Annual report pursuant to Section 13 and 15(d)

Our Portfolio (Tables)

v3.22.4
Our Portfolio (Tables)
 12 Months Ended
Dec. 31, 2022
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, 2022, which is assessed quarterly:

Portfolio Performance
Government Commercial
1 (1)
1 (1)
2 (2)
3 (3)
Total
Receivable vintage (4)
(dollars in millions)
2022 $ —  $ 639  $ —  $ —  $ 639 
2021 —  288  —  —  288 
2020 —  165  —  —  165 
2019 —  457  —  2  459 
2018 —  268  —  —  268 
Prior to 2018 103  100  —  9  212 
Total receivables held-for-investment (5)
103  1,917  —  11  2,031 
Less: Allowance for loss on receivables
 —  (36) —  (5) (41)
Net receivables held-for-investment 103  1,881  —  6  1,990 
Receivables held-for-sale —  85  —  —  85 
Investments 2  8  —  —  10 
Real estate —  353  —  —  353 
Equity method investments (6)
—  1,847  23  —  1,870 
Total
 $ 105  $ 4,174  $ 23  $ 6  $ 4,308 
Percent of Portfolio 2  % 97  % 1  % —  % 100  %
(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 $11 million of loans we had made in a new market venture where the performance has not met expectations to this category from Category 2.
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 the relevant loan agreement is signed, and a given vintage may contain loan advances made in periods subsequent to the period in which the loan agreement was signed.
(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.
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, 2022 and 2021:
December 31, 2022 December 31, 2021
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
$ 1,928  $ 256  $ 41  $ 1,335  $ 184  $ 36 
Government (2)
103  —  —  125  —  — 
Total $ 2,031  $ 256  $ 41  $ 1,460  $ 184  $ 36 

(1)As of December 31, 2022, this category of assets include $1,212 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. 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 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 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 $36 million allowance on these $1.9 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of December 31, 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. 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, 2022:
Commercial Government
(in millions)
Beginning balance - December 31, 2020 $ 36  $ — 
Provision for loss on receivables —  — 
Ending balance - December 31, 2021 36  — 
Provision for loss on receivables 13  — 
Write-off of allowance (8)
Ending balance - December 31, 2022 $ 41  $ — 
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, 2022:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 2,031  $ 4  $ 59  $ 1,098  $ 870 
Weighted average yield by period 8.1  % 1.9  % 5.2  % 8.4  % 7.9  %
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, 2022:
Total Less than 1 year 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 10  $ —  $ —  $ —  $ 10 
Weighted average yield by period 4.6  % —  % —  % —  % 4.6  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio as of December 31, 2022 and 2021, were as follows:
December 31,
2022 2021
  (in millions)
Real estate
Land $ 269  $ 269 
Lease intangibles 104  104 
Accumulated amortization of lease intangibles (20) (17)
Real estate $ 353  $ 356 
Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements
As of December 31, 2022, 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)
2023 $ 3  $ 24 
2024 3  24 
2025 3  24 
2026 3  25 
2027 3  25 
Thereafter 69  698 
Total $ 84  $ 820 
Schedule of Equity Method Investments As of December 31, 2022, we held the following equity method investments:
Investment Date Investee Carrying Value
    (in millions)
Various Jupiter Equity Holdings, LLC $ 540 
Various
Lighthouse Partnerships (1)
389 
Various Phase V Class A LLC 165 
March 2020 University of Iowa Energy Collaborative Holdings LLC 130 
Various Vivint Solar Asset 3 HoldCo Parent LLC 116 
Various Other investees 530 
Total equity method investments $ 1,870 
(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.
Lighthouse Renewable HoldCo II LLC
Other Investments (1)
Total
Balance Sheet in millions
As of September 30, 2022
Current assets $ 13  $ 712  $ 725 
Total assets 413  11,703  12,116 
Current liabilities 23  748  771 
Total liabilities 132  5,631  5,763 
Members’ equity 281  6,072  6,353 
As of December 31, 2021
Current assets 48  818  866 
Total assets 472  11,124  11,596 
Current liabilities 49  818  867 
Total liabilities 130  4,904  5,034 
Members’ equity 342  6,220  6,562 
Income Statement
For the nine months ended September 30, 2022
Revenue (35)
(2)
 326  291 
Income (loss) from continuing operations (61) (340) (401)
Net income (loss) (61) (340) (401)
For the year ended December 31, 2021
Revenue 1  139  140 
Income (loss) from continuing operations —  (577) (577)
Net income (loss) —  (577) (577)
For the year ended December 31, 2020
Revenue —  343  343 
Income (loss) from continuing operations —  (222) (222)
Net income (loss) —  (222) (222)
(1)Represents aggregated financial statement information for investments not separately presented.
(2)Amount contains $34 million of mark-to-market losses on energy swaps which do not qualify for hedge accounting.
Schedule of Related Party Transactions
The following table provides additional detail on these related party transactions:
For the year ended December 31,
2022 2021 2020
(in millions)
Interest income from related party loans $ 60  $ 54  $ 38 
Investments in related party loans 164  324  101 
Principal collected from related party loans 87  71  61 
Interest collected from related party loans 64  53  27