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What changed in HA Sustainable Infrastructure Capital, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HA Sustainable Infrastructure Capital, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+460 added−530 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in HA Sustainable Infrastructure Capital, Inc.'s 2024 10-K

460 paragraphs added · 530 removed · 306 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+33 added−33 removed35 unchanged
Biggest changeOur investments in climate solutions are focused on three markets: • Behind-the-Meter (“BTM”) : distributed energy projects which reduce energy usage or cost through solar power generation, electric storage, or energy efficiency improvements such as heating, ventilation, and air conditioning systems (HVAC), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems; • Grid-Connected (“GC”) : renewable energy projects that deploy cleaner energy sources, such as solar, solar-plus-storage, and wind, to generate power production where the off-taker or counterparty may be part of the wholesale electric power markets; and • Fuels, Transport, and Nature (“FTN”): a range of real assets spanning high-emitting economic sectors other than the power grid such as transportation and fuels in the United States, including renewable natural gas (RNG) plants, transportation fleet enhancements, and ecological restoration projects, among others.
Biggest changeOur investment strategy is focused on three end markets: • Behind-the-Meter (“BTM”): distributed renewable energy projects which reduce energy cost and/or usage through residential, commercial & industrial, and community solar power and energy storage deployments, as well as energy efficiency improvements such as heating, ventilation, and air conditioning systems (HVAC), lighting, energy controls, roofs, windows, building shells, and/or combined heat and power systems.
Under the direction of our chief executive officer and the Board, we are focused on achieving a high level of environmental and social responsibility and strong corporate governance. The Nominating, Governance and Corporate Responsibility Committee of our Board is responsible for our oversight of sustainability, impact, and governance matters, including related policies and communications.
Under the direction of our chief executive officer and our Board, we are focused on achieving a high level of environmental and social responsibility and strong corporate governance. The Nominating, Governance and Corporate Responsibility Committee of our Board is responsible for our oversight of sustainability, impact, and governance matters, including related policies and communications.
In addition, we have implemented whistleblowing procedures designed to facilitate the report of accounting and auditing matters as well as Code of Conduct matters (the “Whistleblower Policy”) that sets forth procedures by which any Covered Persons (as defined in the Whistleblower Policy) may report, on a confidential basis, concerns regarding, among other things, any questionable or unethical accounting, internal accounting controls or auditing matters with our Audit Committee as well as any potential Code of Conduct or ethics violations with our Nominating, Governance and Corporate Responsibility Committee or our Chief Legal Officer.
In addition, we have implemented whistleblowing procedures designed to facilitate the report of accounting and auditing matters as well as Code of Conduct matters (the “Whistleblower Policy”) that sets forth procedures by which any Covered Persons (as defined in the Whistleblower Policy) may report, on a confidential basis, concerns regarding, among other things, any questionable or unethical accounting, internal accounting controls or auditing matters with our Audit Committee as well as any potential Code - 12 - of Conduct or ethics violations with our Nominating, Governance and Corporate Responsibility Committee or our Chief Legal Officer.
Chuslo is responsible for governance support to the Board and management and oversees the Company’s legal resources in its investment and portfolio management activities. Mr. Chuslo has more than 30 years of experience in the fields of securities, commercial and project finance, energy project development, and U.S. federal regulation. Mr.
Chuslo is responsible for governance support to our Board and management and oversees the Company’s legal resources in its investment and portfolio management activities. Mr. Chuslo has more than 30 years of experience in the fields of securities, commercial and project finance, energy project development, and U.S. federal regulation. Mr.
Melko received a Bachelor of Science degree in Accountancy, a Master of Business Administration degree and a Master of Science degree in Accountancy from Wheeling Jesuit University. Mr. Melko holds a CPA license in West Virginia and Maryland and is also a Certified Treasury Professional (CTP).
Melko received a Bachelor of Science degree in - 14 - Accountancy, a Master of Business Administration degree and a Master of Science degree in Accountancy from Wheeling Jesuit University. Mr. Melko holds a CPA license in West Virginia and Maryland and is also a Certified Treasury Professional (CTP).
McMahon received a Bachelor of Arts degree from the University of California, San Diego in 1993, and is a CFA charter holder. He holds Series 24, 63 and 79 securities licenses. Charles W. Melko , CPA, 43, has served as a senior vice president and our chief accounting officer since 2017 and as our treasurer since January 2021.
McMahon received a Bachelor of Arts degree from the University of California, San Diego in 1993, and is a CFA charter holder. He holds Series 24, 63 and 79 securities licenses. Charles W. Melko , CPA, 44, has served as a senior vice president and our chief accounting officer since 2017 and as our treasurer since January 2021.
Pangburn received his Bachelor of Arts degree in economics from Drew University. Susan D. Nickey , 63, has served as an executive vice president and our chief client officer since 2021. Ms. Nickey previously served as a managing director from 2014 to 2021. Ms. Nickey is responsible for leading business development and managing client relationships. Ms.
Pangburn received his Bachelor of Arts degree in economics from Drew University. Susan D. Nickey , 64, has served as an executive vice president and our chief client officer since 2021. Ms. Nickey previously served as a managing director from 2014 to 2021. Ms. Nickey is responsible for leading business development and managing client relationships. Ms.
Haile-Mariam worked at GE Energy Financial Services for 15 years, most recently as Managing Director - Head of Capital Advisory and Portolio, Americas leading the execution, asset management, capital raise and divestment of energy infrastructure projects. Prior to joining GE Energy Financial Services, Mr. Haile-Mariam worked at GE Corporate Audit Staff, conducting financial audits, leading simplification and operational excellence projects.
Haile-Mariam worked at GE Energy Financial Services for 15 years, most recently as Managing Director - Head of Capital Advisory and Portfolio, Americas leading the execution, asset management, capital raise and divestment of energy infrastructure projects. Prior to joining GE Energy Financial Services, Mr. Haile-Mariam worked at GE Corporate Audit Staff, conducting financial audits, leading simplification and operational excellence projects.
Daniela Shapiro , 49, joined the Company as managing director in 2022 and is responsible for growing the Company’s investments in Behind-the-Meter opportunities and expanding solutions for broader onsite and as-a-service offerings. Ms. Shapiro has over 20 years of energy industry experience. Prior to joining the Company, Ms.
Shapiro joined the Company as managing director in 2022 and is responsible for growing the Company’s investments in Behind-the-Meter opportunities and expanding solutions for broader onsite and as-a-service offerings. Ms. Shapiro has over 20 years of energy industry experience. Prior to joining the Company, Ms.
Additionally, we have a committee of employees from across our organization that is focused on implementing sustainability and impact strategies and policies and reports directly to our chief executive officer. Annually we publish a report that illustrates our progress on these matters. Environmental Responsibility.
Additionally, we have a committee of employees from across our organization that is focused on implementing sustainability and impact strategies and policies and reports directly to our chief executive officer. Annually we publish a report that illustrates our progress on these matters.
Pangburn , 38, has served as an executive vice president and our chief financial officer since 2023, and prior to that served as a co-chief investment officer from 2021 to 2023. Mr. Pangburn joined the Company in 2013 and previously served as a managing director until 2021. Prior to joining the Company, Mr.
Pangburn , 39, has served as an executive vice president and our chief financial officer since 2023, and prior to that served as a co-chief investment officer from 2021 to 2023. Mr. Pangburn joined the Company in 2013 and previously served as a managing director until 2021. Prior to joining the Company, Mr.
Rose , CFA, 46, has served as executive vice president since 2015 and as a chief investment officer beginning in 2017 and also from 2013 to 2015. Previously, Mr. Rose served as our chief operating officer from 2015 to 2017 and has been with the Company and its predecessor since 2000. Mr.
Rose , CFA, 47, has served as executive vice president since 2015 and as a chief investment officer beginning in 2017 and also from 2013 to 2015. Previously, Mr. Rose served as our chief operating officer from 2015 to 2017 and has been with the Company and its predecessor since 2000. Mr.
Dent serves on the board of directors for the YWCA of Annapolis and Anne Arundel County. Daniel K. McMahon , CFA, 52, has served us as an executive vice president since 2015 and is the head of our syndication group.
Dent serves on the board of directors for the YWCA of Annapolis and Anne Arundel County. Daniel K. McMahon , CFA, 53, has served us as an executive vice president since 2015 and is the head of our syndication group.
Chuslo , 66, has served as an executive vice president and our general counsel and secretary since 2013 and our chief legal officer since 2021. Previously, Mr. Chuslo has served with the predecessor of the Company as general counsel and secretary since 2008. Mr.
Chuslo , 67, has served as an executive vice president and our general counsel and secretary since 2013 and our chief legal officer since 2021. Previously, Mr. Chuslo has served with the predecessor of the Company as general counsel and secretary since 2008. Mr.
Our policy is “equal pay for equal work” in compliance with applicable state law. Compensation for our employees is based upon experience, seniority, educational attainment, and individual contribution and company performance against goals. As of December 31, 2023, we employed 139 people. We intend to hire additional business professionals as needed to assist in the implementation of our business strategy.
Our policy is “equal pay for equal work” in compliance with applicable state law. Compensation for our employees is based upon experience, seniority, educational attainment, and individual contribution and company performance against goals. As of December 31, 2024, we employed 158 people. We intend to hire additional business professionals as needed to assist in the implementation of our business strategy.
Managers hold performance conversations with their employees on a periodic basis to ensure they receive the performance feedback they deserve, and to allow managers to obtain insight into how to support the development of their staff, and to ensure that performance expectations are clear and aligned with the overarching objectives of the Company.
Managers hold performance conversations with their employees on a periodic basis to ensure they receive adequate performance feedback, and to allow managers to both obtain insight into how to support the development of their staff and to ensure that performance expectations are clear and aligned with the overarching objectives of the Company.
Chuslo received a Bachelor of Arts degree in History from the University of Massachusetts/Amherst and a Juris Doctorate from the Georgetown University Law Center. Katherine McGregor Dent , 51, has served as our senior vice president and chief human resources officer since April 2020, focusing on culture, strategy, and organizational development. Previously, Ms.
Chuslo received a Bachelor of Arts degree in History from the University of Massachusetts/Amherst and a Juris Doctor from the Georgetown University Law Center. Katherine McGregor Dent , 52, has served as our senior vice president and chief human resources officer since April 2020, focusing on culture, strategy, and organizational development. Previously, Ms.
We established the HASI Foundation to provide cash and in-kind support to programs which provide climate solutions investments and career opportunities for those from historically underrepresented communities, as well as organizations across our local region that seek to strengthen the social fabric and promote economic and climate resiliency. Corporate Governance.
We established the HASI Foundation to provide cash and in-kind support to programs which provide climate solutions investments and career opportunities for those from disadvantaged communities, as well as organizations across our local region that seek to strengthen the social fabric and promote economic and climate resiliency. Governance.
We may also use other funds or structures where institutional investors purchase all or a portion of the economics of the transaction and where we may receive upfront or ongoing fees for managing the assets.
We may also use other funds or structures such as CCH1 where institutional investors purchase all or a portion of the economics of the transaction and where we may receive upfront or ongoing fees for managing the assets.
We generally provide the associated CarbonCount metrics for our debt issuances. In addition, certain of our debt issuances meet the environmental eligibility criteria for green bonds as defined by the International Capital Markets Association’s Green Bond Principles, which we believe makes our debt more attractive for many investors compared to such offerings that do not qualify under these principles.
In addition, certain of our debt issuances meet the environmental eligibility criteria for green bonds as defined by the International Capital Markets Association’s Green Bond Principles, which we believe makes our debt more attractive for many investors compared to such offerings that do not qualify under these principles.
Social Responsibility. We recognize that the effects of pollution, environmental degradation, increased climate-fueled extreme weather events, and the economic transition away from fossil fuels fall most heavily on marginalized communities in our society, especially communities of color.
We recognize that the effects of pollution, environmental degradation, increased climate-fueled extreme weather events, and the economic transition away from fossil fuels fall most heavily on certain communities in our society, especially rural communities and communities of color.
For further information on our disclosures, see the discussion in the sections titled “Investment Strategy” and “Sustainability, Impact and Corporate Governance” herein.
For further information on our disclosures, see the discussion in the sections titled “Our Investment Strategy” and “Sustainability, Impact and Corporate Governance” herein.
Amanuel Haile-Mariam , 44, has served as a managing director since joining the Company in 2021 and is responsible for the Company’s structured investments in Grid-Connected renewable energy markets. Prior to joining the Company, Mr.
Amanuel Haile-Mariam , 45, has served as a senior managing director since 2024. Mr. Haile-Mariam joined the Company as a managing director in 2021 and is responsible for the Company’s structured investments in Grid-Connected renewable energy markets. Prior to joining the Company, Mr.
Despite a healthcare environment that is facing rising costs, we continue to pay substantially all of the cost of our employees’ healthcare insurance. Further, in addition to what we believe to be market total rewards benefits, we provide additional benefits, such as on-site seasonal vaccination clinics, back-up childcare solutions, and a tuition reimbursement program.
Despite a healthcare environment that is facing rising costs, we continue to pay substantially all of the cost of our employees’ healthcare insurance. Further, in addition to what we believe to be market total rewards benefits, we provide additional benefits, such as employee assistance programs, back-up childcare solutions, and a tuition reimbursement program.
Notable features of our corporate governance structure include the following: • our Corporate Governance Guidelines provide for a majority vote policy for the election of directors pursuant to which any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation to our Board for their consideration to accept or reject such resignation; • our Board is not staggered, with each of our directors subject to re-election annually; • our Board has determined that nine of our eleven directors are independent for purposes of the New York Stock Exchange (“NYSE”) corporate governance listing standards and Rule 10A-3 under the Exchange Act; • we have a lead independent director of the Board that convenes and chairs executive sessions of the independent directors to discuss certain matters without management or the chairman present; • we have separated the executive chairman and chief executive officer roles as discussed in Item 9B of this Form 10-K; • three of our directors qualify as an “audit committee financial expert” as defined by the Securities and Exchange Commission (the “SEC”); • four of our directors (including our lead independent director) are women and two of our directors are people of underrepresented ethnicity constituting 36% and 18% respectively, of our Board in furtherance of our board diversity policy; • a target retirement age of 75 has been established for our directors; • we have an active stockholder outreach program, including providing stockholders the right to vote on an advisory basis on the fairness of the remuneration of executives; • our Board members and named executive officers are required to maintain certain levels of stock ownership in our company ranging between three and six times their base salary or retainer, depending on position; - 11 - • we have a Clawback Policy that provides for the possible recoupment of performance or incentive-based compensation in the event of an accounting restatement due to material noncompliance by us with any financial reporting requirements under the securities laws (other than due to a change in applicable accounting methods, rules or interpretations); • we have opted out of the control share acquisition statute in the Maryland General Corporations Law (the “MGCL”); • stockholders have the ability to amend the Company’s bylaws by the affirmative vote of the holders of a majority of the outstanding shares of our common stock pursuant to a binding proposal submitted by a stockholder; and • we have exempted from the business combinations statute in the MGCL transactions that are approved by our Board (including a majority of our directors who are not affiliates or associates of the acquiring person).
Notable features of our corporate governance structure include the following: • our Corporate Governance Guidelines provide for a majority vote policy for the election of directors pursuant to which any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall promptly tender his or her resignation to our Board for their consideration to accept or reject such resignation; • our Board is not staggered, with each of our directors subject to re-election annually; • our Board has determined that eight of our ten directors are independent for purposes of the New York Stock Exchange (“NYSE”) corporate governance listing standards and Rule 10A-3 under the Exchange Act; • we have a lead independent director of our Board that convenes and chairs executive sessions of the independent directors to discuss certain matters without management or the chairman present; • we have separated the executive chairman and chief executive officer roles; • three of our directors qualify as an “audit committee financial expert” as defined by the Securities and Exchange Commission (the “SEC”); • four of our directors (including our lead independent director) are women and two of our directors are people of underrepresented ethnicity constituting 40% and 20% respectively, of our Board in furtherance of our board diversity policy; • a target retirement age of 75 has been established for our directors; • we have an active stockholder outreach program, including providing stockholders the right to vote on an advisory basis on the fairness of the remuneration of executives; • our Board members and named executive officers are required to maintain certain levels of stock ownership in our company ranging between three and six times their base salary or retainer, depending on position; • we have a Clawback Policy that provides for the possible recoupment of performance or incentive-based compensation in the event of an accounting restatement due to material noncompliance by us with any financial reporting requirements under the securities laws (other than due to a change in applicable accounting methods, rules or interpretations); and • stockholders have the ability to amend the Company’s bylaws by the affirmative vote of the holders of a majority of the outstanding shares of our common stock pursuant to a binding proposal submitted by a stockholder.
It is important to us that our employees are engaged in our mission of sustainability because we believe engagement improves their performance, as well as our employee recruitment and retention. Our chief executive officer periodically leads employee meetings intended to reinforce the importance of sustainability and regularly meets with small groups of employees to receive their feedback on our business.
Our employees are typically engaged in our mission of sustainability and we believe this engagement improves their performance, as well as our employee recruitment and retention. Our chief executive officer periodically leads employee meetings intended to reinforce the importance of our mission and regularly meets with small groups of employees to receive their feedback on our business.
In 2017, we believe we were the first U.S-based public company to commit to the Climate Disclosure Standards Board led initiative on implementing the recommendations of the Financial Stability Board’s Task Force for Climate-related Financial Disclosures (“TCFD”) and provide the recommended disclosures in our Form 10-K.
In 2017, we believe we were the first U.S-based public company to commit to the Climate Disclosure Standards Board led initiative on implementing the recommendations of the Financial Stability Board’s Task Force for Climate-related Financial Disclosures (“TCFD”).
We know that the effects of climate change are already disproportionately impacting disadvantaged communities, and these adverse outcomes will be exacerbated if we do not eliminate harmful g reenhouse gas emissions. Equally so, we acknowledge the legacy of discriminatory policies in creating and perpetuating this imbalance.
