Is a Wind Lease Buyout Right for You?

wind-lease-buyout

October 1, 2020

Wind Lease Buyout Considerations

Are you eligible for a Wind Lease Buyout from Madison Street Energy (MSE)?

MSE will provide you with a free no-commitment offer price to buyout your wind lease payments/royalties if you meet the following criteria:

1. You own and have leased a portion of your land for a wind company that is currently operating or in the process of constructing a wind turbine(s) on your land.

2. The wind lease requires the project owner to pay some form of compensation (fixed rent, percentage of gross revenues/royalties,  or some other arrangement) in installments, at set dates, throughout the entire term of the wind lease.

3. To the extent payments have already become due, the landowner has paid them and to your knowledge you are not in default under any of the terms of the wind lease.4. You have not pledged the rights to the future lease payments as collateral for a loan nor have you sold or granted rights to the payments to a third party.

What are the Benefits of a Wind Lease Buyout?

Previous landowners have indicated numerous benefits of selling their wind lease including the following *:

1.  Ease of Access to Recover a Lump Sum Cash Payment :  The current lack of an easily accessible liquid market to sell the rights to future wind lease payments  often means that landowners either have no options to unlock the value trapped in their wind lease for immediate funds all together, or the offer prices provided by third parties are unreasonably low.  Since MSE’s team has extensive experience working in the wind industry, we understand the true value of these wind lease payment rights and therefore are able to calculate and offer the best price possible and we are able to do it in a quick manner.

2.  Ability to Make More Money be Using the Lump Sum Payment for Other Purposes : Several landowners have indicated that their motivation for selling the rights to future wind energy lease payments was the result of them determining that they could make more money by taking a lump sum now and using the money to reinvest into their core business (buy new equipment, additional land, etc.) or alternatively, use the money to make other investments.

3.  Certainty of Payment: Although the chance of non-payment of future rent is often disregarded and not something that anyone expects to happen, the reality is that there is always a chance of non-payment of future rent (e.g. the project owner goes bankrupt). Moreover, most wind leases contain a provision that entitles the project owner to terminate the lease early at any time, for any or no reason at all. A project owner can merely provide notice and make one final de minimis termination payment. A lease buyout would allow the landowner to avoid the unexpected loss of income if the project owner were to exercise the option to terminate, for any reason (changes in regulatory law, advances in other more profitable energy technology, decrease in project profitability). MSE would bear the full risk of loss (e.g. the landowner would not have any obligation to payback, nor would MSE have any right to seek a return of, any of the lump sum payment previously made.

What impacts will a Wind Lease Buyout have on me and my land?

As a result of MSE’s in depth knowledge and wide range of experiences working in the wind energy industry, we are uniquely situated to be able to ensure that any wind lease buyout it participates in does not have unacceptable or unexpected effects on your existing rights and obligations related to your land. 

1. You maintain 100% Ownership of your land: MSE has devised its own transaction process and basic legal documents that allow it to just acquire the contractual rights to the future lease payments (rather than  a real estate right). MSE will not have any rights to even enter your property and you will be able to freely transfer the land or refinance any mortgages (with the only caveat being that any future owner or lender would not be receiving any rights to the future rent owed under the wind lease).

2. You will not take on any additional obligations:  Other than complying with the existing terms of the wind lease, applicable to the landowner (e.g. not to interfere with the wind turbines. etc.) you will not have any new or additional requirements. Upon closing, MSE will work with you and the Project Owner so the rent payments are sent directly to us, thereby alleviating any potential extra paperwork/mail forwarding obligations.

*Note: MSE is not an investment advisor and in no event should any information provided by MSE be considered financial or investment related advice. The ability of past landowners to attain benefits similar to those summarized above does not guarantee the same results for any other landowner. All landowners are responsible for making their own decisions about whether they feel a lease buyout will benefit them and MSE encourages all landowners to consult with their own professional financial advisors, lawyers, and accountants when making their decision whether to pursue a wind lease buyout.

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