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Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 167 added, 146 removed, 868 unchanged (27% of the section changed)

3 unchanged sentences

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

June 30, 2021 (unaudited) December 31, 2020

September 30, 2021 (unaudited) December 31, 2020

Cash and cash equivalents $ 413,259 $ 286,250

Equity method investments 1,468,282 1,279,651

Government receivables 130,685 248,455

Commercial receivables, net of allowance of $ 39 million and $ 36 million, respectively

1,224,741 965,452

Receivables held-for-sale 9,308 —

Government receivables 126,412 248,455

Real estate 356,861 359,176

24 unchanged sentences

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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(DOLLARS IN THOUSANDS)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income (loss) $ ( 3,099 ) $ 21,277 $ 64,525 $ 57,746

Unrealized gain (loss) on available-for-sale securities, net of tax benefit (provision) of $( 0.6 ) million and $ 0.2 million for the three and six months ended June 30, 2021 and $( 0.6 ) million and $( 1.1 ) million for the three and six months ended June 30, 2020

Unrealized gain (loss) on available-for-sale securities, net of tax benefit (provision) of $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2021 and $ 0.0 million and $( 1.1 ) million for the three and nine months ended September 30, 2020

( 900 ) 872 ( 8,268 ) 12,280

Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of $( 1.5 ) million and $( 1.9 ) million for the three and six months ended June 30, 2021 and $ 1.8 million and $ 1.7 million for the three and six months ended June 30, 2020

Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of $ 0.9 million and $( 1.0 ) million for the three and nine months ended September 30, 2021 and $( 0.3 ) million and $ 1.3 million for the three and nine months ended September 30, 2020

( 2,703 ) 990 3,351 ( 4,071 )

9 unchanged sentences

Shares Amount

Balance at March 31, 2021 78,319 $ 783 $ 1,489,168 $ ( 181,992 ) $ ( 5,360 ) $ 8,721 $ 1,311,320

Balance at June 30, 2021 78,419 $ 784 $ 1,487,103 $ ( 193,530 ) $ 11,335 $ 16,855 $ 1,322,547

Net income (loss) — — — ( 2,838 ) — ( 261 ) ( 3,099 )

3 unchanged sentences

Equity-based compensation — — 985 — — 2,730 3,715

Issuance (repurchase) of vested equity-based compensation shares 100 1 ( 3,630 ) — — — ( 3,629 )

Conversion of convertible notes 4,999 50 134,856 — — — 134,906

Dividends and distributions — — — ( 29,565 ) — ( 328 ) ( 29,893 )

Balance at September 30, 2021 84,275 $ 843 $ 1,671,747 $ ( 225,933 ) $ 7,746 $ 18,982 $ 1,473,385

Balance at June 30, 2020 73,319 $ 733 $ 1,250,976 $ ( 198,719 ) $ 9,619 $ 5,355 $ 1,067,964

Balance at March 31, 2020 71,325 $ 713 $ 1,206,225 $ ( 185,789 ) $ 11,076 $ 4,330 $ 1,036,555

Net income (loss) — — — 21,175 — 102 21,277

3 unchanged sentences

Equity-based compensation — — 1,617 — — 1,285 2,902

Issuance (repurchase) of vested equity-based compensation shares 56 — ( 1,320 ) — — — ( 1,320 )

Other 59 — 913 — — ( 859 ) 54

Dividends and distributions — — — ( 25,370 ) — ( 200 ) ( 25,570 )

Balance at June 30, 2020 73,319 $ 733 $ 1,250,976 $ ( 198,719 ) $ 9,619 $ 5,355 $ 1,067,964

Balance at September 30, 2020 74,253 $ 743 $ 1,282,744 $ ( 202,914 ) $ 11,474 $ 5,690 $ 1,097,737

See accompanying notes.

