Annual report pursuant to Section 13 and 15(d)

Our Portfolio (Tables)

v3.22.0.1
Our Portfolio (Tables)
 12 Months Ended
Dec. 31, 2021
Investments [Abstract]  
Schedule of Analysis of Portfolio Performance Ratings
The following is an analysis of the Performance Ratings of our Portfolio as of December 31, 2021, which is assessed quarterly:

Portfolio Performance
Government Commercial
1 (1)
1 (1)
2 (2)
3 (3)
Total
Receivable vintage (dollars in millions)
2021 $ —  $ 295  $ —  $ —  $ 295 
2020 —  200  —  —  200 
2019 —  454  2  —  456 
2018 —  263  —  —  263 
2017 31  1  9  —  41 
Prior to 2017 94  103  —  8  205 
Total receivables held-for-investment 125  1,316  11  8  1,460 
Less: Allowance for loss on receivables
 —  (25) (3) (8) (36)
Net receivables held-for-investment (4)
125  1,291  8  —  1,424 
Receivables held-for-sale —  22  —  —  22 
Investments 11  7  —  —  18 
Real estate —  356  —  —  356 
Equity method investments (5)
—  1,726  34  —  1,760 
Total
 $ 136  $ 3,402  $ 42  $ —  $ 3,580 
Percent of Portfolio 4  % 95  % 1  % —  % 100  %
Average remaining balance (6)
$ 6  $ 13  $ 11  $ 4  $ 12 
(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 December 31, 2021 which we have held on non-accrual status since 2017. We expect to continue to pursue our legal claims with regards to these assets. This category previously contained an equity method investment in a wind project with no book value due to our allocation of impairment losses recorded by the project sponsor. We sold this equity method investment in the third quarter for nominal proceeds.
(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 174 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $84 million.
Schedule of Carrying Value, Expected Loan Funding Commitments, and Allowance by Type of Receivable Below is a summary of the carrying value, expected loan funding commitments, and allowance by type of receivable or “Portfolio Segment,” as defined by Topic 326, as of December 31, 2021 and 2020:
December 31, 2021 December 31, 2020
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
$ 1,335  $ 184  $ 36  $ 1,002  $ 282  $ 36 
Government (2)
125  —  —  248  —  — 
Total $ 1,460  $ 184  $ 36  $ 1,250  $ 282  $ 36 

(1)As of December 31, 2021, this category of assets include $776 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 $684 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $108 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 climate solutions 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 $11 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 $25 million allowance on these $1.3 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of December 31, 2021, our government receivables include $28 million of U.S. federal government transactions and $97 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.

The following table reconciles our beginning and ending allowance for loss on receivables by Portfolio Segment for the year ended December 31, 2021:
Commercial Government
(in millions)
Beginning balance - January 1, 2020 (1)
$ 26  $ — 
Provision for loss on receivables 10  — 
Ending balance - December 31, 2020 36  — 
Provision for loss on receivables —  — 
Ending balance - December 31, 2021 $ 36  $ — 
(1)Balance as of the adoption of Topic 326, which includes the pre-tax allowance for loss on receivables of $17 million recorded upon adoption which reflects our estimated loss as of that date under the new standard as well as the $8 million of receivables which were previously on non-accrual status and fully reserved.
Schedule 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 the weighted average yield for each range of maturities as of December 31, 2021:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 1,460  $ 49  $ 49  $ 538  $ 824 
Weighted average yield by period 8.1  % 7.4  % 5.8  % 8.2  % 8.2  %
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 December 31, 2021:
Total Less than 1 year 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 18  $ —  $ —  $ —  $ 18 
Weighted average yield by period 4.1  % —  % —  % —  % 4.1  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio as of December 31, 2021 and 2020, were as follows:
December 31,
2021 2020
  (in millions)
Real estate
Land $ 269  $ 269 
Lease intangibles 104  104 
Accumulated amortization of lease intangibles (17) (14)
Real estate $ 356  $ 359 
Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements
As of December 31, 2021, 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)
2022 $ 3  $ 22 
2023 3  24 
2024 3  24 
2025 3  24 
2026 3  24 
Thereafter 72  723 
Total $ 87  $ 841 
Schedule of Equity Method Investments As of December 31, 2021, we held the following equity method investments:
Investment Date Investee Carrying Value
    (in millions)
Various Jupiter Equity Holdings, LLC $ 540 
December 2020
Lighthouse Partnerships (1)
390 
March 2020 University of Iowa Energy Collaborative Holdings LLC 123 
Various Other investees 707 
Total equity method investments $ 1,760 
(1)Represents the total of three equity investments in a portfolio of a renewable energy projects discussed below.
The following is a summary of the consolidated balance sheets and income statements of the entities in which we have a significant equity method investment. These amounts are presented on the underlying investees’ accounting basis. In certain instances, adjustment to these equity values may be necessary in order to reflect our basis in these investments. As described in Note 2, any difference between the amount of our investment and the amount of our share of underlying equity is generally amortized over the life of the assets and liabilities to which the differences relate.
Vivint Solar Asset 3 Borrower, LLC
Rosie Targetco, LLC
Other Investments (1)
Total
Balance Sheet in millions
As of September 30, 2021
Current assets $ 20  $ 13  $ 754  $ 787 
Total assets 406  282  11,188  11,876 
Current liabilities 16  5  741  762 
Total liabilities 383  101  4,558  5,042 
Members’ equity 23  181  6,630  6,834 
As of December 31, 2020
Current assets 86  25  671  782 
Total assets 303  299  9,637  10,239 
Current liabilities 3  19  631  653 
Total liabilities 139  118  3,845  4,102 
Members’ equity 164  181  5,792  6,137 
Income Statement
For the nine months ended September 30, 2021
Revenue 20  11  65  96 
Income from continuing operations 3  (2) (493) (492)
Net income 3  (2) (493) (492)
For the year ended December 31, 2020
Revenue 2  1  367  370 
Income from continuing operations (2) (5) (232) (239)
Net income (2) (5) (232) (239)
For the year ended December 31, 2019
Revenue —  —  273  273 
Income from continuing operations —  —  (97) (97)
Net income —  —  (97) (97)
(1)Represents aggregated financial statement information for investments not separately presented.