We know that the effects of climate change are already disproportionately impacting disadvantaged communities, and these adverse outcomes will be exacerbated if we do not eliminate harmful g reenhouse gas emissions. Equally so, we acknowledge the legacy of discriminatory policies in creating and perpetuating this imbalance. We believe that the energy transition presents an opportunity to address these disparities. .
For additional information concerning these competitive risks, see “Item 1A. Risk Factors—We operate in a competitive market, which may impact the terms of the investments we make.” INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND OTHER LEADERSHIP TEAM PERSONNEL Our executive officers and other leadership team personnel and their biographies are provided below. Jeffrey A.
For additional information concerning these competitive risks, see “Item 1A. Risk Factors—We operate in a competitive market, which may impact the terms of the investments we make.” INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND OTHER LEADERSHIP TEAM PERSONNEL Our executive officers and other leadership team personnel and their biographies are provided below. On February 13, 2025, we announced that Charles W.
We - 9 - run a periodic education series that includes internal and external speakers presenting topics of interest that are relevant to our employees. We provide multiple learning solutions that cover a wide range of areas such as diversity, equity, and inclusion training, leadership skills, financial knowledge, technology training, and presentation skills.
We run a periodic education series that includes internal and external speakers presenting topics of interest that are relevant to our employees. We provide multiple learning solutions that cover a wide range of areas such as leadership skills, financial knowledge, technology training, presentation skills, and training intended to support an inclusive environment for all.
Reynolds worked several years at New York State Electric and Gas as an energy trader and engineer. Ms. Reynolds received her Bachelor of Science degree in Mechanical Engineering from Rutgers University, The State University of New Jersey.
Reynolds worked several years at New York State Electric and Gas as an energy trader and engineer. Ms. Reynolds received her Bachelor of Science degree in Mechanical Engineering from Rutgers University, The State University of New Jersey. Daniela Shapiro , 50, has served as a managing director since 2024. Ms.
In addition, we operate our business in a manner intended to reduce our own environmental impact, including by purchasing carbon offsets to mitigate the impact of our office operations, encouraging recycling and composting, and offering clean transportation employee incentives for electric and hybrid vehicles.
As described under “Investment Strategy”, we quantify the carbon impact of each of our investments. In addition, we operate our business in a manner intended to reduce our own environmental impact, including by purchasing renewable energy credits to mitigate the impact of our office operations, encouraging recycling and composting, and offering clean transportation employee incentives for electric and hybrid vehicles.
Amin held multiple commercial and strategic roles in the utility and non-utility businesses, and - 14 - ultimately became responsible for the unregulated company’s investment activities overseeing its growth through sourcing, diligence, and execution of new projects in renewable and industrial energy. Prior to joining DTE, Mr.
Amin held multiple commercial and strategic roles in the utility and non-utility businesses, and ultimately became responsible for the unregulated company’s investment activities overseeing its growth through sourcing, diligence, and execution of new projects in renewable and industrial energy. Prior to joining DTE, Mr. Amin worked for several years at Ford Motor Co. and Visteon Corporation as an engineer. Mr.
When issuing debt, we generally provide the estimated carbon emission savings using CarbonCount, and in some instances are able to achieve better borrowing rates by achieving certain CarbonCount scores.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Human Capital Metrics”. When issuing debt, we generally provide the estimated carbon emission savings using CarbonCount, and in some instances are able to achieve better borrowing rates by achieving certain CarbonCount scores.
Amin served in a number of roles at DTE Energy, including its vice president of business development, strategy, and mergers and acquisitions of the unregulated portfolio company from 2018 to 2023. While at DTE, Mr.
Amin leads the on-balance sheet portfolio management group and risk management functions, and supports the Company’s underwriting process. Prior to joining the Company, Mr. Amin served in a number of roles at DTE Energy, including its vice president of business development, strategy, and mergers and acquisitions of the unregulated portfolio company from 2018 to 2023. While at DTE, Mr.
Lipson , 56, has served as president and our chief executive officer since 2023. Prior to becoming chief executive officer, Mr. Lipson served as an executive vice president and our chief operating officer since 2021 and as our chief financial officer since 2019. Previously, Mr.
Prior to becoming chief executive officer, Mr. Lipson served as an executive vice president and our chief operating officer since 2021 and as our chief financial officer since 2019. Previously, Mr. Lipson was president and chief executive officer and director of Congressional Bank (now Forbright Bank). Mr.
Lipson received a Bachelor of Science degree in Economics from Pennsylvania State University in 1989 and a Master of Business Administration in Finance from New York University’s Leonard N. Stern School of Business in 1993. Marc T.
Lipson also previously served in various roles for CapitalSource, Bank of America, and its predecessor FleetBoston Financial. Mr. Lipson received a Bachelor of Science degree in Economics from Pennsylvania State - 13 - University in 1989 and a Master of Business Administration in Finance from New York University’s Leonard N. Stern School of Business in 1993. Marc T.
See additional discussion in “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and Capital Resources” regarding our ongoing evaluation of our leverage limits and fixed-rate debt targets.
Operationally, we target a leverage ratio below our Board’s target limit, in the range of 1.8 to 2.0 to 1. See additional discussion in “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and Capital Resources” regarding our ongoing evaluation of our leverage limits and fixed-rate debt targets.
C ertain of our debt issuances have been evaluated to determine that they meet the environmental eligibility criteria for green bonds as defined by the International Capital Markets Association’s Green Bond Principles. - 12 - COMPETITION We compete against a number of parties, including banks, private equity, hedge or infrastructure investment funds, insurance companies, mutual funds, institutional investors, investment banking firms, specialty finance companies, utilities, independent power producers, project developers, pension funds, governmental bodies, private credit platforms, green banks, and public entities established to own infrastructure assets and other entities.
COMPETITION We compete against a number of parties, including banks, private equity, hedge or infrastructure investment funds, insurance companies, mutual funds, institutional investors, investment banking firms, specialty finance companies, utilities, independent power producers, project developers, pension funds, governmental bodies, private credit platforms, green banks, and public entities established to own infrastructure assets and other entities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations - Environmental Metrics”. In addition to the above environmental reporting initiatives, in 2022, we reported our corporate emissions under PCAF, a global financial industry-led partnership to implement a consistent and transparent disclosure framework to report carbon emissions and avoided emissions resulting from financed assets.
In addition to the above environmental reporting initiatives, beginning in 2022, we report our corporate emissions under PCAF, a voluntary global financial industry-led partnership to implement a consistent and transparent disclosure framework to report carbon emissions and avoided emissions resulting from financed assets. We also disclose metrics related to our Human Capital Strategy. Refer to “Item 7.
We take a values-driven, broad view of diversity, equity, and inclusion. We believe that fostering an internal climate that is supportive and allows people of all backgrounds to flourish lends itself to the highest levels of company performance and facilitates the attraction and retention of best-in-class talent. We also believe it is inherently the right way to conduct business.
We take a values-driven, broad view of diversity, equity, and inclusion for all. We believe that fostering an internal culture of belonging that allows people of all backgrounds to flourish lends itself to the highest levels of company performance and facilitates the attraction and retention of best-in-class talent. Employees who hold divergent opinions are encouraged to voice their views.
In addition to carbon emissions avoidance, we also consider other environmental attributes, such as water use reduction, stormwater remediation benefits and stream restoration benefits. - 8 - We believe that our long history of climate solutions investing, the experience, expertise and relationships of our management team, the anticipated credit strength of the obligors or investees involved in our investments and the size and growth potential of our market, position us well to capitalize on our strategy.
We believe that our long history of climate solutions investing, the experience, expertise and relationships of our management team, the anticipated credit strength of the obligors or investees involved in our investments and the size and growth potential of our market, position us well to capitalize on our strategy. - 9 - Refer to Item 7.
Amin worked for several years at Ford Motor Co. and Visteon Corporation as an engineer. Mr. Amin holds a Bachelor of Science degree and a Master of Science degree in electrical engineering from the University of Michigan, as well as a Master of Business Administration degree from the University of Michigan’s Ross School of Business.
Amin holds a Bachelor of Science degree and a Master of Science degree in electrical engineering from the University of Michigan, as well as a Master of Business Administration degree from the University of Michigan’s Ross School of Business. Steven L.
The mix of our Portfolio is expected to vary over time, as we seek to manage the diversity of our Portfolio by, among other factors, project type, project operator, type of investment, type of technology, transaction size, geography, obligor, and maturity.
The mix of our Portfolio is expected to vary over time, as we seek to manage the diversity of our Portfolio by, among other factors, project type, project operator, type of investment, type of technology, transaction size, geography, obligor, and maturity. - 6 - As of December 31, 2024, assets held in our co-investment structures that were not consolidated as part of our Portfolio but held by our investment partners in these structures totaled approximately $300 million.
Over time, as market conditions change, we may use other forms of financial leverage in addition to these financing arrangements.
During periods of market disruption, certain sources of financing may be less accessible than others which may impact our financing decisions. Over time, as market conditions change, we may use other forms of financial leverage in addition to these financing arrangements.
Mr. Haile-Mariam received his Bachelor of Science degree in accounting and Master of Business Administration in finance from the University of Connecticut. Annmarie Reynolds , 54, has served as a managing director since joining the Company in 2022 and is responsible for building and growing the Company’s investment in markets beyond current asset classes. Prior to joining the Company, Ms.
Mr. Haile-Mariam received his Bachelor of Science degree in accounting and Master of Business Administration in finance from the University of Connecticut. Annmarie Reynolds , 55, has served as a senior managing director since 2024. Ms.
Our 2023 CarbonCount and avoided emissions for investments originated in 2023 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Environmental Metrics”.
As discussed in the “Investment Strategy” section above, we quantify the environmental impact of every transaction we execute through the application of CarbonCount. Our 2024 CarbonCount and avoided emissions for investments originated in 2024 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Environmental Metrics”.
We elected and qualified to be taxed as a REIT for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2013 through our taxable year ended December 31, 2023.
We are committed to providing transparent disclosures on our human capital management, which can be found herein in the section titled “Human Capital Strategy.” We elected and qualified to be taxed as a REIT for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2013 through our taxable year ended December 31, 2023.
We are a signatory to the United Nations Global Compact, an initiative focused on responsible business practices related to human rights, labor, the environment and anti-corruption.
We are a signatory to the United Nations Global Compact, an initiative focused on responsible business practices related to human rights, labor, the environment and anti-corruption. Sustainability. Our business and business strategy are focused on addressing climate change, in part through the reduction of carbon emissions that have been scientifically linked to climate change.
We are determined to incorporate these ideals and actions across our entire business, including in our process for underwriting investments, our engagement with business partners, our human capital strategy, philanthropy, and policy advocacy efforts.
These principles inform our process for underwriting investments, our engagement with business partners, our human capital strategy, philanthropy, and policy advocacy efforts.
Our energy efficiency debt investments are usually assigned the payment stream from the project savings and other contractual rights, often using our pre-existing master purchase agreements with the ESCOs.
Our debt investments in various renewable energy or other sustainable infrastructure projects or portfolios of projects are generally secured by the installed improvements, or other real estate rights. Our energy efficiency debt investments are usually assigned the payment stream from the project savings and other contractual rights, often using our pre-existing master purchase agreements with the energy service companies (“ESCOs”).
For GC assets, the off-takers or counterparties may be utility or electric users who have entered into contractual commitments, such as power purchase agreements (“PPAs”), to purchase power produced by a renewable energy project at a specified price with potential price escalators for a portion of the project’s estimated life.
The off-takers or counterparties for GC assets may be utility, electric users, or participants in the wholesale electric power markets who have entered into contractual commitments, such as power purchase agreements (“PPAs”), to purchase power produced by a renewable energy project at a specified price with potential price escalators for a portion of the project’s estimated life; and • Fuels, Transport, and Nature (“FTN”): a range of infrastructure assets that are designed to reduce emissions and/or provide environmental benefits in projects beyond the power grid, such as transportation and fuels, including renewable natural gas (RNG) plants, transportation fleet enhancements, and ecological restoration projects, among others.
There can, however, be no assurance with regard to any specific terms of such pipeline transactions or that any or all of the transactions in our pipeline will be completed. We are committed to leadership in transparent disclosure on sustainability, impact, and governance matters.
Our pipeline represents transactions that could potentially close in the next 12 months. There can, however, be no assurance with regard to any specific terms of such pipeline transactions or that any or all of the transactions in our pipeline will be completed.
We review all of these policies on a periodic basis with our employees. Our business is managed by our leadership team, subject to the supervision and oversight of our Board. Our directors stay informed about our business by attending meetings of our Board and its committees and through supplemental reports and communications.
We review all of these policies on a periodic basis with our employees. See Exhibit 19.1 to this Form 10-K for these policies. Our business is managed by our leadership team, subject to the supervision and oversight of our Board.
These transactions allow us to participate in the cash flows associated with these projects, typically on a priority basis. Our debt investments in various renewable energy or other sustainable infrastructure projects or portfolios of projects are generally secured by the installed improvements, or other real estate rights.
Our equity investments in climate solutions projects are operated by various renewable energy companies or by joint ventures in which we participate. These transactions allow us to participate in the cash flows associated with these projects, typically on a priority basis.
In December 2023, our board of directors approved our revocation of our REIT status effective January 1, 2024, and we will be taxed as a C Corporation beginning with tax year 2024. We operate our business in a manner that permits us to maintain our exemption from registration as an investment company under the 1940 Act.
In December 2023, our Board approved our revocation of our REIT status effective January 1, 2024, and we are taxed as a C Corporation beginning with tax year 2024.
We also own, both directly and through equity investments, land that is leased under long-term agreements to renewable energy projects where our investment returns are typically senior to most project costs, debt, and equity.
We invest in land that is leased under long-term agreements to renewable energy projects where our investment returns are typically senior to most project costs, debt, and equity. Investing greater than 10% of our assets in any single investment requires the approval of a majority of our independent directors.
The decision on how we finance our business is largely driven by our target capital structure, and by market conditions including the overall interest rate environment, prevailing credit spreads and the terms of available financing. During periods of market disruption, certain sources of financing may be less accessible than others which may impact our financing decisions.
Achieving investment grade status has further enhanced our financing strategy by improving our access to capital and lowering our cost of capital. The decision on how we finance our business is largely driven by our target capital structure, and by market conditions including the overall interest rate environment, prevailing credit spreads and the terms of available financing.
For BTM assets, the off-taker or counterparty may be the building owner or occupant, and our investment may be secured by the installed improvements or other real estate rights.
The off-taker or counterparty for BTM assets may be the building owner or occupant, and our investment may be secured by the installed improvements or other real estate rights; • Grid-Connected (“GC”) : utility-scale renewable energy projects that deploy cleaner energy sources, such as solar, solar-plus-storage, and wind, to generate cleaner, lower cost energy.
AVAILABLE INFORMATION We maintain a website at www.hasi.com. Information on our website is not incorporated by reference in this Form 10-K.
Shapiro received her Bachelor of Science degree in Electrical Engineering from UNIFEI in Brazil, and her Master of Business Administration degree from Northwestern University’s Kellogg School of Management. AVAILABLE INFORMATION We maintain a website at www.hasi.com. Information on our website is not incorporated by reference in this Form 10-K.
Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, for additional discussion on the performance of our Portfolio. FINANCING STRATEGY We believe we have available a broad range of financing sources as part of our strategy to fund our investments.
We believe we have available a broad range of financing sources as part of our strategy to fund our investments.
Sustainability is at the core of our business model and influences every investment decision which is why we require all HASI investments to be neutral to negative on incremental carbon emissions or have some other tangible environmental benefit such as reducing water consumption or increasing resilience to extreme events.
For FTN assets, the off-takers may be oil and gas refiners, industrial companies, and vertically integrated electric utilities. One of the defining criteria of our investment strategy is that all HASI investments are neutral to negative on incremental carbon emissions or have some other tangible environmental benefit such as reducing water consumption or increasing resilience to extreme weather events.
In 2021, we established targets for our transition to net-zero carbon emissions by 2050 using the foundational framework developed by the Science Based Targets Initiative. We have since validated a net-zero target with the Net Zero Asset Managers Alliance, which commits us to achieving net zero carbon intensity for our financed emissions by 2050.
We have also adopted policies focused on minimizing the environmental impact of our operations. In 2021, we established - 11 - targets for our transition to net-zero carbon emissions by 2050 using the foundational framework developed by the Science Based Targets Initiative. Impact.
We invest in a variety of asset classes across our three primary climate solutions markets: Behind the Meter Grid-Connected Fuels, Transport, and Nature • Residential Solar & Storage • Utility-scale Solar • Renewable Natural Gas • Community Solar and Commercial & Industrial Solar • Onshore wind • Fleet Decarbonization • Energy Efficiency • Battery Energy Storage Systems • Ecological Restoration We are internally managed by a management team that has extensive relevant industry knowledge and experience, and a team of over 130 climate finance professionals.
Partnering with these clients, we are able to earn attractive risk-adjusted returns by investing in a variety of asset classes across our three primary climate solutions markets: Behind the Meter Grid-Connected Fuels, Transport, and Nature (BTM) (GC) (FTN) • Residential solar and storage • Utility-scale solar • Renewable natural gas • Community, commercial, and industrial solar and storage • Onshore wind • Fleet decarbonization • Energy efficiency • Battery energy storage systems • Ecological restoration Through December 31, 2024, we have cumulatively closed more than 1,250 investments spanning more than 100 different clients since 1998.
As of December 31, 2023, our Portfolio consisted of over 520 investments, with approximately 48% of our Portfolio invested in BTM assets, approximately 37% invested in GC assets, and approximately 15% invested in FTN investments.
As of December 31, 2024, our Portfolio totaled approximately $6.6 billion, consisting of over 550 investments. Approximately 47% of our Portfolio is invested in BTM assets, approximately 39% invested in GC assets, and approximately 14% invested in FTN investments.