10 unchanged sentences

Issuance (repurchase) of vested equity-based compensation shares 323 3 ( 14,020 ) — — — ( 14,017 )

Conversion of convertible notes 4,999 50 134,856 — — — 134,906

Dividends and distributions — — — ( 85,980 ) — ( 947 ) ( 86,927 )

Balance at June 30, 2021 78,419 $ 784 $ 1,487,103 $ ( 193,530 ) $ 11,336 $ 16,856 $ 1,322,549

Balance at September 30, 2021 84,275 $ 843 $ 1,671,747 $ ( 225,933 ) $ 7,746 $ 18,982 $ 1,473,385

Balance at December 31, 2019 66,338 $ 663 $ 1,102,303 $ ( 169,786 ) $ 3,300 $ 3,432 $ 939,912

8 unchanged sentences

Issuance (repurchase) of vested equity-based compensation shares 537 5 ( 17,293 ) — — — ( 17,288 )

Other 59 — 913 — — ( 860 ) 53

Dividends and distributions — — — ( 76,588 ) — ( 641 ) ( 77,229 )

Balance at June 30, 2020 73,319 $ 733 $ 1,250,976 $ ( 198,719 ) $ 9,619 $ 5,355 $ 1,067,964

Balance at September 30, 2020 74,253 $ 743 $ 1,282,744 $ ( 202,914 ) $ 11,474 $ 5,690 $ 1,097,737

See accompanying notes.

2 unchanged sentences

(DOLLARS IN THOUSANDS)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

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Loss on debt extinguishment 14,584 —

Changes in receivables held-for-sale ( 9,190 ) —

Changes in accounts payable and accrued expenses 11,606 5,906

5 unchanged sentences

Equity method investment distributions received 10,936 90,920

Proceeds from sales of equity method investments 300 —

Purchases of and investments in receivables ( 407,517 ) ( 92,232 )

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Proceeds from issuance of senior unsecured notes 1,000,000 771,250

Proceeds from issuance of convertible notes — 143,750

Redemption of senior unsecured notes ( 500,000 ) —

2 unchanged sentences

Withholdings on employee share vesting ( 14,018 ) ( 17,287 )

Redemption premium paid ( 14,101 ) —

Payment of debt issuance costs ( 17,672 ) ( 14,382 )

5 unchanged sentences

Interest paid $ 74,962 $ 57,310

Non-cash changes in liabilities (financing activity) ( 121,512 ) —

Non-cash changes in receivables and investments (investing activity) 127,614 —

Non-cash changes in residual assets (investing activity) ( 34,684 ) ( 28,923 )

Non-cash changes in other assets (investing activity) ( 1,729 ) —

Supplemental disclosure of non-cash activity

Residual assets retained from securitization transactions $ 45,578 $ 38,081

Right-of-use asset obtained in exchange for lease liability 4,628 —

Issuance of common stock from conversion of convertible notes 135,800 —

Deconsolidation of non-recourse debt 126,139 —

Deconsolidation of assets pledged for non-recourse debt 130,513 —

See accompanying notes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

Hannon Armstrong Sustainable Infrastructure Capital, Inc.

(the “Company”) invests in climate solutions by providing capital to the leading companies in the energy efficiency, renewable energy and other sustainable infrastructure markets.

(the “Company”) invests in climate solutions by providing capital to leading companies in the energy efficiency, renewable energy and other sustainable infrastructure markets.

Our goal is to generate attractive returns from a diversified portfolio of projects with long-term and predictable cash flows from proven technologies that reduce carbon emissions or increase resilience to climate change.

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We also generate fee income through securitizations and syndications, by providing broker/dealer services and by managing and servicing assets owned by third parties.

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “HASI.” We have qualified as a real estate investment trust (“REIT”) and also intend to continue to operate our business in a manner that will maintain our exemption from registration as an investment company under the 1940 Act, as amended.

We operate our business through, and serve as the sole general partner of, our operating partnership subsidiary, Hannon Armstrong Sustainable Infrastructure, L.P., (the “Operating Partnership”), which was formed to acquire and directly or indirectly own our assets.

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In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations and cash flows have been included.

Our results of operations for the three and six-month periods ended June 30, 2021 and 2020, are not necessarily indicative of the results to be expected for the full year or any other future period.

Our results of operations for the three- and nine-month periods ended September 30, 2021 and 2020, are not necessarily indicative of the results to be expected for the full year or any other future period.

Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted.

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We account for our investments in entities that are considered voting interest entities or variable interest entities (“VIEs”) under ASC 810 and assess whether we should consolidate these entities on an ongoing basis.

We have established various special purpose entities or securitization trusts for the purpose of securitizing certain assets which are not consolidated in our financial statements as described below in Securitization of Financial Assets.

We have established various special purpose entities or securitization trusts for the purpose of securitizing certain assets that are not consolidated in our financial statements as described below in Securitization of Financial Assets.

Since we have assessed that we have power over and receive the benefits from those special purpose entities that are formed for the purpose of holding our assets on our balance sheet, we have concluded we are the primary beneficiary and should consolidate these entities under the provisions of ASC 810.

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However, we may provide financial commitments to these VIEs or guarantees of certain of their obligations.

Certain other equity method investments have been assessed to be voting interest entities as we exert significant influence through our ownership of voting interests, and accordingly we do not consolidate.

Certain other entities in which we have equity investments have been assessed to be voting interest entities and are not consolidated as we exert significant influence rather than control through our ownership of voting interests, and accordingly account for them as equity method investments described below.

Equity Method Investments

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At inception of the arrangement, the carrying value of receivables held for investment represents the present value of the note, lease or other payments, net of any unearned fee income, which is recognized as income over the term of the note or lease using the effective interest method.

Receivables that are held for investment are carried at amortized cost, net of any unamortized acquisition premiums or discounts and include origination and acquisition costs, as applicable.

Our initial investment and principal repayments of these receivables are

classified as investing activities and the interest collected is classified as operating activities in our consolidated statements of cash flows.

Receivables that are held for investment are carried at amortized cost, net of any unamortized acquisition premiums or discounts and include

origination and acquisition costs, as applicable.

Our initial investment and principal repayments of these receivables are classified as investing activities and the interest collected is classified as operating activities in our consolidated statements of cash flows.

Receivables that we intend to sell in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value on our balance sheet, which is assessed on an individual asset basis.

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For our other real estate lease transactions that are classified as operating leases, the scheduled rental revenue typically varies during the lease term and thus rental income is recognized on a straight-line basis, unless there is considerable risk as to collectability, so as to produce a constant periodic rent over the term of the lease.

Accrued rental income is the aggregate difference between the scheduled rents which vary during the lease term and the income recognized on a straight-line basis and is recorded in other assets.

Accrued rental income is the aggregate difference between the scheduled rents that vary during the lease term and the income recognized on a straight-line basis and is recorded in other assets.

Expenses, if any, related to the ongoing operation of leases where we are the lessor, are charged to operations as incurred.

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The as-if-vacant fair value of a property is typically determined by management based on appraisals by a qualified appraiser.

In determining the fair value of the identified intangibles of an acquired property, above-market and below-market in-place lease values are valued based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease, including renewal periods reasonably certain of being exercised by the lessee.

In determining the fair value of the identified intangibles of an acquired property, above-market and below-market in-place lease values are valued based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease, including renewal periods reasonably certain of being exercised by the lessee.

The capitalized off-market lease values are amortized as an adjustment of rental income over the term used to value the intangible.

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If the amortized cost of servicing assets is greater than the estimated fair value, we will recognize an impairment in net income.

Our other retained interest in securitized assets, the residual assets, are accounted for similarly to available-for-sale debt securities and carried at fair value.

Our residual assets are evaluated for impairment on a quarterly basis.

Our other retained interest in securitized assets, the residual assets, are accounted for similar to available-for-sale debt securities and carried at fair value.

Income related to the residual assets is recognized using the effective interest rate method and included in fee income in the income statement.

If there is a change in the expected cash flows related to the residual assets, we will assess whether the asset is impaired and will calculate a new yield based on the current amortized cost of the residual assets and the revised expected cash flows.

Our residual assets are evaluated for impairment on a quarterly basis.

A residual asset is impaired if its fair value is less than its carrying value.

The credit component of impairments, if any, are recognized by recording an allowance against the amortized cost of the asset.

For changes in expected cash flows, we will calculate a new yield based on the current amortized cost of the residual assets and the revised expected cash flows.

