HASI Announces First Quarter 2023 Results and Declares Dividend, Affirms 10-13% Annualized Distributable EPS Growth and 5-8% Dividend Growth Guidance
ANNAPOLIS, Md., May 4, 2023 -- (BUSINESS WIRE) -- Hannon Armstrong Sustainable Infrastructure Capital, Inc. ("HASI," "we," "our" or the "Company") (NYSE: HASI), a leading investor in climate solutions, today reported results for the first quarter of 2023.
Business Highlights
Highest-ever first quarter volume and increased pipeline of investment opportunities
15% annual total shareholder return over first ten years as a public company, outperforming the S&P 5001
Conducted successful Investor Day providing detailed description of the business
Completed leadership transition with Jeff W. Eckel assuming the role of Executive Chair, Jeffrey A. Lipson becoming the President and CEO, and Marc Pangburn assuming the role of CFO

Financial Highlights

Delivered $0.26 GAAP diluted EPS compared with $0.51 a year ago
Delivered $0.53 Distributable EPS compared to $0.52 a year ago
Increased Portfolio by 9% in the quarter and 25% in the last twelve months to $4.7 billion. Managed assets grew 15% year over year to $10.4 billion
Increased GAAP-based Net Investment Income of $12.4 million by 23% and Distributable Net Investment Income of $47.1 million by 11% year over year
Closed $389 million of investments in the first quarter of 2023, up 18% from a year ago
Declared dividend of $0.395 per share
Affirm guidance that Distributable Earnings Per Share is expected to grow at a compound annual rate of 10% to 13% from 2021 to 2024, relative to the 2020 baseline of $1.55 per share, which is equivalent to a 2024 midpoint of $2.40 per share

ESG Highlights

An estimated 92,000 metric tons of carbon emissions will be avoided annually by our transactions closed this quarter, equating to a CarbonCount® score of 0.24 metric tons per $1,000 invested
1 Total shareholder return since IPO based on the closing price 4/18/13 to 4/18/23, which marks the 10th anniversary

Released 2022 HASI Impact Report that details our approach, targets and performance across material ESG topics

“We completed another quarter of strong performance, capping ten years of consistent success,” said Jeffrey A. Lipson, HASI President and Chief Executive Officer. “Our business is poised for further growth as we commence our second decade as a public company.”

A summary of our results is shown in the table below:
For the three months ended March 31, 2023For the three months ended March 31, 2022
$ in thousandsPer Share (Diluted)$ in thousandsPer Share (Diluted)
GAAP Net Income$24,106 $0.26 $45,346 $0.51 
Distributable earnings49,658 0.53 45,734 0.52 

Financial Results
“We have maintained substantial liquidity and ongoing access to capital at costs which provide investment margins that support our short and long-term profitability targets,” said Marc Pangburn, HASI Chief Financial Officer.

Comparison of the quarter ended March 31, 2023 to the quarter ended March 31, 2022
Total revenue increased by $11 million, driven by $14 million in higher interest and securitization income from larger portfolio and managed assets balances. There was a $3 million decrease in gain on sale and other income, driven by a change in the mix and volume of assets being securitized as well as lower fee generating opportunities.
Interest expense increased $11 million primarily due to a larger average outstanding debt balance and a higher average interest rate. We recorded a $2 million provision for loss on receivables as a result of loans and loan commitments made during the quarter. Other expenses (compensation and benefits and general and administrative expenses) increased by approximately $4 million primarily due to share-based compensation recognized upon the grant of certain awards for employees eligible for retirement as well as additional investment in corporate infrastructure.
We recognized income of $22 million using the hypothetical liquidation at book value method (HLBV) for our equity method investments in the first quarter of 2023, compared to income of $48 million for the same period in 2022, primarily due to fewer tax attributes recognized by our co-investors in this quarter which decreases our HLBV allocation of earnings.
Income tax expense decreased by approximately $10 million in the first quarter of 2023 compared to the same period in 2022 due to a decrease in GAAP earnings.

GAAP net income (loss) in the first quarter of 2023 was $24 million, compared to $45 million in the same period in 2022. Distributable earnings in the first quarter of 2023 was approximately $50 million, or an increase of approximately $4 million from the same period in 2022 due primarily to new assets added to our portfolio.


