UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 30, 2016
InfraREIT, Inc.
(Exact name of registrant as specified in its charter)
Maryland | 001-36822 | 75-2952822 | ||
(State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
1807 Ross Avenue, 4th Floor Dallas, Texas |
75201 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (214) 855-6700
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. | Entry into a Material Definitive Agreement. |
On December 31, 2016, Sharyland Distribution & Transmission Services, L.L.C. (SDTS), which is a subsidiary of InfraREIT, Inc. (InfraREIT and, together with its subsidiaries, the Company), amended and restated its lease supplements with Sharyland Utilities, L.P. (Sharyland) (other than the lease supplement with respect to the Stanton Transmission Loop Lease) to establish the rent under its existing leases after giving effect to the capital expenditures that the parties expect to place in service during 2017. The foregoing description of the amended and restated lease supplements is qualified in its entirety by reference to the complete text of the amended and restated lease supplements, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated herein by reference. For a description of the Companys lease supplements generally, see the caption Lease Supplements under Our Revenue Model and Leases included under Item 1., Business in InfraREITs Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the Commission) on March 3, 2016. As described below and as part of SDTSs amended rate case filing, SDTS and Sharyland have proposed to replace their five existing lease agreements and related supplements with two leases, one for transmission assets and one for distribution assets.
As more fully described in the section entitled Transactions with Related Persons included in InfraREITs definitive proxy statement filed with the Commission on March 15, 2016, which section is incorporated herein by reference, Sharyland is privately-owned by Hunter L. Hunt and other members of the family of Ray L. Hunt and is controlled by Hunter L. Hunt. Ray L. Hunt and Hunter L. Hunt indirectly control Hunt Consolidated, Inc., which is deemed to be a beneficial owner of more than 5% of InfraREITs common stock and indirectly owns the Companys external manager. Hunter L. Hunt also serves as one of InfraREITs directors.
Item 8.01. | Other Events. |
On December 30, 2016, SDTS and Sharyland filed an amended rate case application and rate filing packages with the Public Utility Commission of Texas (PUCT). The filing requests PUCT approval of a tariff setting forth the rent rates that SDTS will charge Sharyland under the leases between Sharyland and SDTS for the transmission and distribution assets owned by SDTS and also includes a request for the PUCT to issue SDTS its own certificate of convenience and necessity. SDTS and Sharyland have requested the following rate case metrics:
| Allowed return on equity of 10%; |
| Maintaining the current capital structure of 55% debt and 45% equity; and |
| A reduction in cost of debt to 4.97%, down from 6.73%. |
Consistent with the preliminary order issued by the PUCT in October 2016, SDTS and Sharyland have proposed to replace their five existing lease agreements with two leases, one for transmission assets and one for distribution assets. Each of the leases, if approved by the PUCT, will become effective upon the conclusion of the rate case and will continue for a term of four years. The new leases will incorporate by reference the terms and conditions contained in the SDTS tariff and will be subject to the authority of the PUCT. Sharyland will continue to have operational control over the leased assets and will remain primarily responsible for regulatory compliance and reporting requirements related to the leased assets, on behalf of and with the cooperation of SDTS.
2
The proposed lease payments under the two new leases are designed to comply with the true lease requirement and other tax rules applicable to real estate investment trusts by providing Sharyland with approximately 3% of the projected regulated return on rate base that SDTS would have been entitled to earn if it owned and operated the assets rather than leasing them to Sharyland. The proposed lease payments will include both base rent and percentage rent as established by the PUCT. Base rent under the leases is a fixed amount, payable monthly, and percentage rent will be an annual amount equal to a percentage (the percentage rent rate) of gross revenues collected by Sharyland during the year (subject to certain adjustments described in the leases) in excess of the applicable annual percentage rent breakpoint. The transmission lease will have a single annual percentage rent breakpoint and percentage rent rate, while the distribution lease will have two annual percentage rent breakpoints, the initial annual breakpoint and the secondary annual breakpoint, and two percentage rent rates, the initial percentage rent rate and the secondary percentage rent rate. Sharyland will owe percentage rent under the distribution lease at the initial percentage rent rate on the portion of Sharylands gross revenues that is in excess of the initial annual breakpoint but does not exceed the secondary annual breakpoint. Sharyland will also owe percentage rent under the distribution lease at the secondary percentage rent rate on its gross revenues that is in excess of the secondary annual breakpoint.
As proposed in the SDTS tariff, based on the SDTS rate base as of the 2015 test year, Sharyland will pay rent to SDTS at the following rates:
Transmission Lease | Distribution Lease | |||
Monthly Base Rent |
$8,270,255 | $3,247,770 | ||
Percentage Rent Rate(s) |
35% | Initial: 15.4% Secondary: 39.9% | ||
Annual Percentage Rent Breakpoint(s) |
$99,243,065 | Initial: $38,973,241 Secondary: $102,247,190 |
As proposed in the rate case filing package, lease payments under the transmission lease will be updated upon the effectiveness of the rate case to give effect to interim transmission cost of service filings that have been approved after the test year. The base rent payments will also be updated through interim transmission cost of service and distribution cost recovery factor filings with the PUCT. These updates will replace the current rent supplements and validation process in the Companys existing lease structure.
The rate case filing also references a transition payment agreement (the Transition Payment Agreement) between unregulated owners of SDTS and Sharyland that represents a proposed solution for allocating the growth in Sharylands distribution revenues after the test year between the unregulated owners, in order to provide the Company the opportunity to realize revenue growth between rate cases similar to other utilities. The Transition Payment Agreement has not yet been negotiated; however, the Company expects the payments under the Transition Payment Agreement to be based on a variety of factors, including Sharylands distribution revenue growth and the amount of SDTSs and Sharylands distribution assets placed in service.