This yield is used prospectively to recognize our income related to these assets.

11 unchanged sentences

The initial issuance and any principal repayments are classified as financing activities and interest payments are classified as operating activities in our consolidated statements of cash flows.

If converted, the carrying value of each bond is reclassified into stockholders' equity.

We elected and qualified to be taxed as a REIT for U.S.

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Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted.

We evaluate any deferred tax assets for valuation allowances

based on an assessment of available evidence including sources of taxable income, prior years taxable income, any existing taxable temporary differences and our future investment and business plans that may give rise to taxable income.

The effect on deferred tax assets and liabilities from a change in tax rates is

recognized in earnings in the period when the new rate is enacted.

We evaluate any deferred tax assets for valuation allowances based on an assessment of available evidence including sources of taxable income, prior years taxable income, any existing taxable temporary differences and our future investment and business plans that may give rise to taxable income.

We treat any tax credits we receive from our equity investments in renewable energy projects as reductions of federal income taxes of the year in which the credit arises.

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Recently Issued Accounting Pronouncements

Accounting standards updates issued before August 6, 2021, and effective after June 30, 2021, are not expected to have a material effect on our consolidated financial statements and related disclosures.

Accounting standards updates issued before November 5, 2021, and effective after September 30, 2021, are not expected to have a material effect on our consolidated financial statements and related disclosures.

Fair Value Measurements

4 unchanged sentences

We use our judgment and consider factors specific to the financial assets and liabilities in determining the significance of an input to the fair value measurements.

As of June 30, 2021 and December 31, 2020, only our residual assets related to our securitization trusts and investments were carried at fair value on the consolidated balance sheets on a recurring basis.

As of September 30, 2021 and December 31, 2020, only our residual assets related to our securitization trusts and investments were carried at fair value on the consolidated balance sheets on a recurring basis.

The three levels of the fair value hierarchy are described below:

7 unchanged sentences

The receivables held-for-sale, if any, are carried at the lower of cost or fair value.

As of June 30, 2021

As of September 30, 2021

Fair Value Carrying

2 unchanged sentences

Commercial receivables 1,397 1,225 Level 3

Receivables held-for-sale 16 9 Level 3

Investments (1)

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Convertible notes 203 158 Level 2

(1) The amortized cost of our investments as of June 30, 2021, was $ 17 million.

(1) The amortized cost of our investments as of September 30, 2021, was $ 17 million.

(2) Included in securitization assets on the consolidated balance sheet.

This amount excludes securitization servicing assets, which are carried at amortized cost.

The amortized cost of our securitization assets as of June 30, 2021 was $ 173 million.

The amortized cost of our securitization assets as of September 30, 2021 was $ 184 million.

(3) Fair value and carrying value exclude unamortized financing costs.

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The following table reconciles the beginning and ending balances for our Level 3 investments that are carried at fair value on a recurring basis:

For the three months ended June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2021 2020 2021 2020

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(in millions)

June 30, 2021 $ 7 $ — $ 0.2 $ —

September 30, 2021 $ 7 $ — $ 0.2 $ —

December 31, 2020 — 6 — 0.3

1 unchanged sentence

We have the intent and ability to hold these investments until a recovery of fair value.

In determining the fair value of our investments we used a market-based risk-free rate and a range of interest rate spreads of approximately 1 % to 4 % based upon transactions involving similar assets as of June 30, 2021 and December 31, 2020.

The weighted average discount rate used to determine the fair value of our investments as of June 30, 2021 and December 31, 2020 were 3.6 % and 3.2 %, respectively.

The weighted average discount rate used to determine the fair value of our investments as of September 30, 2021 and December 31, 2020 were 3.6 % and 3.2 %, respectively.

Securitization residual assets

The following table reconciles the beginning and ending balances for our Level 3 securitization residual assets that are carried at fair value on a recurring basis:

For the three months ended June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2021 2020 2021 2020

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Balance, end of period $ 198 $ 142 $ 198 $ 142

In determining the fair value of our securitization residual assets, we used a market-based risk-free rate and a range of interest rate spreads of approximately 1 % to 5 % based upon transactions involving similar assets as of June 30, 2021 and December 31, 2020.

