Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.20.2
Our Portfolio (Tables)
 9 Months Ended
Sep. 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 September 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 $ —  $ 85  $ —  $ —  $ —  $ —  $ 85 
2019 2  399  —  2  —  —  403 
2018 —  270  —  —  —  —  270 
2017 38  1  —  8  —  —  47 
2016 68  60  —  —  —  —  128 
2015 88  —  —  —  —  —  88 
Prior to 2015
 55  47  —  —  —  8  110 
Total receivables 251  862  —  10  —  8  1,131 
Less: Allowance for loss on receivables
 —  (19) —  (4) —  (8) (31)
Net receivables (4)
251  843  —  6  —  —  1,100 
Investments 36  16  —  —  —  —  52 
Real estate —  360  —  —  —  —  360 
Equity method investments (5)
—  695  —  24  —  —  719 
Total
 $ 287  $ 1,914  $ —  $ 30  $ —  $ —  $ 2,231 
Percent of Portfolio 13  % 86  % —  % 1  % —  % —  % 100  %
Average remaining balance (6)
$ 7  $ 12  $ —  $ 11  $ —  $ 4  $ 11 
(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 September 30, 2020 which we 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 145 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $58 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 September 30, 2020 and January 1, 2020:
September 30, 2020 January 1, 2020
Carrying Value Allowance Carrying Value Allowance
(in millions)
Government (1)
$ 251  $ —  $ 263  $ — 
Commercial (2)
880  31  904  26 
Total $ 1,131  31  $ 1,167  26 
(1)As of September 30, 2020, our government receivables include $145 million of U.S. federal government transactions and $106 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 September 30, 2020, this category of assets includes $469 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 $370 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $16 million. This total also includes $47 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 $19 million allowance on these $862 million in assets as a result of lower probability assumptions utilized in our allowance methodology.
The following table reconciles our beginning and ending allowance for loss on receivables by Portfolio Segment:
Three months ended September 30, 2020 Nine months ended September 30, 2020
Government Commercial Government Commercial
(in thousands)
Beginning balance $ —  $ 28,831  $ —  $ 25,660 
Provision for loss on receivables —  2,458  —  5,629 
Ending balance $ —  $ 31,289  $ —  $ 31,289 
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 September 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) $ 1,131  $ —  $ 176  $ 302  $ 653 
Weighted average yield by period 8.2  % —  % 7.2  % 9.1  % 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 September 30, 2020:
 
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 52  $ —  $ —  $ —  $ 52 
Weighted average yield by period 3.9  % —  % —  % —  % 3.9  %
Components of Real Estate Portfolio The components of our real estate portfolio as of September 30, 2020 and December 31, 2019, were as follows: 
September 30, 2020 December 31, 2019
  (in millions)
Real estate
Land $ 269  $ 269 
Lease intangibles 104  104 
Accumulated amortization of lease intangibles (13) (11)
Real estate $ 360  $ 362 
Schedule of Future Amortization Expense of Intangible Assets
As of September 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 October 1, 2020 to December 31, 2020 $ 1  $ 6 
2021 3  22 
2022 3  22 
2023 3  23 
2024 3  24 
2025 3  24 
Thereafter 75  740 
Total $ 91  $ 861 
Schedule of Equity Method Investments
As of September 30, 2020, we held the following equity method investments:  
Investment Date Investee Carrying Value
    (in millions)
July 2020 Jupiter Equity Holdings, LLC $ 152 
March 2020 University of Iowa Energy Collaborative Holdings LLC 116 
December 2015 Buckeye Wind Energy Class B Holdings, LLC 72 
Various 2007 Vento I, LLC 64 
Various Vivint Solar Asset 1 Class B, LLC 60 
Various Vivint Solar Asset 2 Class B, LLC 60 
October 2016 Invenergy Gunsight Mountain Holdings, LLC 33 
Various Other investees 162 
Total equity method investments $ 719 
The following is a summary of the consolidated financial position and results of operations of the significant entities accounted for using the equity method.

SunStrong Capital Holdings, LLC Vivint Solar Asset 2 Class B, LLC
Other Investments (1)
Total
(in millions)
Balance Sheet
As of June 30, 2020
Current assets $ 90  $ 8  $ 258  $ 356 
Total assets 1,415  244  4,829  6,488 
Current liabilities 48  2  251  301 
Total liabilities 1,134  138  1,673  2,945 
Members' equity 281  106  3,156  3,543 
As of December 31, 2019
Current assets 99  46  309  454 
Total assets 1,335  183  3,484  5,002 
Current liabilities 54  1  252  307 
Total liabilities 1,010  81  908  1,999 
Members' equity 325  102  2,576  3,003 
Income Statement
For the six months ended June 30, 2020
Revenue 61  8  125  194 
Income (loss) from continuing operations (4) 1  (15) (18)
Net income (loss) (4) 1  (15) (18)
For the six months ended June 30, 2019
Revenue 46  —  72  118 
Income from continuing operations (loss) (11) —  (15) (26)
Net income (loss) (11) —  (15) (26)

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