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  "documentTitle": "Sunrun Inc. (RUN)",
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  "notes": "The slide critiques the valuation validity of PV system transfers by highlighting the sponsor's control and the guaranteed nature of tax equity returns.",
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      "text": "In fact, RUN investor relations referred to tax equity as “effectively debt”, which underscores our concern that RUN is, in essence, selling the ITCs or using them as collateral for financing.",
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      "text": "RUN then uses the residual cash flow to pledge to lenders, which provide it with additional “back leverage” loans. Once the Tax Equity Investor has received its target IRR, the sponsor exercises a call option on the class A interest.",
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      "text": "1. Pays approximately $.80 - $.90 on the dollar for the ITC and depreciation tax benefits... 2. Receives approximately 100 cents on the dollar of ITC and depreciation tax benefits...",
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      "text": "After the flip date, which is either time-triggered or triggered by economics, such as the Class A Member hitting its target IRR, the Class B member has the right to buy out the Class A member.",
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      "text": "The Tax Equity Investor’s resulting yield is guaranteed by RUN, as it consists almost entirely of tax credits and tax losses, whereas the projects themselves have an appraised WACC of 5% to 6%.",
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      "text": "The Sponsor / Class B Member acts as the Partnership’s managing member—so the Sponsor Equity controls the Partnership—and has a cheap call right to the Tax Equity Investor / Class A Member following Year 5.",
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      "text": "RUN implicitly argues the transfer of the PV Systems to the partnership and sale of the Tax Equity validates its valuations. However, because RUN never really relinquishes the project cash flows... we do not believe the Tax Equity Investor’s purchase of its partnership interest validates the valuations.",
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      "text": "RUN investor relations referred to tax equity as “effectively debt” — Sunrun Investor Relations",
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      "text": "48 Conversation with RUN Investor Relations, December 2021. 49 We understand that serial Tax Equity Investors... 50 Conversation with RUN investor relations, December 2021.",
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