The weighted average discount rates used to determine the fair value of our securitization residual assets as of June 30, 2021 and December 31, 2020 were 4.3 % and 3.8 %, respectively.

In determining the fair value of our securitization residual assets, we used a market-based risk-free rate and a range of interest rate spreads of approximately 1 % to 4 % based upon transactions involving similar assets as of September 30, 2021 and December 31, 2020.

The weighted average discount rates used to determine the fair value of our securitization residual assets as of September 30, 2021 and December 31, 2020 were 4.3 % and 3.8 %, respectively.

Non-recurring Fair Value Measurements

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We may use third-party valuation firms to assist us with developing our estimates of fair value.

See Note 6 for discussion of a fair value measurement recorded at June 30, 2021 related to an equity method investment.

See Note 6 for discussion of a fair value measurement recorded at September 30, 2021 related to an equity method investment.

Concentration of Credit Risk

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We had cash deposits that are subject to credit risk as shown below:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in millions)

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The outstanding OP units held by outside limited partners represent less than 1 % of our outstanding OP units and are redeemable by the limited partners for cash, or at our option, for a like number of shares of our common stock.

No OP units were exchanged by non-controlling interest holders during the six months ended June 30, 2021 and June 30, 2020.

No OP units were exchanged by non-controlling interest holders during the nine months ended September 30, 2021 and 57,400 OP units were exchanged by non-controlling interest holders during the nine months ended September 30, 2020.

We have also granted to members of our management team and directors LTIP Units pursuant to the 2013 Plan.

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The following summarizes certain transactions with securitization trusts:

As of and for the six months ended June 30,

As of and for the nine months ended September 30,

(in millions)

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In connection with securitization transactions, we typically retain servicing responsibilities and residual assets.

We generally receive annual servicing fees typically up to 0.20 % of the outstanding balance.

We may periodically make servicer advances, which are subject to credit risk.

We generally receive annual servicing fees that are typically up to 0.20 % of the outstanding balance.

We may periodically make servicer advances, that are subject to credit risk.

Included in securitization assets in our consolidated balance sheets are our servicing assets at amortized cost and our residual assets at fair value.

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Depending on the nature of the transaction risks, the discount rate ranged from 2 % to 8 %.

As of June 30, 2021 and December 31, 2020, our managed assets totaled $ 8.0 billion and $ 7.2 billion respectively, of which $ 5.0 billion and $ 4.3 billion were securitized assets held in unconsolidated securitization trusts.

There were no securitization credit losses in the six months ended June 30, 2021 or June 30, 2020.

As of June 30, 2021, there were no material payments from debtors to the securitization trusts that were greater than 90 days past due.

As of September 30, 2021 and December 31, 2020, our managed assets totaled $ 8.2 billion and $ 7.2 billion, respectively, of which $ 5.0 billion and $ 4.3 billion, respectively, were securitized assets held in unconsolidated securitization trusts.

There were no securitization credit losses in the nine months ended September 30, 2021 or September 30, 2020.

As of September 30, 2021, there were no material payments from debtors to the securitization trusts that were greater than 90 days past due.

Receivables from contracts for the installation of energy efficiency and other technologies are the source of cash flows of $ 109 million of our securitization residual assets.

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Our Portfolio

As of June 30, 2021, our Portfolio included approximately $ 3.0 billion of equity method investments, receivables, real estate and investments on our balance sheet.

As of September 30, 2021, our Portfolio included approximately $ 3.2 billion of equity method investments, receivables, real estate and investments on our balance sheet.

The equity method investments represent our non-controlling equity investments in renewable energy and energy efficiency projects and land.

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In addition, we consider the overall economic environment, the climate solutions sector, the effect of local, industry and broader economic factors, the impact of any variation in weather and the historical and anticipated trends in interest rates, defaults and loss severities for similar transactions.