3
The ultimate timing and outcome of the rate case is uncertain, although the Company currently expects it to be completed during 2017.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. These statements state the current expectations or intentions of the Company regarding future events, which, by their nature, involve known and unknown risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated above include, among others, risks and uncertainties related to the outcome of the rate case and other risks and uncertainties discussed from time to time in the Companys filings with the Commission. Any forward-looking statement made by the Company in this report is based only on information currently available to the Company and speaks only as of the date on which it is made. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.
4
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
EXHIBIT |
DESCRIPTION | |||
10.1 | | Eleventh Amended and Restated Rent Supplement (McAllen Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.2 | | Eleventh Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.3 | | Ninth Amended and Restated Rent Supplement (CREZ Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.4 | | Sixth Amended and Restated Rent Supplement (ERCOT Transmission Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. |
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
InfraREIT, Inc. | ||||||
Date: January 3, 2017 | By: | /s/ Gregory S. Imhoff | ||||
Gregory S. Imhoff | ||||||
Vice President, General Tax Counsel and | ||||||
Corporate Secretary |
6
INDEX TO EXHIBITS
EXHIBIT |
DESCRIPTION | |||
10.1 | | Eleventh Amended and Restated Rent Supplement (McAllen Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.2 | | Eleventh Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.3 | | Ninth Amended and Restated Rent Supplement (CREZ Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. | ||
10.4 | | Sixth Amended and Restated Rent Supplement (ERCOT Transmission Lease), dated December 31, 2016, between Sharyland Distribution & Transmission Services, L.L.C. and Sharyland Utilities, L.P. |
7
Exhibit 10.1
Eleventh Amended and Restated Rent Supplement
(McAllen Lease)
December 31, 2016
This Eleventh Amended and Restated Rent Supplement (this Eleventh Amended Supplement) between Sharyland Distribution & Transmission Services, L.L.C. (Lessor) and Sharyland Utilities, L.P. (Lessee) is executed and delivered on December 31, 2016, to memorialize supplements to the McAllen Lease (as defined below), effective as of January 1, 2017. Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the McAllen Lease.
WHEREAS, Lessor and Lessee are Parties to a Third Amended and Restated Master System Lease Agreement (McAllen System), dated December 1, 2014 (as amended from time to time in accordance with its terms, the McAllen Lease);
WHEREAS, on February 26, 2016 the Parties executed a Tenth Amended and Restated Rent Supplement (McAllen Lease) effective as of January 1, 2016, as amended by the First Amendment to Tenth Amended and Restated Rent Supplement (McAllen Lease), effective as of June 13, 2016, as further amended by the Second Amendment to Tenth Amended and Restated Rent Supplement (McAllen Lease), effective as of September 22, 2016 (collectively, the Tenth Amended Supplement);
WHEREAS, the Parties wish to amend and restate the Tenth Amended Supplement pursuant to Section 3.2(b) of the McAllen Lease; and
WHEREAS, the Parties intend to memorialize in this Eleventh Amended Supplement the Incremental CapEx the Parties expect during 2017.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree to the following:
1. The Tenth Amended Supplement is hereby amended and restated in its entirety as set forth below.
2. The McAllen Lease, except as supplemented by this Eleventh Amended Supplement, shall remain in full force and effect.
Incremental CapEx:
2010 | $ | 2,195,000 | ||
2011 | $ | 504,000 | ||
2012 | $ | 1,262,963 | ||
2013 | $ | 16,391,255 | ||
2014 | $ | 46,042,142 | ||
2015 | $ | 391,710 | ||
$ | 2,039,488 | |||
|
|
|||
(Total 2015) | $ | 2,431,198 | ||
2016 | $ | 4,360,495 | * | |
$ | 8,189 | ** | ||
(Total 2016) | $ | 4,368,684 | *** | |
2017 | $ | 4,632,906 | # | |
$ | 20,859 | ## | ||
(Total 2017) | $ | 4,653,764 | ### |
MCALLEN LEASE
1
* | Represents the amount of distribution Incremental CapEx that the Parties expected to be placed in service during 2016, with an expected weighted average in service date of September 1, 2016. Rent supplements with respect to this distribution Incremental CapEx were agreed to and memorialized as part of the Ninth Amended and Restated Rent Supplement (McAllen Lease) dated December 31, 2015 (Ninth Amended Supplement). |
** | Represents the aggregate amount of transmission Incremental CapEx the Parties expected to be placed in service in 2016. Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Ninth Amended Supplement. Of the 2016 Incremental CapEx, $0 was expected to be in service as of the balance sheet date reflected in Lessees first 2016 Regulatory Order (First 2016 CapEx), an aggregate of $8,189 was expected to be in service as of the balance sheet date reflected in Lessees second 2016 Regulatory Order (Second 2016 CapEx), and $0 was expected to be placed in service throughout the remainder of 2016 (2016 Stub-Year CapEx). A Regulatory Order is defined as either (i) the PUCTs approval of Lessees application for updated wholesale transmission rates or (ii) final resolution or settlement of a rate case applicable to Lessees transmission rates. The Parties expected the First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx, collectively, to have a weighted average in-service date of April 1, 2016. The Parties expected the first 2016 Regulatory Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017. The Parties have agreed that any Rent Validation (within the meaning of the McAllen Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the McAllen Lease. |
*** | Represents the total Incremental CapEx that the Parties expected to be placed in service during 