The calculation of our fixed-rate debt and leverage ratios as of March 31, 2023 and December 31, 2022 are shown in the table below:
March 31, 2023% of TotalDecember 31, 2022% of Total
($ in millions)($ in millions)
Floating-rate borrowings (1)
$439 13 %$431 14 %
Fixed-rate debt (2)
2,921 87 %2,545 86 %
Total$3,360 100 %$2,976 100 %
Leverage (3)
2.0 to 11.8 to 1
(1)Floating-rate borrowings include borrowings under our floating-rate credit facilities and commercial paper issuances with less than six months original maturity, to the extent such borrowings are not hedged using interest rate swaps.
(2)Fixed-rate debt includes the present notional value of debt that is hedged using interest rate swaps. Debt excludes securitizations that are not consolidated on our balance sheet.

(3)Leverage, as measured by our debt-to-equity ratio.

Our balance sheet portfolio totaled approximately $4.7 billion as of March 31, 2023, which included approximately $2.5 billion of behind-the-meter assets and approximately $2.0 billion of grid-connected assets, with the remainder in fuels, transport, and nature. The following is an analysis of the Performance Ratings of our portfolio as of March 31, 2023:

Portfolio Performance
1 (1)
1 (1)
2 (2)
3 (3)
(dollars in millions)
Total receivables98 1,995 — 11 2,104 
Less: Allowance for loss on receivables
— (38)— (5)(43)
Net receivables (4)
98 1,957 — 2,061 
Receivables held-for-sale— 17 — — 17 
Investments— — 10 
Real estate— 352 — — 352 
Equity method investments (5)
— 2,227 23 — 2,250 
$100 $4,561 $23 $$4,690 
Percent of Portfolio%97 %%— %100 %
(1)This category includes our assets where based on our credit criteria and performance to date, we believe that our risk of not receiving our invested capital remains low.
(2)This category includes our assets where based on our credit criteria and performance to date, we believe there is a moderate level of risk of not receiving some or all of our invested capital.
(3)This category includes our assets where based on our credit criteria and performance to date, we believe there is substantial doubt regarding our ability to recover some or all of our invested capital. Loans in this category are placed on non-accrual status.
(4)Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets.
(5)Some of the individual projects included in portfolios that make up our equity method investments have government off-takers. As they are part of large portfolios, they are not classified separately. 

The Company expects that annual distributable earnings per share will grow at a compounded annual rate of 10% to 13% from 2021 to 2024, relative to the 2020 baseline of $1.55 per share, which is equivalent to a 2024 midpoint of $2.40 per share. The Company also expects growth of annual dividends per share to be at a compounded annual rate of 5% to 8%. This guidance reflects the Company’s judgments and estimates of (i) yield on its existing portfolio; (ii) yield on incremental portfolio investments, inclusive of the Company’s existing pipeline; (iii) the volume and profitability of transactions; (iv) amount, timing, and costs of debt and equity capital to fund new investments; (v) changes in costs and expenses reflective of the Company’s forecasted operations; and (vi) the general interest rate and market environment. All guidance is based on current expectations of the regulatory environment, the dynamics of the markets in which we operate and the judgment of the Company’s management team, among other factors. In addition, distributions are subject to approval by the Company’s Board of Directors on a quarterly basis. The Company has not provided GAAP guidance as discussed in the Forward-Looking Statements section of this press release.

The Company is announcing today that its Board of Directors approved a quarterly cash dividend of $0.395 per share of common stock. This dividend will be paid on July 12, 2023, to stockholders of record as of July 5, 2023.

Conference Call and Webcast Information
HASI will host an investor conference call today, Thursday, May 4, 2023, at 5:00 p.m. Eastern Time. The conference call can be accessed live over the phone by dialing 1-877-407-0890 (Toll-Free) or +1-201-389-0918 (toll). Participants should inform the operator you want to be joined to the HASI call. The conference call will also be accessible as an audio webcast with slides on our website. A replay after the event will be accessible as on-demand webcast on our website.

About HASI
HASI (NYSE: HASI) is a leading climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $10 billion in managed assets, our vision is that every investment improves our climate future. For more information, please visit hasi.com.