The following is an analysis of the Performance Ratings of our Portfolio as of June 30, 2021, which is assessed quarterly:

The following is an analysis of the Performance Ratings of our Portfolio as of September 30, 2021, which is assessed quarterly:

Portfolio Performance

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(3) This category includes our assets where based on our credit criteria and performance to date, we believe there is substantial doubt regarding our ability to recover some or all of our invested capital.

Included in this category are two commercial receivables with a combined total carrying value of approximately $ 8 million as of June 30, 2021 which we have held on non-accrual status since 2017.

Included in this category are two commercial receivables with a combined total carrying value of approximately $ 8 million as of September 30, 2021, which we have held on non-accrual status since 2017.

We expect to continue to pursue our legal claims with regards to these assets.

In addition, there is an equity method investment in a wind project with no book value where we had previously disclosed in 2019 our allocation of impairment losses recorded by the project sponsor.

We moved this investment from Category 2 to Category 3 in the first quarter of 2021 due to continued underperformance.

This category previously contained an equity method investment in a wind project with no book value due to our allocation of impairment losses recorded by the project sponsor.

We sold this equity method investment in the third quarter for nominal proceeds.

(4) Total reconciles to the total of the government receivables and commercial receivables lines of the consolidated balance sheets.

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(6) Average remaining balance is calculated gross of allowance for loss on receivables and excludes approximately 152 transactions each with outstanding balances that are less than $ 1 million and that in the aggregate total $ 72 million.

As of June 30, 2021, our allowance for loan losses was $ 37 million based on our expectation of credit losses over the lives of the receivables in our portfolio.

During the three and six months ended June 30, 2021, we increased our reserve by approximately $ 1 million as a result of loan commitments made during the period.

Below is a summary of the carrying value, expected loan funding commitments, and allowance by type of receivable or "Portfolio Segment", as defined by Topic 326, as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

As of September 30, 2021, our allowance for loan losses was $ 39 million based on our expectation of credit losses over the lives of the receivables in our portfolio.

During the three and nine months ended September 30, 2021, we increased our reserve by approximately $ 2 million and $ 3 million, respectively, primarily as a result of loans and loan commitments made during the period.

Below is a summary of the carrying value, expected loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance

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Total $ 1,390 $ 290 $ 39 $ 1,250 $ 282 $ 36

(1) As of June 30, 2021, our government receivables include $ 29 million of U.S.

(1) As of September 30, 2021, our government receivables include $ 28 million of U.S.

federal government transactions and $ 98 million of transactions where the ultimate obligors are state or local governments.

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Our expectation of credit losses for these receivables is immaterial given the high credit-quality of the obligors.

(2) As of June 30, 2021, this category of assets includes $ 565 million of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies which are secured by residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries.

(2) As of September 30, 2021, this category of assets includes $ 742 million of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies which are secured by residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries.

Approximately $ 647 million of our commercial receivables are loans made to entities in which we also have non-controlling equity investments of approximately $ 76 million.

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The following table reconciles our beginning and ending allowance for loss on receivables by Portfolio Segment:

Three months ended June 30, 2021 Three months ended June 30, 2020

Three months ended September 30, 2021 Three months ended September 30, 2020

Government Commercial Government Commercial

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Ending balance $ — $ 39 $ — $ 31

Six months ended June 30, 2021 Six months ended June 30, 2020

Nine months ended September 30, 2021 Nine months ended September 30, 2020

Government Commercial Government Commercial

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Ending balance $ — $ 39 $ — $ 31

(1) For the six months ended June 30, 2020, the beginning balance represents January 1, 2020, the adoption date of Topic 326.

(1) For the nine months ended September 30, 2020, the beginning balance represents January 1, 2020, the adoption date of Topic 326.

The beginning balance includes the pre-tax allowance for loss on receivables of $ 17 million recorded upon adoption which reflects our estimated loss as of that date under the new standard as well as the $ 8 million of receivables which were previously on non-accrual status and fully reserved.

Other than the $ 8 million of receivables discussed above with a Performance Rating of 3, we have no receivables which are on non-accrual status.

