Sunday, February 2, 2014


CASHING IN ON WIND ENERGY ROYALTY RIGHTS

When Selling Active Wind Turbine Leases to Third Party Investors.

Wow. What a market whirlwind for the 2014 American Farmer with commodity prices downgraded and global competition on the rise.  Where can “Joe Farmer” make a sound profit in this weakening producer market, and bring home the bacon if he is expected to lose money at the start of this planting season? 

With major wind farm development and build-out in most states, some landowners just need to look out the back door and strategize.

Over the years, I have written numerous articles on wind energy and land lease subject matter.  And as this energy market continues to mature in the U.S. and abroad, a growing number of investment companies are now offering lump sum cash payments to acquire wind turbine royalty rights.

These transactions largely mirror what happens in the oil and natural gas industry when a landowner is selling his/her royalty and/or mineral rights to a third party investor. 

Typically, this is how it works.  Most wind turbine buyout offers are solely based on the gross annual income as paid to the property owner by the wind farm developer. 

The potential buyer will review your wind energy lease and annual royalty payment income structure to determine its present value.  The investor will then offer a specific amount for the transfer of all ground lease/royalty rights that remain with the existing wind farm agreement.  Note: This is the time when the seller (wind turbine host) should negotiate additional rights for monetary value.  

Upon agreement, all wind lease royalty rights are released to the buyer when the contract agreement is fully executed after seeking verifiable receipt of annual payment stubs.  

These types of buyout offers are payable in the form of a lump sum cash payment to the landowner normally within 30 days. 
 
I have recently dealt with a property owner that sold his royalty rights to the highest bidder.  His property had three turbines and he sold his remaining rights to an investment firm that offered $73,000 per turbine (a total of $219,000).

Now lets strategize!  Why should one want to sell their royalty rights?  Because...business management decisions always boil down to risk verses reward, which are as follows:

·       (REWARD) Reinvestment Option:  Cash out and buy  more land tax-free using a 1031 like kind exchange.  Invest in  additional real estate, stock options, or farm equipment to avoid paying capital gains tax (as applicable).
 
·       (REWARD) Selling the Farm: Cash out and collect all royalty rights upfront before selling off the farm, land and other assets.

·       (REWARD) Increase Royalty Rights:  Increase fair market value by putting royalty rights out for bid to multiple buyers. 
 
·       (RISK) Bankruptcy:  Flower Ridge Wind Farm (Benton Co., IN) is currently suing Duke Energy over a contractual dispute for trying to back out of buying its power.

·       (RISK) Life Expectancy:  Wind farm agreements pay out over the long term (20 to 60 plus years) which usually out live the landowner.

·       (RISK) Market Liquidity:  The Consumer Price Index (CPI) that is written into the wind farm land lease doesn’t adequately increase with actual inflation over time. 

·       (RISK) Weak US Dollar:  Our government is broke, tax rates will increase and the dollar will be worth less over time.

·       (RISK) Loss of Income:  Tornadoes can wipe out turbines which may not be rebuilt; no more royalty checks.

EHS Energy is a management firm which specializes in helping landowners deal with the full impact of wind energy projects related to project development, land lease agreements and financial issues.

If you’d like more information, please contact EHS Energy at 260-582-9046 or email (Rodeagleson@gmail.com.).

This Blogsite (traffic) averages 1,500 hits per month as more and more investors are searching for wind royalty buyout deals.  These firms are enthusiastically looking for sellers.

 

10 comments:

  1. These green energy resources can bring a massive change. I appreciate the author's concern towards the environment

    ReplyDelete
  2. Bali is a Countryside nature-friendly and cultural retreat, Known for its scenic beauty, liberation, awakening perfection and contentment. Land in Hyderabad Bali spread Across 240 acres, comprising of 'Bali Village' (Plots & Villas) and 'Bali Bamboo Farms',
    http://www.incrediblelands.com/bali-farms.html

    ReplyDelete
  3. Wind energy farms are growing both in size and number throughout the United States. A surprise to me was learning that Texas has the largest wind farm production in the country with more in the planning stages.

    ReplyDelete
  4. Is wind power a good thing or are the claims for wind energy and the rapid growth of modern-day windmills not really as good as suggested? Read this article to find out about all the pros and the cons of this remarkably clean energy technology.
    medical office leasing

    ReplyDelete
  5. would like to know more about selling my contract. To be honest I have been offered but low balled in many people's opinions.

    ReplyDelete
  6. 25 year contract with Southern California Edison which has been paid for 4 years....Brookfield.

    ReplyDelete
  7. There's a chance you qualify for a new solar energy program.
    Find out if you qualify now!

    ReplyDelete
  8. Okay then...

    What I'm going to tell you might sound really creepy, maybe even kind of "out there"....

    BUT what if you could simply click "Play" to LISTEN to a short, "miracle tone"...

    And INSTANTLY attract MORE MONEY to your life?

    I'm talking about thousands... even MILLIONS of DOLLARS!!!

    Sound too EASY? Think it's IMPOSSIBLE?!?

    Well, I'll be the one to tell you the news..

    Usually the largest blessings life has to offer are the easiest to RECEIVE!!!

    Honestly, I will PROVE it to you by allowing you to listen to a REAL "miracle money tone" I've synthesized...

    And TOTALLY FOR FREE

    You simply push "Play" and watch how money starts piling up around you.. starting almost INSTANTLY..

    CLICK here NOW to PLAY the mysterious "Miracle Abundance Tone" as my gift to you!!!

    ReplyDelete
  9. How Lemeridian funding service  grant me a loan!!!

    Hello everyone, I'm Lea Paige Matteo from Zurich Switzerland and want to use this medium to express gratitude to lemeridian funding service for fulfilling his promise by granting me a loan, I was stuck in a financial situation and needed to refinance and pay my bills as well as start up a Business. I tried seeking for loans from various loan firms both private and corporate organisations but never succeeded and most banks declined my credit request. But as God would have it, I was introduced by a friend named Lisa Rice to Le_meridian funding service and undergone the due process of obtaining a loan from the company, to my greatest surprise within 48hrs just like my friend Lisa, I was also granted a loan of $216,000.00 So my advise to everyone who desires a loan, "if you must contact any firm with reference to securing a loan online with low interest rate of 1.9% and better repayment plans/schedule, please contact Le_meridian funding service. Besides, he doesn't know that am doing this but due to the joy in me, I'm so happy and wish to let people know more about this great company whom truly give out loans, it is my prayer that GOD should bless them more as they put smiles on peoples faces. You can contact them via email on {lfdsloans@lemeridianfds.com Or lfdsloans@outlook.com} or Text through Whatsapp +1-989 394 3740.

    ReplyDelete