Brookfield Renewable Energy Partners LP (NYSE:BEP) Q1 2019 Earnings Conference Call Transcript

May 02, 2019 • 09:00 am ET

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Brookfield Renewable Energy Partners LP (NYSE:BEP) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the BEP First Quarter 2019 Results Conference Call and Webcast. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Sachin Shah, Chief Executive Officer. Sir, you may begin.

Executive
Sachin G. Shah

Thank you, operator. Good morning, everyone, and thank you for joining us for our first quarter 2019 conference call.

Before I begin, I'd like to remind you that a copy of our news release, investor supplement and Letter to Unitholders can be found on our website. I also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you're encouraged to review our regulatory filings available on SEDAR, EDGAR and on our website.

We continue to advance our key priorities for the business, our long-term objective remains focused on generating 12% to 15% total return on a per unit basis. Our approach over the last 20 years has consistently been to acquire high-quality assets and businesses, surface value over time through operational improvements while maintaining a low-risk profile underpinned by an investment-grade balance sheet and strong access to capital.

More recently, we have reached the scale in the business where we can add asset sales as an alternative source of low-cost funding, which can be redeployed accretively into our acquisition and development program.

The first quarter of 2019 was strong as we generated FFO per unit of $0.73, representing an 18% increase over the prior year. We agreed to invest approximately $630 million of capital or $160 million net-to-debt across two transactions, one in Canada and one in India, all at returns commensurate with our long-term targets. We also commissioned a 19-megawatt hydro facility in Brazil and advanced an additional 134 megawatts of hydro wind storage and rooftop solar construction projects globally. We raised over $400 million of proceeds through asset sales and the issuance of preferred share units and ended the quarter with $2.3 billion of available liquidity. Finally, we continue to reduce our FFO payout ratio, which is now trending below 90% on an annualized basis.

As most of you know, in March 2019, we agreed to invest $750 million into TransAlta Corporation, the largest power producer in Alberta, Canada. The investment will occur in two tranches: $350 million was funded yesterday and $450 million -- sorry, $400 million will be funded in October 2020. The investment provides us with the option to convert into an interest in TransAlta's 800- megawatt portfolio of high-quality hydroelectric assets in Alberta between the years 2025 and 2028 based on a multiple of 13x the average annual EBITDA over the prior three years before conversion. As part of the transaction, we also agreed to increase our ownership in TransAlta's common shares from approximately 5% today to over 9%. The TransAlta investment was the culmination of a multiyear relationship and establishes a