Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.22.2.2
Our Portfolio (Tables)
 9 Months Ended
Sep. 30, 2022
Investments [Abstract]  
Schedule of Analysis of Portfolio Performance Ratings
The following is an analysis of the Performance Ratings of our Portfolio as of September 30, 2022, which is assessed quarterly:
Portfolio Performance
1 (1)
2 (2)
3 (3)
Total
Government Commercial Commercial Commercial
Receivable vintage (4)
(dollars in millions)
2022 $ —  $ 270  $ —  $ —  $ 270 
2021 —  281  —  —  281 
2020 —  164  —  —  164 
2019 —  451  —  2  453 
2018 —  267  —  —  267 
2017 24  1  —  9  34 
Prior to 2017 79  100  —  —  179 
Total receivables 103  1,534  —  11  1,648 
Less: Allowance for loss on receivables
 —  (29) —  (5) (34)
Net receivables (5)
103  1,505  —  6  1,614 
Receivables held-for-sale —  17  —  —  17 
Investments 2  9  —  —  11 
Real estate —  358  —  —  358 
Equity method investments (6)
—  1,900  22  —  1,922 
Total
 $ 105  $ 3,789  $ 22  $ 6  $ 3,922 
Percent of Portfolio 3  % 96  % 1  % —  % 100  %
Average remaining balance (7)
$ 5  $ 11  $ 11  $ 11  $ 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. Loans in this category are placed on non-accrual status. In the second quarter of 2022, we moved to this category from Category 2 $11 million of loans we had made in a new market venture where the performance has not met expectations.
Previously included in this category were two commercial receivables with a combined total carrying value of approximately $8 million which were assignments of land lease payments from two wind projects that we had originated in 2014. In 2017, the operator of the projects terminated the lease, at which time we filed a legal claim and placed these assets on non-accrual status. In 2019, we received a court decision indicating that the owners of the projects were within their rights under the contract terms to terminate the lease which impacts the land lease assignments to us, at which time we reserved the receivables for their full carrying amount. In the second quarter of 2022, we received a court decision indicating that our appeal was not successful, and accordingly we wrote off the full amount of the receivable.
(4)Receivable vintage refers to the period in which in which the relevant loan agreement is signed, and a given vintage may contain loan advances made in subsequent periods to the loan agreement.
(5)Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets.
(6)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. 
(7)Average remaining balance is calculated gross of allowance for loss on receivables and excludes approximately 227 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $67 million.
Schedule of Carrying Value, Expected Loan Funding Commitments, and Allowance by Type of Receivable
Below is a summary of the carrying value, loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of September 30, 2022 and December 31, 2021:
September 30, 2022 December 31, 2021
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
1,545  166  34  1,335  184  36 
Government (2)
$ 103  $ —  $ —  $ 125  $ —  $ — 
Total $ 1,648  $ 166  $ 34  $ 1,460  $ 184  $ 36 
(1)As of September 30, 2022, this category of assets includes $1.0 billion 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. 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 to our financial statements in this Form 10-Q.
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 to our financial statements in this Form 10-Q. All of our commercial receivables are included in Performance Rating 1 in the Portfolio Performance table above, except for the $11 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 $29 million allowance on these $1.5 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of September 30, 2022, our government receivables include $13 million of U.S. federal government transactions and $90 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 to our financial statements in this Form 10-Q. 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:
Three months ended September 30, 2022 Three months ended September 30, 2021
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 37  $ —  $ 37 
Provision for loss on receivables —  (3) —  2 
Write-off of allowance —  —  —  — 
Ending balance $ —  $ 34  $ —  $ 39 
Nine months ended September 30, 2022 Nine months ended September 30, 2021
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 36  $ —  $ 36 
Provision for loss on receivables —  6  —  3 
Write-off of allowance —  (8) —  — 
Ending balance $ —  $ 34  $ —  $ 39 
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 September 30, 2022:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 1,648  $ 1  $ 51  $ 762  $ 834 
Weighted average yield by period 8.1  % 3.3  % 5.2  % 8.2  % 8.1  %
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, 2022:
 
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 11  $ —  $ —  $ —  $ 11 
Weighted average yield by period 4.7  % —  % —  % —  % 4.7  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio as of September 30, 2022 and December 31, 2021, were as follows: 
September 30, 2022 December 31, 2021
  (in millions)
Real estate
Land $ 275  $ 269 
Lease intangibles 103  104 
Accumulated amortization of lease intangibles (20) (17)
Real estate $ 358  $ 356 
Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements
As of September 30, 2022, 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, 2022 to December 31, 2022 $ 1  $ 5 
2023 3  24 
2024 3  24 
2025 3  24 
2026 3  25 
2027 3  25 
Thereafter 67  713 
Total $ 83  $ 840 
Schedule of Equity Method Investments
As of September 30, 2022, we held the following equity method investments:
Investment Date Investee Carrying Value
    (in millions)
Various Jupiter Equity Holdings LLC $ 539 
Various
Lighthouse Partnerships (1)
395 
Various Phase V Class A LLC 191 
March 2020 University of Iowa Energy Collaborative Holdings LLC 128 
Various Vivint Solar Asset 3 HoldCo Parent, LLC 110 
Various Other investees 559 
Total equity method investments $ 1,922 
(1)     Represents the total of three equity investments in a portfolio of renewable assets.
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.
Lighthouse Renewable HoldCo LLC Lighthouse Renewable HoldCo 2 LLC Phase V Class A LLC Vivint Solar Asset 3 Holdco Parent LLC
Other Investments (1)
Total
(in millions)
Balance Sheet
As of June 30, 2022
Current assets $ 39  $ 20  $ 63  $ 21  $ 596  $ 739 
Total assets 828  425  276  397  10,663  12,589 
Current liabilities 65  29  40  10  600  744 
Total liabilities 315  134  50  378  4,905  5,782 
Members' equity 513  291  226  19  5,758  6,807 
As of December 31, 2021
Current assets 102  48  17  13  725  905 
Total assets 750  472  198  384  10,264  12,068 
Current liabilities 105  49  37  12  658  861 
Total liabilities 211  130  43  379  4,400  5,163 
Members' equity 539  342  155  5  5,864  6,905 
Income Statement
For the six months ended June 30, 2022
Revenue (30) (33) 4  20  130  91 
Income (loss) from continuing operations (53) (51) (1) —  (237) (342)
Net income (loss) (53) (51) (1) —  (237) (342)
For the six months ended June 30, 2021
Revenue (71) —  1  11  48  (11)
Income (loss) from continuing operations (88) —  —  4  (286) (370)
Net income (loss) (88) —  —  4  (286) (370)
(1)     Represents aggregated financial statement information for investments not separately presented.