Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.24.3
Our Portfolio (Tables)
 9 Months Ended
Sep. 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 September 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 $ 20  $ —  $ —  $ —  $ 20 
2023 854  —  —  —  854 
2022 1,008  —  —  —  1,008 
2021 294  —  —  —  294 
2020 173  —  —  —  173 
2019 242  —  —  —  242 
Prior to 2019 323  35  —  —  358 
Total receivables held-for-investment 2,914  35  —  —  2,949 
Less: Allowance for loss on receivables
 (49) —  —  —  (49)
Net receivables held-for-investment
 2,865  35  —  —  2,900 
Receivables held-for-sale 19  3  —  —  22 
Investments 16  2  —  —  18 
Real estate 3  —  —  —  3 
Equity method investments (5)
3,320  —  33  —  3,353 
Total
 $ 6,223  $ 40  $ 33  $ —  $ 6,296 
Percent of Portfolio 98  % 1  % 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 September 30, 2024 and December 31, 2023:
September 30, 2024 December 31, 2023
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
2,914  455  49  3,033  423  50 
Government (2)
$ 35  $ —  $ —  $ 91  $ —  $ — 
Total $ 2,949  $ 455  $ 49  $ 3,124  $ 423  $ 50 
(1)As of September 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. See “Related Party Transactions” below for discussion of loans in this category made to special purpose entities sponsored by the SunPower Corporation.
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 $49 million allowance on these $2.9 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of September 30, 2024, our government receivables include $7 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 September 30, 2024 Three months ended September 30, 2023
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 48  $ —  $ 44 
Provision for loss on receivables —  1  —  7 
Ending balance $ —  $ 49  $ —  $ 51 
Nine months ended September 30, 2024 Nine months ended September 30, 2023
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 50  $ —  $ 41 
Provision for loss on receivables —  (1) —  10 
Ending balance $ —  $ 49  $ —  $ 51 
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, 2024:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 2,949  $ 15  $ 908  $ 903  $ 1,123 
Weighted average yield by period 8.6  % 8.3  % 8.4  % 9.2  % 8.2  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio that we own directly as of September 30, 2024 and December 31, 2023, were as follows: 
September 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 September 30, 2024, we held the following equity method investments:
Investee Carrying Value
  (in millions)
Jupiter Equity Holdings LLC $ 579 
Daggett Renewable HoldCo LLC 445 
Lighthouse Renewable HoldCo 2 LLC 350 
CarbonCount Holdings 1 LLC 84 
Other equity method investments 1,895 
Total equity method investments $ 3,353 
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 June 30, 2024
Current assets $ 59  $ 68  $ 1,036  $ 1,163 
Total assets 2,906  1,141  16,540  20,587 
Current liabilities 316  13  907  1,236 
Total liabilities 546  454  8,718  9,718 
Members' equity 2,360  687  7,822  10,869 
As of December 31, 2023
Current assets 52  35  898  985 
Total assets 2,950  677  14,965  18,592 
Current liabilities 205  10  715  930 
Total liabilities 500  262  7,898  8,660 
Members' equity 2,450  415  7,067  9,932 
Income Statement
For the six months ended June 30, 2024
Revenue 6  31  489  526 
Income (loss) from continuing operations (95) 1  (102) (196)
Net income (loss) (95) 1  (102) (196)
For the six months ended June 30, 2023
Revenue 59  2  386  447 
Income (loss) from continuing operations (27) 2  (61) (86)
Net income (loss) (27) 2  (61) (86)
(1)     Represents aggregated financial statement information for investments not separately presented.
Schedule of Related Party Transactions
The following table provides additional detail on our transactions with related party equity method investments:
Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
(in millions)
Interest income from related party loans $ 21  $ 18  $ 60  $ 49 
Additional investments made in related party loans
 79  95  172  187 
Principal collected from related party loans 17  12  260  27 
Interest collected from related party loans 15  15  49  45