Here’s how one family office bought a wind farm. Now you can too
AFTER years of building an industrial real estate business in Puerto Rico, the older members of Raoul Slavin Julia’s family were ready to sell their assets and retire. It was 2004, years before the island would face the back-to-back-to-back blows of bankruptcy and two destructive hurricanes, but it seemed like a good time to have a bit of liquidity.
“We looked around and said: What now?” Slavin Julia, 46, remembers. What he saw on the island were crippling electricity costs and dependency on fossil fuels. The answer to his question, he eventually determined, was blowing all around him. His family would soon start on a journey to become builders and owners of wind farms in Puerto Rico and later the mainland US.
When he first looked for investment opportunities, in 2007, he discovered why wind farm ownership was the province of utilities: The education process takes years. Due diligence resembles that of industrial real estate, but clean-power plants often require a different sort of financial and regulatory sophistication. “I have never run across another family office competing” for a wind farm, says Slavin Julia, who is a director of single-family office Treehouse Investments. ( The family’s concern about sea levels rising from climate change inspired them to name the business after an elevated house, he says.) The family office owns wind farms through subsidiary Aspenall Energies.
Slavin Julia’s family built its first wind farm in 2009, a two-turbine facility to power a local Bacardi rum factory. With that success, it looked a couple of years later for opportunities on the US mainland, opting to purchase a newly completed farm for its first utility- scale project. “A family entering now in any US state will find there is a rigorous framework, with a few exceptions,” Slavin Julia says.
Why did Slavin Julia’s family choose wind? Well, first, there’s the broad appeal of renewables. Operating wind and solar farms typically benefit from long-term contracts with investment- grade utilities.
They tend to perform well, so there’s a high probability of steady, decadeslong revenue. It’s the type of investment that’s now attracting institutional investors such as pension funds and insurers- and appeals to climate-focused family offices such as Treehouse. “If you expect a decent rate of return and your vision is multigenerational, then those two perspectives coincide,” Slavin Julia says.
The reason for investing in wind instead of solar was mostly situational. Treehouse would consider solar today, he says. In the mid-2000s, however, solar had yet to crack the US mainstream and faced high insurance costs in hurricane-prone Puerto Rico, says Anne Amanda Bangasser, a Treehouse director and Slavin Julia’s sister-in-law.
One early advantage Treehouse had in getting into the wind business was the specific expertise family members had to handle much0 of an operating plant’s needs. Slavin Julia’s background is in law, Bangasser is an engineer, and Slavin Julia’s wife is an accountant. Still, when the family first decided to invest in a utility-scale wind farm, they didn’t feel comfortable enough to build one from scratch and wanted something that was already “spinning,” Slavin Julia says. “We thought: Let’s have our first project be one that has already gone through the construction process,” he says. “That way, we can be an asset owner and we can get some experience.”
Over the years, Treehouse built up a renewables network. Family members attended trade shows and engaged consultants in the years they spent building the Puerto Rico wind farm and planning others there. They had something specific in mind: a modest- size utility- scale farm that employed members of the community benefiting from it. They vetted projects in the US and even Europe. Eventually a consultant referred them to a competitive auction for a 20megawatt farm in Minnesota that had been in operation for several years.
The family won the farm and closed the deal in 2015. They tended to the farm for a while before they felt ready to break ground and actually construct a utility- scale plant. They have since built a 13MW farm in Minnesota and are erecting a 30MW project in Nebraska.