As of December 31, 2023, we held approximately $6.2 billion of transactions on our balance sheet, which we refer to as our “Portfolio.” For those transactions that we choose not to hold on our balance sheet, we transfer all or a portion of the economics of the transaction, typically using securitization trusts, to institutional investors in exchange for cash and, in certain cases, residual interests in the trusts and ongoing fees.
As of December 31, 2024, our managed assets totaled approximately $13.7 billion, and generally fall into one of three categories: (1) our Portfolio, which primarily consists of receivables and equity method investments we have retained on our balance sheet, (2) the portion of assets in our co-investment structures that are not included in our Portfolio but held by our investment partners in these structures, and (3) assets we have securitized by transferring all or a portion of the economics of the transaction, typically using securitization trusts, to institutional investors in exchange for cash and, in certain cases, residual interests in the trusts and ongoing fees.
We have long-standing relationships with some of the leading clean energy project developers, owners and operators, utilities, and energy service companies (“ESCOs”), that provide recurring, programmatic investment and fee-generating opportunities. We measure and report the efficiency with which all HASI investments avoid carbon emissions using CarbonCount®, producing a quantitative impact score of the avoided CO 2 equivalent .
We have long-standing, programmatic relationships with some of the leading U.S. clean energy project developers, owners and operators, utilities, and energy service companies, which provide recurring, investment and fee-generating opportunities, while also enabling scale benefits and operational and transactional efficiencies.
We adhere to a blended learning approach with the understanding that our people learn from experiences (on the job and in life), from other people (mentors or supportive managers), and from formal learning and training programs. We acknowledge that learning is highly individualized and needs to be offered in a way that is most conducive to a specific learner’s needs.
We continuously evaluate our employees’ level of engagement through in-person or remote meetings and through formal surveys or similar tools administered on a periodic basis. - 10 - We adhere to a blended learning approach with the understanding that our people learn from experiences (on the job and outside of work), from other people (mentors or supportive managers), and from formal learning and training programs.
Rose is a CFA charter holder and has passed the CPA examination. He holds a Series 63 and 79 securities licenses. Richard R. Santoroski , 59, has served as executive vice president and a head of portfolio management since October 2021, previously serving as chief analytics officer since January 2021 after joining the Company in 2020 as a managing director.
Rose is a CFA charter holder and has passed the CPA examination. He holds a Series 63 and 79 securities licenses. Viral Amin, 53, joined the Company as a senior vice president in 2023, and in 2024 became executive vice president and chief risk officer. Mr.
We make our investments utilizing a variety of structures, including: • equity investments in either preferred or common structures in unconsolidated entities; • commercial and government receivables or securities, and • real estate. Our equity investments in climate solutions projects are operated by various renewable energy companies or by joint ventures in which we participate.
In addition, we typically secure our investments with collateral that we are confident will support the return of our capital, further lowering the risk of our investments. We make our investments via a variety of structures, including: • equity investments in either preferred or common structures in unconsolidated entities; • commercial and government receivables or securities, and • real estate.
We believe in transparent reporting relating to sustainability and impact matters because we believe such reporting improves the understanding of our financial results. As discussed in the “Investment Strategy” section above, we quantify the environmental impact of every transaction we execute through the application of CarbonCount.
Our directors stay informed about our business by attending meetings of our Board and its committees and through supplemental reports and communications. We believe in transparent reporting relating to sustainability and impact matters because we believe such reporting improves the understanding of our financial results.
Beginning in 2013, we became one of the first capital providers to evaluate the climate impact of our Portfolio by utilizing CarbonCount.
Beginning in 2013, we became one of the first capital providers to evaluate the climate impact of our investments, and we measure and report the efficiency with which all HASI investments avoid carbon emissions using CarbonCount®, our proprietary quantitative impact score of the avoided carbon dioxide equivalent emissions.
We may also consider the use of special purpose entities or funds in which outside investors participate to allow us to expand the investments that we make or to manage our Portfolio diversification.
We may consider further use of similar structures to allow us to expand the investments that we make or to manage our Portfolio diversification. During 2024, we received a second investment grade rating from a major rating agency, which enabled our bonds to be included in investment grade bond indices.
We also meet no less than quarterly as a Company to provide information to employees on our mission, strategic planning and financial results. We continuously evaluate our employees’ level of engagement through in-person or remote meetings that include asking open-ended questions and through formal surveys or similar tools administered on a periodic basis.
We also meet no less than quarterly as a company to provide information to employees on our strategy, mission, and financial results.
Our pipeline of transactions that could potentially close in the next 12 months consists of opportunities in which we will be the lead originator as well as opportunities in which we may participate with other institutional investors. As of December 31, 2023, our pipeline consisted of more than $5.0 billion in new equity, debt and real estate opportunities.
As of December 31, 2024, our pipeline consisted of more than $5.5 billion in new equity, debt and real estate opportunities. Of our pipeline, 48% is related to BTM assets and 25% is related to GC assets, with the remainder related to FTN.
Decisions regarding staffing, selection, and promotions are made on the basis of individual qualifications related to the requirements of the position. We are committed to identifying and developing the next generation of leaders. We endeavor to select qualified individuals from a diverse pool of candidates derived from broad outreach efforts when we are recruiting.
We endeavor to select qualified individuals from a diverse pool of candidates derived from broad outreach efforts when we are recruiting. We are committed to the development and/or promotion of highly-qualified personnel from all demographics including women, people of color and other recognized groups for management and Board positions.
Our programmatic client partnership, flexible capital and aligned goals enable repeat business and operational efficiencies. Through our specialized platform, we offer stockholders access to attractive risk adjusted returns from direct asset investing in diverse energy transition end markets. Our investments take many forms, including equity, joint ventures, real estate, commercial and government receivables or securities, and other financing transactions.
Our investments take many forms, including equity, joint ventures, real estate, commercial and government receivables or securities, and other financing transactions.
We support an innovative, creative culture where people can bring their best and most authentic selves to work. Employees who hold divergent opinions are encouraged to voice their views. We track and report internally on key talent metrics including workforce demographics, critical role pipeline data, diversity data, and engagement and inclusion indices.
We track and report internally on key talent metrics including workforce demographics, critical role pipeline data, and engagement and inclusion indices. Decisions regarding staffing, selection, and promotions are made on the basis of individual qualifications related to the requirements of the position.
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Item 1. Business GENERAL HASI is a climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $12 billion in managed assets, our vision is that every investment improves our climate future.
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Item 1. Business COMPANY OVERVIEW HASI is an investor in sustainable infrastructure assets advancing the energy transition. Our investment strategy is focused on actively partnering with clients to deploy capital primarily in income-generating real assets that are supported by long-term recurring cash flows.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we believe that these financings were properly treated as financings of our TRSs for U.S. federal income tax purposes, no assurance can be provided that the IRS would not assert that such financings should be treated as issued by other entities in our structure, which could impact our compliance with the TRS limitation and the other REIT requirements during the period that we elected to be taxed as a REIT.
Biggest changeAlthough we believe that these financings were properly treated as financings of our TRSs for U.S. federal income tax purposes, no assurance can be provided that the IRS would not assert that such financings should be treated as issued by other entities in our structure, which could impact our compliance with the TRS limitation and the other REIT requirements during the period that we elected to be taxed as a REIT. - 28 - If the IRS were to determine that we failed to qualify as a REIT for any prior taxable year ended on or before December 31, 2023, and we do not qualify for certain statutory relief provisions, we would be subject to U.S. federal income tax on our taxable income for such taxable year at the applicable corporate rate.
These projects may be unable to renegotiate these contracts once their terms expire on equally favorable terms or at all. If it is not possible to renegotiate these contracts on favorable terms, our business, financial condition, results of operations, and prospects could be materially and adversely affected.
These projects may be unable to renegotiate these contracts on equally favorable terms or at all once their terms expire. If it is not possible to renegotiate these contracts on favorable terms, our business, financial condition, results of operations, and prospects could be materially and adversely affected.
The presence of hazardous substances, if any, may adversely affect our ability to sell the affected real property or the project and we may incur substantial remediation costs, thus harming our financial condition. Our insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments.
The presence of hazardous substances, if any, may adversely affect our ability to sell the affected real property or the project and we may incur substantial remediation costs, thus harming our financial condition. Insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments.
Some of the factors that have or in the future could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; • changes in the mix of our investment products and services, including the level of securitizations or fee income in any quarter; • actual or perceived conflicts of interest with individuals, including our executives; • our ability to arrange financing for projects; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • seasonality in construction and demand for our investments; • actual or anticipated accounting problems; • publication of research reports about us or the climate solutions industry; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • commodity price changes; • interest rate changes; • additions to or departures of our key personnel; • speculation or negative publicity in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock, and would result in increased interest expenses on certain of our debt; • changes in governmental policies, regulations or laws; • failure to maintain our exemption from registration as an investment company under the 1940 Act; • price and volume fluctuations in the stock market generally; and • general market and economic conditions, including the current state of the credit and capital markets.
Some of the factors that have or in the future could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; • changes in the mix of our investment products and services, including the level of securitizations or fee income in any quarter; • actual or perceived conflicts of interest with individuals, including our executives; • our ability to arrange financing for projects; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • seasonality in construction and demand for our investments; • actual or anticipated accounting problems; • publication of research reports about us or the climate solutions industry; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • commodity price changes; • interest rate changes; • additions to or departures of our key personnel; - 35 - • speculation or negative publicity in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock, and would result in increased interest expenses on certain of our debt; • changes in governmental policies, regulations or laws; • failure to maintain our exemption from registration as an investment company under the 1940 Act; • price and volume fluctuations in the stock market generally; and • general market and economic conditions, including the current state of the credit and capital markets.
Although there is limited authority directly on point, given the nature of, and the extent to which, the structural improvements securing the receivables held by us during the period we elected to be taxed as a REIT were integrated into and served the related buildings, we believe that the better view is that the nature and scope of our rights in such buildings that inured to us as a result of our receivables were sufficient to satisfy the requirements of the Real Property Regulations described above.
Although there is limited authority directly on point, given the nature of, and the extent to which, the structural improvements securing the receivables held by us during the period we elected to be taxed as a REIT were integrated into and served the related buildings, we believe that the better view is that the nature and scope of our rights in such buildings that inured to us as a result of our receivables were sufficient to - 27 - satisfy the requirements of the Real Property Regulations described above.
Decreases in interest rates, in general, may over time cause: (1) project owners to be more interested in borrowing or raising equity thus increase the demand for our assets; (2) prepayments on our assets, to the extent allowed, to increase; (3) the interest expense associated with our borrowings to decrease; (4) the market value of our fixed rate or fixed return assets to increase; and (5) the market value of any fixed-rate interest rate swap agreements to decrease.
Decreases in interest rates, in general, may over time cause: (1) project owners to be more interested in borrowing or raising equity thus increase the demand for our assets; (2) prepayments on our assets, to the extent allowed, to increase; (3) the interest expense associated with the project’s borrowings to decrease; (4) the market value of the project’s fixed rate or fixed return assets to increase; and (5) the market value of any fixed-rate interest rate swap agreements to decrease.
As a holder of the residual value or other such interests, we are more exposed to losses on - 30 - the underlying collateral because the interest we retain in the securitization vehicle or other entity would be subordinate to the more senior notes or interests issued to investors and we would, therefore, absorb all of the losses, up to the value of our interests, sustained with respect to the underlying assets before the owners of the notes or other interests experience any losses.
As a holder of the residual value or other such interests, we are more exposed to losses on the underlying collateral because the interest we retain in the securitization vehicle or other entity would be subordinate to the more senior notes or interests issued to investors and we would, therefore, absorb all of the losses, up to the value of our interests, sustained with respect to the underlying assets before the owners of the notes or other interests experience any losses.
We were entitled to rely on this Ruling for those assets which fit within the scope of the Ruling only to the extent that we had the legal and contractual rights described in the Ruling, and we operated in accordance with the relevant facts described in the Ruling request we submitted, such facts were accurately presented and only to the extent that the Ruling was not inconsistent with the Real Property Regulations (as discussed in more - 36 - detail below).
We were entitled to rely on this Ruling for those assets which fit within the scope of the Ruling only to the extent that we had the legal and contractual rights described in the Ruling, and we operated in accordance with the relevant facts described in the Ruling request we submitted, such facts were accurately presented and only to the extent that the Ruling was not inconsistent with the Real Property Regulations (as discussed in more detail below).
Potential sources for disruption, damage or failure of our information technology systems include, without limitation, computer viruses, security - 27 - breaches, human error, cyber- attacks, natural disasters and defects in design. Additionally, due to the size and nature of our company, we rely on third-party service providers for many aspects of our business.
Potential sources for disruption, damage or failure of our information technology systems include, without limitation, computer viruses, security breaches, human error, cyber- attacks, natural disasters and defects in design. Additionally, due to the size and nature of our company, we rely on third-party service providers for many aspects of our business.
Government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exemption from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the 1940 Act. - 28 - We conduct our businesses primarily through our subsidiaries and our operations so that we comply with the 40% test.
Government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exemption from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the 1940 Act. We conduct our businesses primarily through our subsidiaries and our operations so that we comply with the 40% test.
Our existing credit facilities and debt contain, and any future financing facilities may contain, various affirmative and negative covenants, including maintenance of an interest coverage ratio and limitations on the incurrence of liens and indebtedness, investments, fundamental organizational changes, dispositions, changes in the nature of business, transactions with affiliates, use of proceeds and stock repurchases.
Certain of our existing credit facilities and debt contain, and any future financing facilities may contain, various affirmative and negative covenants, including maintenance of an interest coverage ratio and limitations on the incurrence of liens and indebtedness, investments, fundamental organizational changes, dispositions, changes in the nature of business, transactions with affiliates, use of proceeds and stock repurchases.
Failure to qualify as a REIT for this and prior taxable years would subject us to U.S. federal income tax and potentially state and local tax. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2013, but recently terminated our election, effective January 1, 2024.
Failure to qualify as a REIT for prior taxable years would subject us to U.S. federal income tax and potentially state and local tax. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2013, but recently terminated our election, effective January 1, 2024.
For example, Federal Energy Regulatory Commission (“FERC”) recently conducted its own review of grid resiliency and the functioning of electricity markets and has made, and could continue to make, changes to policies and regulations related to the function of the electricity markets and grid resiliency which may negatively impact the use of renewable energy or encourage the use of fossil fuel energy over renewable energy.
For example, Federal Energy Regulatory Commission (“FERC”) conducted its own review of grid resiliency and the functioning of electricity markets and has made, and could continue to make, changes to policies and regulations related to the function of the electricity markets and grid resiliency which may negatively impact the use of renewable energy or encourage the use of fossil fuel energy over renewable energy.
In addition, government counterparties also may have the discretion to change or increase regulation of project operations, or implement laws or regulations affecting project operations, separate from any contractual - 15 - rights they may have. These actions could adversely impact the efficient and profitable operation of the projects in which we invest.
In addition, government counterparties also may have the discretion to change or increase regulation of project operations, or implement laws or regulations affecting project operations, separate from any contractual rights they may have. These actions could adversely impact the efficient and profitable operation of the projects in which we invest.
In many cases, in addition to contractual protections and remedies, project owners may seek guaranties, warranties and construction bonding to provide additional protection. The warranties provided by the third parties and, in some cases, their subcontractors, typically limit any direct harm that results from relying on their products and services.
In many cases, in addition to contractual protections and remedies, project owners may seek guaranties, warranties and construction bonding to provide additional protection. - 24 - The warranties provided by the third parties and, in some cases, their subcontractors, typically limit any direct harm that results from relying on their products and services.
Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of an entity in which we have invested, holders of instruments ranking senior to our investment in that project or business would typically be entitled to receive payment in full before we receive any - 20 - distribution.
Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of an entity in which we have invested, holders of instruments ranking senior to our investment in that project or business would typically be entitled to receive payment in full before we receive any distribution.
If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, - 33 - interest rate fluctuations and conditions in capital markets have, or in the future could, affect the market value of our common stock.
If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and conditions in capital markets have, or in the future could, affect the market value of our common stock.
Our ability to originate new assets could be adversely affected if one or more of the ESCOs or other origination sources with whom we have relationships are suspended or debarred or fail to win new, or renew existing, contracts.
Our ability to originate new assets could be adversely affected if one or more of the - 18 - ESCOs or other origination sources with whom we have relationships are suspended or debarred or fail to win new, or renew existing, contracts.
As a result, if a hedging counterparty cannot perform under the terms of the hedge, we would not receive payments due under that hedge, we may lose any unrealized gain associated with the hedge and the hedged liability would cease to be hedged.
As a result, if a hedging counterparty cannot perform under the terms of the hedge, we would not receive payments due under that hedge, we may lose any unrealized gain - 34 - associated with the hedge and the hedged liability would cease to be hedged.
We do not believe that the Ruling is inconsistent with the Real Property Regulations because we believe the analysis in the Ruling was based on similar principles as the relevant - 37 - portions of the Real Property Regulations, and accordingly we do not believe that the Real Property Regulations impacted our ability to rely on the Ruling.
We do not believe that the Ruling is inconsistent with the Real Property Regulations because we believe the analysis in the Ruling was based on similar principles as the relevant portions of the Real Property Regulations, and accordingly we do not believe that the Real Property Regulations impacted our ability to rely on the Ruling.
In these cases, we could be subject to environmental liabilities with respect to these assets. To the extent that - 26 - we become liable for the removal costs, our results of operation and financial condition may be adversely affected.
In these cases, we could be subject to environmental liabilities with respect to these assets. To the extent that we become liable for the removal costs, our results of operation and financial condition may be adversely affected.
Our duties, as the general partner, to our Operating Partnership and our partners may come into conflict with the duties of our directors and officers to us. Under Delaware law, a general partner of a Delaware limited partnership owes its limited partners the duties of good faith and fair dealing.
