Annual report pursuant to Section 13 and 15(d)

Our Portfolio (Tables)

v3.20.4
Our Portfolio (Tables)
 12 Months Ended
Dec. 31, 2020
Investments [Abstract]  
Schedule of Analysis of Portfolio by Type of Obligor and Credit Quality
The following is an analysis of the Performance Ratings of our Portfolio as of December 31, 2020, which is assessed quarterly:

Portfolio Performance
Government Commercial
1 (1)
1 (1)
2 (2)
3 (3)
Total
Receivable vintage (dollars in millions)
2020 $ —  $ 184  $ —  $ —  $ 184 
2019 —  423  2  —  425 
2018 —  269  —  —  269 
2017 39  1  8  —  48 
2016 68  60  —  —  128 
Prior to 2016 141  47  —  8  196 
Total receivables 248  984  10  8  1,250 
Less: Allowance for loss on receivables
 —  (24) (4) (8) (36)
Net receivables (4)
248  960  6  —  1,214 
Investments 35  20  —  —  55 
Real estate —  359  —  —  359 
Equity method investments (5)
—  1,255  25  —  1,280 
Total
 $ 283  $ 2,594  $ 31  $ —  $ 2,908 
Percent of Portfolio 10  % 89  % 1  % —  % 100  %
Average remaining balance (6)
$ 7  $ 14  $ 12  $ 4  $ 12 
(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. Included in this category are two commercial receivables with a combined total carrying value of approximately $8 million as of December 31, 2020 which we have held on non-accrual status since 2017. We expect to continue to pursue our legal claims with regards to these assets.
(4)Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets
(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. 
(6)Average remaining balance is calculated gross of allowance for loss on receivables per transaction and excludes approximately 143 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $56 million.
Schedule of Financing Receivable, Allowance for Credit Loss
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, 2020 and January 1, 2020:
December 31, 2020 January 1, 2020
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Government (1)
$ 248  $ —  $ —  $ 263  $ —  $ — 
Commercial (2)
1,002  282  36  904  57  26 
Total $ 1,250  282  36  $ 1,167  57  26 
(1)As of December 31, 2020, our government receivables include $145 million of U.S. federal government transactions and $104 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.
(2)As of December 31, 2020, this category of assets includes, gross of allowance, $505 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. Approximately $408 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $23 million. This total also includes $111 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 sustainable infrastructure 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 $10 million of receivables included in Performance Category 2 and the $8 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 $24 million allowance on these $984 million in assets as a result of lower probability assumptions utilized in our allowance methodology.

The following table reconciles our beginning and ending allowance for loss on receivables by Portfolio Segment for the year ended December 31, 2020:
Government Commercial
(in millions)
Beginning balance - January 1, 2020 $ —  $ 26 
Provision for loss on receivables —  10 
Ending balance - December 31, 2020 $ —  $ 36 
Summary 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, 2020:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 1,250  $ 24  $ 134  $ 301  $ 791 
Weighted average yield by period 8.2  % 9.9  % 6.7  % 9.2  % 7.6  %
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, 2020:
Total Less than 1 year 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 55  $ —  $ —  $ —  $ 55 
Weighted average yield by period 4.1  % —  % —  % —  % 4.1  %
Schedule of Components of Real Estate Portfolio The components of our real estate portfolio as of December 31, 2020 and 2019, were as follows:
December 31,
2020 2019
  (in millions)
Real estate
Land $ 269  $ 269 
Lease intangibles 104  104 
Accumulated amortization of lease intangibles (14) (11)
Real estate $ 359  $ 362 
Schedule of Future Amortization Expenses Related to Intangible Assets and Future Minimum Rental Payments under Land Lease Agreements
As of December 31, 2020, 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)
2021 $ 3  $ 22 
2022 3  22 
2023 3  23 
2024 3  24 
2025 3  24 
Thereafter 75  741 
Total $ 90  $ 856 
Schedule of Equity Method Investments As of December 31, 2020, we held the following equity method investments:
Investment Date Investee Carrying Value
    (in millions)
Various Jupiter Equity Holdings, LLC $ 465 
December 2020
Lighthouse Partnerships (1)
201 
March 2020 University of Iowa Energy Collaborative Holdings LLC 118 
December 2015 Buckeye Wind Energy Class B Holdings, LLC 72 
Various Vivint Solar Asset 2 Class B, LLC 66 
Various Other investees 358 
Total equity method investments $ 1,280 
(1)Represents a portfolio of interests in renewable energy projects discussed below.
The following is a summary of the consolidated financial position and results of operations of the significant entities accounted for using the equity method.
SunStrong Capital Holdings, LLC
Jupiter Equity Holdings, LLC
Other Investments (1)
Total
Balance Sheet in millions
As of September 30, 2020
Current assets $ 94  $ 88  $ 233  $ 415 
Total assets 1,472  2,689  4,992  9,153 
Current liabilities 48  229  647  924 
Total liabilities 1,179  340  2,225  3,744 
Members’ equity 293  2,349  2,767  5,409 
As of December 31, 2019
Current assets 99  289  254  642 
Total assets 1,335  1,892  3,270  6,497 
Current liabilities 54  209  230  493 
Total liabilities 1,010  270  975  2,255 
Members’ equity 325  1,622  2,295  4,242 
Income Statement
For the nine months ended September 30, 2020
Revenue 94  19  275  388 
Income from continuing operations (9) (36) (84) (129)
Net income (9) (36) (84) (129)
For the year ended December 31, 2019
Revenue 102  —  155  257 
Income from continuing operations (16) 34  (73) (55)
Net income (16) 34  (73) (55)
For the year ended December 31, 2018
Revenue —  —  176  176 
Income from continuing operations —  —  (42) (42)
Net income —  —  (42) (42)
(1)Represents aggregated financial statement information for investments not separately presented.