Investors in Ecofin US Renewables (RNEW) will receive half the dividend they expected after cashflows were hit by tornado damage to its Whirlwind wind farm in Floydada in the US and maintenance interruptions at some of its solar assets.

The $103m (£81m) trust said net cashflows would be ‘meaningfully lower’ than forecast for the quarters ending 30 June and 30 September and it expects to declare in August a reduced dividend of ‘not less than’ 0.7 cents per share for the second quarter of this year, half the previous rate of 1.4 cents.

‘The board believes a temporary reduction at this time is prudent,’ the company told the stock exchange.

It follows a tornado in west Texas on 21 June, which killed four and injured nine, and damaged five transmission poles at the Whirlwind Energy wind farm, RNEW’s largest asset, accounting for 38% of net asset value (NAV).

Cashflows are also being hampered by corrective maintenance interruptions at some of its solar assets, leading to lower-than-expected energy performance and one-off costs.

The manager is actively engaged in attempts to remedy these issues and expects cashflows to return to forecast levels by the end of the calendar year.

However, Numis noted that the fund is not in control of when the American Electric Power-owned substation in neighbouring Matador, which was also severely damaged in the tornado and through which Whirlwind transmits electricity, is repaired.

Difficult journey

News of the tornado impact has hit shares in the fund, sending them to a 40% discount to NAV.

Analyst Colette Ord said it topped off a ‘difficult journey for shareholders’ since the trust’s modest initial public offering (IPO) in December 2020, when it raised $125m of a $250m target.

‘Despite offering exposure to long-term contracts rather than merchant revenues, it has struggled to capture investor attention,’ she said.

‘Given the subscale nature of the fund [£61m market cap], concentrated portfolio and now reduced dividend, any meaningful recovery in share price rating is likely to be limited to strategic action by the board,’ she said.

Since its IPO, RNEW has made eight investments in 65 assets with a generating capacity of 177MW, weighted 49% to commercial solar, 33% to wind and 18% to utility.

It usually targets an annual dividend of between 5.25 and 5.75 cents. It paid 5.6 cents in the year ending December 2022, which was fully covered.

Peel Hunt expects the dollar-denominated 9.3%-yielder to move to a 5% dividend yield based on the new quarterly dividend run-rate.