The following table provides a summary of our anticipated maturity dates of our receivables and the weighted average yield for each range of maturities as of June 30, 2021:

The following table provides a summary of our anticipated maturity dates of our receivables and the weighted average yield for each range of maturities as of September 30, 2021:

Total Less than 1

3 unchanged sentences

Weighted average yield by period 8.2 % 7.6 % 6.3 % 8.4 % 8.3 %

The following table provides a summary of our anticipated maturity dates of our investments and the weighted average yield for each range of maturities as of June 30, 2021:

The following table provides a summary of our anticipated maturity dates of our investments and the weighted average yield for each range of maturities as of September 30, 2021:

Total Less than 1

3 unchanged sentences

Weighted average yield by period 4.1 % — % — % — % 4.1 %

We had no investments that were impaired or on non-accrual status as of June 30, 2021 or December 31, 2020, and no allowances associated with our investments.

We had no investments that were impaired or on non-accrual status as of September 30, 2021 or December 31, 2020, and no allowances associated with our investments.

Our real estate is leased to renewable energy projects, typically under long-term triple net leases with expiration dates that range between the years 2033 and 2057 under the initial terms and 2047 and 2080 if all renewals are exercised.

The components of our real estate portfolio as of June 30, 2021 and December 31, 2020, were as follows:

June 30, 2021 December 31, 2020

The components of our real estate portfolio as of September 30, 2021 and December 31, 2020, were as follows:

September 30, 2021 December 31, 2020

(in millions)

3 unchanged sentences

Real estate $ 357 $ 359

As of June 30, 2021, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:

As of September 30, 2021, the future amortization expense of the intangible assets and the future minimum rental income payments under our land lease agreements are as follows:

Future Amortization Expense Minimum Rental Income Payments

(in millions)

From July 1, 2021 to December 31, 2021 $ 2 $ 11

From October 1, 2021 to December 31, 2021 $ 1 $ 5

Thereafter 72 717

2 unchanged sentences

We have made non-controlling equity investments in a number of renewable energy and energy efficiency projects as well as in a joint venture that owns land with long-term triple net lease agreements to several solar projects that we account for as equity method investments.

As of June 30, 2021, we held the following equity method investments:

As of September 30, 2021, we held the following equity method investments:

Investment Date Investee Carrying Value

8 unchanged sentences

Jupiter Equity Holdings LLC

On July 1, 2020, we acquired a preferred equity interest in Jupiter Equity Holdings, LLC ("Jupiter") that is expected to own an approximately 2.3 gigawatt portfolio of renewable energy projects.

We have agreed to guarantee certain of the obligations of the subsidiary in connection with these agreements.

As of June 30, 2021, we have made capital contributions to Jupiter of approximately $ 522 million related to nine operating wind projects and three operating solar projects with an aggregate capacity of approximately 2.3 gigawatts.

We expect to ultimately invest approximately $ 540 million in Jupiter by making additional periodic capital contributions related to one more project anticipated to be commercially operational on or prior to December 31, 2021, at which time the additional project will be transferred into Jupiter.

Assuming all of the projects are acquired by Jupiter, the renewables portfolio will consist of 13 projects ( nine onshore wind projects and four utility-scale solar projects) and will feature cash flows from fixed-price power purchase agreements and financial hedges with a weighted average contract life of 13 years, contracted with highly creditworthy off-takers and counterparties.

We have a preferred equity interest in Jupiter Equity Holdings LLC (“Jupiter”) that owns nine operating onshore wind projects and four operating utility-scale solar projects with an aggregate capacity of approximately 2.3 gigawatts.

As of September 30, 2021, we have made capital contributions to Jupiter of approximately $ 540 million related to these projects.

The projects feature cash flows from fixed-price power purchase agreements and financial hedges with a weighted average contract life of 13 years, contracted with highly creditworthy off-takers and counterparties.

Jupiter is governed by an amended and restated limited liability company agreement, dated July 1, 2020, by and among Jupiter, one of our subsidiaries and a subsidiary of the project sponsor, and contains customary terms and conditions.

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We use the equity method of accounting to account for our preferred equity interest in Jupiter, and have elected to recognize earnings from this investment one quarter in arrears to allow for the receipt of financial information.