Our duties, as the general partner, to our Operating Partnership and our partners may come into conflict with the duties of our directors and officers to us. - 25 - Under Delaware law, a general partner of a Delaware limited partnership owes its limited partners the duties of good faith and fair dealing.
To the extent those parties are unable to perform on their contractual obligations or performance guarantees we may see diminished equity returns or the special purpose entity may be unable to repay their loan timely or at all.
To the extent those parties are unable to perform on their contractual obligations or performance guarantees we may see diminished equity returns or the special purpose entity may be unable to - 22 - repay their loan timely or at all.
While the projects maintain insurance, obtain warranties from vendors and obligate contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover the lost revenues, increased expenses or liquidated damages payments should the project experience any equipment breakdowns, insurance claims or non-performance by contractors or vendors. - 24 - Some of the projects in which we invest may require substantial operating or capital expenditures in the future.
While the projects maintain insurance, obtain warranties from vendors and obligate contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover the lost revenues, increased expenses or liquidated damages payments should the project experience any equipment breakdowns, insurance claims or non-performance by contractors or vendors. - 23 - Some of the projects in which we invest may require substantial operating or capital expenditures in the future.
We provide a range of investment structures, including various types of debt and equity securities, senior and subordinated loans, real property leases, mezzanine debt, preferred equity and common equity.
We provide a range of product investment structures, including various types of debt and equity securities, senior and subordinated loans, real property leases, mezzanine debt, preferred equity and common equity.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to our provision of loan losses. - 19 - We rely on our project sponsors for financial reporting related to our project companies, and our financial statements may be materially affected if the financial reporting related to our project companies proves to be incorrect.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to our provision of loan losses. - 20 - We rely on our project sponsors for financial reporting related to our project companies, and our financial statements may be materially affected if the financial reporting related to our project companies proves to be incorrect.
These exemptions generally require that at least 55% of such subsidiaries’ portfolios must be comprised of qualifying assets that meet the requirements of the exemption.
These exemptions generally require that at least 55% of such subsidiaries’ portfolios must be comprised of qualifying assets that meet - 31 - the requirements of the exemption.
We have also established funds and special purpose entities through which we hold only a partial or subordinate interest or a residual value after taking into account our non-recourse debt facilities or a right to participate in the profits of such entity once it achieves a predefined threshold.
We have also established special purpose entities through which we hold only a partial or subordinate interest or a residual value after taking into account our non-recourse debt facilities or a right to participate in the profits of such entity once it achieves a predefined threshold.
An ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards and other tax attributes. In October 2023, our Board of Directors adopted a tax benefits preservation plan (the “Tax Benefits Preservation Plan”) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.
An ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards and other tax attributes. In October 2023, our Board adopted a tax benefits preservation plan (the “Tax Benefits Preservation Plan”) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.
The determination of our provision for loan losses requires us to make certain estimates and judgments, which may be difficult to determine. Our estimates and judgments are based on a number of factors and may not be correct. If our estimates or judgments are incorrect, our results of operations and financial condition could be severely impacted.
The determination of our provision for loan losses requires us to make certain estimates and judgments, which may be difficult to determine. Our estimates and judgments are based on a number of factors and may not be correct. If our estimates or judgments are incorrect, our results of operations and financial condition could be adversely impacted.
As a result, no assurance can be given that we will be able to make distributions to our stockholders at any time in the future or that the level of any distributions we do make to our stockholders will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect us.
Moreover, no assurance can be given that we will be able to make distributions to our stockholders at any time in the future or that the level of any distributions we do make to our stockholders will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect us.
In addition, project operations may be subject to the risk that the project owners may make business, financial or management choices with which we do not agree or the management of the project may take risks or otherwise act in a manner that does not serve our interests.
In addition, project operations may be subject to the risk that the project owners may make business, financial or management choices with which we do not agree or the management of the project may take risks or otherwise act in a manner that does not serve our interests, including not making distributions.
Climate projects are subject to various construction and operating delays and risks that have in the past caused them to, and may in the future cause them to, incur higher than expected costs or generate less than expected amounts of savings or outputs, such as electricity in the case of a renewable energy project.
Generally, any projects involving construction are subject to various construction and operating delays and risks that have in the past caused them to, and may in the future cause them to, incur higher than expected costs or generate less than expected amounts of savings or outputs, such as electricity in the case of a renewable energy project.
Although our assets or projects generally have insurance, supplier warranties, subcontractors performance assurances such as bonding and other risk mitigation measures, the proceeds of such insurance, warranties, bonding or other measures may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the future.
Although the assets or projects in which we invest generally have insurance, supplier warranties, subcontractors performance assurances such as bonding and other risk mitigation measures, the proceeds of such insurance, warranties, bonding or other measures may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the future.
Congress and other governmental and regulatory bodies have taken, are taking or may in the future take, various actions to address inflation, financial crises, or other areas of regulatory concern.
Congress and other governmental and regulatory bodies have taken, are taking or may in the future take, various actions to address inflation, financial crises, perceived trade imbalances, or other areas of regulatory concern.
Foreclosure proceedings against a project can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed investment. Our climate solutions project companies may incur liabilities that rank equally with, or senior to, our investments in such projects.
Foreclosure proceedings against a project can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed investment. The projects in which we invest may incur liabilities that rank equally with, or senior to, our investments in such projects.
We may seek to expand our projects outside of the United States in the future. These operations will be subject to a variety of risks that we do not face in the United States, including risk from changes in foreign country regulations, infrastructure, legal systems and markets.
We have begun to expand and may seek to expand our investments outside of the United States in the future. These operations will be subject to a variety of risks - 30 - that we do not face in the United States, including risk from changes in foreign country regulations, infrastructure, legal systems and markets.
These factors could materially affect these projects, which could negatively affect our business, results of operations, financial condition, and cash flow. - 23 - Our projects and their obligors are exposed to an increase in climate change or other change in meteorological conditions, which could have an impact on electric generation, revenue, insurance costs or the ability of the projects or their obligors to honor their contract obligations, all of which could adversely affect our business, financial condition and results of operations and cash flows.
Our projects and their obligors are exposed to an increase in climate change or other change in meteorological conditions, which could have an impact on electric generation, revenue, insurance costs or the ability of the projects or their obligors to honor their contract obligations, all of which could adversely affect our business, financial condition and results of operations and cash flows.
We may lose business opportunities if we do not match our competitors’ pricing, terms and structure. If we match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable risk-adjusted returns on our assets or we may be forced to bear greater risks of loss.
If we match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable risk-adjusted returns on our assets or we may be forced to bear greater risks of loss.
We own land or leasehold interests that are used by renewable energy projects. Negative market conditions or adverse events affecting tenants, or the industries in which they operate, could have an adverse impact on our underwritten returns.
We have invested in, through various structures, land or leasehold interests that are used by renewable energy projects. Negative market conditions or adverse events affecting tenants, or the industries in which they operate, could have an adverse impact on our underwritten returns.
Our stockholders are urged to consult with an independent tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in shares of our stock. Item 1B. Unresolved Staff Comments. None.
Our stockholders are urged to consult with an independent tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in shares of our stock.
The cash flows or cost savings of a project can be affected by, among other things: the terms of the power purchase or other use agreements used in such project; the creditworthiness of the off-taker or project user; price of power or services now and in the future; the technology deployed; unanticipated expenses in the development or operation of the project and changes in national, regional, state or local economic conditions, laws and regulations; and acts of God, terrorism, social unrest and civil disturbances.
The cash flows or cost savings of a project can be affected by, among other things: the terms of the power purchase or other use agreements used in such project; the creditworthiness of the off-taker or project user; price of power or services now and in the future; the technology deployed; unanticipated expenses in the development or operation of the project and changes in national, regional, state or local economic conditions, laws and regulations; and force majeure events.
Rapid changes in the values of our assets may make it more difficult for us to maintain our exemption from the 1940 Act. - 29 - If the market value or income potential of our assets changes as a result of changes in interest rates, general market conditions, government actions or other factors, we may need to adjust the portfolio mix of our real estate assets and income or liquidate our non-qualifying assets to maintain our exemption from the 1940 Act.
If the market value or income potential of our assets changes as a result of changes in interest rates, general market conditions, government actions or other factors, we may need to adjust the portfolio mix of our real estate assets and income or liquidate our non-qualifying assets to maintain our exemption from the 1940 Act.
These provisions may limit our ability to obtain distributions from the underlying assets and could impact our cash flow and expected returns. - 31 - We have issued senior unsecured notes that require us to maintain a certain amount of unencumbered assets as a part of our Portfolio, as well as to maintain certain debt coverage service ratios in order to issue additional notes.
These provisions may limit our ability to obtain distributions from the underlying assets and could impact our cash flow and expected returns. We have issued senior unsecured notes that require us to maintain a certain amount of unencumbered assets as a part of our Portfolio.
Many of our assets pay a fixed rate of interest or provide a fixed preferential return. - 18 - With respect to our business operations, increases in interest rates, have caused, and in general, may in the future cause: (1) project owners to be less interested in borrowing or raising equity and thus reduce the demand for our investments; (2) the interest expense associated with our borrowings to increase; (3) the market value of our fixed rate or fixed return assets to decline; and (4) the market value of any fixed-rate interest rate swap agreements to increase.
With respect to the projects in which we invest, increases in interest rates, have caused, and in general, may in the future cause: (1) project owners to be less interested in borrowing or raising equity and thus reduce the demand for our investments; (2) the interest expense associated with the project’s borrowings to increase; (3) the market value of the project’s fixed rate or fixed return assets to decline; and (4) the market value of any of the project’s fixed-rate interest rate swap agreements to increase.
Low natural gas prices also typically adversely affect both the price available to renewable energy projects under future power sale agreements and the price of the electricity the projects sell on either a forward or a spot-market basis.
For example, low natural gas prices may reduce the demand for projects like renewable energy that can substitute for natural gas. Low natural gas prices also typically adversely affect both the price available to renewable energy projects under future power sale agreements and the price of the electricity the projects sell on either a forward or a spot-market basis.
We may apply too much leverage to our assets or may employ an inefficient financing strategy to our assets. The use of securitizations and special purpose entities exposes us to additional risks. We hold securitized loans and often hold the most junior certificates or the residual value associated with a securitization.
We may apply too much leverage to our assets or may employ an inefficient financing strategy to our assets. The use of securitizations and special purpose entities exposes us to additional risks. We typically retain the residual value associated with a securitization.
Our underwriting process and our asset and financial management and reporting are dependent on our present and future communications and information systems. Any failure or interruption of these systems could cause delays or other problems in our originating, financing, investing, asset and financial management and reporting activities, which could have a material adverse effect on our operating results.
Any failure or interruption of these systems could cause delays or other problems in - 29 - our originating, financing, investing, asset and financial management and reporting activities, which could have a material adverse effect on our operating results.
Further, the hedges entered into by us or the projects in which we invest may not be effective which could adversely impact our economics. - 32 - If we, or our projects, choose not to pursue, or fail to qualify for, hedge accounting treatment, our operating results under GAAP may be impacted because losses on the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction.
If we, or our projects, choose not to pursue, or fail to qualify for, hedge accounting treatment, our operating results under GAAP may be impacted because losses on the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction.
Certain participants in the sustainable energy industry have experienced significant declines in the value of their equity and difficulty in raising or refinancing debt, which increases the credit risk to these companies and they may not be able to fulfill their obligations which could adversely impact our operating results. - 22 - Some of the projects in which we invest have sold their output under PPAs that expose the projects to various risks.
Certain participants in the sustainable energy industry have experienced significant declines in the value of their equity and difficulty in raising or refinancing debt, which increases the credit risk to these companies and they may not be able to fulfill their obligations which could adversely impact our operating results.
Performance of projects where we invest may be harmed by future labor disruptions and economically unfavorable collective bargaining agreements. A number of the projects where we invest could have workforces that are unionized or in the future may become unionized and, as a result, are required to negotiate the wages, benefits and other terms with many of their employees collectively.
A number of the projects where we invest could have workforces that are unionized or in the future may become unionized and, as a result, are required to negotiate the wages, benefits and other terms with many of their employees collectively.
In the case of securities ranking equally with instruments we hold, we would have to share on an equal basis any distributions with other stakeholders holding such instruments in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant project.
In the case of securities ranking equally with instruments we hold, we would have to share on an equal basis any distributions with other stakeholders holding such instruments in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant project. - 21 - We invest in joint ventures and other similar arrangements that subject us to additional risks.
Some of our project companies are structured as joint ventures, partnerships, securitizations, syndications and consortium arrangements. Part of our strategy is to participate with other institutional investors or the project’s sponsor on various climate solutions transactions.
Some of our project companies are structured as joint ventures, partnerships, securitizations, and syndications, and we also at times invest in project companies through co-investment structures. Part of our strategy is to participate with other institutional investors or the project’s sponsor on various climate solutions transactions.
We, or the projects in which we invest, enter into hedging transactions that could expose us to contingent liabilities or additional credit risk in the future and adversely impact our financial condition.
These provisions may limit our ability to leverage certain assets and limit our overall debt levels. We, or the projects in which we invest, enter into hedging transactions that could expose us to contingent liabilities or additional credit risk in the future and adversely impact our financial condition.
Our NOL carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to use them. Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods.
Additionally, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to use them. Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods.
Risks Related to Our Company Our management and employees depend on information systems and system failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.
Our management and employees depend on information systems and system failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends to our stockholders. Our underwriting process and our asset and financial management and reporting are dependent on our present and future communications and information systems.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility, and reduce the market price of shares of our stock. - 38 - Changes to the tax laws may occur, and any such changes could have an adverse effect on an investment in shares of our stock or on the market value or the resale potential of our assets.
Changes to the tax laws may occur, and any such changes could have an adverse effect on an investment in shares of our stock or on the market value or the resale potential of our assets.
Such prices, which have decreased and may continue to decrease, may reduce the demand for energy efficiency projects or other projects, including renewable energy facilities, that do not rely on fossil fuel energy sources. For example, low natural gas prices may reduce the demand for projects like renewable energy that can substitute for natural gas.
Many traditional sources of energy such as coal, petroleum-based fuels and natural gas can be influenced by the price of underlying or substitute commodities. Such prices, which have decreased and may continue to decrease, may reduce the demand for energy efficiency projects or other projects, including renewable energy facilities, that do not rely on fossil fuel energy sources.
As some of our borrowings will have a remaining balance at maturity, we may be required to enter into new borrowings at higher rates or to sell certain of our assets to repay the loan. Our credit facilities have rates that adjust on a frequent basis based on prevailing short-term interest rates.
Our borrowings may have a shorter duration than our assets. As some of our borrowings will have a remaining balance at maturity, we may be required to enter into new borrowings at higher rates or to sell certain of our assets to repay the loan.
Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our directors and officers have duties to our company under applicable Maryland law in connection with our management.
Conflicts of interest could arise as a result of our structure. Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other.
Effective January 1, 2024, we revoked our REIT election and starting in 2024 we will be taxed as a C corporation, and as a result, in 2024, we are no longer subject to this requirement. However, our current policy is to pay quarterly distributions.
Effective January 1, 2024, we revoked our REIT election and starting in 2024 we were taxed as a C corporation, and as a result, in 2024 and going forward, we were no longer subject to this requirement.
Additionally, our results of operations for a given period could be adversely affected if our determinations regarding the fair value of these assets were materially higher than the values that we ultimately realize upon their disposal. The valuation process can be particularly challenging during periods when market events make valuations of certain assets more difficult, unpredictable and volatile.
Additionally, our results of operations for a given period could be adversely affected if our determinations regarding the fair value of these assets were materially higher than the values that we ultimately realize upon their disposal.
We operate in a competitive market, which may impact the terms of our investments. We compete against a number of parties who may provide alternatives to our investments including, among others, a wide variety of financial institutions, government entities and energy industry participants.
We compete against a number of parties who may provide alternatives to our investments including, among others, a wide variety of financial institutions, government entities and energy industry participants. Increasing investor acceptance of the climate solutions market has increased the level of competition we experience.
The future success of our assets will depend, in part, on their ability to maintain satisfactory interconnection agreements.
The ability of our assets to generate revenue from certain projects depends on having interconnection arrangements and services. The future success of our assets will depend, in part, on their ability to maintain satisfactory interconnection agreements.
In addition, there is an increasing trend towards initiating or increasing fixed fees for users to have electricity service from a utility. These fees could increase our customers’ cost to use energy efficiency and renewable energy systems not supplied by the utility and make them less desirable, thereby harming our business, prospects, financial condition and results of operations.
These fees could increase our customers’ cost to use energy efficiency and - 16 - renewable energy systems not supplied by the utility and make them less desirable, thereby harming our business, prospects, financial condition and results of operations.
Such rights may be triggered at a time when we may not want them to be exercised and such rights may inhibit our ability to sell our interest in an entity within our desired time frame or on any other desired terms. - 21 - Many of our assets depend on revenues from third-party contractual arrangements, including PPAs, that expose the projects to various risks.
Such rights may be triggered at a time when we may not want them to be exercised and such rights may inhibit our ability to sell our interest in an entity within our desired time frame or on any other desired terms.
The ability and willingness of customers to pay for renewable energy systems that benefit from net metering rules may be reduced if net metering rules are eliminated or their benefits reduced, which may also impact our returns on such systems. - 16 - Existing electric utility industry regulations, and changes to regulations, may present technical, regulatory and economic barriers to the purchase and use of renewable energy and energy efficiency systems that may significantly reduce demand for systems and projects in which we invest or may adversely affect the profitability of such projects.
Existing electric utility industry regulations, and changes to regulations, may present technical, regulatory and economic barriers to the purchase and use of renewable energy and energy efficiency systems that may significantly reduce demand for systems and projects in which we invest or may adversely affect the profitability of such projects.
