Quarterly report pursuant to Section 13 or 15(d)

Our Portfolio (Tables)

v3.21.2
Our Portfolio (Tables)
 9 Months Ended
Sep. 30, 2021
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 September 30, 2021, which is assessed quarterly:
Portfolio Performance
1 (1)
2 (2)
3 (3)
Total
Government Commercial Commercial Commercial
Receivable vintage (dollars in millions)
2021 $ —  $ 203  $ —  $ —  $ 203 
2020 —  190  —  —  190 
2019 —  483  6  —  489 
2018 —  260  —  —  260 
2017 31  1  8  —  40 
2016 14  59  —  —  73 
Prior to 2016 81  46  —  8  135 
Total receivables 126  1,242  14  8  1,390 
Less: Allowance for loss on receivables
 —  (26) (5) (8) (39)
Net receivables (4)
126  1,216  9  —  1,351 
Receivables held-for-sale —  —  —  —  — 
Investments 11  7  —  —  18 
Real estate —  357  —  —  357 
Equity method investments (5)
—  1,442  26  —  1,468 
Total
 $ 137  $ 3,022  $ 35  $ —  $ 3,194 
Percent of Portfolio 4  % 95  % 1  % —  % 100  %
Average remaining balance (6)
$ 6  $ 13  $ 10  $ 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 September 30, 2021, which we have held on non-accrual status since 2017. We expect to continue to pursue our legal claims with regards to these assets. This category previously contained an equity method investment in a wind project with no book value due to our allocation of impairment losses recorded by the project sponsor. We sold this equity method investment in the third quarter for nominal proceeds.
(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 and excludes approximately 152 transactions each with outstanding balances that are less than $1 million and that in the aggregate total $72 million.
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 September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Government (1)
$ 126  $ —  $ —  $ 248  $ —  $ — 
Commercial (2)
1,264  290  39  1,002  282  36 
Total $ 1,390  $ 290  $ 39  $ 1,250  $ 282  $ 36 
(1)As of September 30, 2021, our government receivables include $28 million of U.S. federal government transactions and $98 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.
(2)As of September 30, 2021, this category of assets includes $742 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 $647 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $76 million. This total also includes $47 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 to our financial statements in this Form 10-Q.
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, except for $14 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 $26 million allowance on these $1.2 billion 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:
Three months ended September 30, 2021 Three months ended September 30, 2020
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 37  $ —  $ 29 
Provision for loss on receivables —  2  —  2 
Ending balance $ —  $ 39  $ —  $ 31 
Nine months ended September 30, 2021 Nine months ended September 30, 2020
Government Commercial Government Commercial
(in millions)
Beginning balance (1)
$ —  $ 36  $ —  $ 26 
Provision for loss on receivables —  3  —  5 
Ending balance $ —  $ 39  $ —  $ 31 
(1)For the nine months ended September 30, 2020, the beginning balance represents January 1, 2020, the adoption date of Topic 326. The beginning balance includes the pre-tax allowance for loss on receivables of $17 million recorded upon adoption which reflects our estimated loss as of that date under the new standard as well as the $8 million of receivables which were previously on non-accrual status and fully reserved.
Schedule of Anticipated Maturity Dates of Financing 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, 2021:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 1,390  $ 67  $ 56  $ 482  $ 785 
Weighted average yield by period 8.2  % 7.6  % 6.3  % 8.4  % 8.3  %
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 September 30, 2021:
 
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period $ 18  $ —  $ —  $ —  $ 18 
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 September 30, 2021 and December 31, 2020, were as follows: 
September 30, 2021 December 31, 2020
  (in millions)
Real estate
Land $ 269  $ 269 
Lease intangibles 104  104 
Accumulated amortization of lease intangibles (16) (14)
Real estate $ 357  $ 359 
Schedule of Future Amortization Expense of Intangible Assets
As of September 30, 2021, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:
Future Amortization Expense Minimum Rental Income Payments
  (in millions)
From October 1, 2021 to December 31, 2021 $ 1  $ 5 
2022 3  22 
2023 3  23 
2024 3  24 
2025 3  24 
2026 3  24 
Thereafter 72  717 
Total $ 88  $ 839 
Schedule of Equity Method Investments
As of September 30, 2021, we held the following equity method investments:
Investment Date Investee Carrying Value
    (in millions)
Various Jupiter Equity Holdings LLC $ 540 
Various
Lighthouse Partnerships (1)
211 
March 2020 University of Iowa Energy Collaborative Holdings LLC 121 
Various Phase V Class A LLC 109 
Various Other investees 487 
Total equity method investments $ 1,468 
(1)     Represents the total of three equity investments in a portfolio of renewable assets.
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
Rosie Target Co, LLC (1)
Lighthouse Renewable HoldCo LLC (1)
Summit Ridge Capital Holdings, LLC Vivint Solar Asset 3 Holdco Parent LLC
Other Investments (2)
Total
(in millions)
Balance Sheet
As of June 30, 2021
Current assets $ 87  $ 11  $ 11  $ 51  $ 60  $ 636  $ 856 
Total assets 1,624  282  482  407  441  7,900  11,136 
Current liabilities 63  5  41  58  8  587  762 
Total liabilities 1,282  101  130  357  353  2,586  4,809 
Members' equity 342  181  352  50  88  5,314  6,327 
As of December 31, 2020
Current assets 92  25  22  18  86  539  782 
Total assets 1,532  299  497  268  303  7,340  10,239 
Current liabilities 48  19  22  43  3  518  653 
Total liabilities 1,217  118  87  243  139  2,298  4,102 
Members' equity 315  181  410  25  164  5,042  6,137 
Income Statement
For the six months ended June 30, 2021
Revenue 67  6  (71) 6  11  4  23 
Income (loss) from continuing operations 2  (3) (88) (5) 4  (283) (373)
Net income (loss) 2  (3) (88) (5) 4  (283) (373)
For the six months ended June 30, 2020
Revenue 61  —  —  1  —  118  180 
Income (loss) from continuing operations (4) —  —  (2) —  (1) (7)
Net income (loss) (4) —  —  (2) —  (1) (7)
(1)     Component of the Lighthouse Partnerships described in Note 6 to our financial statements in this Form 10-Q.
(2)     Represents aggregated financial statement information for investments not separately presented.