2016. |
# | Represents the amount of distribution Incremental CapEx that the Parties expect to be placed in service during 2017, with an expected weighted average in service date of October 1, 2017. |
## | Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2017. Of the 2017 Incremental CapEx, $0 is expected to be in service as of the balance sheet date reflected in Lessees first 2017 Regulatory Order (First 2017 CapEx), an aggregate of $20,859 is expected to be in service as of the balance sheet date reflected in Lessees second 2017 Regulatory Order (Second 2017 CapEx), and $0 is expected to be placed in service throughout the remainder of 2017 (2017 Stub-Year CapEx) and to be included in the first 2018 Regulatory Order. The Parties expect the First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx, collectively, to have a weighted average in-service date of April 1, 2017. The Parties expect the first 2017 Regulatory Order to be effective on May 1, 2017, the second 2017 Regulatory Order to be effective on March 1, 2018, and the first 2018 Regulatory Order to be effective on June 1, 2018. The Parties agree that any Rent Validation (within the meaning of the McAllen Lease) with respect to First 2017 CapEx, Second 2017 CapEx, or 2017 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the McAllen Lease. |
### | Represents the aggregate amount of distribution Incremental CapEx and transmission Incremental CapEx the Parties expect to be placed in service in 2017. |
Lessee CapEx:
2010 | $ | 666,488 | ||
2011 | $ | 121,897 | ||
2012 | $ | 263,733 | ||
2013 | $ | 68,303 | ||
2014 | $ | 89,405 | ||
2015 | $ | 168,289 | ||
2016 | $ | 0 | ||
2017 | $ | 0 |
MCALLEN LEASE
2
Base Rent:
2010 | $ | 5,260,447 | ||
2011 | $ | 5,453,529 | ||
2012 | $ | 5,521,881 | ||
2013 | $ | 6,566,290 | ||
2014 | $ | 8,445,964 | ||
2015 | $ | 11,818,692 | ||
2016 | $ | 11,931,782 | # | |
2017 | $ | 11,643,887 | ## | |
2018 | $ | 11,460,585 | ### | |
2019 | $ | 11,240,935 |
# | The amount of 2016 Base Rent included in the Tenth Amended Supplement was $11,931,782, comprised of 2016 Base Rent payments of $994,302 on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016) and $994,302 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which was 30 days after the expected approval of Lessees first 2016 Regulatory Order. Lessee is scheduled to make a monthly 2016 Base Rent payment of $994,382 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which was 30 days after the expected approval of Lessees second 2016 Regulatory Order. |
## | Lessee will make a monthly 2017 Base Rent payment of $970,324 on the 15th day of each month beginning on March 15, 2017 through June 15, 2017 (with respect to January 2017 through April 2017). Lessee will then make a 2017 Base Rent payment of $970,324 on the 15th day of each month beginning on July 15, 2017 through February 15, 2018 (with respect to May 2017 through December 2017), with the increase in monthly Base Rent reflecting 2016 Stub-Year CapEx and commencing May 1, 2017, which is 30 days after the expected approval of Lessees first 2017 Regulatory Order. |
### | Lessee will make a monthly 2018 Base Rent payment of $954,890 on the 15th day of each month beginning on March 15, 2018 through April 15, 2018 (with respect to January 2018 through February 2018). Lessee will make a monthly 2018 Base Rent payment of $955,081 on the 15th day of each month beginning on May 15, 2018 through July 15, 2018 (with respect to March 2018 through May 2018), with the increase in monthly Base Rent reflecting Second 2017 CapEx and commencing March 1, 2018, which is 30 days after the expected approval of Lessees second 2017 Regulatory Order. Lessee will then make a 2018 Base Rent payment of $955,081 on the 15th day of each month beginning on August 15, 2018 through February 15, 2019 (with respect to June 2018 through December 2018), with the increase in monthly Base Rent reflecting 2017 Stub-Year CapEx and commencing June 1, 2018, which is 30 days after the expected approval of Lessees first 2018 Regulatory Order. |
Percentage Rent
Percentages:
2010 | 36.993 | % | ||
2011 | 36.972 | % | ||
2012 | 36.923 | % | ||
2013 | 37.0 | % | ||
2014 | 36.9 | % | ||
2015 | 37.2 | % | ||
2016 | 32.1 | % | ||
2017 | 31.1 | % | ||
2018 | 29.2 | % | ||
2019 |
28.9 | % |
MCALLEN LEASE
3
Annual Percentage Rent
Breakpoints:
2010 | $ | 5,260,447 | ||
2011 | $ | 5,453,529 | ||
2012 | $ | 5,521,881 | ||
2013 | $ | 6,566,290 | ||
2014 | $ | 8,445,964 | ||
2015 | $ | 11,818,692 | ||
2016 | $ | 12,681,862 | ||
2017 | $ | 12,423,887 | * | |
2018 | $ | 12,271,585 | ** | |
2019 | $ | 12,084,935 |
* | The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order and the second 2017 Regulatory Order, as well as the amount of First 2017 CapEx and Second 2017 CapEx. |
** | The 2018 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order, the second 2017 Regulatory Order, and the first 2018 Regulatory Order, as well as the amount of First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx. |
Revenues Attributable to
Lessee CapEx:
2010 | $ | 60,546 | ||
2011 | $ | 249,481 | ||
2012 | $ | 289,945 | ||
2013 | $ | 345,693 | ||
2014 | $ | 355,744 | ||
2015 | $ | 360,527 | ||
2016 | $ | 206,130 | ||
2017 | $ | 97,925 | ||
2018 | $ | 73,431 | ||
2019 | $ | 45,266 |
ERCOT Transmission Rate
Allocation:
before June 20, 2013: 100% between June 20 and October 17, 2013: 27.8% between October 17, 2013 and February 25, 2014: 11.8% between February 25, 2014 and May 1, 2014: 8.2% between May 1, 2014 and October 3, 2014: 8.6% between October 3, 2014 and March 31, 2015: 12.0% between April 1, 2015 and October 31, 2015: 11.9% between November 1, 2015 and June 13, 2016: 10.6% between June 14, 2016 and September 22, 2016: 9.8% between September 23, 2016 and April 30, 2017: 8.5% between May 1, 2017 and February 28, 2018: 8.0% | ||
starting March 1, 2018: 7.3% | ||
Term of Rent Supplement: Expires 12/31/19 |
MCALLEN LEASE
4
The Parties have executed this Eleventh Amended Supplement to the McAllen Lease as of the date set forth above.
