATLRs that were identified when our new relationship with Extensia Financial began. Together, the teams at AVANA and Extensia have made great progress in this effort and we expect 100% completion of the past-due ATLRs by the end of this month. Also, as discussed in last month’s Credit Matters, we are committed to substantially enhancing our credit team through supplemental hiring. Thus far, we have brought three new credit team members on board and we have two more members joining our team next month. These additions will significantly increase our capacity for timely and detailed reporting, as well as the underwriting of a greater volume of new investment opportunities for our partners.
New Investment Opportunities
The enhancements to our credit team as well as additions to our originations team will enable us to show you a broad range of high-quality projects for participation opportunities. We will be focusing on projects in industries and geographies that are well-positioned for economic recovery, as well as a wide range of property types. With each project, we will be focused on strong credit fundamentals.
Loan Participations
With more focused in-depth pre-underwriting at the front end, we are ensuring timely deal reviews for our credit union partners that will result in an improved closing ratio. Our originations team has also expanded and we anticipate presenting new participation opportunities to our partners in the very near future.
Spotlight on Solar
One industry in which we specialize, renewable energy, has proven especially resistant to market fluctuations during the global pandemic. Equipment procurement and installation projects for solar projects have remained free from delay and profitable throughout the pandemic. Because energy is an essential-use product, we have found that there have been very few disruptions in this space.
These loans are typically $10 Million or less, and have flexibility in terms and investment size. Further, these investments have low risk and produce a better yield than opportunities in many other asset classes. The example below illustrates the potential opportunity with a successful, repeat borrower in the solar industry.
Sol River: A Long-term Partner and Multiple Loans
Over the course of three years, AVANA Companies has provided financing to Sol River, a major solar developer, on a total of 11 projects valued at $85 Million. In a recent project, Sol River is developing a solar farm that will provide power to Portland General Electric (A3 – Moody’s credit rating) under a 20-year power purchase agreement at a guaranteed contract price. This project, with a loan of $8.4 Million, involved the procurement and installation of solar panels that will generate power that is directly sent to the power company for distribution to customers in the Portland area.
This Sol River project represents a typical solar loan investment opportunity offered by AVANA Companies. We would be delighted to discuss this project or the several similar upcoming projects available for investment participation with you.
Additionally, we are always available to review your current portfolio and to talk about ways we can enhance your experience with Extensia Financial and AVANA Companies.
Kind regards,
Matt Hunt
Chief Credit Officer