Octopus Renewables Infrastructure Trust (LON:ORIT) used its 2025 annual results presentation to reiterate its focus on recycling capital, maintaining dividend cover, and repositioning the portfolio for medium-term net asset value (NAV) growth despite continued pressure across listed renewables.
2025 results: NAV down, dividend covered
Senior portfolio manager Genevieve Legg said closing NAV was £495 million, down from £570 million a year earlier. NAV per share fell to 93.8p from 102.6p. Gross asset value declined to £897 million from just over £1 billion, a move she said largely reflected valuation changes and asset sales completed at the end of the fourth quarter.
ORIT paid a 6.17p dividend for 2025, in line with its target, equating to a 10.1% yield based on the year-end share price. The dividend was 1.86 times covered before scheduled debt amortization and 1.14 times covered after those repayments. For 2026, ORIT increased its dividend target to 6.23p, a 1% rise, which management framed as consistent with a progressive dividend policy.
Capital allocation: buybacks, debt reduction, and asset sales
Co-fund manager David Bird reviewed three objectives set for 2025: increasing share buybacks to £30 million, reducing debt to 40% or less of gross asset value by year-end, and completing £80 million of asset sales to support those goals.
- Share buybacks: £26 million completed, with the remaining authorization available to the board.
- Asset sales: £74 million agreed and completed before year-end, with £70 million of cash proceeds received by the period end.
- Debt: total borrowings reduced by £56.3 million (including £23.6 million of scheduled amortization) and the weighted average cost of debt lowered to 3.3% from 4%.
Despite absolute debt reduction, Bird said gearing remained flat at 45% due to the NAV decline during the year, though it fell around three percentage points from its peak.
Bird also described how ORIT allocated cash during the year. Management cited approximately £108 million of available cash, comprising portfolio cash generation (net of scheduled principal repayments) and disposal proceeds. A little over £50 million was returned to shareholders through dividends and buybacks, nearly £50 million went to debt reduction, and the smallest portion was used for selective reinvestment.
Portfolio changes and reinvestment priorities
Asset recycling remained a central theme. Bird said the £74 million of sales agreed in 2025 took total disposals since 2023 to £235 million, and that all disposals were agreed at or above holding values prior to transaction.
Key sales included a 51% stake in the Cross Dykes onshore wind farm in Scotland and a 49% stake in the Breach Solar Farm in Cambridgeshire, both sold to Tokyo Century at or slightly above prior holding values, which management said supported the robustness of its valuations.
ORIT also exited its investment in HYRO, a UK-focused green hydrogen developer, arguing the opportunity did not fit its preferred project sizes and timelines for the developer allocation. It also sold down exposure related to Simply Blue as that company sold an 80% interest in its floating offshore wind business to Kansai Electric, which management said would help progress those projects.
On reinvestment, management emphasized selectivity and described investment in the Irishtown solar farm in Ireland as an example of buying at an attractive valuation, citing ORIT’s existing ownership in nearby sites and associated grid access as a negotiating advantage. It also referenced continued support for developer platforms Nordic Generation (Finland) and BLC Energy (UK) with projects approaching “ready-to-build” status.
Operations: solar strength, wind weather headwinds
Bird said generation, revenue, and EBITDA increased year over year, driven by a 5% increase in output, despite the sale of certain assets. Performance was slightly below budget, which he attributed mainly to lower-than-expected wind resource and other external factors.
Solar performance was described as notably strong, helped by the first full year in which all five sites in ORIT’s Irish solar complex were connected and operational. Wind performance was weaker, partly reflecting the earlier sale of the Ljungby wind farm in Sweden and weather-driven lower wind speeds. Bird also highlighted improved technical availability across the portfolio, describing it as a continuation of a trend since IPO.
Management flagged Irish grid curtailment as a detractor for solar. While some curtailment was compensated, not all was, and Bird noted a European court case challenging the partial compensation regime. He said any potential upside from that case was not included in figures or valuations. ORIT also referenced a small French site, Cougé, being offline while panels are replaced under warranty, with a return to operations targeted during 2026.
Valuation drivers and outlook under ORIT 2030 strategy
Legg walked through the year-on-year NAV bridge, citing modest positives from additional hedging and macro assumptions, and larger negatives from updated market revenue forecasts. She said the most significant valuation impact came from power prices, green certificates, and capacity market assumptions, especially in the UK. ORIT also reflected a £5 million reduction from ROC indexation following the UK government decision to move from RPI to CPI. Discount rates were “a modest negative,” reflecting interest rates and portfolio mix changes.
ORIT reported a combined valuation decrease of £23.4 million from changes to power price and green certificate curves. The weighted average operational portfolio discount rate was 7.8% at year-end, increasing to 8.2% after incorporating development portfolio expected returns and fund-level leverage.
Co-fund manager Chris Gaydon reiterated the ORIT 2030 strategy announced in September, targeting 9%-11% per annum total return over the medium to long term, supported by £100 million to £120 million per year of growth investment funded principally through asset recycling. Management said it expects to continue asset sales in 2026 without setting a specific target, with proceeds intended for new construction assets, which could lift gearing in the short term before it falls again. They also said construction investment implies NAV growth is expected from 2027 onwards, while the trust intends to keep paying a covered dividend in line with board guidance.
In Q&A, management said it believes the dividend is sustainable and can continue to grow, but also framed the pace of growth as a board decision balancing progress with an increased emphasis on funding growth investment. It also said ORIT is monitoring potential sector M&A opportunities but characterized the opportunity set as small and emphasized any transaction must be accretive to its risk and return targets.
About Octopus Renewables Infrastructure Trust (LON:ORIT)
Octopus Renewables Infrastructure Trust plc (“ORIT”) is an Impact Fund helping accelerate the transition to net zero. It is an investment company focused on providing investors with an attractive and sustainable level of income returns, with an element of capital growth, by investing in a diversified portfolio of Renewable Energy Assets across Europe, the UK and Australia.
