Quarterly report pursuant to Section 13 or 15(d)

Organization

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Organization
 3 Months Ended
Mar. 31, 2013
Organization

1. Organization

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (“HASI”) is a self-advised and self-administered real estate investment trust that was organized in the state of Maryland on November 7, 2012 to provide debt and equity financing for sustainable infrastructure projects that increase energy efficiency, provide cleaner energy sources, positively impact the environment or make more efficient use of natural resources. HASI completed the IPO of its common stock on April 23, 2013. The IPO resulted in the sale of 13,333,333 shares of common stock, at a price per share of $12.50. The net proceeds to HASI from the IPO were approximately $155.4 million, after deducting underwriting discounts. HASI did not conduct any activity prior to the IPO and the Predecessor became an indirect subsidiary of HASI upon closing of various formation transactions completed concurrently with the completion of the IPO. HASI intends to utilize the net proceeds from the IPO and its permanent equity capital base to continue to broaden the types of projects historically undertaken by the Predecessor and enhance its financial structuring flexibility, while retaining a larger share of the economics for future financings than was traditionally kept by the Predecessor. HASI intends to operate as a REIT for U.S. federal income tax purposes, commencing with the portion of its taxable year ending December 31, 2013.
Predecessor [Member]
  
Organization

1. The Predecessor

Hannon Armstrong Capital, LLC (the “Predecessor”) is the predecessor of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) a specialty finance company that provides debt and equity financing for sustainable infrastructure projects that increase energy efficiency, provide cleaner energy sources, positively impact the environment or make more efficient use of natural resources. The Predecessor commenced operations in October 2000 as successor to its former parent, Hannon Armstrong & Company.

On April 23, 2013, HASI completed its initial public offering (“IPO”) of 13,333,333 shares of common stock priced at $12.50 per share. The common stock is listed on the New York Stock Exchange under the symbol “HASI”. The net proceeds to the HASI from the IPO were approximately $155.4 million, after deducting underwriting discounts. On May 17, 2013, the underwriters exercised their option to purchase an additional 818,356 shares of common stock for additional net proceeds after deducting underwriting discounts of $9.5 million.

As part of the IPO, HASI completed a series of transactions, which are referred to as the formation transactions, that resulted in the Predecessor becoming a subsidiary of HASI and that will enable HASI to qualify as a REIT.

The significant elements of the formation transactions included:

 

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the exchange by the existing owners of the Predecessor, directly or indirectly by merger or equity contribution, of their equity interests in the entities that own the Predecessor for shares of HASI common stock or OP units in the operating partnership; and

 

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the repayment of the credit facility and the related swap discussed in Note 7.

The accompanying condensed consolidated financial statements of the Predecessor reflect the financial statements of the Predecessor, and do not reflect the effect of the IPO or the formation transactions that occurred in April 2013. They also do not reflect the material changes to the business of the Predecessor as a result of the capital raised in the IPO to continue to broaden the types of projects historically undertaken by the Predecessor and enhance its financial structuring flexibility, while retaining a larger share of the economics for future financings.

The Predecessor’s and its subsidiaries’ principal business is providing or arranging financing of sustainable infrastructure projects supported by the projects’ cash flows. The Predecessor and its subsidiaries finance their business through the securitization of the receivables or through the use of nonrecourse debt. The Predecessor also generates fee income for arranging financings that are held directly on the balance sheet of other investors, by providing broker/dealer or other financing related services to sustainable infrastructure project developers and by servicing the Predecessor’s managed assets. The Predecessor’s subsidiaries are typically special purpose entities (“SPEs”) that are formed for specific operations associated with financing sustainable infrastructure receivables for specific long-term contracts.