The acquired assets (“Spruce Power 5 Portfolio” or the “Portfolio”) consist of approximately 9,800 solar systems in New Jersey that were installed under a CEV residential solar program between 2010 to 2024. Solar systems underlying the Portfolio are supported by long-term lease agreements with homeowners, with an average remaining contract life of over 11 years. Spruce is entitled to the customer payment streams and renewable energy credit program incentives related to the Portfolio effective October 1st, 2024.
The acquisition of the Spruce Power 5 Portfolio meaningfully expands Spruce’s presence within New Jersey, now representing the Company’s second largest geographic presence with approximately 16,000 customers. During 2024, Spruce executed the roll-out of its first in-market field services organization in New Jersey. The Company expects to benefit from efficiencies on increased geographic density as it relates to customer service, ongoing operations and maintenance expenditures, and environmental commodity market opportunities.
“This is an exciting acquisition that provides immediate positive impact to Spruce’s financial and strategic outlook through continued scaling of our ownership of home solar assets and contracts,” said Chris Hayes, Chief Executive Officer of Spruce. “We are proud that this acquisition solidifies Spruce as a leading provider of residential solar energy in New Jersey. Over the past decade, the NJR CEV team has built an impressive portfolio of high-quality residential solar systems and cultivated a strong customer base. We look forward to continuing their commitment to safety, the environment and customer service in the state of New Jersey.”
Spruce funded the acquisition purchase price with $22.7 million of cash on hand and proceeds from a new debt facility. In conjunction with the acquisition, Spruce closed on a $109.8 million debt facility (the “SP5 Facility”) provided by Santander. The SP5 Facility collateral pool consists of the cash flow streams from the acquired lease contracts and certain related renewable energy credit incentive payments, and the facility is non-recourse to the Company.
While the Company is not updating its full-year 2024 financial guidance as issued on November 13, 2024, the transaction is expected to have an immediate accretive financial impact, delivering strong initial cash-on-cash yield. In evaluating acquisition opportunities, the Company’s management considers levered cash flows as a key investment criterion, believing it offers a clear measure of the cash returns available to Spruce and its equity holders. The Company defines levered cash flows as the cash flows available after servicing project-level, non-recourse debt, including both interest and principal payments. The Company currently expects the Spruce Power 5 Portfolio to generate levered cash flows of approximately $7.0 million for the twelve months ended September 30, 2025. Over the three fiscal years from 2025 to 2027, the Company currently expects the Spruce Power 5 Portfolio to generate cumulative levered cash flows of approximately $22.0 million.
About Spruce Power
Spruce Power Holding Corporation (NYSE: SPRU) is a leading owner and operator of distributed solar energy assets across the United States. We provide subscription-based services that make it easy for homeowners to benefit from rooftop solar power and battery storage. Our power as-a-service model allows consumers to access new technology without making a significant upfront investment or incurring maintenance costs. Our company owns the cash flows from approximately 85,000 home solar assets and contracts across the United States. For additional information, please visit www.sprucepower.com.