In addition, our projects may be exposed to a locational basis risk resulting from a difference between where the power is generated and the contracted delivery point.
In addition, our projects may be exposed to a locational basis risk resulting from a difference between where the power is generated and the contracted delivery point. These factors could materially affect these projects, which could negatively affect our business, results of operations, financial condition, and cash flow.
As a result, competitive pressures we face could have a material adverse effect on our business, financial condition and results of operations. A change in the fiscal health, level of appropriations or budgets of U.S. federal, state and local governments could reduce demand for our investments.
As a result, competitive pressures we face could have a material adverse effect on our business, financial condition and results of operations. Our business depends in part on U.S. federal, state and local government policies, and a decline in the level of government support could harm our business.
Under the Code, a corporation is generally allowed a deduction for net operating losses (“NOLs”) carried over from prior taxable years, subject to certain limitations.
Under the Code, a corporation is generally allowed a deduction for net operating losses (“NOLs”) carried over from prior taxable years, subject to certain limitations. Our NOL carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities.
Further, many of our competitors are not subject to the operating constraints associated with maintenance of an exemption from the 1940 Act. These characteristics could allow our competitors to consider a wider variety of opportunities, establish more relationships and offer better pricing and more flexible structuring than we can offer.
In addition, some of our competitors have higher risk tolerances or different risk assessments, which allow those competitors to consider a wider variety of investments and establish more relationships than we can. Further, many of our competitors are not subject to the operating constraints associated with maintenance of an exemption from the 1940 Act.
We may not be able to meet our financing obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to liquidation or sale to satisfy the obligations.
We may not be able to meet our financing obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to liquidation or sale to satisfy the obligations. - 32 - An increase in our borrowing costs relative to the interest we receive on our assets may adversely affect our profitability and our cash available for distribution to our stockholders.
An event in a non-related part of the business could have a material adverse impact on the financial strength of such end-customer, such as the effect of wildfires on the California utilities.
There is a risk that these customers may default under their contracts. In addition, many of these end-customers are large entities with wide ranging activities. An event in a non-related part of the business could have a material adverse impact on the financial strength of such end-customer, such as the effect of wildfires on the California utilities.
We do not maintain key person life insurance on any of our officers. The loss of services of one or more members of our senior management team could harm our business and our prospects. Conflicts of interest could arise as a result of our structure.
Notwithstanding these agreements, there can be no assurance that any or all members of our senior management team will remain employed by us. We do not maintain key person life insurance on any of our officers. The loss of services of one or more members of our senior management team could harm our business and our prospects.
We may refer to the energy efficiency, renewable energy and the other sustainable infrastructure projects or market collectively as climate solutions projects or the industry. Please also refer to the sections entitled “Forward-Looking Statements” and “Risk Factor Summary”.
We may refer to the energy efficiency, renewable energy and the other sustainable infrastructure projects or markets in which we participate collectively as climate solutions projects or the industry.
The loss of our ownership interest in a subsidiary or some or all of a subsidiary’s assets could have a material adverse effect on our business, financial condition and operating results.
The loss of our ownership interest in a subsidiary or some or all of a subsidiary’s assets could have a material adverse effect on our business, financial condition and operating results. - 33 - Certain of our existing credit facilities and debt contain, and any future financing facilities may contain, covenants that restrict our operations and may inhibit our ability to grow our business and increase revenues.
Many of the projects in which we invest rely on revenue or repayment from contractual commitments of end-customers, including federal, state, or local governments for energy efficiency projects or utilities or other customers under PPAs. There is a risk that these customers may default under their contracts. In addition, many of these end-customers are large entities with wide ranging activities.
Many of the projects in which we invest depend on revenues from third-party contractual arrangements, including PPAs, that expose the projects to various risks. Many of the projects in which we invest rely on revenue or repayment from contractual commitments of end-customers, including federal, state, or local governments for energy efficiency projects or utilities or other customers under PPAs.
Our Board will make determinations regarding distributions based upon various factors, including our earnings, our financial condition, our liquidity, our debt covenants, applicable provisions of the MGCL and other factors as our Board may deem relevant from time to time.
However, our current policy is to pay quarterly distributions, though the timing, declaration, amount and payment of any dividends will be within the discretion of our Board, and will depend upon various factors, including our earnings, our financial condition, our liquidity, our debt covenants, applicable provisions of Delaware law and other factors as our Board may deem relevant from time to time.
A decline in the fair market value of any asset we carry at fair value, may require us to reduce the value of such assets under GAAP. In addition, our other financial assets are subject to an impairment assessment that could result in adjustments to their carrying values.
In addition, our other financial assets are subject to an impairment assessment that could result in adjustments to their carrying values.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. - 34 - Risks Related to Our Organization and Structure Our business could be harmed if key personnel terminate their employment with us.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. Item 1B. Unresolved Staff Comments. None.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company’s information security program, led by our CTO and Deputy CISO, collaborates with various departments within the organization, such as information technology, legal, enterprise risk management, human resources, accounting, finance, and internal audit, as well as external third-party partners. This collaboration aims to identify, mitigate, and plan for potential cybersecurity threats comprehensively.
Biggest changeThey also identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods. The Company’s information security program, led by our CTO, collaborates with various departments within the organization, such as information technology, legal, enterprise risk management, human resources, accounting, finance, and internal audit, as well as external third-party partners.
Risk Factors” in this Annual Report on Form 10-K, including “Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, a misappropriation of funds, and/or damage to our business relationships, all of which could negatively impact our financial results.” Governance Our board of directors addresses our cybersecurity risk management as part of its general oversight function.
Risk Factors” in this Annual Report on Form 10-K, including “Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, a misappropriation of funds, and/or damage to our business relationships, all of which could negatively impact our financial results.” Governance Our Board addresses our cybersecurity risk management as part of its general oversight function.
Risk management and strategy We have implemented and maintain various information security processes at each of our remote and office locations designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property and confidential information that is proprietary, strategic or competitive in nature (“Information Systems and Data”).
Risk management and strategy - 36 - We have implemented and maintain various information security processes at each of our remote and office locations designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property and confidential information that is proprietary, strategic or competitive in nature (“Information Systems and Data”).
For example, (1) cybersecurity risk is addressed as a component of our enterprise risk management program; (2) the information security function works with our leadership team to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our CTO evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Finance & Risk Committee of our board of directors (the “Finance and Risk Committee”), which evaluates our overall enterprise risk.
For example, (1) cybersecurity risk is addressed as a component of our enterprise risk management program; (2) the information security function works with our leadership team to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our CTO evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Finance & Risk Committee of our Board (the “Finance and Risk Committee”), which evaluates our overall enterprise risk.
In addition, our incident response plan and vulnerability management processes include reporting to our board of directors for certain cybersecurity incidents. The Finance & Risk Committee receives periodic reports from CTO concerning our significant cybersecurity threats and risk and the processes we have implemented to address them.
In addition, our incident response plan and vulnerability management processes include reporting to our Board for certain cybersecurity incidents. The Finance & Risk Committee receives periodic reports from CTO concerning our significant cybersecurity threats and risk and the processes we have implemented to address them.
The Finance & Risk Committee also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
The Finance & Risk Committee also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation. - 37 -
Our Chief Technology Officer (“CTO”), who also serves as our chief information security officer, and Deputy Chief Information Security Officer (“Deputy CISO”) help identify, assess and manage our cybersecurity threats and risks. Collaborating with their team, they are responsible for steering the company-wide cybersecurity strategy, policy, standards, architecture, and processes.
Our Chief Technology Officer (“CTO”), who also serves as our chief information security officer, helps identify, assess and manage our cybersecurity threats and risks. Collaborating with their team, they are responsible for steering the company-wide cybersecurity strategy, policy, standards, architecture, and processes.
These include incident management, change management, network segmentation, cyber protection and containment, detection and response, and recovery. We measure our programs against the National Institute of Standards and Technology Cyber Security Framework and regularly test our controls and incident response plans. Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
We measure our programs against the National Institute of Standards and Technology Cyber Security Framework and regularly test our controls and incident response plans. Our assessment and management of material risks from cybersecurity threats are integrated into our overall risk management processes.
The Finance & Risk Committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our CTO and Deputy CISO.
The Finance & Risk Committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our CTO. The CTO has a over two decades of information technology and cybersecurity leadership experience.
Additionally, the Company consistently evaluates and enhances its processes, procedures, and management approaches in response to evolving cybersecurity landscapes. Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data. These include incident management, change management, network segmentation, cyber protection and containment, detection and response, and recovery.
Our CTO and Deputy CISO are responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Our CTO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. Our CTO is responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Removed
They also identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods.
Added
This collaboration aims to identify, mitigate, and plan for potential cybersecurity threats comprehensively. Additionally, the Company consistently evaluates and enhances its processes, procedures, and management approaches in response to evolving cybersecurity landscapes.
Removed
The CTO and Deputy CISO have a combined four decades of information technology and cybersecurity leadership experience across public and private sectors. - 39 - Our CTO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various claims and legal actions in the ordinary course of business. As of December 31, 2023, we are not currently subject to any legal proceedings that are likely to have a material adverse effect on our financial position, results of operations or cash flows. Item 4.
Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various claims and legal actions in the ordinary course of business. As of December 31, 2024, we are not currently subject to any legal proceedings that are likely to have a material adverse effect on our financial position, results of operations or cash flows. Item 4.
Mine Safety Disclosures Not applicable. - 40 - PART II
Mine Safety Disclosures Not applicable. - 38 - PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee Note 11 to our audited financial statements in this Form 10-K for details of our dividends declared in 2023 and 2022. Additionally, as we were subject to the REIT requirements to distribute at least 90% of our REIT taxable income for tax years 2023 and prior, there was a minimum amount of distributions that we were required to make.
Biggest changeSee Note 11 to our audited financial statements in this Form 10-K for details of our dividends declared in 2024 and 2023.
The 159 holders of record do not include the beneficial owners of our common stock whose shares are held by a broker or bank. Such information was obtained from The Depository Trust Company. Dividends We intend to make regular quarterly distributions to holders of our common stock.
The 161 holders of record do not include the beneficial owners of our common stock whose shares are held by a broker or bank. Such information was obtained from The Depository Trust Company. Dividends We intend to make regular quarterly distributions to holders of our common stock.
The graph assumes that $100 was invested at closing on December 31, 2018, in our shares of common stock, the S&P 500 Index, and the peer group indices and that all dividends were reinvested without the payment of any commissions.
The graph assumes that $100 was invested at closing on December 31, 2019, in our shares of common stock, the S&P 500 Index, and the peer group index and that all dividends were reinvested without the payment of any commissions.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below summarizes all of our repurchases of our common stock during 2023.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below summarizes all of our repurchases of our common stock during 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “HASI.” Holders As of February 12, 2024, we had 159 registered holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “HASI.” Holders As of February 11, 2025, we had 161 registered holders of our common stock.
No OP units were exchanged by non-controlling interest holders during the year ended December 31, 2023. The price paid per share is based on the closing price of our common stock as of the date of the exchange and withholding. - 42 - Item 6. [Reserved] None.
Non-controlling interest holders exchanged 10,000 OP units for the same number of shares of common stock during the year ended December 31, 2024. The price paid per share is based on the closing price of our common stock as of the date of the exchange and withholding. Item 6. [Reserved] None. - 40 -
The following graph is a comparison of the cumulative total stockholder return from December 31, 2018 to December 31, 2023 on shares of our common stock, the Standard & Poor’s 500 Index (the “S&P 500 Index”), and peer group indices, including the ALPS Clean Energy ETF, FTSE NAREIT All Equity REIT Index, and Global X Renewable Energy Producers ETF.
The following graph is a comparison of the cumulative total stockholder return from December 31, 2019 to December 31, 2024 on shares of our common stock, the Standard & Poor’s 500 Index (the “S&P 500 Index”), and a peer group index, the ALPS Clean Energy ETF.
Date Total number of shares purchased (1) Average price per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs 1/18/2023 6,468 $ 34.43 N/A N/A 3/5/2023 35,104 31.18 N/A N/A 5/15/2023 4,452 26.10 N/A N/A 7/31/2023 351 26.11 N/A N/A 8/15/2023 989 23.56 N/A N/A 11/15/2023 973 23.22 N/A N/A (1) During the year ended December 31, 2023, certain of our employees surrendered shares of our common stock owned by them to satisfy their tax and other compensation related withholdings associated with the vesting of restricted stock and restricted stock units.
Date Total number of shares purchased (1) Average price per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs 3/5/2024 6,198 $ 25.36 N/A N/A 5/15/2024 9,563 32.28 N/A N/A 8/15/2024 1,160 31.06 N/A N/A 11/15/2024 1,005 27.22 N/A N/A (1) During the year ended December 31, 2024, certain of our employees surrendered shares of our common stock owned by them to satisfy their tax and other compensation related withholdings associated with the vesting of restricted stock and restricted stock units.
Removed
The taxable income of the REIT can vary from our GAAP earnings due to a number of different factors, including, the book to tax timing differences of income and expense recognition from our transactions as well as the amount of taxable income of our TRSs distributed to the REIT.
Added
There can be no assurance that the performance of our common stock will continue in line with the same or similar trends depicted in the graph below. - 39 - Company or Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 HA Sustainable Infrastructure Capital, Inc. $ 100.00 $ 205.95 $ 176.97 $ 100.75 $ 102.54 $ 105.61 S&P 500 Index 100.00 118.39 152.34 124.73 157.48 196.84 Alps Clean Energy ETF 100.00 240.24 193.54 138.53 110.77 81.19 Sources: Bloomberg L.P.
Removed
We are no longer subject to these requirements for taxable years 2024 and onward. See Note 10 to our audited financial statements in this Form 10-K regarding the amount of our distributions that are taxed as ordinary income to our stockholders.
Removed
There can be no assurance that the performance of our common stock will continue in line with the same or similar trends depicted in the graph below.
Removed
In this Form 10-K we have added ALPS Clean Energy ETF, which beginning with the 2024 Form 10-K for the year ended December 31, 2024 will replace the FTSE NAREIT All Equity REIT Index and Global X Renewable Energy Producers ETF as indices in this graph.
Removed
As a growing, US-based, well-diversified, mid-cap investor in climate-positive real assets, we believe this index is well positioned to serve as a peer group index.
Removed
ALPS Clean Energy ETF is comprised of companies who generally own or operate assets similar to our investments in renewable energy projects as well other companies positively exposed to the energy transition. - 41 - Company or Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Hannon Armstrong Sustainable Infrastructure Capital, Inc. $ 100.00 $ 177.08 $ 364.69 $ 313.37 $ 178.40 $ 181.57 S&P 500 Index 100.00 131.47 155.65 200.29 163.98 207.04 Alps Clean Energy ETF 100.00 151.67 364.37 293.55 210.10 168.00 FTSE NAREIT All Equity REIT Index 100.00 128.65 122.12 172.52 129.53 144.14 Global X Renewable Energy Producers ETF 100.00 137.05 173.56 151.36 128.19 111.76 Sources: Bloomberg L.P.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

102 edited+83 added−109 removed71 unchanged
Biggest changeIn addition, Adjusted Cash Flow from Operations plus Other Portfolio Collections is not comparable to Net cash provided by (used in) financing activities in that it excludes many of our financing activities such as proceeds from common stock issuances and borrowings and repayments of unsecured debt. - 62 - For the year ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 99,689 $ 230 $ 13,309 Changes in receivables held-for-sale (51,538) 62,953 22,035 Equity method investment distributions received 30,140 110,064 21,777 Proceeds from sales of equity method investments — 1,700 300 Principal collections from receivables 197,784 125,976 148,769 Proceeds from sales of receivables 7,634 5,047 75,582 Proceeds from sales of land — 4,550 — Principal collections from investments (1) 3,805 171 414 Proceeds from sales of investments and securitization assets — 7,020 15,197 Principal payments on non-recourse debt (21,606) (30,581) (37,974) Adjusted cash flow from operations and other portfolio collections $ 265,908 $ 287,130 $ 259,409 Less: Dividends (159,786) (132,198) (113,510) Cash Available for Reinvestment $ 106,122 $ 154,932 $ 145,899 (1) Included in Other in the cash provided (used in) investing activities section of our statement of cash flows.
Biggest changeManagement uses Cash available for reinvestment in this way, and we believe that our investors use it in a similar fashion. - 53 - For the year ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 5,852 $ 99,689 $ 230 Changes in receivables held-for-sale 29,273 (51,538) 62,953 Equity method investment distributions received 39,142 30,140 110,064 Proceeds from sales of equity method investments 9,472 — 1,700 Principal collections from receivables 600,652 197,784 125,976 Proceeds from sales of receivables 171,991 7,634 5,047 Proceeds from sales of land 115,767 — 4,550 Principal collections from investments (1) 47 3,805 171 Proceeds from the sale of a previously consolidated VIE (1) 5,478 — — Proceeds from sales of investments and securitization assets 5,390 — 7,020 Principal payments on non-recourse debt (72,989) (21,606) (30,581) Adjusted cash flow from operations and other portfolio collections $ 910,075 $ 265,908 $ 287,130 Less: Dividends (192,269) (159,786) (132,198) Cash Available for Reinvestment $ 717,806 $ 106,122 $ 154,932 (1) Included in Other in the cash provided (used in) investing activities section of our statement of cash flows.
The table below presents, for the debt investments and real estate related holdings of our Portfolio and our interest-bearing liabilities inclusive of our short-term commercial paper issuances and revolving credit facilities, the average outstanding balances, income earned, the interest expense incurred, and average yield or cost. Our earnings from our equity method investments are not included in this table.
The table below presents, for the debt investments and real estate related holdings of our Portfolio and our interest-bearing liabilities inclusive of our short-term commercial paper issuances and revolving credit facilities, the average outstanding balances, income earned, interest expense incurred, and average yield or cost. Our earnings from our equity method investments are not included in this table.