SHARYLAND UTILITIES, L.P. | ||
By: | /s/ Greg Wilks | |
Name: | Greg Wilks | |
Title: | Chief Financial Officer | |
SHARYLAND DISTRIBUTION & | ||
TRANSMISSION SERVICES, L.L.C. | ||
By: | /s/ Brant Meleski | |
Name: | Brant Meleski | |
Title: | Chief Financial Officer |
MCALLEN LEASE
Exhibit 10.2
Eleventh Amended and Restated Rent Supplement
(Stanton/Brady/Celeste Lease)
December 31, 2016
This Eleventh Amended and Restated Rent Supplement (this Eleventh Amended Supplement) between Sharyland Distribution & Transmission Services, L.L.C. (Lessor) and Sharyland Utilities, L.P. (Lessee) is executed and delivered on December 31, 2016, to memorialize supplements to the S/B/C Lease (as defined below), effective as of January 1, 2017. Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the S/B/C Lease.
WHEREAS, Lessor and Lessee are Parties to a Third Amended and Restated Lease Agreement (Stanton/Brady/Celeste Assets) dated December 31, 2015 (as amended from time to time in accordance with its terms, the S/B/C Lease);
WHEREAS, on February 26, 2016 the Parties executed a Tenth Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease) effective as of January 1, 2016, as amended by the First Amendment to Tenth Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease), effective as of June 13, 2016, and as further amended by the Second Amendment to Tenth Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease), effective as of September 22, 2016 (collectively, the Tenth Amended Supplement);
WHEREAS, the Parties wish to amend and restate the Tenth Amended Supplement pursuant to Section 3.2(b) of the S/B/C Lease; and
WHEREAS, the Parties intend to memorialize in this Eleventh Amended Supplement the Incremental CapEx the Parties expect during 2017.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree to the following:
1. The Tenth Amended Supplement is hereby amended and restated in its entirety as set forth below.
2. The S/B/C Lease, except as supplemented by this Eleventh Amended Supplement, shall remain in full force and effect.
Incremental CapEx:
2011 | $ | 4,212,000 | ||
2012 | $ | 14,873,337 | ||
2013 | $ | 43,422,100 | ||
2014 | $ | 139,387,740 | ||
2015 | $ | 73,231,002 | ||
$ | 80,197,538 | |||
|
|
|||
(Total 2015) | $ | 153,428,540 | ||
2016 | $ | 121,427,537 | * | |
$ | 83,593,598 | ** | ||
(Total 2016) | $ | 205,021,135 | *** | |
2017 | $ | 60,058,438 | # | |
$ | 69,114,285 | ## | ||
(Total 2017) | $ | 129,172,722 | ### |
STANTON BRADY CELESTE LEASE
1
* | Represents the amount of distribution Incremental CapEx that the Parties expected to be placed in service during 2016, with an expected weighted average in-service date of July 1, 2016. Rent supplements with respect to this distribution Incremental CapEx were agreed to and memorialized as part of the Ninth Amended and Restated Rent Supplement (Stanton/Brady/Celeste Lease) dated December 31, 2015 (Ninth Amended Supplement). |
** | Represents the aggregate amount of transmission Incremental CapEx the Parties expected to be placed in service in 2016. Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Ninth Amended Supplement. Of the 2016 Incremental CapEx, an aggregate of $12,037,735 was expected to be in service as of the balance sheet date reflected in Lessees first 2016 Regulatory Order (First 2016 CapEx), an aggregate of $35,187,221 was expected to be in service as of the balance sheet date reflected in Lessees second 2016 Regulatory Order (Second 2016 CapEx), and an aggregate of $36,368,643 was expected to be placed in service throughout the remainder of 2016 (2016 Stub-Year CapEx). A Regulatory Order is defined as either (i) the PUCTs approval of Lessees application for updated wholesale transmission rates or (ii) final resolution or settlement of a rate case applicable to Lessees transmission rates. The Parties expected the First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx, collectively, to have a weighted average in-service date of July 1, 2016. The Parties expected the first 2016 Regulatory Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017. The Parties have agreed that any Rent Validation (within the meaning of the S/B/C Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the S/B/C Lease. |
*** | Represents the total Incremental CapEx that the Parties expected to be placed in service during 2016. |
# | Represents the amount of distribution Incremental CapEx that the Parties expect to be placed in service during 2017, with an expected weighted average in-service date of May 1, 2017. |
## | Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2017. Of the 2017 Incremental CapEx, an aggregate of $10,473,331 is expected to be in service as of the balance sheet date reflected in Lessees first 2017 Regulatory Order (First 2017 CapEx), an aggregate of $58,640,953 is expected to be in service as of the balance sheet date reflected in Lessees second 2017 Regulatory Order (Second 2017 CapEx), and an aggregate of $0 is expected to be placed in service throughout the remainder of 2017 (2017 Stub-Year CapEx) and to be included in the first 2018 Regulatory Order. The Parties expect the First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx, collectively, to have a weighted average in-service date of July 1, 2017. The Parties expect the first 2017 Regulatory Order to be effective on May 1, 2017, the second 2017 Regulatory Order to be effective on March 1, 2018, and the first 2018 Regulatory Order to be effective on June 1, 2018. The Parties agree that any Rent Validation (within the meaning of the S/B/C Lease) with respect to First 2017 CapEx, Second 2017 CapEx, or 2017 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the S/B/C Lease. |
### | Represents the total Incremental CapEx that the Parties expect to be placed in service during 2017. |
Lessee CapEx:
2011 | $ | 1,232,807 | ||
2012 | $ | 1,969,693 | ||
2013 | $ | 2,920,207 | ||
2014 | $ | 12,972,164 | ||
2015 | $ | 4,857,416 | ||
2016 | $ | 5,000,000 | # | |
2017 | $ | 5,000,000 | * |
STANTON/BRADY/CELESTE LEASE
2
# | Represents the amount of Lessee CapEx the Parties expected during 2016, with an expected weighted average in-service date of July 1, 2016. Rent supplements with respect to this Lessee CapEx were agreed to and memorialized as part of the Ninth Amended Supplement. |
* | Represents the amount of Lessee CapEx the Parties expect during 2017, with an expected weighted average in-service date of July 1, 2017. |
Base Rent:
2011 | $ | 18,111,535 | ||
2012 | $ | 18,669,636 | ||
2013 | $ | 21,784,564 | ||
2014 | $ | 31,794,169 | ||
2015 | $ | 44,737,618 | ||
2016 | $ | 61,449,561 | # | |
2017 | $ | 75,497,661 | ## |
# | The amount of 2016 Base Rent included in the Tenth Amended Supplement was $61,449,561, comprised of 2016 Base Rent payments of $5,001,017 on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016), and $5,122,354 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which was 30 days after the expected approval of Lessees first 2016 Regulatory Order. Lessee is scheduled to make a monthly 2016 Base Rent payment of $5,477,022 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which was 30 days after the expected approval of Lessees second 2016 Regulatory Order. |
## | Lessee will make a monthly 2017 Base Rent payment of $6,230,262 on the 15th day of each month beginning on March 15, 2017 through June 15, 2017 (with respect to January 2017 through April 2017). Lessee will then make a 2017 Base Rent payment of $6,322,076 on the 15th day of each month beginning on July 15, 2017 through February 15, 2018 (with respect to May 2017 through December 2017), with the increase in monthly Base Rent reflecting First 2017 CapEx and commencing May 1, 2017, which is 30 days after the expected approval of Lessees first 2017 Regulatory Order. |
Percentage Rent
Percentages:
2011 | 29.019 | % | ||
2012 | 24.206 | % | ||
2013 | 25.1 | % | ||
2014 | 23.6 | % | ||
2015 | 23.1 | % | ||
2016 | 23.1 | % | ||
2017 | 23.1 | % |
Annual Percentage Rent
Breakpoints:
2011 | $ | 27,111,535 | ||
2012 | $ | 27,669,636 | ||
2013 | $ | 30,784,564 | ||
2014 | $ | 36,935,549 | ||
2015 | $ | 47,271,231 | ||
2016 |
$ | 55,428,569 | ||
2017 |
$ | 72,373,288 | * |
STANTON/BRADY/CELESTE LEASE
3
* | The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order and the second 2017 Regulatory Order, as well as the amount of First 2017 CapEx and Second 2017 CapEx. |
Revenues Attributable to
Lessee CapEx:
2013 | $ | 1,357,683 | ||
2014 | $ | 4,850,029 | ||
2015 | $ | 7,283,133 | ||
2016 | $ | 8,171,603 | ||
2017 | $ | 8,841,302 |
ERCOT Transmission Rate
Allocation:
before June 20, 2013: 0% | ||
between June 20 and October 17, 2013: 6.9% | ||
between October 17 and February 25, 2014: 3.4% | ||
between February 25 and May 1, 2014: 8.5% | ||
between May 1 and October 3, 2014: 8.3% | ||
between October 3, 2014 and March 31, 2015: 7.3% | ||
between April 1, 2015 and October 31, 2015: 10.5% | ||
between November 1, 2015 and June 13, 2016: 17.8% | ||
between June 13, 2016 and September 22, 2016: 20.4% | ||
between September 23, 2016 and April 30, 2017: 17.6% | ||
starting May 1, 2017: 21.2% |
Term of Rent Supplement: Expires 12/31/17
STANTON/BRADY/CELESTE LEASE
4
The Parties have executed this Eleventh Amended Supplement to the S/B/C Lease as of the date set forth above.
SHARYLAND UTILITIES, L.P. | ||
By: | /s/ Greg Wilks | |
Name: | Greg Wilks | |
Title: | Chief Financial Officer | |
SHARYLAND DISTRIBUTION & | ||
TRANSMISSION SERVICES, L.L.C. | ||
By: | /s/ Brant Meleski | |
Name: | Brant Meleski | |
Title: | Chief Financial Officer |
STANTON BRADY CELESTE LEASE
Exhibit 10.3
Ninth Amended and Restated Rent Supplement
(CREZ Lease)
December 31, 2016
This Ninth Amended and Restated Rent Supplement (this Ninth Amended Supplement) between Sharyland Distribution & Transmission Services, L.L.C. (Lessor) and Sharyland Utilities, L.P. (Lessee) is executed and delivered on December 31, 2016, to memorialize supplements to the CREZ Lease (as defined below), effective as of January 1, 2017. Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the CREZ Lease.
WHEREAS, Lessor and Lessee are Parties to a Third Amended and Restated Lease Agreement (CREZ Assets) dated as of December 4, 2015 (as amended from time to time in accordance with its terms, the CREZ Lease);
WHEREAS, on February 26, 2016 the Parties executed an Eighth Amended and Restated Rent Supplement (CREZ Lease) effective as of January 1, 2016, as amended by the First Amendment to the Eighth Amended and Restated Rent Supplement (CREZ Lease), effective as of June 13, 2016, as further amended by the Second Amendment to the Eighth Amended and Restated Rent Supplement (CREZ Lease), effective as of September 22, 2016 (collectively, the Eighth Amended Supplement);
WHEREAS, the Parties wish to amend and restate the Eighth Amended Supplement pursuant to Section 3.2(b) of the CREZ Lease; and
WHEREAS, the Parties intend to memorialize in this Ninth Amended Supplement the Incremental CapEx the Parties expect during 2017.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree to the following:
1. The Eighth Amended Supplement is hereby amended and restated in its entirety as set forth below.
2. The CREZ Lease, except as supplemented by this Ninth Amended Supplement, shall remain in full force and effect.
Incremental Cap Ex:
2013 |
$ | 466,424,280 | ||
2014 |
$ | 198,982,000 | ||
2015 |
$ | 3,493,096 | ||
2016 |
$ | 5,244,389 | * | |
2017 |
$ | 49,475,943 | ** |
* | Represents the aggregate amount of transmission Incremental CapEx the Parties expected to be placed in service in 2016. Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Seventh Amended and Restated Rent Supplement (CREZ Lease) dated December 31, 2015. Of the 2016 Incremental CapEx, $0 was expected to be in service as of the balance sheet date reflected in Lessees first 2016 Regulatory Order (First 2016 CapEx), an aggregate of $2,052,263 was expected to be in service as of the balance sheet date reflected in Lessees second 2016 Regulatory Order (Second 2016 CapEx), and an aggregate of $3,192,126 was expected to be placed in service throughout the remainder of 2016 (2016 Stub-Year CapEx). A Regulatory Order is defined as either (i) the PUCTs approval of Lessees application for updated wholesale transmission rates or (ii) final resolution or settlement of a rate case applicable to Lessees transmission rates. The Parties expected the First 2016 CapEx, Second 2016 CapEx, and 2016 Stub-Year CapEx, collectively, to have a weighted average in-service date of October 1, 2016. The Parties expected the first 2016 Regulatory |
CREZ LEASE
1
Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017. The Parties have agreed that any Rent Validation (within the meaning of the CREZ Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the CREZ Lease. |
** | Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2017. Of the 2017 Incremental CapEx, $0 is expected to be in service as of the balance sheet date reflected in Lessees first 2017 Regulatory Order (First 2017 CapEx), an aggregate of $49,475,943 is expected to be in service as of the balance sheet date reflected in Lessees second 2017 Regulatory Order (Second 2017 CapEx), and an aggregate of $0 is expected to be placed in service throughout the remainder of 2017 (2017 Stub-Year CapEx). The Parties expect the First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx, collectively, to have a weighted average in-service date of July 1, 2017. The Parties expect the first 2017 Regulatory Order to be effective on May 1, 2017, the second 2017 Regulatory Order to be effective on March 1, 2018, and the first 2018 Regulatory Order to be effective on June 1, 2018. The Parties agree that any Rent Validation (within the meaning of the CREZ Lease) with respect to First 2017 CapEx, Second 2017 CapEx, or 2017 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the CREZ Lease. |
Lessee Cap Ex:
2013 |
$ | 0 | ||
2014 |
$ | 0 | ||
2015 |
$ | 0 | ||
2016 |
$ | 0 | ||
2017 |
$ | 0 |
Base Rent:
2013 |
$ | 21,758,233 | ||
2014 |
$ | 67,335,947 | ||
2015 |
$ | 68,524,342 | ||
2016 |
$ | 66,210,646 | # | |
2017 |
$ | 64,049,041 | ## | |
2018 |
$ | 65,745,990 | ### | |
2019 |
$ | 64,218,231 | ||
2020 |
$ | 61,890,240 |
# | The amount of 2016 Base Rent included in the Eighth Amended Supplement was $66,210,646, comprised of 2016 Base Rent payment of $5,514,292 on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016), and $5,514,292 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which was 30 days after the expected approval of Lessees first 2016 Regulatory Order. Lessee is scheduled to make a monthly 2016 Base Rent payment of $5,533,861 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which was 30 days after the expected approval of Lessees second 2016 Regulatory Order. |
## | Lessee will make a monthly 2017 Base Rent payment of $5,337,420 on the 15th day of each month beginning on March 15, 2017 through June 15, 2017 (with respect to January 2017 through April 2017). Lessee will then make a 2017 Base Rent payment of $5,337,420 on the 15th day of each month beginning on July 15, 2017 through February 15, 2018 (with respect to May 2017 through December 2017), with the increase in monthly Base Rent reflecting First 2017 CapEx and commencing May 1, 2017, which is 30 days after the expected approval of Lessees first 2017 Regulatory Order |
CREZ LEASE
2
### | Lessee will make a monthly 2018 Base Rent payment of $5,142,012 on the 15th day of each month beginning on March 15, 2018 through April 15, 2018 (with respect to January 2018 through February 2018). Lessee will make a monthly 2018 Base Rent payment of $5,546,197 on the 15th day of each month beginning on May 15, 2018 through July 15, 2018 (with respect to March 2018 through May 2018), with the increase in monthly Base Rent reflecting Second 2017 CapEx and commencing March 1, 2018, which is 30 days after the expected approval of Lessees second 2017 Regulatory Order. Lessee will then make a 2018 Base Rent payment of $5,546,197 on the 15th day of each month beginning on August 15, 2018 through February 15, 2019 (with respect to June 2018 through December 2018), with the increase in monthly Base Rent reflecting 2017 Stub-Year CapEx and commencing June 1, 2018, which is 30 days after the expected approval of Lessees first 2018 Regulatory Order. |
Percentage Rent
Percentages:
2013 |
29.2 | % | ||
2014 |
31.6 | % | ||
2015 |
31.3 | % | ||
2016 |
30.3 | % | ||
2017 |
29.5 | % | ||
2018 |
28.5 | % | ||
2019 |
27.7 | % | ||
2020 |
26.8 | % |
Annual Percentage Rent
Breakpoints:
2013 |
$ | 21,758,233 | ||
2014 |
$ | 67,335,947 | ||
2015 |
$ | 68,524,342 | ||
2016 |
$ | 66,230,214 | ||
2017 |
$ | 64,079,575 | * | |
2018 |
$ | 65,745,990 | ** | |
2019 |
$ | 64,218,231 | ||
2020 |
$ | 61,890,240 |
* | The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order and the second 2017 Regulatory Order, as well as the amount of First 2017 CapEx and Second 2017 CapEx. |
** | The 2018 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order, the second 2017 Regulatory Order, and the first 2018 Regulatory Order, as well as the amount of First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx. |
Revenues Attributable to
Lessee Capex, by Lease Year:
2013 | $ | 0 | ||
2014 | $ | 0 | ||
2015 | $ | 0 | ||
2016 | $ | 0 | ||
2017 | $ | 0 |
CREZ LEASE
3
ERCOT Transmission Rate
Allocation
between June 20 and October 17, 2013: 65.3% | ||
between October 17, 2013 and February 25, 2014: 84.8% | ||
between February 25, 2014 and May 1, 2014: 83.3% | ||
between May 1, 2014 and October 3, 2014: 80.9% | ||
between October 3, 2014 and March 31, 2015: 75.8% | ||
between April 1, 2015 and October 31, 2015: 72.7% | ||
between November 1, 2015 and June 13, 2016: 65.6% | ||
between June 13, 2016 and September 22, 2016: 56.8% | ||
between September 23, 2016 and April 30, 2017: 49.0% | ||
between May 1, 2017 and February 28, 2018: 46.8% | ||
starting March 1, 2018: 46.6% |
Term of Rent Supplement: Expires 12/31/20
CREZ LEASE
4
The Parties have executed this Ninth Amended Supplement to the CREZ Lease as of the date set forth above.