Forward-Looking Statements:
Some of the information contained in this press release is forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, we intend to identify forward-looking statements. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include those discussed under the caption “Risk Factors” included in our most recent Annual Report on Form 10-K as well as in other periodic reports that we file with the U.S. Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances, including, but not limited to, unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.
The Company has not provided GAAP guidance as forecasting a comparable GAAP financial measure, such as net income, would require that the Company apply the HLBV method to these investments. In order to forecast under the HLBV method, the Company would be required to make various assumptions related to expected changes in the net asset value of the various entities and how such changes would be allocated under HLBV. GAAP HLBV earnings over a period of time are very sensitive to these assumptions especially in regard to when a partnership transaction flips and thus the liquidation scenarios change materially. The Company believes that these assumptions would require unreasonable efforts to complete and if completed, the wide variation in projected GAAP earnings based upon a range of scenarios would not be meaningful to investors. Accordingly, the Company has not included a GAAP reconciliation table related to any distributable earnings guidance.
Estimated carbon savings are calculated using the estimated kilowatt hours, gallons of fuel oil, million British thermal units of natural gas and gallons of water saved as appropriate, for each project. The energy savings are converted into an estimate of metric tons of CO2 equivalent emissions based upon the project’s location and the corresponding emissions factor data from the U.S. Government and International Energy Agency. Portfolios of projects are represented on an aggregate basis.
Investor Contact:
Neha Gaddam

Media Contact:
Gil Jenkins

 For the Three Months Ended March 31,
Interest income$43,108 $30,242 
Rental income6,487 6,499 
Gain on sale of receivables and investments15,719 17,099 
Securitization income3,432 2,741 
Other income355 1,895 
Total revenue69,101 58,476 
Interest expense37,216 26,652 
Provision for loss on receivables1,883 621 
Compensation and benefits18,369 14,929 
General and administrative8,022 7,138 
Total expenses65,490 49,340 
Income before equity method investments3,611 9,136 
Income (loss) from equity method investments22,418 47,566 
Income (loss) before income taxes26,029 56,702 
Income tax (expense) benefit(1,431)(10,999)
Net income (loss) $24,598 $45,703 
Net income (loss) attributable to non-controlling interest holders
492 357 
Net income (loss) attributable to controlling stockholders$24,106 $45,346 
Basic earnings (loss) per common share$0.26 $0.53 
Diluted earnings (loss) per common share$0.26 $0.51 
Weighted average common shares outstanding—basic
91,102,374 85,583,152 
Weighted average common shares outstanding—diluted
94,129,174 89,052,167 

March 31, 2023December 31, 2022
Cash and cash equivalents$142,489 $155,714 
Equity method investments2,249,684 1,869,712 
Commercial receivables, net of allowance of $43 million and $41 million, respectively
1,962,793 1,887,483 
Government receivables97,968 102,511 
Receivables held-for-sale16,603 85,254 
Real estate352,227 353,000 
Investments10,499 10,200 
Securitization assets193,378 177,032 
Other assets114,229 119,242 
Total Assets$5,139,870 $4,760,148 
Liabilities and Stockholders’ Equity
Accounts payable, accrued expenses and other$120,968 $120,114 
Credit facilities358,728 50,698 
Green commercial paper notes99,899 192 
Term loan facility380,102 379,742 
Non-recourse debt (secured by assets of $602 million and $632 million, respectively)
395,002 432,756 
Senior unsecured notes1,779,749 1,767,647 
Convertible notes346,607 344,253 
Total Liabilities3,481,055 3,095,402 
Stockholders’ Equity:
Preferred stock, par value $0.01 per share, 50,000,000 shares authorized, no shares issued and outstanding— — 
Common stock, par value $0.01 per share, 450,000,000 shares authorized, 91,657,822 and 90,837,008 shares issued and outstanding, respectively
917 908 
Additional paid in capital1,946,904 1,924,200 
Accumulated deficit(297,708)(285,474)
Accumulated other comprehensive income (loss)(32,820)(10,397)
Non-controlling interest
41,522 35,509 
Total Stockholders’ Equity1,658,815 1,664,746 
Total Liabilities and Stockholders’ Equity$5,139,870 $4,760,148 

