A new company, Radiant REIT, is inviting loan inquiries from solar developers to refinance short-term debt and buy out tax equity investors. Radiant REIT plans to issue long-term loans that match the duration of a solar project’s lease or power purchase agreement.
The firm expects to make its first loans by the end of the year, as it is “in the middle of closing” a $300 million equity raise, said co-founder and CEO Jeff Just in an email. The firm’s team, comprised of Mr. Just, co-founder Jim Spano, and three board members, has financed over $1 billion of projects to date, per the firm’s website.
The firm plans to soon begin funding new projects at the commercial operation date. “We will not be offering construction loans; however, we will commit to funding new projects prior to the start of construction, which will enable developers to secure construction loans,” said Just.
Radiant REIT initially has a $10 million minimum loan amount for solar projects (which may include storage), or for portfolios of projects from a single customer. This contrasts with big banks, said Just, which “are looking for $50 million-plus projects.” In the longer term, Just said, the firm intends to streamline its process such that “smaller loans will be cost-effective for us to pursue.”
The firm announced its plans at the Storage Day conference prior to the Solar Power International conference in Anaheim. Board member Jonathan Lieberman explained that for solar developers, “we are moving away from balloon loans to amortization,” while Just noted that the firm will lend against the cash flows of an operating solar installation. Lieberman added that from an investing standpoint, institutions with long-term obligations want to invest in long-term assets, such as Radiant REIT’s offerings.
Co-founder Jim Spano said the privately held company is being capitalized with equity and debt; will be listed on a stock exchange “eventually;” and will access capital markets. Mr. Just added that in the longer term the REIT wants to reduce interest rates for solar developments.
The most similar financial firm currently lending to solar developers may be Hannon Armstrong, which invests in solar, wind, and energy efficiency projects.
From an investor standpoint, yieldcos investing in solar and wind projects are also similar to Radiant REIT. But from the developer standpoint, CEO Just makes this distinction: “We will be a mortgage REIT only, and will not be owning projects ourselves, simply lending to them.” Radiant REIT does not want to compete with developers for projects, he said, but instead “We want to compete with the banks to provide a service to developers.”
The potential benefits of a solar REIT have been discussed since 2012, according to a Radiant REIT press release.