SHARYLAND UTILITIES, L.P. | ||
By: | /s/ Greg Wilks | |
Name: | Greg Wilks | |
Title: | Chief Financial Officer | |
SHARYLAND DISTRIBUTION & | ||
TRANSMISSION SERVICES, L.L.C. | ||
By: | /s/ Brant Meleski | |
Name: | Brant Meleski | |
Title: | Chief Financial Officer |
CREZ LEASE
Exhibit 10.4
Sixth Amended and Restated Rent Supplement
(ERCOT Transmission Lease)
December 31, 2016
This Sixth Amended and Restated Rent Supplement (this Sixth Amended Supplement) between Sharyland Distribution & Transmission Services, L.L.C. (Lessor) and Sharyland Utilities, L.P. (Lessee) is executed and delivered on December 31, 2016, to memorialize supplements to the ERCOT Transmission Lease (as defined below), effective as of January 1, 2017. Capitalized terms used herein that are not otherwise defined will have the meanings assigned to them in the ERCOT Transmission Lease.
WHEREAS, Lessor and Lessee are Parties to a Lease Agreement (ERCOT Transmission Assets) dated December 1, 2014 (as amended from time to time in accordance with its terms, the ERCOT Transmission Lease);
WHEREAS, on February 26, 2016 the Parties executed a Fifth Amended and Restated Rent Supplement (ERCOT Transmission Lease) effective as of January 1, 2016, as amended by the First Amendment to Fifth Amended and Restated Rent Supplement (ERCOT Transmission Lease), effective June 13, 2016, and as further amended by the Second Amendment to Fifth Amended and Restated Rent Supplement (ERCOT Transmission Lease), effective as of September 22, 2016 (collectively, the Fifth Amended Supplement); and
WHEREAS, the Parties wish to amend and restate the Fifth Amended Supplement pursuant to Section 3.2(b) of the ERCOT Transmission Lease; and
WHEREAS, the Parties wish to memorialize in this Sixth Amended Supplement the Incremental CapEx the Parties expect during 2017.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree to the following:
1. The Fifth Amended Supplement is hereby amended and restated in its entirety as set forth below.
2. The ERCOT Transmission Lease, except as supplemented by this Sixth Amended Supplement, shall remain in full force and effect.
Incremental CapEx:
2014 |
$ | 18,470,677 | ||
2015 |
$ | 22,517,350 | ||
2016 |
$ | 9,237,495 | * | |
2017 |
$ | 4,553,684 | ** |
* | Represents the aggregate amount of transmission Incremental CapEx the Parties expected to be placed in service in 2016. Rent supplements with respect to this transmission Incremental CapEx were agreed to and memorialized as part of the Fourth Amended and Restated Rent Supplement (ERCOT Transmission Lease) dated December 31, 2015. Of the 2016 Incremental CapEx, an aggregate of $4,244,655 was expected to be in service as of the balance sheet date reflected in Lessees first 2016 Regulatory Order (First 2016 CapEx), an aggregate of $2,086,871 was expected to be in service as of the balance sheet date reflected in Lessees second 2016 Regulatory Order (Second 2016 CapEx), and an aggregate of $2,905,968 was expected to be placed in service throughout the remainder of 2016 (2016 Stub-Year CapEx). A Regulatory Order is defined as either (i) the PUCTs approval of Lessees application for updated wholesale transmission rates or (ii) final resolution or settlement of a rate case applicable to Lessees transmission rates. The Parties expected the First 2016 CapEx, Second 2016 CapEx, and 2016 |
ERCOT TRANSMISSION LEASE
1
Stub-Year CapEx, collectively, to have a weighted average in-service date of June 1, 2016. The Parties expected the first 2016 Regulatory Order to be effective on June 1, 2016, the second 2016 Regulatory Order to be effective on October 1, 2016, and the first 2017 Regulatory Order to be effective on March 1, 2017. The Parties have agreed that any Rent Validation (within the meaning of the ERCOT Transmission Lease) with respect to First 2016 CapEx, Second 2016 CapEx, or 2016 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the ERCOT Transmission Lease. |
** | Represents the aggregate amount of transmission Incremental CapEx the Parties expect to be placed in service in 2017. Of the 2017 Incremental CapEx, an aggregate of $0 is expected to be in service as of the balance sheet date reflected in Lessees first 2017 Regulatory Order (First 2017 CapEx), an aggregate of $4,553,684 is expected to be in service as of the balance sheet date reflected in Lessees second 2017 Regulatory Order (Second 2017 CapEx), and an aggregate of $0 is expected to be placed in service throughout the remainder of 2017 (2017 Stub-Year CapEx) and to be included in the first 2018 Regulatory Order. The Parties expect the First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx, collectively, to have a weighted average in-service date of June 1, 2017. The Parties expect the first 2017 Regulatory Order to be effective on May 1, 2017, the second 2017 Regulatory Order to be effective on March 1, 2018, and the first 2018 Regulatory Order to be effective on June 1, 2018. The Parties agree that any Rent Validation (within the meaning of the ERCOT Transmission Lease) with respect to First 2017 CapEx, Second 2017 CapEx, or 2017 Stub-Year CapEx will use the actual effective dates of the applicable Regulatory Order (to the extent known), but will otherwise be determined in accordance with Section 3.2(c) of the ERCOT Transmission Lease. |
Lessee CapEx:
2014 |
$ | 0 | ||
2015 |
$ | 0 | ||
2016 |
$ | 0 | ||
2017 |
$ | 0 |
Base Rent:
2014 |
$ | 484,276 | ||
2015 |
$ | 2,477,452 | ||
2016 |
$ | 4,547,412 | # | |
2017 |
$ | 4,789,842 | ## | |
2018 |
$ | 5,037,465 | ### | |
2019 |
$ | 4,936,440 | ||
2020 |
$ | 4,761,952 | ||
2021 |
$ | 4,595,655 | ||
2022 |
$ | 4,432,302 |
# | The amount of 2016 Base Rent included in the Fifth Amended Supplement was $4,547,412, comprised of 2016 Base Rent payments of $355,151 paid on the 15th day of each month beginning on March 15, 2016 through August 15, 2016 (with respect to January 2016 through June 2016) and Base Rent payments of $396,049 on the 15th day of each month beginning on September 15, 2016 through December 15, 2016 (with respect to July 2016 through October 2016), with the increase in monthly Base Rent reflecting First 2016 CapEx and commencing July 1, 2016, which was 30 days after the expected approval of Lessees first 2016 Regulatory Order. Lessee is scheduled to make a monthly 2016 Base Rent payment of $416,155 on each of January 15, 2017 and February 15, 2017 (with respect to November 2016 and December 2016), with the increase in monthly Base Rent reflecting Second 2016 CapEx and commencing November 1, 2016, which was 30 days after the expected approval of Lessees second 2016 Regulatory Order. |
ERCOT TRANSMISSION LEASE
2
## | Lessee will make a monthly 2017 Base Rent payment of $399,154 on the 15th day of each month beginning on March 15, 2017 through June 15, 2017 (with respect to January 2017 through April 2017). Lessee will then make a 2017 Base Rent payment of $399,154 on the 15th day of each month beginning on July 15, 2017 through February 15, 2018 (with respect to May 2017 through December 2017), with the increase in monthly Base Rent reflecting 2016 Stub-Year CapEx and commencing May 1, 2017, which is 30 days after the expected approval of Lessees first 2017 Regulatory Order. |
### | Lessee will make a monthly 2018 Base Rent payment of $387,850 on the 15th day of each month beginning on March 15, 2018 through April 15, 2018 (with respect to January 2018 through February 2018). Lessee will then make a 2018 Base Rent payment of $426,176 on the 15th day of each month beginning on May 15, 2018 through July 15, 2018 (with respect to March 2018 through May 2018), with the increase in monthly Base Rent reflecting Second 2017 CapEx and commencing March 1, 2018, which is 30 days after the expected approval of Lessees second 2017 Regulatory Order. Lessee will then make a 2018 Base Rent payment of $426,176 on the 15th day of each month beginning on August 15, 2018 through February 15, 2019 (with respect to June 2018 through December 2018), with the increase in monthly Base Rent reflecting 2017 Stub-Year CapEx and commencing June 1, 2018, which is 30 days after the expected approval of Lessees first 2018 Regulatory Order. |
Percentage Rent
Percentages:
2014 |
35.8 | % | ||
2015 |
35.1 | % | ||
2016 |
31.1 | % | ||
2017 |
28.2 | % | ||
2018 |
27.2 | % | ||
2019 |
26.2 | % | ||
2020 |
25.3 | % | ||
2021 |
24.4 | % | ||
2022 |
23.5 | % |
Annual Percentage Rent
Breakpoints:
2014 |
$ | 484,276 | ||
2015 |
$ | 2,477,452 | ||
2016 |
$ | 4,608,413 | ||
2017 |
$ | 4,818,146 | * | |
2018 |
$ | 5,037,465 | ** | |
2019 |
$ | 4,936,440 | ||
2020 |
$ | 4,761,952 | ||
2021 |
$ | 4,595,655 | ||
2022 |
$ | 4,432,302 |
* | The 2017 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order and the second 2017 Regulatory Order, as well as the amount of First 2017 CapEx and Second 2017 CapEx. |
** | The 2018 Annual Percentage Rent Breakpoint reflects the assumptions set forth above regarding the timing of the first 2017 Regulatory Order, the second 2017 Regulatory Order, and the first 2018 Regulatory Order, as well as the amount of First 2017 CapEx, Second 2017 CapEx, and 2017 Stub-Year CapEx. |
ERCOT TRANSMISSION LEASE
3
Revenues Attributable to
Lessee CapEx:
2014 |
$ | 0 | ||
2015 |
$ | 0 | ||
2016 |
$ | 0 | ||
2017 |
$ | 0 | ||
2018 |
$ | 0 | ||
2019 |
$ | 0 | ||
2020 |
$ | 0 | ||
2021 |
$ | 0 | ||
2022 |
$ | 0 |
ERCOT Transmission Rate
Allocation:
before October 3, 2014: 0% |
between October 3, 2014 and March 31, 2015: 2.1% |
between April 1, 2015 and October 31, 2015: 2.1% |
between November 1, 2015 and June 13, 2016: 3.6% |
between June 13, 2016 and September 22, 2016: 4.1% |
between September 23, 2016 and April 30, 2017: 3.6% |
between May 1, 2017 and February 28, 2018: 3.6% |
starting March 1, 2018: 3.6% |
Term of Rent Supplement: Expires 12/31/22
ERCOT TRANSMISSION LEASE
4
The Parties have executed this Sixth Amended Supplement to the ERCOT Transmission Lease as of the date set forth above.
SHARYLAND UTILITIES, L.P. | ||
By: | /s/ Greg Wilks | |
Name: | Greg Wilks | |
Title: | Chief Financial Officer | |
SHARYLAND DISTRIBUTION & | ||
TRANSMISSION SERVICES, L.L.C. | ||
By: | /s/ Brant Meleski | |
Name: | Brant Meleski | |
Title: | Chief Financial Officer |
ERCOT TRANSMISSION LEASE