 Three Months Ended March 31,
Cash flows from operating activities
Net income (loss)$24,598 $45,703 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loss on receivables1,883 621 
Depreciation and amortization926 987 
Amortization of financing costs3,250 2,716 
Equity-based compensation7,898 3,540 
Equity method investments(11,415)(38,564)
Non-cash gain on securitization
(Gain) loss on sale of receivables and investments1,305 29 
Changes in receivables held-for-sale37,249 (43,482)
Changes in accounts payable and accrued expenses936 11,709 
Change in accrued interest on receivables and investments(12,231)(2,925)
Other1,287 (7,745)
Net cash provided by (used in) operating activities48,804 (31,943)
Cash flows from investing activities
Equity method investments(362,831)(78,717)
Equity method investment distributions received1,469 4,217 
Proceeds from sales of equity method investments— 1,700 
Purchases of and investments in receivables(96,842)(35,018)
Principal collections from receivables22,741 19,850 
Proceeds from sales of receivables7,634 — 
Purchases of real estate— (4,550)
Posting of hedge collateral (20,350)— 
Net cash provided by (used in) investing activities(448,727)(95,493)

 Three Months Ended March 31,
Cash flows from financing activities
Proceeds from credit facilities312,000 — 
Principal payments on credit facilities(5,000)— 
Proceeds from issuance of commercial paper notes100,000 25,000 
Principal payments on non-recourse debt
Net proceeds of common stock issuances23,256 50,011 
Payments of dividends and distributions(35,142)(31,810)
Withholdings on employee share vesting(1,317)(2,211)
Payment of financing costs— (3,421)
Net cash provided by (used in) financing activities388,154 31,531 
Increase (decrease) in cash, cash equivalents, and restricted cash(11,769)(95,905)
Cash, cash equivalents, and restricted cash at beginning of period175,972 251,073 
Cash, cash equivalents, and restricted cash at end of period$164,203 $155,168 
Interest paid$20,343 $13,145 
Supplemental disclosure of non-cash activity
Residual assets retained from securitization transactions$5,330 $4,532 
Issuance of common stock from conversion of Convertible Notes— 7,674 
Deconsolidation of non-recourse debt32,923 — 
Deconsolidation of assets pledged for non-recourse debt31,371 — 

Non-GAAP Financial Measures
Distributable Earnings
We calculate distributable earnings as GAAP net income (loss) excluding non-cash equity compensation expense, provisions for loss on receivables, amortization of intangibles, non-cash provision (benefit) for taxes, losses or (gains) from modification or extinguishment of debt facilities, any one-time acquisition related costs or non-cash tax charges and the earnings attributable to our non-controlling interest of Hannon Armstrong Sustainable Infrastructure, L.P., a Delaware limited partnership (our “Operating Partnership”). We also make an adjustment to our equity method investments in the renewable energy projects as described below. We will use judgment in determining when we will reflect the losses on receivables in our distributable earnings, and will consider certain circumstances such as the time period in default, sufficiency of collateral as well as the outcomes of any related litigation. In the future, distributable earnings may also exclude one-time events pursuant to changes in GAAP and certain other adjustments as approved by a majority of our independent directors.
We believe a non-GAAP measure, such as distributable earnings, that adjusts for the items discussed above is and has been a meaningful indicator of our economic performance in any one period and is useful to our investors as well as management in evaluating our performance as it

