Hannon Armstrong Sustainable Infrastructure Capital, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

Our Portfolio (Tables)

9 Months Ended

Sep. 30, 2019

Analysis of Portfolio by Type of Obligor and Credit Quality

The following is an analysis of our Portfolio as of September 30, 2019:



	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	$	—		$	—		$	—		$	—		$	427	$	427
Receivables ⁽⁴⁾	300			158			517			975			—		975
Real estate ⁽⁵⁾	—			363			—			363			22		385
Investments	34			79			—			113			—		113
Total	$	334		$	600		$	517		$	1,451		$	449	$	1,900
% of Debt and real estate portfolio	23		%	41		%	36		%	100		%	N/A		N/A
Average remaining balance ⁽⁶⁾	$	8		$	6		$	16		$	8		$	15	$	9

(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 $223 million of U.S. federal government transactions and $111 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, $8 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 $445 million of mezzanine loans made 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. Approximately $260 million of our non-investment grade loans were made to entities in which we also have non-controlling equity investments of approximately $19 million. Commercial Non-Investment Grade receivables also includes $72 million of transactions where the projects or the ultimate obligors are commercial entities that have ratings below investment grade using our internal credit analysis. $8 million of loans are on non-accrual status and are fully reserved for loss. 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 175 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $60 million.

Schedule of Equity Method Investments

As of September 30, 2019, we held the following equity method investments:



Investment Date	Investee	Carrying Value
		(in millions)
Various	2007 Vento I, LLC	$	81
December 2015	Buckeye Wind Energy Class B Holdings, LLC	73
Various	Vivint Solar Asset 1 Class B, LLC	50
Various	Northern Frontier Wind, LLC	45
December 2018	3D Engie, LLC	39
October 2016	Invenergy Gunsight Mountain Holdings, LLC	35
Various	Helix Fund I, LLC	26
Various	Other transactions	100
	Total equity method investments	$	449

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			Other Investments ⁽¹⁾			Total
	(in millions)
Balance Sheet
As of June 30, 2019
Current assets	$	3		$	332		$	335
Total assets	271			4,085			4,356
Current liabilities	1			187			188
Total liabilities	12			1,416			1,428
Members' equity	259			2,669			2,928
As of December 31, 2018
Current assets	4			228			232
Total assets	276			3,903			4,179
Current liabilities	1			163			164
Total liabilities	12			1,204			1,216
Members' equity	264			2,699			2,963
Income Statement
For the six months ended June 30, 2019
Revenue	7			179			186
Income from continuing operations	(2		)	(18		)	(20		)
Net income	(2		)	(18		)	(20		)
For the six months ended June 30, 2018
Revenue	7			131			138
Income from continuing operations	(2		)	32			30
Net income	(2		)	32			30

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

Summary of Anticipated Maturity Dates of Financing 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 September 30, 2019:



	Total			Less than 1 year			1-5 years			5-10 years			More than 10 years
	(dollars in millions)
Receivables
Maturities by period	$	975		$	3		$	62		$	187		$	723
Weighted average yield by period	7.8		%	4.8		%	7.3		%	7.5		%	7.9		%
Investments
Maturities by period	$	113		$	—		$	—		$	12		$	101
Weighted average yield by period	4.6		%	—		%	—		%	4.1		%	4.7		%

Components of Real Estate Portfolio

The components of our real estate portfolio as of September 30, 2019 and December 31, 2018, were as follows:



	September 30, 2019			December 31, 2018
	(in millions)
Real estate
Land	$	269		$	269
Lease intangibles	104			104
Accumulated amortization of lease intangibles	(10		)	(8		)
Real estate	$	363		$	365

Schedule of Minimum Rental Income Payments

As of September 30, 2019, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:



	Future Amortization Expense		Minimum Rental Income Payments
	(in millions)
From October 1, 2019 to December 31, 2019	$	1	$	5
2020	3		22
2021	3		22
2022	3		22
2023	3		23
2024	3		24
Thereafter	78		765
Total	$	94	$	883

Schedule of Future Amortization Expense of Intangible Assets

As of September 30, 2019, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:



	Future Amortization Expense		Minimum Rental Income Payments
	(in millions)
From October 1, 2019 to December 31, 2019	$	1	$	5
2020	3		22
2021	3		22
2022	3		22
2023	3		23
2024	3		24
Thereafter	78		765
Total	$	94	$	883