HA Sustainable Infrastructure Capital, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Our Portfolio (Tables)

Our Portfolio (Tables)

12 Months Ended

Dec. 31, 2018

Analysis of Portfolio by Type of Obligor and Credit Quality

The following is an analysis of our Portfolio as of December 31, 2018:



	Investment Grade
	Government ⁽¹⁾			Commercial Investment Grade ⁽²⁾			Commercial Non-Investment Grade ⁽³⁾			Subtotal, Debt and Real Estate			Equity Method Investments		Total
	(dollars in millions)
Equity investments in renewable energy projects	$	—		$	—		$	—		$	—		$	449	$	449
Receivables ⁽⁴⁾	498			148			299			945			—		945
Real estate ⁽⁵⁾	—			365			—			365			22		387
Investments	102			68			—			170			—		170
Total	$	600		$	581		$	299		$	1,480		$	471	$	1,951
% of Debt and real estate portfolio	41		%	39		%	20		%	100		%	N/A		N/A
Average remaining balance ⁽⁶⁾	$	12		$	6		$	14		$	9		$	16	$	10

(1)

Transactions where the ultimate obligor is the U.S. federal government or state or local governments where the obligors are rated investment grade (either by an independent rating agency or based upon our internal credit analysis). This amount includes $384 million of U.S. federal government transactions and $216 million of transactions where the ultimate obligors are state or local governments. Transactions may have guaranties of energy savings from third party service providers, which typically are entities rated investment grade by an independent rating agency.


(2)	Transactions where the projects or the ultimate obligors are commercial entities that have been rated investment grade (either by an independent rating agency or based on our internal credit analysis). Of this total, $9 million of the transactions have been rated investment grade by an independent rating agency.

(3)

Transactions where the projects or the ultimate obligors are commercial entities that either have ratings below investment grade (either by an independent rating agency or using our internal credit analysis) or where the nature of the subordination in the asset causes it to be considered non-investment grade. This category of assets includes $273 million of mezzanine loans made in 2018 on a non-recourse basis to special purpose subsidiaries of residential solar companies where the nature of the subordination causes it to be considered non-investment grade. These loans are secured by residential solar assets and we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. This amount also includes $18 million of transactions made in 2018 where the projects or the ultimate obligors are commercial entities that have ratings below investment grade using our internal credit analysis, and $8 million of loans on non-accrual status. See Receivables and Investments below for further information.


(4)	Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets.


(5)	Includes the real estate and the lease intangible assets (including those held through equity method investments) from which we receive scheduled lease payments, typically under long-term triple net lease agreements.


(6)	Excludes approximately 170 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $64 million.

Schedule of Equity Method Investments

As of December 31, 2018, we held the following equity method investments:



Investment Date	Investee	Carrying Value
		(in millions)
Various	2007 Vento I, LLC	$	92
Various	Northern Frontier Wind, LLC	75
December 2015	Buckeye Wind Energy Class B Holdings, LLC	72
December 2018	3D Engie, LLC	49
October 2016	Invenergy Gunsight Mountain Holdings, LLC	37
Various	Helix Fund I, LLC	26
Various	Other transactions	120
	Total equity method investments	$	471

The following is a summary of the consolidated financial position and results of operations of the significant entities accounted for using the equity method.



	Buckeye Wind Energy Class B Holdings, LLC			MM Solar Parent LLC		Helix Fund I, LLC		Other investments ⁽¹⁾			Total

Balance Sheet
As of September 30, 2018
Current assets	$	4		$	4	$	1	$	248		$	257
Total assets	280			84		27		3,713			4,104
Current liabilities	3			5		—		108			116
Total liabilities	13			33		—		955			1,001
Members’ equity	267			51		27		2,758			3,103
As of December 31, 2017
Current assets	3			3		1		130			137
Total assets	286			85		28		2,866			3,265
Current liabilities	1			5		—		70			76
Total liabilities	11			36		—		319			366
Members’ equity	275			49		28		2,547			2,899
Income Statement
For the nine months ended September 30, 2018
Revenue	10			8		2		197			217
Income from continuing operations	(5		)	4		1		19			19
Net income	(5		)	4		1		19			19
For the year ended December 31, 2017
Revenue	12			11		2		248			273
Income from continuing operations	(8		)	4		1		(49		)	(52		)
Net income	(8		)	4		1		(49		)	(52		)
For the year ended December 31, 2016
Revenue	13			12		—		283			308
Income from continuing operations	(6		)	5		—		23			22
Net income	(6		)	5		—		23			22


(1)	Represents aggregated financial statement information for investments not separately presented.

Summary of Anticipated Maturity Dates of Receivables and Investments and Weighted Average Yield

The following table provides a summary of our anticipated maturity dates of our receivables and investments and the weighted average yield for each range of maturities as of December 31, 2018:



	Total			Less than 1 year			1-5 years			5-10 years			More than 10 years
	(dollars in millions)
Receivables
Maturities by period	$	945		$	1		$	17		$	57		$	870
Weighted average yield by period	6.6		%	3.4		%	6.0		%	4.8		%	6.7		%
Investments
Maturities by period	$	170		$	64		$	—		$	13		$	93
Weighted average yield by period	4.2		%	3.6		%	—		%	4.1		%	4.7		%

Components of Real Estate Portfolio

The components of our real estate portfolio as of December 31, 2018 and 2017, were as follows:



	December 31,
	2018			2017
	(in millions)
Real estate
Land	$	269		$	247
Lease intangibles	104			99
Accumulated amortization of lease intangibles	(8		)	(5		)
Real estate	$	365		$	341

Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements

As of December 31, 2018, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:



Year Ending December 31,	Future Amortization Expense		Minimum Rental Payments
	(in millions)
2019	$	3	$	22
2020	3		22
2021	3		22
2022	3		22
2023	3		23
Thereafter	81		788
Total	$	96	$	899

Summary of Outstanding Deferred Funding Obligations to be Paid

The outstanding deferred funding obligations to be paid are as follows:



Year Ending December 31,	Future Payments
	(in millions)
2019	$	51
2020	16
2021	5
Total	$	72