Watch the Clean Energy Fund – Fund President Q4 2023 Update
Transcript
Ray Punn: [00:00:45]
I’m pleased to provide you with Skyline Clean Energy Fund’s update for quarter four, 2023. Joining me here today is Rob. Rob, thanks for joining.
Rob Stein: [00:00:52]
Hey, thanks for having me, Ray.
Ray Punn: [00:00:53]
Rob I know quarter four was a really busy one for you with acquisitions, so let’s get right into it.
Rob Stein: [00:00:57]
Yeah. We joked that we try not to do transactions over the holiday break, but for every year since inception, we simply have a transaction over the holiday break. So we closed something we’d been working on for about four years. We bought the SkyPower Complete Canadian Holdings, which, we made probably nine offers over the last four years, and was able to close it as of this, as of December 29th, 2023. It was a great transaction for us. So we closed on a seven-asset portfolio, all utility-scale solar operating projects with historical production and lots of room for improvement. This takes the Fund from around $300 million to about $440 million approximately.
Rob Stein: [00:01:35]
It does change our ratio of biogas and solar, where we were trying to optimize for about a 50/50 ratio of ownership, to a little more solar heavy. So we have about $305 million of solar holdings and about $130 million of biogas holdings and $5 million of non-core to make up around that $440 million of total assets under management. It did grow the Fund’s size significantly.
Rob Stein: [00:01:58]
We moved from about 45MW (megawatts) under management, doubled to 98MW, which a lot of our investors ask, why is that important? What did that do for them? And one, it grew our yield, which was a great thing. We’ll see that through future unit value adjustments there. What it does is stabilizes a lot of our operations. We’re able to hire more people that can service our portfolio, not just that one portfolio, but the overall portfolio, which really helps lower costs. That gives us some economies of scales when we renegotiate debt or service agreements or insurance. And so really, there’s a lot of underlying benefits to growing the portfolio. One, yes, there’s a yield change where, you know, we can stabilize our yield. We see a little bit of a unit value increase. We’ll see a stabilization of the assets. We’ll have a more robust team that can service that portfolio and other portfolios. And so the transaction as a whole really added a ton of value for the Fund and our unitholders.
Rob Stein: [00:02:51]
And really for 2024, we really just have to put down our head and make sure that we’re stabilizing that asset, we’re operating to its best of its abilities and making sure that, you know, we’re finding the efficiencies that got us really excited when we looked at buying the systems.
Ray Punn: [00:03:05]
Thanks for sharing that, Rob. That’s, uh, you kept us all busy right up to the end of the year, but congratulations. It was the largest acquisition for the Skyline Clean Energy Fund. You mentioned 2024. So let’s talk a little bit more about that. You mentioned keeping your head down and staying focused. What does that mean?
Rob Stein: [00:03:21]
Yeah, the asset manager, the Fund, my team, we really have a stable look on what, 2024 looks like. There’s a lot of uncertainty in the market with interest rates. You know, money coming into the Fund, redemptions flowing out. And we’re really trying to make sure that we’re optimizing our assets to see the greatest yield for our unitholders. And so, say keep my head down in 2024, but 2024 is going to be a very busy 2024. We just know exactly what it looks like. We’re optimizing our facility, our biogas facility in Elmira. We’re changing it from generating electricity to renewable natural gas. So through 2024 we’ll work with our engineers, we’re working through our financiers, and we’ll make sure that as we progress through 2024 and 2025, we are deploying capital into making that adjustment from electricity to renewable natural gas. In Lethbridge, we’re bringing online our de-pack facility, which means we’re able to actually take packaged materials, waste product in Alberta, and unpackage it and use that, the rich organic materials, and turn it into energy in Alberta. So we’ve been working on that project through 2023. And that will come online in the next couple of months. So we’re excited about that. Once we’ve done those two projects in biogas, it will actually allow us to refinance our biogas assets. Right now, we have very low leverage on them. About $20 million of operating line in Lethbridge.
Rob Stein: [00:04:39]
But now we can take 130 million, maybe $150 million of EV at that time and go to a bank and say, hey, what would you lend off the cash flows of this business? So we’re going to use the cash flow of that for the next growth of the biogas business. So as those two optimizations happen this year, we’ll make sure that we’re refinancing those assets and surfacing value for our unitholders.
Rob Stein: [00:04:58]
On the solar side of it, one, you know, 2024 is we’re stabilizing the SkyPower transaction. We have seven big utility-scale projects. We think there’s ways to make sure they’re generating more electricity, that they run with less downtime, and we’re going to implement those things through 2024. In addition to that, we have this 20 megawatt or sorry, about 13 megawatt project in Alberta called Bassano. We’ve talked about it. We start construction. We actually put shovels in the ground this year. So really exciting. The team’s been working on the engineering and the design of that through 2023, and we’re about ready to start that.
Rob Stein: [00:05:31]
So really exciting stuff that the unitholders already have that we just need to surface as much value out of those those opportunities as possible. So 2024 is, is sort of written in stone all we now have to do is follow the the game plan and execute. So that’s what we’re going to be doing and we’re excited to be doing it.
Ray Punn: [00:05:47]
Well thanks, Rob, for joining me today. Skyline Clean Energy Fund is open for new investment. If you have any questions, please contact Skyline Wealth Management. Thanks for watching.