Annual report pursuant to Section 13 and 15(d)

Our Portfolio (Tables)

v3.24.0.1
Our Portfolio (Tables)
 12 Months Ended
Dec. 31, 2023
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, 2023, which is assessed quarterly:

Portfolio Performance
Commercial Government
1 (1)
2 (2)
3 (3)
1 (1)
Total
Receivable vintage (4)
(dollars in millions)
2023 $ 877  $ —  $ —  $ —  $ 877 
2022 978  —  —  —  978 
2021 294  —  —  —  294 
2020 168  —  —  —  168 
2019 398  —  —  —  398 
Prior to 2019
 318  —  —  91  409 
Total receivables held-for-investment
3,033  —  —  91  3,124 
Less: Allowance for loss on receivables
 (50) —  —  —  (50)
Net receivables held-for-investment (5)
2,983  —  —  91  3,074 
Receivables held-for-sale 32  —  —  3  35 
Investments 5  —  —  2  7 
Real estate 111  —  —  —  111 
Equity method investments (6)
2,930  36  —  —  2,966 
Total
 $ 6,061  $ 36  $ —  $ 96  $ 6,193 
Percent of Portfolio 97  % 1  % —  % 2  % 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)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, 2023 and 2022:
December 31, 2023 December 31, 2022
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
$ 3,033  $ 423  $ 50  $ 1,928  $ 256  $ 41 
Government (2)
91  —  —  103  —  — 
Total $ 3,124  $ 423  $ 50  $ 2,031  $ 256  $ 41 

(1)As of December 31, 2023, this category of assets include $1.5 billion of mezzanine loans made on a non-recourse basis to 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.
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. 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 $50 million allowance on these $3.0 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of December 31, 2023, our government receivables include $10 million of U.S. federal government transactions and $81 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, 2023:
Commercial Government
(in millions)
Beginning balance - December 31, 2021
$ 36  $ — 
Provision for loss on receivables 13  — 
Write-off of allowance (8) — 
Ending balance - December 31, 2022
 41  — 
Provision for loss on receivables 9  — 
Write-off of allowance —  — 
Ending balance - December 31, 2023
 $ 50  $ — 
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, 2023:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 3,124  $ 1  $ 553  $ 1,317  $ 1,253 
Weighted average yield by period 8.4  % 6.5  % 8.9  % 8.5  % 8.0  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio as of December 31, 2023 and 2022, were as follows:
December 31,
2023 2022
  (in millions)
Real estate
Land $ 97  $ 269 
Lease intangibles 22  104 
Accumulated amortization of lease intangibles (8) (20)
Real estate $ 111  $ 353 
Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements
As of December 31, 2023, 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)
2024 $ 1  $ 24 
2025 1  24 
2026 1  24 
2027 1  25 
2028 1  25 
Thereafter 9  673 
Total $ 14  $ 795 
Schedule of Equity Method Investments As of December 31, 2023, we held the following equity method investments:
Investee Carrying Value
  (in millions)
Jupiter Equity Holdings, LLC $ 538 
Lighthouse Partnerships (1)
903 
Other equity method investments
 1,525 
Total equity method investments $ 2,966 
(1)Represents the total of five 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, for reasons including but not limited to the investees reporting to us being on a cost basis rather than a fair value basis or due to our allocations under HLBV differing from our purchase price of the investment. 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. Our basis in equity method investments exceeds the basis reported to us by our investees by an aggregate amount of $284 million, and $531 million, as of December 31, 2023 and 2022, respectively.
Daggett Renewable HoldCo LLC
Other Investments (1)
Total
Balance Sheet in millions
As of September 30, 2023
Current assets $ 142  $ 1,114  $ 1,256 
Total assets 782  16,420  17,202 
Current liabilities 131  875  1,006 
Total liabilities 548  7,799  8,347 
Members’ equity 234  8,621  8,855 
As of December 31, 2022
Current assets —  692  692 
Total assets —  14,702  14,702 
Current liabilities —  822  822 
Total liabilities —  6,836  6,836 
Members’ equity —  7,866  7,866 
Income Statement
For the nine months ended September 30, 2023
Revenue 7  737  744 
Income (loss) from continuing operations 16  (110) (94)
Net income (loss) 16  (110) (94)
For the year ended December 31, 2022
Revenue —  528  528 
Income (loss) from continuing operations —  (406) (406)
Net income (loss) —  (406) (406)
For the year ended December 31, 2021
Revenue —  183  183 
Income (loss) from continuing operations —  (589) (589)
Net income (loss) —  (589) (589)
(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:
For the year ended December 31,
2023 2022 2021
(in millions)
Interest income from related party loans $ 68  $ 60  $ 54 
Additional investments made in related party loans
 324  164  324 
Principal collected from related party loans 36  87  71 
Interest collected from related party loans 62  64  53