Our sources of liquidity typically include collections from our Portfolio, cash proceeds from asset sales and securitizations, fee revenue, proceeds from debt transactions, and proceeds from equity transactions. Our uses of liquidity typically include funding investments, operating expenses (including cash compensation), interest and principal payments on our debt, and stockholder dividends and limited partner distributions.
Our sources of liquidity typically include collections from our Portfolio, cash proceeds from asset sales and securitizations, fee revenue, proceeds from debt transactions, and proceeds from equity transactions. Our uses of liquidity typically include funding investments, operating expenses (including cash compensation), interest and principal payments on our debt, stockholder dividends and limited partner distributions, and funding investments.
As it relates to the Convertible Notes, those obligations may be settled at maturity with cash, or with the issuance of shares to the extent that the market price of our common stock exceeds the strike price on the Convertible Notes. For further information on our long-term debt, see Note 8 to our financial statements of this Form 10-K.
As it relates to the Convertible Notes, those obligations may be settled at maturity with cash, or with the issuance of shares to the extent that the market price of our common stock exceeds the strike price on our Convertible Notes. For further information on our long-term debt, see Note 8 to our financial statements of this Form 10-K.
Equity Method Investments For our non-consolidated equity investments that we have concluded contain substantive profit sharing agreements, we generally determine our income allocations under the equity method of accounting based on the change in our claim on net assets of the investee entity as reported by the investee using a method commonly referred to as the hypothetical liquidation at book value method or (“HLBV”).
Equity Method Investments For our non-consolidated equity investments that we have concluded contain substantive profit sharing agreements, we generally determine our income allocations under the equity method of accounting based on the change in our claim on net assets of the investee entity as reported by the investee using a method commonly referred to as the hypothetical liquidation at book value method (“HLBV”).
Thus, in calculating distributable earnings, for certain of these investments where there are characteristics as described above, we further adjust GAAP net income (loss) to take into account our calculation of the return on capital (based upon the underwritten investment rate), as adjusted to reflect the performance of the project and the cash distributed.
Thus, in calculating adjusted earnings, for certain of these investments where there are characteristics as described above, we further adjust GAAP net income (loss) to take into account our calculation of the return on capital (based upon the underwritten investment rate), as adjusted to reflect the performance of the project and the cash distributed.
The investment tax credit available for election in solar projects is a one-time credit realized in the quarter when the project is considered operational for tax purposes and is fully allocated under HLBV in that quarter (subject to an impairment test), while the production tax credit required for wind projects and electable for solar projects is a ten-year credit and thus is - 58 - allocated under HLBV over a ten year period.
The investment tax credit available for election in solar projects is a one-time credit realized in the quarter when the project is considered operational for tax purposes and is fully allocated under HLBV in that quarter (subject to an impairment test), while the production tax credit required for wind projects and electable for solar projects is a ten-year credit and thus is allocated under HLBV over a ten year period.
The decision on how we finance specific assets or groups of assets is largely driven by risk and portfolio and financial management considerations, including the potential for gain on sale or fee income, as well as the overall interest rate environment, prevailing credit spreads and the terms of available financing and market conditions.
The decision as to how we finance specific assets or groups of assets is largely driven by risk and portfolio and financial management considerations, including the potential for gain on sale or fee income, as well as the overall interest rate environment, prevailing credit spreads, the terms of available financing, and financial market conditions.
We view the revenue from such activities as a valuable component of our earnings and an important source of franchise value. In many cases, we arrange the securitization of the loan or other asset prior to originating the transaction and thus avoid exposure to credit spread and interest rate risks.
We view the revenue from such activities as a valuable component of our earnings and an important source of franchise value. - 43 - In many cases, we arrange the securitization of the loan or other asset prior to originating the transaction and thus avoid exposure to credit spread and interest rate risks.
Impairment of our Portfolio We evaluate the various assets in our Portfolio on at least a quarterly basis, and more frequently when economic or other conditions warrant such an evaluation, for delinquencies or other events that may indicate a potential impairment or specific consideration in the development of the allowance for credit losses.
Impairment of our Portfolio We evaluate the various assets in our Portfolio on at least a quarterly basis, and more frequently when economic or other conditions warrant such an evaluation, for delinquencies or other events that may indicate a potential impairment or specific - 45 - consideration in the development of the allowance for credit losses.
Dividends Any distributions we make will be at the discretion of our board of directors and will depend upon, among other things, our actual results of operations. These results and our ability to pay distributions will be affected by various factors, including the net interest and other income from our assets, our operating expenses and any other expenditures.
Dividends Any distributions we make will be at the discretion of our Board and will depend upon, among other things, our actual results of operations. These results and our ability to pay distributions will be affected by various factors, including the net interest and other income from our assets, our operating expenses and any other expenditures.
See Note 2 to our audited financial statements in this Form 10-K for further details on our accounting policies. - 53 - We evaluate our critical accounting estimates and judgments on an ongoing basis and update them, as necessary, based on changing conditions.
See Note 2 to our audited financial statements in this Form 10-K for further details on our accounting policies. We evaluate our critical accounting estimates and judgments on an ongoing basis and update them, as necessary, based on changing conditions.
Other than the allowance for current expected credit losses applied to our commercial and government receivables, our remaining assets and liabilities do not incorporate other factors that may have a significant impact on their value, most notably any impact of business activities, changes in estimates, or changes in general economic conditions, interest rates or commodity prices since the dates the assets or liabilities were initially recorded.
Other than the allowance for current expected credit losses applied to our receivables, our remaining assets and liabilities do not incorporate other factors that may have a significant impact on their value, most notably any impact of business activities, changes in estimates, or changes in general economic conditions, interest rates or commodity prices since the dates the assets or liabilities were initially recorded.
Our board of directors had approved of our revocation of our REIT status effective for tax year 2024. We elected to be taxed as a REIT during tax years 2023 and previous.
Our Board had approved of our revocation of our REIT status effective for tax year 2024. We elected to be taxed as a REIT during tax years 2023 and previous.
Distributable Earnings We calculate distributable earnings as GAAP net income (loss) excluding non-cash equity compensation expense, provisions for loss on receivables, amortization of intangibles, non-cash provision (benefit) for taxes, losses or (gains) from modification or extinguishment of debt facilities, any one-time acquisition related costs or non-cash tax charges and the earnings attributable to our non-controlling interest of our Operating Partnership.
Adjusted Earnings We calculate adjusted earnings as GAAP net income (loss) excluding non-cash equity compensation expense, provisions for loss on receivables, amortization of intangibles, non-cash provision (benefit) for taxes, losses or (gains) from modification or extinguishment of debt facilities, any one-time acquisition related costs or non-cash tax charges and the earnings attributable to our non-controlling interest of our Operating Partnership.
We believe a non-GAAP measure, such as distributable earnings, that adjusts for the items discussed above is and has been a meaningful indicator of our economic performance in any one period and is useful to our investors as well as management in evaluating our performance as it relates to expected dividend payments over time.
We believe a non-GAAP measure, such as adjusted earnings, that adjusts for the items discussed above is and has been a meaningful indicator of our economic performance in any one period and is useful to our investors as well as management in evaluating our performance as it relates to expected dividend payments over time.
We believe this equity method investment adjustment to our GAAP net income (loss) in calculating our distributable earnings measure is an important supplement to the income (loss) from equity method investments as determined under GAAP for an investor to understand the economic performance of these investments where HLBV income can differ substantially from the economic returns in any one period.
We believe this equity method investment adjustment to our GAAP net income (loss) in calculating our adjusted earnings measure is an important supplement to the income (loss) from equity method investments as determined under GAAP for an investor to understand the economic performance of these investments where HLBV income can differ substantially from the economic returns in any one period.
We believe that our Managed Asset information is useful to investors because it portrays the amount of both on- and off-balance sheet receivables that we manage, which enables investors to understand and evaluate the credit performance associated with our portfolio of receivables, investments and residual assets in off-balance sheet securitized receivables. Our management also uses Managed Assets in this way.
We believe that our Managed Asset information is useful to investors because it portrays the amount of both on- and off-balance sheet assets that we manage, which enables investors to understand and evaluate the credit performance associated with our portfolio of receivables, equity investments, and residual assets in off-balance sheet assets. Our management also uses Managed Assets in this way.
We use a similar approach in the underwriting of our receivables. Under GAAP, we account for these equity method investments utilizing the HLBV method.
We use a similar approach in the underwriting of our receivables. - 49 - Under GAAP, we account for these equity method investments utilizing the HLBV method.
We calculate distributable net investment income as shown in the table below by adjusting GAAP-based net investment income for those distributable earnings adjustments that are applicable to distributable net investment income. We believe that this measure is useful to investors as it shows the recurring income generated by our Portfolio after the associated interest cost of debt financing.
We calculate adjusted net investment income as shown in the table below by adjusting GAAP-based net investment income for those earnings adjustments that are applicable to adjusted net investment income. We believe that this measure is useful to investors as it shows the recurring income generated by our Portfolio after the associated interest cost of debt financing.
(2) In addition to these provisions, in 2022 we wrote-off two commercial receivables with a combined total carrying value of approximately $8 million which represented assignments of land lease payments from two wind projects that we had originated in 2014 as a part of an acquisition of a large land portfolio.
(4) In addition to these provisions, in 2022 we wrote off two commercial receivables with a combined total carrying value of approximately $8 million which represented assignments of land lease payments from two wind projects that we had originated in 2014 as a part of an acquisition of a large land portfolio.
Quantitative and Qualitative Disclosures about Market Risk for further information on the impact of commodity prices. - 45 - Government Policies We make investments in renewable energy projects that typically depend in part on various federal, state or local governmental policies that support or enhance the project’s economic feasibility.
Quantitative and Qualitative Disclosures about Market Risk for further information on the impact of commodity prices. - 44 - Government Policies We make investments in renewable energy projects that typically depend in part on various federal, state or local governmental policies that support or enhance the project’s economic feasibility.
Distributable earnings does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), or an indication of our cash flow from operating activities (determined in accordance with GAAP), or a measure of our liquidity, or an indication of funds available to fund our cash needs, including our ability to make cash distributions.
Adjusted earnings does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), or an indication of our cash flow from operating activities (determined in accordance with GAAP), or a measure of our liquidity, or an indication of funds available to fund our cash needs, including our ability to make cash distributions.
We have excluded the write off from Distributable earnings for the year ended December 31, 2022, due to the infrequent occurrence of credit losses as well as the unique nature of the receivables, as the assignment of land lease payments from wind projects represent a small portion of our total portfolio.
We have excluded the write-off from Adjusted earnings for the year ended December 31, 2022, due to the infrequent occurrence of credit losses as well as the unique nature of the receivables, as the assignment of land lease payments from wind projects represent a small portion of our total portfolio.
Our management also uses distributable net investment income in this way. Our non-GAAP distributable net investment income measure may not be comparable to similarly titled measures used by other companies. For further information on the adjustments between GAAP-based net investment income and distributable net investment income, see the discussion above related to Distributable Earnings.
Our management also uses adjusted net investment income in this way. Our non-GAAP adjusted net investment income measure may not be comparable to similarly titled measures used by other companies. For further information on the adjustments between GAAP-based net investment income and adjusted net investment income, see the discussion above related to Adjusted Earnings.
Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our financial statements are based are reasonable at the time made and based upon information available to us at that time.
Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that the decisions and assessments upon which our financial statements are based are reasonable at the time made and based upon information available to us at that time.
Accordingly, our book value does not necessarily represent an estimate of our net realizable value, liquidation value or our fair market value.
Accordingly, our book value does not necessarily represent an estimate of our net realizable value, liquidation value or our fair market value. - 59 -
For information on our securitization assets relating to our securitization trusts, see Note 5 to our audited financial statements in this Form 10-K. The securitization assets do not have a contractual maturity date and the underlying securitized assets have contractual maturity dates until 2059.
For information on our securitization assets relating to our securitization trusts, see Note 5 to our audited financial statements in this Form 10-K. The securitization assets do not have a contractual maturity date and the underlying securitized assets have contractual maturity dates until 2065.
The amount of financial leverage we may deploy for particular assets will depend upon our target capital structure and the availability of particular types of financing and our assessment of the credit, liquidity, price volatility and other risks of those assets, and the interest rate environment.
The amount of financial leverage we may deploy for particular assets will depend upon our target capital structure and the availability of particular types of financing and our assessment of the credit, liquidity, price volatility and other risks of such assets, and the interest rate environment.
Refer to ‘Item 7 -- Management’s Discussion and Analysis of Financial Condition and Results of Operations’ on our Form 10-K for the year ended December 31, 2022 for a discussion of our results for the year ended December 31, 2022 and a comparison of our results of operations for the fiscal years ended December 31, 2022 and December 31, 2021.
Refer to ‘Item 7 -- Management’s Discussion and Analysis of Financial Condition and Results of Operations’ on our Form 10-K for the year ended December 31, 2023 for a discussion of our results for the year ended December 31, 2023 and a comparison of our results of operations for the fiscal years ended December 31, 2023 and December 31, 2022.
Other than our securitization assets (including any outstanding servicer advances) of approximately $231 million as of December 31, 2023 , that may be at risk in the event of defaults or prepayments in our securitization trusts and as discussed below, and except as disclosed in Note 9 to our audited financial statements in this Form 10-K, we have not guaranteed any obligations of non-consolidated entities or entered into any commitment or intent to provide additional funding to any such entities.
Other than our securitization assets (including any outstanding servicer advances) of approximately $263 million as of December 31, 2024 , that may be at risk in the event of defaults or prepayments in our securitization trusts and as discussed below, and except as disclosed in Note 9 to our audited financial statements in this Form 10-K, we have not guaranteed any obligations of non-consolidated entities or entered into any commitment or intent to provide additional funding to any such entities.
We also have maturities related to our non-recourse debt and Convertible Notes. However, as it relates to the non-recourse debt, to the extent there are not sufficient cash flows received from those investments pledged as collateral, the investor has no recourse against other corporate assets to recover any shortfalls and corporate cash contributions would not be required.
We also have maturities related to our non-recourse debt and Convertible Notes. However, as it relates to the non-recourse debt, to the extent there are not sufficient cash flows received from investments pledged as collateral for such debt, the investor has no recourse against other corporate assets to recover any shortfalls and corporate cash contributions would not be required.
Additionally, we believe that our investors also use distributable earnings, or a comparable supplemental performance measure, to evaluate and compare our performance to that of our peers, and as such, we believe that the disclosure of distributable earnings is useful to our investors.
Additionally, we believe that our investors also use adjusted earnings, or a comparable supplemental performance measure, to evaluate and compare our performance to that of our peers, and as such, we believe that the disclosure of adjusted earnings is useful to our investors.
Our management uses portfolio yield this way and we believe that our investors use it in a similar fashion to evaluate certain characteristics of our Portfolio compared to our peers, and as such, we believe that the disclosure of portfolio yield is useful to our investors. Our Portfolio totaled approximately $6.2 billion as of December 31, 2023.
Our management uses portfolio yield this way and we believe that our investors use it in a similar fashion to evaluate certain characteristics of our Portfolio compared to our peers, and as such, we believe that the disclosure of portfolio yield is useful to our investors. Our Portfolio totaled approximately $6.6 billion as of December 31, 2024.
Results of Operations For a comparison of our results of operations for the fiscal years ended December 31, 2022 and December 31, 2021, see “Part II, Item 7.
Results of Operations For a comparison of our results of operations for the fiscal years ended December 31, 2023 and December 31, 2022, see “Part II, Item 7.
In addition, our methodology for calculating distributable earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported distributable earnings may not be comparable to similar metrics reported by other companies. We have calculated our distributable earnings for the years ended December 31, 2023, 2022 and 2021.
In addition, our methodology for calculating adjusted earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported adjusted earnings may not be comparable to similar metrics reported by other companies. We have calculated our adjusted earnings for the years ended December 31, 2024, 2023 and 2022.
In addition to diversity of gender and ethnic background, we also value diversity of thought, with 57% of our leadership team and 72% of our Board possessing degrees outside the fields of business or economics, including in science and engineering, liberal and fine arts, and law.
In addition to diversity of gender and ethnic background, we also value diversity of thought, with 54% of our leadership team and 70% of our Board possessing degrees outside the fields of business or economics, including in science and engineering, liberal and fine arts, and law.
The average tenure of our employees as of December 31, 2023, was approximately 4.5 years, and more than 36% of our employees had been employed by us for more than 4 years. For the year ended December 31, 2023, we had a voluntary employee turnover rate of 6%. There were no retirements or resignations related to ill health.
The average tenure of our employees as of December 31, 2024, was approximately 4.5 years, and more than 40% of our employees had been employed by us for more than 4 years. For the year ended December 31, 2024, we had a voluntary employee turnover rate of 5%. There were no retirements or resignations related to ill health.
Other than our investments, the residual assets in securitized financial assets, and interest rate swaps and collar that are carried on our balance sheet at fair value as of December 31, 2023, the carrying value of our remaining assets and liabilities are calculated as of a particular point in time, which is largely determined at the time such assets and liabilities were added to our balance sheet using a cost basis in accordance with GAAP, adjusted for income or loss recognized on such assets.
Other than our investments, the residual assets in securitized financial assets, and derivatives that are carried on our balance sheet at fair value as of December 31, 2024, the carrying value of our remaining assets and liabilities are calculated as of a particular point in time, which is largely determined at the time such assets and liabilities were added to our balance sheet using a cost basis in accordance with GAAP, adjusted for income or loss recognized on such assets.
As shown in the table below, our debt to equity ratio was approximately 2.0 to 1 as of December 31, 2023, which is below our current board-approved leverage limit of up to 2.5 to 1.
As shown in the table below, our debt to equity ratio was approximately 1.8 to 1 as of December 31, 2024, which is below our current Board-approved leverage limit of up to 2.5 to 1.
