CBRE Group’s SPAC and Altus Merge

Altus Valued at $1.58 Billion

CBRE Group is expanding in the solar-power installation market, with a SPAC sponsored by the commercial real estate company merging with Altus Power. Altus Power builds and operates solar power installations on commercial buildings. The deal values Altus at $1.58 billion.

The merger will give Altus access to money it can use for expansion. It also puts the company in front of CBRE’s clients, which include some of the biggest owners of real estate in the US, Europe, and Asia. CBRE currently manages 7 billion square feet of commercial space. Many of its buildings have large rooftops and parking lots, making CBRE an ideal partner for Altus. CBRE is also facing pressure from its clients to become greener, so the deal will help with this initiative.

Solar Power Poised for Growth

Commercial properties tend to use a lot of power. Owners and tenants are increasingly looking to solar as a green source of energy. This shift is expected to drive growth for the solar power industry over the next decade with the power-generation capacity of solar panels installed on commercial properties projected to increase 200%.

Solar power is a viable alternative energy source for commercial property owners because the cost of installing has fallen significantly in recent years. In 2009, a 100,000- to 150,000-square-foot solar farm would cost $4 to $5 million to install. Today that cost is down to $1.5 million.

Blackstone Gets a Stake

CBRE launched CBRE Acquisition Holdings (CBAH), the SPAC purchasing Altus, last year on the New York Stock Exchange. It has raised about $400 million. CBRE looked at 80 targets when selecting a merger partner. As part of the deal, Blackstone Group (BX), which led a $350 million debt financing for Altus and already pledged $300 million in preferred equity to the solar panel company, gets a 17% ownership stake in the combined company.

As the world embraces more environmentally friendly ways to produce electricity, solar panels are getting a lot of attention. It will be interesting to see if more real estate and solar panel partnerships follow this deal.

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