Investments

Portfolio of Renewable Power Projects

Date: October 2019
Sector: Energy (Renewables)
Geography: U.S., Canada, Japan

Overview

  • CBRE Caledon originated and structured a bespoke Structured Preferred Equity security in a portfolio of renewable power projects
  • The company is an independent energy generation company focused on constructing, owning and operating renewable energy projects with long-term sales contracts
  • The company has a diversified portfolio of 28 renewable projects in the U.S., Canada and Japan with a 13.5 year weighted average contract life, and an A-average off-taker credit rating

Investment Rationale

  • Attractive financial returns and current cash yield driven by an escalating fixed dividend and contingent dividend payments
  • Opportunity to invest in a leading renewable energy platform with an attractive portfolio of highly contracted assets located in OECD geographies
  • Risk mitigation through a preferred position in the capital structure sitting senior to >$2.5bn of common equity
  • Opportunity to partner with a management team experienced in the development, investment and operation of renewable energy projects

Norwegian Ferry Operator

Date: July 2019
Sector: Transportation
Geography: Norway

Overview:

  • Largest express boat operator in Norway and second largest ferry operator in Norway with 59 ferries and 28 express boat vessels, transporting ~17 million passengers and ~9 million cars annually
  • Aiming to increase market share by continuing to win new and existing contracts as they come up for tender
  • The company has the broadest geographical coverage in Norway
  • 50 / 50 partnership with Nordic specialist fund manager to acquire 100% of the business

Investment Rationale

  • Water transportation is an essential part of Norwegian infrastructure given the country’s topography
  • The company is a first-mover globally in introducing innovative and environmentally friendly transportation solutions. The company owns and operates the only electric car ferry in Norway and is commissioning the world’s first hydrogen-electric ferry
  • Availability-based gross contracts with revenues underpinned by 8-14 year concessions (no volume risk) and linked to the “ferry index” with protection against volatility in cost inputs

Data Center Platform

Date: March 2017
Sector: Digital Infrastructure
Geography: North America

Overview

  • Wholesale U.S. data center platform with campuses in Silicon Valley, Ashburn, Quincy, Montreal and Quebec City, with land available for further build-out in Phoenix, AZ.
  • The Company provides large-scale data center leasing to enterprise customers under long term contracts.
  • The customer base is comprised of 16 blue chip companies across a range of sectors, including a leading cloud computing provider.
  • All facilities are high quality and have been built within the past five years. There is an opportunity for significant expansion of the existing campuses.

Investment Rationale

  • Leading position in supply constrained Silicon Valley market with creditworthy “blue chip” customer base.
  • Strong industry fundamentals driving data center demand with a 3x increase predicted over the next five years.
  • Strong cash flow visibility from 10-20 year take-or-pay contracts with multiple renewal options and high switching costs.
  • Lower risk profile due to long-term customer contracts, underlying creditworthy cash flows, and land ownership in Silicon Valley.
  • Strong investment management team with 100+ years of combined industry experience.

Australian Smart Metering Business

Date: June 2018
Sector: Utilities
Geography: Australia, New Zealand

Overview

  • Investment alongside experienced local partners in an Australian smart meter service provider. The company subsequently acquired the second largest smart meter operator in New Zealand
  • The combined business is one of the leading smart meter operators in Australia and New Zealand with long‐term, contracted cashflows and good growth opportunities
  • Smart meter servicing involves the installation, remote data reading and two-way communication with electricity meters and is essential to the control, operation and payment system of electricity networks

Investment Rationale

  • The smart metering space represents an attractive sub-segment of the utility sector which is experiencing strong growth tailwinds driven by several factors including new regulations and benefits to electricity distributors / customers
  • Smart meter contracts provide a contracted price per meter and pass-through of non-standard costs. These contracts also provide for minimum annual meter deployments and mitigate cash flow variability risk
  • Attractive return profile with upside value potential achievable based on increased market penetration and capitalizing on ancillary opportunities

Joint Venture with Global Solar Developer

Date: Q3 2017
Sector: Energy (Renewables)
Geography: Global

Overview

  • Caledon has formed an exclusive joint venture (“JV”) with a Canadian solar developer to provide ongoing funding for its global pipeline
  • Over the past seven years, the developer has originated and developed 420MW of projects (US$1.1 billion of capex)
  • Initial markets for the JV are the United States, Japan and India (limited to 16% of platform)

Investment Rationale

  • Off-market, proprietary opportunity enables CBRE Caledon to negotiate key terms such as diversification limits, developer economics and the specific requirements for inclusion of projects in each jurisdiction
  • Projects will be backed by 20+ year power purchase agreements with investment grade counterparties or by 20+ year Feed-In-Tariff contracts with A+ rated governments
  • Significant upside potential beyond base case as projects are valued over the power purchase agreement term only with no merchant sales assumed thereafter

Data Center Platform

Date: October 2016
Sector: Digital Infrastructure
Geography: United States

Overview

  • U.S. provider of data centers and related telecommunications services with six data centers in three regions
  • Critical telecommunications infrastructure that provides the back-end support for internet data storage and connectivity
  • Well-advanced growth and additional expansion opportunities, within the existing footprint and in additional identified markets

Investment Rationale

  • Strong industry fundamentals with global internet traffic having increased 5x in the past five years
  • Diversified customer contracts in place with majority of client base having automatic renewals and price escalators
  • High switching costs and operational risk for customers looking to change datacenter providers
  • Management team with over 100 years of data center experience

New Zealand Gas Transmission and Distribution Utility

new-zealand-gas-transmission

Date: June 2016
Sector: Utilities
Geography: New Zealand

Overview

  • Gas transmission and distribution utility that operates in the North Island of New Zealand
  • The high pressure transmission system consists of underground pipelines and above ground station facilities serving gas shippers, with the end users including a variety of important New Zealand industries including electricity generation, dairy, meat processing, steel, refining and fertilizer
  • The lower pressure distribution system consists of over 60,000 connections, and primarily serves residential customers in cities and towns

Investment Rationale

  • Highly predicable, inflation-linked, regulated cash flows with high yield
  • Monopolistic position and low operating complexity
  • Investment made alongside a trusted, experienced fund partner
  • Scope for regulatory outperformance and potential for additional growth
  • Critical national infrastructure