We include any issuances of our common stock related to share based compensation units in the amount we believe is reasonably certain to vest.
We include any potential common stock issuances related to share based compensation units in the amount we believe is reasonably certain to vest.
Years Ended December 31, 2023 2022 2021 (dollars in millions) Portfolio, excluding equity method investments Interest income, receivables $ 203 $ 132 $ 106 Average balance of receivables $ 2,424 $ 1,650 $ 1,301 Average interest rate of receivables 8.4 % 8.0 % 8.1 % Interest income, investments $ 1 $ 1 $ 1 Average balance of investments $ 12 $ 13 $ 26 Average interest rate of investments 4.9 % 4.4 % 4.0 % Rental income $ 21 $ 26 $ 26 Average balance of real estate $ 286 $ 357 $ 358 Average yield on real estate 7.4 % 7.3 % 7.2 % Average balance of receivables, investments, and real estate $ 2,722 $ 2,021 $ 1,685 Average yield from receivables, investments, and real estate 8.3 % 7.9 % 7.9 % Debt Interest expense, including the impact of cash flow hedges (1) $ 171 $ 116 $ 106 Average balance of debt $ 3,437 $ 2,688 $ 2,300 Average cost of debt 5.0 % 4.3 % 4.6 % (1) Excludes loss on debt modification or extinguishment included in interest expense in our income statement.
Years Ended December 31, 2024 2023 2022 (dollars in millions) Portfolio, excluding equity method investments Interest income, receivables $ 260 $ 203 $ 132 Average balance of receivables $ 3,086 $ 2,424 $ 1,650 Average interest rate of receivables 8.4 % 8.4 % 8.0 % Interest income, investments $ 1 $ 1 $ 1 Average balance of investments $ 12 $ 12 $ 13 Average interest rate of investments 6.1 % 4.9 % 4.4 % Rental income $ 2 $ 21 $ 26 Average balance of real estate $ 25 $ 286 $ 357 Average yield on real estate 8.5 % 7.4 % 7.3 % Average balance of receivables, investments, and real estate $ 3,123 $ 2,722 $ 2,021 Average yield from receivables, investments, and real estate 8.4 % 8.3 % 7.9 % Debt Interest expense, including the impact of cash flow hedges (1) $ 241 $ 171 $ 116 Average balance of debt $ 4,273 $ 3,437 $ 2,688 Average cost of debt 5.6 % 5.0 % 4.3 % (1) Excludes loss on debt modification or extinguishment included in interest expense in our income statement.
The following table provides a summary of our anticipated principal repayments for our receivables and investments as of December 31, 2023: - 56 - Principal payment due by Period Total Less than 1 year 1-5 years 5-10 years More than 10 years (in millions) Receivables (excluding allowance) $ 3,124 $ 182 $ 803 $ 1,481 $ 658 Investments 7 1 1 3 2 See Note 6 to our audited financial statements in this Form 10-K for information on: • the anticipated maturity dates of our receivables and investments and the weighted average yield for each range of maturities as of December 31, 2023, • the term of our leases and a schedule of our future minimum rental income under our land lease agreements as of December 31, 2023, • the Performance Ratings of our Portfolio, and • the receivables on non-accrual status.
The following table provides a summary of our anticipated principal repayments for our receivables and investments as of December 31, 2024: - 47 - Principal payment due by Period Total Less than 1 year 1-5 years 5-10 years More than 10 years (in millions) Receivables (excluding allowance) $ 2,946 $ 113 $ 1,292 $ 1,072 $ 469 Investments 7 1 1 3 2 See Note 6 to our audited financial statements in this Form 10-K for information on: • the anticipated maturity dates of our receivables and investments and the weighted average yield for each range of maturities as of December 31, 2024, • the term of our leases and a schedule of our future minimum rental income under our land lease agreements as of December 31, 2024, • the Performance Ratings of our Portfolio, and • the receivables on non-accrual status.
The following table provides results related to our equity method investments for the last three years: Years ended December 31, 2023 2022 2021 (dollars in millions) Income (loss) under GAAP $ 141 $ 31 $ 126 Collections of Distributable earnings $ 39 $ 57 $ 23 Return of capital 24 101 30 Cash collected (1) $ 63 $ 158 $ 53 (1) Cash collected during 2023 and 2022 includes $9 million and $64 million, respectively of debt issuance proceeds from certain of our equity method investees, the repayment of which we have guaranteed.
The following table provides results related to our equity method investments for the last three years: Years ended December 31, 2024 2023 2022 (dollars in millions) Income (loss) under GAAP $ 248 $ 141 $ 31 Collections of Adjusted earnings $ 90 $ 39 $ 57 Return of capital 17 24 101 Cash collected (1) $ 107 $ 63 $ 158 (1) Cash collected during 2023 and 2022 includes $9 million and $64 million, respectively of debt issuance proceeds from certain of our equity method investees, the repayment of which we have guaranteed.
In these transactions, unless we decide to hold a portion of the economic interest of the transaction on our balance sheet, we have no exposure to risks related to ownership of those financings. We may charge advisory, retainer or other fees, including through our broker dealer subsidiary.
In these transactions, unless we decide to hold a portion of the economic interest of the transaction on our balance sheet, we have no exposure to risks related to ownership of those financings. We may charge advisory, retainer or other fees, including through our broker dealer subsidiary and for our management services provided to co-investment structures.
We consider the impact of any capped calls in assessing whether an instrument is equity-like or debt-like. - 60 - Distributable Net Investment Income We have a portfolio of investments in climate solutions that we finance using a combination of debt and equity.
We will consider the impact of any capped calls in assessing whether an instrument is equity-like or debt like. - 51 - Adjusted Net Investment Income We have a portfolio of investments that we finance using a combination of debt and equity.
In the future, distributable earnings may also exclude one-time events pursuant to changes in GAAP and certain other adjustments as approved by a majority of our independent directors.
In the future, adjusted earnings may also exclude one-time events pursuant to changes in GAAP and certain other adjustments as approved by a majority of our independent directors. Prior to 2024, we referred to this metric as distributable earnings.
Provision for loss on receivables decreased by $1 million compared to the prior period as a result of the release of certain loan specific reserves, offset partially by provision on new loans and loan commitments. • Compensation and benefits increased by $1 million as a result of an increase in our employee headcount and compensation.
Provision for loss on receivables decreased by $11 million compared to the prior period as a result of the release of certain loan specific reserves due to the contributions of loans to a co-investment structure and non-recurring prepayments, offset partially by provision on new loans and loan commitments. • Compensation and benefits increased by $17 million as a result of an increase in our employee headcount and compensation.
Unlevered portfolio yield was 7.9% as of December 31, 2023 and 7.5% as of December 31, 2022. See Note 6 to our financial statements and MD&A - Our Business in this Form 10-K for additional discussion of the characteristics of our Portfolio as of December 31, 2023. Environmental Metrics As discussed in Item 1.
Unlevered portfolio yield was 8.3% as of December 31, 2024 and 7.9% as of December 31, 2023. See Note 6 to our financial statements and MD&A - Our Business in this Form 10-K for additional discussion of the characteristics of our Portfolio as of December 31, 2024.
(2) Fixed-rate debt includes the impact of our interest rate swaps and collars on debt that is otherwise floating. Debt excludes securitizations that are not consolidated on our balance sheet. We intend to use financial leverage for the primary purpose of financing our Portfolio and business activities and not for the purpose of speculating on changes in interest rates.
Debt excludes securitizations that are not consolidated on our balance sheet. We intend to use financial leverage for the primary purpose of financing our Portfolio and business activities and not for the purpose of speculating on changes in interest rates.
Also, Adjusted Cash Flow from Operations plus Other Portfolio Collections differs from Net cash provided by (used in) investing activities in that it excludes many of the uses of cash used in our investing activities such as in Equity method investments, Purchases of and investments in receivables, Purchases of real estate, Purchases of investments, Funding of escrow accounts, and excludes Withdrawal from escrow accounts, and Other.
Also, Adjusted Cash Flow from Operations plus Other Portfolio Collections differs from Net cash provided by (used in) investing activities in that it excludes many of the uses of cash used in our investing activities such as Equity method investments, Purchases of and investments in receivables, Purchases of investments, and Collateral provided to and received from hedge counterparties.
For transactions that we securitize via a non-consolidated trust, we recognize a gain on the securitization. The gain may be comprised of either or both cash received and a residual interest in securitized assets. We may also recognize additional income from servicing fees from these securitized assets over the life of the asset.
The gain may be comprised of either or both cash received and a residual interest in securitized assets. We may also recognize additional income from servicing fees from these securitized assets over the life of the asset.
See Note 10 to our financial statements in this Form 10-K regarding the amount of our distributions that are treated as ordinary taxable income to our stockholders.
See Note 10 to our financial statements in this Form 10-K regarding the amount of our distributions that are treated as ordinary taxable income to our stockholders. The dividends declared in 2024 and 2023 are described in Note 11 to our audited financial statements in this Form 10-K.
The Federal Reserve Board of Governors increased the federal funds rate (the rate at which banks lend to one another) 11 times in 2022 and 2023 for an overall increase of 5.25% to reduce inflation to stated targets.
The Federal Reserve Board of Governors increased the federal funds rate (the rate at which banks lend to one another) 11 times in 2022 and 2023 for an overall increase of 5.25% to reduce inflation to stated targets. In 2024, as inflationary pressures eased, the Board of Governors lowered rates three times for an overall decrease of 1.00%.
The timing and impact of future sales of receivables and investments, if any, cannot be predicted with any certainty. We believe our identified sources of liquidity will be adequate for purposes of meeting our short-term and long-term liquidity needs, which include funding future investments, debt service, operating costs and distributions to our stockholders.
We believe our identified sources of liquidity will be adequate for purposes of meeting our short-term and long-term liquidity needs, which include funding future investments, debt service, operating costs and distributions to our stockholders.
Consolidation We account for our investment in entities that are considered voting or variable interest entities under ASC 810, Consolidation . We perform an ongoing assessment and make judgments to determine the primary beneficiary of each entity as required by ASC 810, which includes an assessment of the type and degree of control we have over the entity.
We perform an ongoing assessment as to whether each entry is a voting interest entity or a variable interest entity, and for variable interest entities, we make judgments to determine the primary beneficiary of each entity as required by ASC 810, which includes an assessment of the type and degree of control we have over the entity.
As it relates to Convertible Notes, we will assess the market characteristics around the instrument to determine if it is more akin to debt or equity based on an expectation of the likelihood of conversion based on current conditions.
As it relates to Convertible Notes, we will assess the market characteristics around the instrument to determine if it is more akin to debt or equity based on the value of the underlying shares compared to the conversion price.
These results do not include the Non-GAAP earnings adjustment related to equity method investments, which is discussed in the Non-GAAP Financial Measures section. • Interest income increased by $73 million due to a higher average rate on a larger portfolio.
These results do not include the Non-GAAP earnings adjustment related to equity method investments, which is discussed in the Non-GAAP Financial Measures section. • Interest income and securitization asset income increased by $63 million due to a larger receivable portfolio and a larger securitization assets balance.
The following is a reconciliation of our GAAP-based net investment income to our distributable net investment income for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, 2023 2022 2021 (in thousands) Interest income $ 207,794 $ 134,656 $ 106,889 Rental income 21,251 26,245 25,905 GAAP-based investment revenue $ 229,045 $ 160,901 $ 132,794 Interest expense 171,008 115,559 121,705 GAAP-based net investment income $ 58,037 $ 45,342 $ 11,089 Equity method earnings adjustment 156,757 131,762 103,707 Loss (gain) on debt modification or extinguishment — — 16,083 Amortization of real estate intangibles 2,473 3,061 3,089 Distributable net investment income $ 217,267 $ 180,165 $ 133,968 Managed Assets As we both consolidate assets on our balance sheet and securitize assets off-balance sheet, certain of our receivables and other assets are not reflected on our balance sheet where we may have a residual interest in the performance of the investment, such as servicing rights or a retained interest in cash flows.
The following is a reconciliation of our GAAP-based net investment income to our adjusted net investment income for the years ended December 31, 2024, 2023 and 2022: Years Ended December 31, 2024 2023 2022 (in thousands) Interest income $ 263,792 $ 207,794 $ 134,656 Rental income 2,095 21,251 26,245 GAAP-based investment revenue $ 265,887 $ 229,045 $ 160,901 Interest expense 242,364 171,008 115,559 GAAP-based net investment income $ 23,523 $ 58,037 $ 45,342 Equity method earnings adjustment 239,032 156,757 131,762 Loss (gain) on debt modification or extinguishment 953 — — Amortization of real estate intangibles 180 2,473 3,061 Adjusted net investment income $ 263,688 $ 217,267 $ 180,165 Managed Assets As we consolidate assets on our balance sheet, securitize assets off-balance sheet, and manage asset in which we coinvest with other parties, certain receivables and other assets are not reflected on our balance sheet where we may have a residual interest in the performance of the investment, such as a retained interest in cash flows.
Approximately 45% of our Portfolio consisted of unconsolidated equity investments in renewable energy related projects. Approximately 51% consisted of commercial and government receivables on our balance sheet and approximately 4% of our Portfolio was real estate leased to renewable energy projects under long-term operating lease agreements.
Approximately 46% consisted of commercial and government receivables on our balance sheet, and the remainder of our Portfolio was real estate leased to renewable energy projects under long-term operating lease agreements.
The maturity profile of our recourse debt obligations are shown below: We plan to continue to issue debt which may be either recourse or non-recourse and either fixed-rate or floating-rate as a means of financing our business and may issue additional equity. We also expect to use both on-balance sheet and off-balance sheet securitizations.
The maturity profile of our recourse debt obligations are shown below: - 56 - Additional borrowings and financial leverage management As a means of financing our business, we plan to continue to issue debt which may be either recourse or non-recourse and either fixed-rate or floating-rate and may issue additional equity.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 21, 2023. We completed approximately $2.3 billion of transactions during 2023, compared to approximately $1.8 billion during 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 21, 2023. We completed approximately $2.3 billion of transactions during both 2024 and 2023. Our strategy includes holding a large portion of these transactions on our balance sheet.
Our Portfolio consisted of over 520 transactions with an average size of $12 million and the weighted average remaining life of our Portfolio (excluding match-funded transactions) of approximately 17 years as of December 31, 2023. - 55 - The table below provides details on the interest rate and maturity of our receivables and debt securities as of December 31, 2023: Balance Maturity (in millions) Floating-rate receivable, interest rate of 10.1% $ 277 2026 to 2026 Fixed-rate receivables, interest rates less than 5.00% per annum 102 2025 to 2047 Fixed-rate receivables, interest rates from 5.00% to 6.49% per annum 417 2024 to 2061 Fixed-rate receivables, interest rates from 6.50% to 7.99% per annum 868 2025 to 2069 Fixed-rate receivables, interest rates from 8.00% to 9.49% per annum 1,004 2027 to 2039 Fixed-rate receivables, interest rates 9.50% or greater per annum 456 2024 to 2047 Receivables (1) 3,124 Less: Allowance for loss on receivables (50) Receivables, net of allowance 3,074 Fixed-rate investments, interest rates less than 5.00% per annum 7 2035 to 2051 Fixed-rate investments, interest rates from 5.00% to 6.50% per annum — 2047 to 2050 Total receivables and investments $ 3,081 (1) Excludes receivables held-for-sale of $35 million.
Our Portfolio consisted of over 550 transactions with an average size of $11 million and the weighted average remaining life of our Portfolio (excluding match-funded transactions) of approximately 16 years as of December 31, 2024. - 46 - The table below provides details on the interest rate and maturity of our receivables and debt securities as of December 31, 2024: Balance Maturity (in millions) Floating-rate receivable, interest rate of 10.0% $ 316 2027 Fixed-rate receivables, interest rates less than 5.00% per annum 46 2029 to 2047 Fixed-rate receivables, interest rates from 5.00% to 6.49% per annum 88 2025 to 2061 Fixed-rate receivables, interest rates from 6.50% to 7.99% per annum 973 2025 to 2069 Fixed-rate receivables, interest rates from 8.00% to 9.49% per annum 1,062 2026 to 2039 Fixed-rate receivables, interest rates 9.50% or greater per annum 461 2025 to 2050 Receivables (1) 2,946 Less: Allowance for loss on receivables (50) Receivables, net of allowance 2,896 Fixed-rate investments, interest rates less than 5.00% per annum 7 2033 to 2047 Total receivables and investments $ 2,903 (1) Excludes receivables held-for-sale of $76 million.
We also make an adjustment to our equity method investments in the renewable energy projects as described below. We will use judgment in determining when we will reflect the losses on receivables in our distributable earnings and will consider certain circumstances such as the time period in default, sufficiency of collateral as well as the outcomes of any related litigation.
We will use judgment in determining when we will reflect the losses on receivables in our adjusted earnings and will consider certain circumstances such as the time period in default, sufficiency of collateral as well as the outcomes of any related litigation.
These non-GAAP financial measures, as calculated by us, may not be comparable to similarly named financial measures as reported by other companies that do not define such terms exactly as we define such terms.
These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as measures of our operating performance. These non-GAAP financial measures, as calculated by us, may not be comparable to similarly named financial measures as reported by other companies that do not define such terms exactly as we define such terms.
Our percentage of fixed rate debt was approximately 92% as of December 31, 2023, which is within our board-approved targeted fixed rate debt percentage range of 75% to 100%.
Our percentage of fixed rate debt including the impact of our interest rate derivatives was approximately 100% as of December 31, 2024, which is at the top of our Board-approved targeted fixed rate debt percentage range of 75% to 100%.
In addition, for our receivables, we make judgments about our expected losses related to the receivables in our Portfolio and record an allowance for credit losses on such receivables with a provision for loss on receivables in our income statement.