relates to expected dividend payments over time. As a REIT, we are required to distribute substantially all of our taxable income to investors in the form of dividends, which is a principal focus of our investors. Additionally, we believe that our investors also use distributable earnings, or a comparable supplemental performance measure, to evaluate and compare our performance to that of our peers, and as such, we believe that the disclosure of distributable earnings is useful to our investors.
Certain of our equity method investments in renewable energy and energy efficiency projects are structured using typical partnership “flip” structures where the investors with cash distribution preferences receive a pre-negotiated return consisting of priority distributions from the project cash flows, in many cases, along with tax attributes. Once this preferred return is achieved, the partnership “flips” and the common equity investor, often the operator or sponsor of the project, receives more of the cash flows through its equity interests while the previously preferred investors retain an ongoing residual interest. We have made investments in both the preferred and common equity of these structures. Regardless of the nature of our equity interest, we typically negotiate the purchase prices of our equity investments, which have a finite expected life, based on our underwritten project cash flows discounted back to the net present value, based on a target investment rate, with the cash flows to be received in the future reflecting both a return on the capital (at the investment rate) and a return of the capital we have committed to the project. We use a similar approach in the underwriting of our receivables.
Under GAAP, we account for these equity method investments utilizing the HLBV method. Under this method, we recognize income or loss based on the change in the amount each partner would receive, typically based on the negotiated profit and loss allocation, if the assets were liquidated at book value, after adjusting for any distributions or contributions made during such quarter. The HLBV allocations of income or loss may be impacted by the receipt of tax attributes, as tax equity investors are allocated losses in proportion to the tax benefits received, while the sponsors of the project are allocated gains of a similar amount. The investment tax credit available for election in solar projects is a one-time credit realized in the quarter when the project is considered operational for tax purposes and is fully allocated under HLBV in that quarter (subject to an impairment test), while the production tax credit required for wind projects and electable for solar projects is a ten year credit and thus is allocated under HLBV over a ten year period. In addition, the agreed upon allocations of the project’s cash flows may differ materially from the profit and loss allocation used for the HLBV calculations in a given period. We also consider the impact of any OTTI in determining our income from equity method investments.
The cash distributions for those equity method investments where we apply HLBV are segregated into a return on and return of capital on our cash flow statement based on the cumulative income (loss) that has been allocated using the HLBV method. However, as a result of the application of the HLBV method, including the impact of tax allocations, the high levels of depreciation and other non-cash expenses that are common to renewable energy projects and the differences between the agreed upon profit and loss and the cash flow allocations, the distributions and thus the economic returns (i.e. return on capital) achieved from the investment are often significantly different from the income or loss that is allocated to us under the HLBV method in any one period. Thus, in calculating distributable earnings, for certain of these investments where there are characteristics as described above, we further adjust GAAP net

income (loss) to take into account our calculation of the return on capital (based upon the underwritten investment rate) from our renewable energy equity method investments, as adjusted to reflect the performance of the project and the cash distributed. We believe this equity method investment adjustment to our GAAP net income (loss) in calculating our distributable earnings measure is an important supplement to the HLBV income allocations determined under GAAP for an investor to understand the economic performance of these investments where HLBV income can differ substantially from the economic returns in any one period.

We have acquired equity investments in portfolios of renewable energy projects which have the majority of the distributions payable to more senior investors in the first few years of the project. The following table provides our results related to our equity method investments for the three months ended March 31, 2023 and 2022.
Three Months Ended
March 31,
(in millions)
Income (loss) under GAAP$22 $48 
Collections of Distributable earnings$$
Return of capital
Cash collected $12 $13 
Distributable earnings does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), or an indication of our cash flow from operating activities (determined in accordance with GAAP), or a measure of our liquidity, or an indication of funds available to fund our cash needs, including our ability to make cash distributions. In addition, our methodology for calculating distributable earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported distributable earnings may not be comparable to similar metrics reported by other companies.
Reconciliation of our GAAP Net Income to Distributable Earnings
We have calculated our distributable earnings and provided a reconciliation of our GAAP net income to distributable earnings for the three months ended March 31, 2023 and 2022 in the tables below.

For the three months ended March 31, 2023For the three months ended March 31, 2022
(dollars in thousands, except per share amounts)
$per share$per share
Net income attributable to controlling stockholders (1)
$24,106 $0.26 $45,346 $0.51 
Distributable earnings adjustments:
Reverse GAAP (income) loss from equity method investments(22,418)(47,566)
Add equity method investments earnings 33,957 31,598 
Equity-based expense9,435 3,540 
Provision for loss on receivables1,883 621 
Other adjustments (2)
2,695 12,195 
Distributable earnings (3)
$49,658 $0.53 $45,734 $0.52 
(1)The per share amounts represent GAAP diluted earnings per share and is the most comparable GAAP measure to our distributable earnings per share.
(2)See Other adjustments table below.
(3)Distributable earnings per share for the three months ended March 31, 2023 and 2022, are based on 93,266,916 shares and 87,206,540 shares outstanding, respectively, which represents the weighted average number of fully-diluted shares outstanding including our restricted stock awards, restricted stock units, long-term incentive plan units, and the non-controlling interest in our Operating Partnership. We include any potential common stock issuances related to share based compensation units in the amount we believe is reasonably certain to vest. As it relates to Convertible Notes, we will assess the market characteristics around the instrument to determine if it is more akin to debt or equity based on the value of the underlying shares upon conversion. If the instrument is more debt-like then we will include any related interest expense and exclude the underlying shares issuable upon conversion of the instrument. If the instrument is more equity-like and is more dilutive when treated as equity then we will exclude any related interest expense and include the weighted average shares underlying the instrument.

