Wind Lease Royalties, Wind Royalties, Wind Turbine Royalties, Wind Rents, Wind Income Stream… these terms are one and the same: they refer to the payments that landowners receive from wind energy developers when they lease their land.
Do you have an active wind lease on your land? The time to sell your wind lease payments is now. Landowners are making huge profits from selling these wind income streams while market demand is high. Rather than receiving a check in the mail each month or each year over the lifetime of the wind farm project on your land, you can cash in now for one large payment. There are eager buyers actively searching for wind rent payments to purchase, and LandGate can help you market your payments for sale for free.
Wind Rents / Wind Royalties Explained
When you lease your land for a wind farm, you can expect to collect your earnings over the time period stated in your lease agreement, typically 25 to 50 years, in the form of wind rent payments. These wind rent payments can be based on a fixed amount per wind turbine, or they can be a percentage of the energy production or gross revenue, or a combination of both. While a wind land lease positions you to receive these payments monthly, quarterly, or biannually depending on your lease agreement, selling your wind rent payments provides you a lump sum payment up front, rather than waiting years to collect your earnings. "We were considering accepting an offer to sell our wind lease payments but were not sure if we were getting a fair offer. We listed our wind turbine payments on LandGate. Within 5 days we had seven separate cash offers. We decided to go with the best one that was over three times higher!" -PF
Top Reasons to Sell Wind Rent/Royalties:
Inflation - With inflation at historic highs, your wind payments are losing value every day. Since wind payments are relatively fixed and they are not variable, the higher inflation rises, the less valuable your future payments will become over time.
Taxes - The sale of your wind rent payments could qualify for a 1031 Exchange. In a 1031 exchange, you can exchange the proceeds from the sale of your wind lease payments for other real estate assets (such as farmland or a vacation home) to defer any capital gains taxes associated with that sale. That means you can have severely reduced tax consequences when you sell your wind rents and get paid upfront.
Extremely High Demand for Wind Rents - There is currently a very high demand from investors to purchase wind rent payments. In fact, these buyers are currently paying up to twice as much for wind cash flows vs. any other type of income stream! As more renewable energy projects are constructed and the market cools down, the willingness of these investors to go above and beyond typical investment metrics will likely go away. The country is experiencing a ‘renewable energy bubble’ right now, and it will not last forever.
Lease Term Uncertainty - The developer of your lease can stop operating the facility at any time. This means that your cash flow is not guaranteed- most landowners are not aware of this risk. In many cases, the renewable energy credit is what makes a wind farm economic from a financial perspective. Oftentimes, those energy credits expire before the end of a lease term. An investor that purchases your lease payments upfront takes on the full risk of that uncertainty vs. you hoping that the project continues to operate after any renewable energy credits expire.
Net Present Value - The value of an upfront payment is more valuable than waiting for payments to come in throughout the life of the project. In other words, $10,000 in your pocket today is worth more than $10,000 30 years from now. Many landowners are cashing out and re-investing that money into additional real estate or other investments that will grow vs. depreciate due to inflation.
Don’t Have to Sell Your Property - You can sell the wind lease income stream without selling the land! Keeping your property that will appreciate over time while selling your lease that is depreciating over time is an incredibly smart financial move for landowners. Many landowners are growing the size of their farm, ranch, or real estate portfolio by capitalizing on the opportunity to sell their wind lease payments up front, and they still own the land at the end of the day.
Now is the Time to Sell Wind Rents
Your wind lease royalties are currently in high demand from energy investors who are scrambling to add ‘green investments’ to their portfolios. Amidst a frothy market and a renewable energy boom, wind cash flow buyers are willing to pay a premium for your wind rent payments, meaning more money in your pocket today. This boom will not last forever!
LandGate has helped landowners find buyers for their wind lease income streams that pay close to ‘inflation cash’ for 30 years of future wind royalties. This means that they’d pay you today what you’ll be getting over the course of 30 years, minus inflation. Large financial investors are desperate to show that they invest in green energy, and they can do this by purchasing wind lease payments. Investors are increasingly utilizing ESG (Environmental, Social, and Governance) to analyze risk factors and growth opportunities when they are looking to invest in companies. In other words, they are viewing companies that lack a focus on sustainability as “riskier” investments.
Therefore, these companies are eager to purchase your wind lease payments to prove to potential investors they have an eye on sustainability, giving experts like LandGate the upper hand in the negotiations to present you the best deals. While green energy is currently heavily incentivized, the future of these incentives is uncertain and can change at any time. Strike while the iron is hot!
It is important to also note that many wind leases include clauses that allow the developer to stop operating the wind farm at any time. Operational problems can also cause your wind lease to get canceled, potentially cutting your 20 years of receiving rent checks drastically short. If you sell your wind payments now, you can take the future money from your producing wind farm and invest in something more stable.
How Our Client Made Money Selling Wind Lease Royalties
As an example, LandGate recently secured a top offer for a landowner from Illinois who signed a Wind Lease and Easement Agreement with a wind farm developer 6 years ago. The wind farm was constructed and is currently in the operations phase, which means the developer is converting wind energy into electricity and selling it to utility companies. This lease has a term of 25 years and also grants the developer 2 options to extend the lease at 5-year intervals at the end of the 25-year term.
The lease provides for an annual minimum rental payment plus monthly royalty payments. The rental payment is $6/acre/year and increases $1/acre/year every 5 years. The monthly royalty payment is 4% and increases an additional 2% every 5 years. As the rental is a fixed amount/year, the royalty payment is calculated based on the gross revenues of electricity sold. The form and terms of wind lease agreements can vary from one company to another. Oftentimes, rent and royalty payments can be calculated differently.
This landowner received an offer to purchase all his future payments, which he estimated to be approximately $1,000,000. Then, he published a listing on LandGate to market his wind turbine payments for sale to see if he could generate higher offers. In a matter of days, he received multiple offers and accepted an offer almost 3 times his original offer.
LandGate Can Help You Sell Your Wind Cash Flow
Hundreds of buyers and investors are actively looking to purchase wind rent payments from landowners, and posting a listing on LandGate is a great way to get in front of those groups so that you can start receiving offers. Listing is completely free (we do not charge any fees or commissions), and there is no obligation to accept any offers. Whether you are ready to list your wind royalties on our leading marketplace, or simply want to calculate how much your wind payments are worth, LandGate can help!