For our receivables, we make judgments about our expected losses related to the receivables in our Portfolio and record an allowance for credit losses on such receivables with a provision for loss on receivables in our income statement. We further discuss our process for evaluating these judgments in Note 2 to our audited financial statements in this Form 10-K.
Other Measures and Metrics Portfolio Yield We calculate portfolio yield as the weighted average underwritten yield of the investments in our Portfolio as of the end of the period. Underwritten yield is the rate at which we discount the expected cash flows from the assets in our Portfolio to determine our purchase price.
Underwritten yield is the rate at which we discount the expected cash flows from the assets in our Portfolio to determine our purchase price.
The table below provides a reconciliation of our GAAP net income to distributable earnings: - 59 - Years Ended December 31, 2023 2022 2021 $ Per Share $ Per Share $ Per Share (dollars in thousands, except per share amounts) Net income attributable to controlling stockholders (1) $ 148,836 $ 1.42 $ 41,502 $ 0.47 $ 126,579 $ 1.51 Distributable earnings adjustments Reverse GAAP income from equity method investments (140,974) (31,291) (126,421) Add equity method investments earnings adjustment 156,757 131,762 103,707 Equity-based expenses 19,782 20,101 17,047 Non-cash provision for loss on receivables (2) 11,832 12,798 496 Loss (gain) on debt modification or extinguishment — — 16,083 Amortization of intangibles 2,473 3,129 3,307 Non-cash provision (benefit) for taxes 31,621 7,381 17,158 Current year earnings attributable to non-controlling interest 1,921 409 767 Distributable earnings (3) $ 232,248 $ 2.23 $ 185,791 $ 2.08 $ 158,723 $ 1.88 (1) The per share data reflects the GAAP diluted earnings per share and is the most comparable GAAP measure to our distributable earnings per share.
The table below provides a reconciliation of our GAAP net income to adjusted earnings: - 50 - Years Ended December 31, 2024 2023 2022 $ Per Share $ Per Share $ Per Share (dollars in thousands, except per share amounts) Net income attributable to controlling stockholders (1) $ 200,037 $ 1.62 $ 148,836 $ 1.42 $ 41,502 $ 0.47 Adjustments: Reverse GAAP income from equity method investments (247,878) (140,974) (31,291) Equity method investments earnings adjustment (2) 239,032 156,757 131,762 Elimination of proportionate share of fees earned from co-investment structures (3) (2,144) — — Equity-based expenses 25,608 19,782 20,101 Non-cash provision for loss on receivables (4) 1,059 11,832 12,798 Loss (gain) on debt modification or extinguishment 953 — — Amortization of intangibles 180 2,473 3,129 Non-cash provision (benefit) for income taxes 70,198 31,621 7,381 Current year earnings attributable to non-controlling interest 3,591 1,921 409 Adjusted earnings $ 290,636 $ 2.45 $ 232,248 $ 2.23 $ 185,791 $ 2.08 Shares for adjusted earnings per share (5) 118,648,176 104,319,803 89,355,907 (1) The per share data reflects the GAAP diluted earnings per share and is the most comparable GAAP measure to our Adjusted earnings per share.
Human Capital Metrics As part of our broader human capital strategy, we monitor and disclose certain metrics which help us understand our workforce and our progress in fostering a diverse and inclusive work environment. As of December 31, 2023, we employed 137 people full-time, 2 people part-time, and 4 people as independent contractors.
Human Capital Metrics As part of our broader human capital strategy, we monitor and disclose certain metrics which help us understand our workforce. As of December 31, 2024, we employed 153 people full-time, 5 people part-time, and 11 people as independent contractors.
Governmental agencies, commercial entities and developers of climate solutions projects frequently depend on these policies and incentives to help defray the costs of various projects. Government regulations also impact the terms of third party financing provided to support these projects.
Commercial entities, developers of climate solutions projects, and government agencies consider the impacts of these policies and incentives when making decisions on capital expenditures. Government regulations may also impact the terms of third party financing provided to support these projects.
Sources and Uses of Cash We had approximately $75 million and $176 million in unrestricted cash, cash equivalents, and restricted cash as of December 31, 2023 and 2022, respectively.
Sources and Uses of Cash We had approximately $150 million and $75 million in unrestricted cash, cash equivalents, and restricted cash as of December 31, 2024 and 2023, respectively. The following table summarizes our cash flows for the years ended December 31, 2024, 2023, and 2022.
Our targeted fixed rate debt range allows for percentages as low as 70% on a short term basis if we intend to repay or swap floating rate borrowings in the near term The calculation of our fixed-rate debt and financial leverage as of December 31, 2023 and 2022 is shown in the chart below: - 68 - December 31, 2023 % of Total December 31, 2022 % of Total (dollars in millions) (dollars in millions) Floating-rate borrowings (1) $ 338 8 % $ 431 14 % Fixed-rate debt (2) 3,909 92 % 2,545 86 % Total debt $ 4,247 100 % $ 2,976 100 % Equity $ 2,142 $ 1,665 Leverage 2.0 to 1 1.8 to 1 (1) Floating-rate borrowings include borrowings under our floating-rate credit facilities and commercial paper notes with less than six months original maturity, to the extent such borrowings are not hedged using interest rate swaps.
The calculation of our fixed-rate debt and financial leverage as of December 31, 2024 and 2023 is shown in the chart below: December 31, 2024 % of Total December 31, 2023 % of Total (dollars in millions) (dollars in millions) Floating-rate borrowings (1) $ — — % $ 338 8 % Fixed-rate debt (2) 4,400 100 % 3,909 92 % Total debt $ 4,400 100 % $ 4,247 100 % Equity $ 2,405 $ 2,142 Leverage 1.8 to 1 2.0 to 1 (1) Floating-rate borrowings include borrowings under our floating-rate credit facilities and commercial paper issuances with less than six months original maturity, to the extent such borrowings are not hedged using interest rate swaps. - 57 - (2) Fixed-rate debt includes the impact of our interest rate swaps and collars on debt that is otherwise floating.
In addition to net investment income from our portfolio, we also generate ongoing fees through gain-on-sale securitization transactions, asset management, and other services. We are internally managed, and our management team has extensive relevant industry knowledge and experience.
In addition to net investment income from our portfolio, we also generate gains-on-sale from securitization transactions, as well as on-going fees from asset management and other services. We are internally managed by an executive team that has extensive relevant industry knowledge and experience, and a team of over 150 clean energy investment, operating, and technical professionals.
The level of our new origination activity, the percentage of the originations that we choose to retain on our balance sheet and the related income, will directly impact our interest and rental revenue and income from equity method investments. - 44 - Income from Securitization, Syndication and Other Services We earn gain on sale of assets or fee income by securitizing or selling all or a portion of certain transactions.
The level of our new origination activity, the percentage of the originations that we choose to retain on our balance sheet and the related income, will directly impact our interest and rental revenue and income from equity method investments.
Thus, we present our investments on a non-GAAP “Managed Assets” basis, which assumes that securitized receivables are not sold.
Thus, we present our investments on a non-GAAP “Managed Assets” basis.
We have long-standing relationships with the leading energy service companies (“ESCOs”), manufacturers, project developers, utilities, owners and operators that provide recurring, programmatic investment and fee-generating opportunities. We completed approximately $2.3 billion of transactions during 2023, compared to approximately $1.8 billion during 2022.
We have long-standing relationships with the leading clean energy project developers, owners and operators, utilities, and ESCOS, which provide recurring, programmatic investment and fee-generating opportunities, while also enabling scale benefits and operational efficiencies. We completed approximately $2.3 billion of transactions during both 2024 and 2023.
Quantitative and Qualitative Disclosures about Market Risk-Interest Rate and Borrowing Risks” for an analysis of the impact of rates on our business. To date, inflationary pressures have not had a material impact on our business. According to the EIA, the average annual Henry Hub natural gas price for 2023 was $2.57/MMBtu, a decrease of 62 percent over 2022.
See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk-Interest Rate and Borrowing Risks” for an analysis of the impact of rates on our business. To date, inflationary pressures have not had a material impact on our business.
We may also consider the use of separately funded special purpose entities or funds to allow us to expand the investments that we make or to manage Portfolio diversification.
We also expect to use both on-balance sheet and off-balance sheet securitizations. We also use separately funded special purpose entities or co-investment vehicles to allow us to expand the investments that we make or to manage Portfolio diversification.
As of December 31, 2023, the outstanding principal balance of our assets financed through the use of these off-balance sheet transactions was approximately $6.1 billion. - 67 - In addition to general operational obligations, which are typically paid as incurred, and dividends and distributions, which are declared by our Board quarterly, we will have future cash needs related to the payments due at maturity on the Senior Unsecured Notes and loans under our unsecured loan facility and the balances under our commercial paper program and revolving credit facilities.
Maturities of recourse debt obligations In addition to general operational obligations, which are typically paid as incurred, and dividends and distributions, which are declared by our Board quarterly, we have future cash needs related to the payments due at maturity of our Senior Unsecured Notes and our term loan facilities, and the balances of our short-term commercial paper programs and our revolving credit facilities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs it relates to environmental risks, when we underwrite and structure our investments the environmental risks and opportunities are an integral consideration to our investment parameters. While we cannot fully protect our investments, we seek to mitigate these risks by using third party experts to conduct engineering and weather analysis and insurance reviews as appropriate.
Biggest changeWhile we cannot fully protect our investments, we seek to mitigate these risks by using third party experts to conduct engineering and weather analysis and insurance reviews as appropriate. Weather related risks are at times managed in cooperation with our clients where they buy offsetting power positions to mitigate power market disruptions or operational impacts.
Although we generally focus on renewable energy projects that have the majority of their operating cash flow supported by long-term PPAs or leases, many of our projects have shorter term contracts (which may have the potential of producing higher current returns) or sell their power or environmental attributes in the open market on a merchant basis.
Although we generally focus on renewable energy projects that have the majority of their operating cash flow supported by long-term PPAs or leases, many of our projects have shorter term contracts (which may have the potential of producing higher current returns) or sell their power, energy or environmental attributes in the open market on a merchant basis.
We attempt to reduce - 71 - interest rate risks and to minimize exposure to interest rate fluctuations through the use of fixed rate financing structures, when appropriate, whereby we seek to (1) match the maturities of our debt obligations with the maturities of our assets, (2) borrow at fixed rates for a period of time or (3) match the interest rates on our assets with like-kind debt (i.e., we may finance floating rate assets with floating rate debt and fixed-rate assets with fixed-rate debt), directly or through the use of interest rate swap agreements, interest rate cap agreements or other financial instruments, or through a combination of these strategies.
We attempt to reduce interest rate risks and to minimize exposure to interest rate fluctuations through the use of fixed rate financing structures, when appropriate, whereby we seek to (1) match the maturities of our debt obligations with the maturities of our assets, (2) borrow at fixed rates for a period of time or (3) match the interest rates on our assets with like-kind debt (i.e., we may finance floating rate assets with floating rate debt and fixed-rate assets with fixed-rate debt), directly or through the use of interest rate swap agreements, interest rate cap agreements or other financial instruments, or through a combination of these strategies.
If interest rates rise, and our fixed rate debt balance remains constant, we expect the fair value of our fixed rate debt to decrease and the value of any hedges on floating rate debt to increase.
If interest rates rise, and our fixed - 60 - rate debt balance remains constant, we expect the fair value of our fixed rate debt to decrease and the value of any hedges on floating rate debt to increase.
The performance of renewable energy projects that produce electricity can be impacted by volatility in the market prices of various forms of energy, including electricity, coal and natural gas.
The performance of renewable energy projects that produce electricity or natural gas can be impacted by volatility in the market prices of various forms of energy, including electricity, coal and natural gas.
These structural protections, which are typically in the form of a preferred return mechanism, are designed to allow recovery of our capital and an acceptable return over time. When structuring and underwriting these transactions, we evaluate these transactions using a variety of - 72 - scenarios, including natural gas prices remaining low for an extended period of time.
These structural protections, which are typically in the form of a preferred return or cash sweep mechanism, are designed to allow recovery of our capital and an acceptable return over time. When structuring and underwriting these transactions, we evaluate these transactions using a variety of scenarios, including natural gas prices remaining low for an extended period of time.
Commodity and Environmental Attribute Price Risk When we make equity or debt investments for a renewable energy project that acts as a substitute for an underlying commodity, we may be exposed to volatility in prices for that commodity.
See also “Credit Risks” discussed above. Commodity and Environmental Attribute Price Risk When we make equity or debt investments for a renewable energy project that acts as a substitute for an underlying commodity, we may be exposed to volatility in prices for that commodity.
We are exposed to credit risk in our other projects that do not benefit from governments as the obligor such as on balance sheet financing of projects undertaken by universities, schools and hospitals, as well as privately owned commercial projects. We have invested in mezzanine loans and, as a result, we are exposed to additional credit risk.
We are exposed to credit risk in our other projects that do not benefit from governments as the obligor such as on balance sheet financing of projects undertaken by universities, schools and hospitals, as well as privately owned commercial projects.
As described above, we may use various financing techniques including interest rate swap agreements, interest rate cap agreements or other financial instruments, or a combination of these strategies to mitigate the variable interest nature of these facilities, and have hedged $820 million of these floating-rate borrowings.
As described above, we may use various financing techniques including interest rate swap agreements, interest rate cap agreements or other financial instruments, or a combination of these strategies to mitigate the variable interest nature of these facilities, and have $618 million notional value of interest rate swaps to hedge these floating-rate borrowings.
We first evaluate the credit rating of the obligors involved in the project using an average of the external credit ratings for an obligor, if available, or an estimated internal rating based on a third-party credit scoring system.
We first evaluate the credit rating of the offtakers or counterparties to the project using an average of the external credit ratings for an obligor, if available, or an estimated internal rating based on a third-party credit scoring system.
Despite these protections, as natural gas or renewable fuel credit price volatility continues or PPAs expire, the cash flows from certain of our projects are exposed to these market conditions and we work with the projects sponsors to minimize any impact as part of our on-going active asset management and portfolio monitoring.
As energy or environment attribute price volatility continues or as PPAs expire, the cash flows from certain of our projects are exposed to these market conditions and we work with the projects sponsors to minimize any impact as part of our on-going active asset management and portfolio monitoring.
Projects in which we invest, or in which we may plan to invest, may also be exposed to volatility in the prices of environmental attributes, such as renewable energy credits or other similar credits which the project may produce.
Projects in which we invest, or in which we may plan to invest, may also be exposed to volatility in the prices of environmental attributes which the project may produce.
We seek to manage credit risk through thorough due diligence and underwriting processes, strong structural protections in our transaction agreements with customers and continual, active asset management and portfolio monitoring.
We have invested in mezzanine loans and, as a result, we are exposed to additional credit risk. We seek to manage credit risk through thorough due diligence and underwriting processes, strong structural protections in our transaction agreements with customers and continual, active asset management and portfolio monitoring.
A 50 basis point increase in benchmark interest rates would increase the quarterly interest expense related to the $338 million in unhedged variable rate borrowings by $423 thousand. Such hypothetical impact of interest rates on our variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment.
An increase in benchmark interest rates would not increase the quarterly interest expense related to our variable rate borrowings as a result of these interest rate swaps. Such hypothetical impact of interest rates on our variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment.
To the extent transmission and distribution infrastructure in geographies in which we invest is not able to accommodate additional power, additional renewable penetration from other new projects in certain geographic areas could decrease the revenues of our projects. We seek to structure our energy efficiency investments so that we typically avoid exposure to commodity price risk.
To the extent transmission and distribution infrastructure in geographies in which we invest is not able to accommodate additional power, additional renewable penetration from other new projects in certain geographic areas could decrease the revenues of our projects. - 61 - Environmental Risks Our business is impacted by the effects of climate change and various related regulatory responses.
Our unsecured term loan is a variable rate loan with an outstanding balance of $535 million, and our revolving credit facilities are variable rate lines of credit with approximately $401 million outstanding as of December 31, 2023.
Our unsecured term loan is a variable rate loan with an outstanding balance of $247 million as of December 31, 2024, and our revolving credit facilities are variable rate lines of credit. We also have short-term green commercial paper borrowings outstanding of $100 million, which we may refinance through the issuance of additional paper at the then prevailing short-term rate.
Many of our assets, or the collateral supporting those assets, are concentrated in certain geographic areas, which may make those assets or the related collateral more susceptible to natural disasters or other regional events. See also “Credit Risks” discussed above.
Many of our assets, or the collateral supporting those assets, are concentrated in certain geographic areas and markets, which may make those assets or the related collateral more susceptible to market or environmental disruptions. As it relates to environmental risks, when we underwrite and structure our investments the environmental risks and opportunities are an integral consideration to our investment parameters.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of climate change on our future operations. - 73 -
Once a transaction has closed we continue to monitor the environmental risks to the Portfolio. We further discuss our strategy to managing these risks in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of climate change on our future operations. - 62 -
Removed
We also have short-term green commercial paper borrowings outstanding of $30 million, which we may refinance through the issuance of additional paper at the then prevailing short-term rate. Increases in interest rates would result in higher interest expense while decreases in interest rates would result in lower interest expense.
Added
Increases in interest rates would result in higher interest expense while decreases in interest rates would result in lower interest expense.
Removed
Certain of the projects in which we invest have one obligor and thus we are subject to concentration risk for these investments and could incur significant losses if any of these projects perform poorly or if we are required to write down the value of any of these projects.
Removed
However, volatility in energy prices may cause building owners and other parties to be reluctant to commit to projects for which repayment is based upon a fixed monetary value for energy savings that would not decline if the price of energy declines. Environmental Risks Our business is impacted by the effects of climate change and various related regulatory responses.
Removed
Weather related risks are at times managed in cooperation with our clients where they buy offsetting power positions to mitigate power market disruptions or operational impacts. Once a transaction has closed we continue to monitor the environmental risks to the Portfolio. We further discuss our strategy to managing these risks in Item 7.

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