The table below provides a reconciliation of the Other adjustments:
For the Three Months Ended March 31,
(in thousands)
Other adjustments
Amortization of intangibles (1)
$772 $839 
Non-cash provision (benefit) for income taxes1,431 10,999 
Net income attributable to non-controlling interest492 357 
Other adjustments$2,695 $12,195 
(1)Adds back non-cash amortization of lease and pre-IPO intangibles.

The table below provides a reconciliation of GAAP SG&A expenses to Distributable SG&A expenses:
For the Three Months Ended March 31,
(in thousands)
GAAP SG&A expenses
Compensation and benefits$18,369 $14,929 
General and administrative8,022 7,138 
Total SG&A expenses (GAAP)$26,391 $22,067 
Distributable SG&A expenses adjustments:
Non-cash equity-based expenses (1)
Amortization of intangibles (2)
— (68)
Distributable SG&A expenses adjustments(9,435)(3,608)
Distributable SG&A expenses$16,956 $18,459 
(1)Reflects add back of non-cash amortization of equity-based expenses. Outstanding grants related to equity-based expenses are included in the distributable earnings per share calculation.
Adds back non-cash amortization of pre-IPO intangibles.

Distributable Net Investment Income

We have a portfolio of debt and equity investments in climate change solutions. We calculate distributable net investment income by adjusting GAAP-based net investment income for those distributable earnings adjustments described above which impact investment income. We believe that this measure is useful to investors as it shows the recurring income generated by our Portfolio after the associated interest cost of debt financing. Our management also uses distributable net investment income in this way. Our non-GAAP distributable net investment income measure may not be comparable to similarly titled measures used by other companies. The following is a reconciliation of our GAAP-based net investment income to our distributable net investment income:
Three months ended March 31,
(in thousands)
Interest income$43,108 $30,242 
Rental income6,487 6,499 
GAAP-based investment revenue49,595 36,741 
Interest expense37,216 26,652 
GAAP-based net investment income12,379 10,089 
Equity method earnings adjustment (1)
33,957 31,598 
Amortization of real estate intangibles (2)
772 771 
Distributable net investment income$47,108 $42,458 

(1)     Reflects adjustment for equity method investments described above.

(2)    Adds back non-cash amortization related to acquired real estate leases.

Managed Assets

As we both consolidate assets on our balance sheet and securitize assets, certain of our receivables and other assets are not reflected on our balance sheet where we may have a residual interest in the performance of the investment, such as servicing rights or a retained interest in cash flows. Thus, we present our investments on a non-GAAP “managed” basis, which assumes that securitized receivables are not sold. We believe that our Managed Asset information is useful to investors because it portrays the amount of both on- and off-balance sheet receivables that we manage, which enables investors to understand and evaluate the credit performance associated with our portfolio of receivables, investments, and residual assets in securitized receivables. Our non-GAAP Managed Assets measure may not be comparable to similarly titled measures used by other companies.

The following is a reconciliation of our GAAP-based Portfolio to our Managed Assets as of March 31, 2023 and December 31, 2022:
 As of
 March 31, 2023December 31, 2022
 (dollars in millions)
Equity method investments$2,250 $1,870 
Commercial receivables, net of allowance1,963 1,887 
Government receivables98 103 
Receivables held-for-sale17 85 
Real estate352 353 
Investments10 10 
GAAP-Based Portfolio4,690 4,308 
Assets held in securitization trusts5,686 5,486 
Managed assets$10,376 $9,794