Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.24.2.u1
Our Portfolio (Tables)
 6 Months Ended
Jun. 30, 2024
Investments [Abstract]  
Schedule of Analysis of Portfolio Performance Ratings
The following is an analysis of the Performance Ratings of our Portfolio as of June 30, 2024, which is assessed quarterly:
Portfolio Performance
1 (1)
2 (2)
3 (3)
Total
Commercial Government Commercial Commercial
Receivable vintage (4)
(dollars in millions)
2024 $ —  $ —  $ —  $ —  $ — 
2023 773  —  —  —  773 
2022 1,013  —  —  —  1,013 
2021 295  —  —  —  295 
2020 172  —  —  —  172 
2019 206  —  —  —  206 
Prior to 2019 322  36  —  —  358 
Total receivables held-for-investment 2,781  36  —  —  2,817 
Less: Allowance for loss on receivables
 (48) —  —  —  (48)
Net receivables held-for-investment
 2,733  36  —  —  2,769 
Receivables held-for-sale 33  3  —  —  36 
Investments 5  2  —  —  7 
Real estate 3  —  —  —  3 
Equity method investments (5)
3,333  —  38  —  3,371 
Total
 $ 6,107  $ 41  $ 38  $ —  $ 6,186 
Percent of Portfolio 99  % 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.
(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)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, loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of June 30, 2024 and December 31, 2023:
June 30, 2024 December 31, 2023
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
2,781  430  48  3,033  423  50 
Government (2)
$ 36  $ —  $ —  $ 91  $ —  $ — 
Total $ 2,817  $ 430  $ 48  $ 3,124  $ 423  $ 50 
(1)As of June 30, 2024, this category of assets includes $1.5 billion of mezzanine loans made on a non-recourse basis to bankruptcy-remote special purpose subsidiaries of residential solar companies which hold residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. These residential solar assets typically contain back-up servicer provisions to allow for continuity of operations in the event the project sponsor is unable to fulfill its duties in that capacity.
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. 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 $48 million allowance on these $2.8 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of June 30, 2024, our government receivables include $8 million of U.S. federal government transactions and $28 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 June 30, 2024 Three months ended June 30, 2023
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 52  $ —  $ 43 
Provision for loss on receivables —  (4) —  1 
Ending balance $ —  $ 48  $ —  $ 44 
Six months ended June 30, 2024 Six months ended June 30, 2023
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 50  $ —  $ 41 
Provision for loss on receivables —  (2) —  3 
Ending balance $ —  $ 48  $ —  $ 44 
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 June 30, 2024:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 2,817  $ 16  $ 629  $ 1,092  $ 1,080 
Weighted average yield by period 8.6  % 7.6  % 8.5  % 9.0  % 8.3  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio that we own directly as of June 30, 2024 and December 31, 2023, were as follows: 
June 30, 2024 December 31, 2023
  (in millions)
Real estate
Land $ 3  $ 97 
Lease intangibles —  22 
Accumulated amortization of lease intangibles —  (8)
Real estate $ 3  $ 111 
Schedule of Equity Method Investments
As of June 30, 2024, we held the following equity method investments:
Investee Carrying Value
  (in millions)
Jupiter Equity Holdings LLC $ 604 
Daggett Renewable HoldCo LLC 447 
Lighthouse Renewable HoldCo 2 LLC 367 
CarbonCount Holdings 1 LLC 66 
Other equity method investments 1,887 
Total equity method investments $ 3,371 
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. Certain of our equity method investments have the unrealized mark-to-market losses on energy hedges at the project level that do not qualify for hedge accounting. These unrealized mark-to-market losses, which resulted from rising energy prices, are recorded in the revenue line of the projects’ statements of operations. As these swaps are settled, the projects will sell power at the higher market price, offsetting the loss recognized on the energy hedges.
Jupiter Equity Holdings LLC Daggett Renewable Holdco LLC
Other Investments (1)
Total
(in millions)
Balance Sheet
As of March 31, 2024
Current assets $ 45  $ 59  $ 970  $ 1,074 
Total assets 2,922  1,144  15,859  19,925 
Current liabilities 210  12  819  1,041 
Total liabilities 506  453  8,363  9,322 
Members' equity 2,416  691  7,496  10,603 
As of December 31, 2023
Current assets 52  35  916  1,003 
Total assets 2,950  677  14,981  18,608 
Current liabilities 205  10  723  938 
Total liabilities 500  262  7,904  8,666 
Members' equity 2,450  415  7,077  9,942 
Income Statement
For the three months ended March 31, 2024
Revenue 20  12  229  261 
Income (loss) from continuing operations (33) 1  (52) (84)
Net income (loss) (33) 1  (52) (84)
For the three months ended March 31, 2023
Revenue 26  —  130  156 
Income (loss) from continuing operations (25) (6) (128) (159)
Net income (loss) (25) (6) (128) (159)
(1)     Represents aggregated financial statement information for investments not separately presented.
Schedule of Related Party Transactions
The following table provides additional detail on these related party transactions:
Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023
(in millions)
Interest income from related party loans $ 18  $ 16  $ 39  $ 32 
Additional investments made in related party loans
 33  78  94  92 
Principal collected from related party loans 226  6  243  15 
Interest collected from related party loans 17  15  34  30