Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.20.2
Our Portfolio (Tables)
 6 Months Ended
Jun. 30, 2020
Investments [Abstract]  
Analysis of Portfolio by Type of Obligor and Credit Quality
The following is an analysis of the Performance Ratings of our Portfolio as of June 30, 2020, which is assessed quarterly:
Portfolio Performance
1 (1)
2 (2)
3 (3)
Total
Government Commercial Government Commercial Government Commercial
Receivable vintage (dollars in millions)
2020 $ —    $ 80    $ —    $ —    $ —    $ —    $ 80   
2019 2    400    —    2    —    —    404   
2018 —    264    —    —    —    —    264   
2017 40    1    —    8    —    —    49   
2016 69    61    —    —    —    —    130   
2015 90    —    —    —    —    —    90   
Prior to 2015
 56    47    —    —    —    8    111   
Total receivables 257    853    —    10    —    8    1,128   
Less: Allowance for loss on receivables
 —    (18)   —    (3)   —    (8)   (29)  
Net receivables (4)
257    835    —    7    —    —    1,099   
Investments 35    11    —    —    —    —    46   
Real estate —    361    —    —    —    —    361   
Equity method investments (5)
—    532    —    24    —    —    556   
Total
 $ 292    $ 1,739    $ —    $ 31    $ —    $ —    $ 2,062   
Percent of Portfolio 14  % 84  % —  % 2  % —  % —  % 100  %
Average remaining balance (6)
$ 7    $ 11    $ —    $ 11    $ —    $ 4    $ 10   
(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 to 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. Included in this category are two commercial receivables with a combined total carrying value of approximately $8 million as of June 30, 2020 which we consider impaired and have held on non-accrual status since 2017. We recorded an allowance for the entire asset amounts as described in our 2019 Form 10-K. We expect to continue to pursue our legal claims with regards to these assets.
(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. 
(6)Average remaining balance is calculated gross of allowance for loss on receivables and excludes approximately 130 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $49 million.
Financing Receivable, Allowance for Credit Loss
Below is a summary of the carrying value and allowance by type of receivable or "Portfolio Segment", as defined by Topic 326, as of June 30, 2020 and January 1, 2020:
June 30, 2020 January 1, 2020
Carrying Value Allowance Carrying Value Allowance
(in millions)
Government (1)
$ 256    $ —    $ 270    $ —   
Commercial (2)
843    29    892    26   
Total $ 1,099    29    $ 1,162    26   
(1)As of June 30, 2020, our government receivables include $146 million of U.S. federal government transactions and $110 million of transactions where the ultimate obligors are state or local governments.
Risk characteristics of our government receivables include the energy savings or the power output of the projects and the ability of the government obligor to generate revenue for debt service, via taxation or other means. Transactions may have guarantees of energy savings or other performance support from third-party service providers, which typically are entities, directly or whose ultimate parent entity is, rated investment grade by an independent rating agency. All of our government receivables are included in Performance Rating 1 in the Portfolio Performance table above. Our allowance for government receivables is primarily calculated by using PD/LGD methods as discussed in Note 2. Our expectation of credit losses for these receivables is immaterial given the high credit-quality of the obligors.
(2)As of June 30, 2020, this category of assets includes $461 million of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies which are secured by residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. Approximately $371 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $12 million. This total also includes $48 million of lease agreements where we hold legal title to the underlying real estate which are treated under GAAP as receivables since they were deemed to be failed sale/leaseback transactions as described in Note 2.
Risk characteristics of our commercial receivables include a project’s operating risks, which include the impact of the overall economic environment, the sustainable infrastructure sector, the effect of local, industry, and broader economic factors, the impact of any variation in weather and trends in interest rates. We use assumptions related to these risks to estimate an allowance using a discounted cash flow analysis or the PD/LGD method as discussed in Note 2. All of our commercial receivables are included in Performance Rating 1 in the Portfolio Performance table above, except for $10 million of receivables included in Performance Category 2 and the $8 million of receivables we have placed on non-accrual status which are included in Performance Rating 3. For those assets in Performance Rating 1, the credit worthiness of the obligor combined with the various structural protections of our assets cause us to believe we have a low risk we will not receive our invested capital, however we recorded a $18 million allowance on these $853 million in assets as a result of lower probability assumptions utilized in our allowance methodology.
The following table reconciles our allowance for loss on receivables by Portfolio Segment:


Three months ended June 30, 2020 Six months ended June 30, 2020
Government Commercial Government Commercial
(in millions)
Beginning balance $ —    $ 26    $ —    $ 26   
Provision for loss on receivables —    3    —    3   
Ending balance $ —    $ 29    $ —    $ 29   
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 the weighted average yield for each range of maturities as of June 30, 2020:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 1,128    $ 1    $ 174    $ 309    $ 644   
Weighted average yield by period 8.1  % 4.3  % 7.1  % 8.9  % 7.6  %
Investments
The following table provides a summary of our anticipated maturity dates of our investments and the weighted average yield for each range of maturities as of June 30, 2020:
 
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 46    $ —    $ —    $ —    $ 46   
Weighted average yield by period 3.9  % —  % —  % —  % 3.9  %
Components of Real Estate Portfolio The components of our real estate portfolio as of June 30, 2020 and December 31, 2019, were as follows: 
June 30, 2020 December 31, 2019
  (in millions)
Real estate
Land $ 269    $ 269   
Lease intangibles 104    104   
Accumulated amortization of lease intangibles (12)   (11)  
Real estate $ 361    $ 362   
Schedule of Future Amortization Expense of Intangible Assets
As of June 30, 2020, 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 July 1, 2020 to December 31, 2020 $ 2    $ 11   
2021 3    22   
2022 3    22   
2023 3    23   
2024 3    24   
2025 3    24   
Thereafter 75    741   
Total $ 92    $ 867   
Schedule of Equity Method Investments As of June 30, 2020, we held the following equity method investments:  
Investment Date Investee Carrying Value
    (in millions)
March 2020 University of Iowa Energy Collaborative Holdings LLC $ 115   
Various 2007 Vento I, LLC 75   
December 2015 Buckeye Wind Energy Class B Holdings, LLC 71   
Various Vivint Solar Asset 1 Class B, LLC 62   
Various Vivint Solar Asset 2 Class B, LLC 59   
October 2016 Invenergy Gunsight Mountain Holdings, LLC 33   
Various Other investees 141   
Total equity method investments $ 556   
The following is a summary of the consolidated financial position and results of operations of the significant entities accounted for using the equity method.

Vivint Solar Asset 2 Class B, LLC
Other Investments (1)
Total
(in millions)
Balance Sheet
As of March 31, 2020
Current assets $ 31    $ 415    $ 446   
Total assets 230    4,089    4,319   
Current liabilities 2    176    178   
Total liabilities 115    1,983    2,098   
Members' equity 115    2,106    2,221   
As of December 31, 2019
Current assets 46    307    353   
Total assets 183    3,944    4,127   
Current liabilities 1    218    219   
Total liabilities 81    1,780    1,861   
Members' equity 102    2,164    2,266   
Income Statement
For the three months ended March 31, 2020
Revenue 3    78    81   
Income (loss) from continuing operations —    (7)   (7)  
Net income (loss) —    (7)   (7)  
For the three months ended March 31, 2019
Revenue —    58    58   
Income from continuing operations (loss) —    (1)   (1)  
Net income (loss) —    (1)   (1)  

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