Lighthouse Renewables Portfolio

Lighthouse Partnerships

In December 2020, we entered into certain agreements relating to the acquisition, ownership and management of approximately $ 663 million in preferred cash equity investments in three partnerships (the “Lighthouse Partnerships”) that expect to own cash equity interests in an approximately 1.6 gigawatt portfolio of onshore wind, utility-scale solar and solar-plus-storage projects (the “Renewables Portfolio”) developed and managed by the project sponsor.

We have made initial investments in the preferred cash equity interests of the Lighthouse Partnerships of approximately $ 219 million through June 30, 2021, and additional investments are expected to be made in 2021 and 2022 as the projects become commercially operational.

We have made initial investments in the preferred cash equity interests of the Lighthouse Partnerships of approximately $ 219 million through September 30, 2021, and additional investments are expected to be made in 2021 and 2022 as the projects become commercially operational.

The Renewables Portfolio currently has contracted cash flows with a combined weighted average contract life of greater than 14 years with a diversified group of predominately investment grade corporate, utility, university and municipal offtakers.

5 unchanged sentences

Subject to customary exceptions, no member of a Lighthouse Partnership can transfer any of its equity ownership in any Lighthouse Partnership to a third party without approval of the review committee of that Lighthouse Partnership.

We use the equity method of accounting to account for our preferred equity interest in each Lighthouse

Partnership, and have elected to recognize earnings from this investment one quarter in arrears to allow for the receipt of financial information.

We use the equity method of accounting to account for our preferred equity interest in each Lighthouse Partnership, and have elected to recognize earnings from this investment one quarter in arrears to allow for the receipt of financial information.

Other Equity method investments

In July 2021, we restructured an equity method investment with a GAAP carrying value of $ 24 million to convert it to a $ 17 million loan.

The June 30, 2021 GAAP carrying value of this investment included amounts related to non-cash HLBV income which in normal course would have reversed over time.

The June 30, 2021 GAAP carrying value of this investment included amounts related to non-cash HLBV income that in normal course would have reversed over time.

Because this transaction was an indication of fair value that existed as of June 30, 2021, we accelerated the reversal of $ 7 million of previously recorded non-cash HLBV income included in the June 30, 2021 carrying value of this investment in the second quarter through income from equity method investments on our income statement.

Credit facilities

Credit facilities and commercial paper notes

Secured credit facilities

1 unchanged sentence

The Rep-Based Facility is a secured revolving limited-recourse credit facility, which we modified in March 2021 to have a maximum outstanding principal amount of $ 100 million, lowered from a previous amount of $ 250 million.

This modification resulted in a $ 1.5 million loss due to the acceleration of a portion of the related unamortized financing costs which was recognized in the first quarter of 2021.

This modification resulted in a $ 1.5 million loss due to the acceleration of a portion of the related unamortized financing costs that was recognized in the first quarter of 2021.

The Approval-Based Facility is a secured revolving recourse credit facility with a maximum outstanding principal amount of $ 200 million.

The following table provides additional detail on our Secured Credit Facilities as of June 30, 2021:

The following table provides additional detail on our Secured Credit Facilities as of September 30, 2021:

Facility Approval-Based Facility

2 unchanged sentences

Value of collateral pledged to credit facility 24 89

Weighted average short-term borrowing rate N/A 1.58 %

Available capacity based on pledged assets 11 64

Weighted average short-term borrowing rate N/A N/A

Loans under the Rep-Based Facility bear interest at a rate equal to one-month LIBOR plus 1.40 % or 1.85 % (depending on the type of collateral) or, in certain circumstances, the Federal Funds Rate plus 0.40 % or 0.85 % (depending on the type of collateral).

7 unchanged sentences

Federal Government obligor, 80 % in the case of an institutional obligor or state and local obligor, and with respect to other obligors or in certain circumstances, such other percentage as the administrative agent may prescribe.

Under the Approval-Based Facility, the applicable valuation percentage is 85 % in the case of certain approved financings and 67 % or such other percentage as the administrative agent may prescribe, including in the case of one asset, an agreed-upon amortization schedule.

The stated minimum maturities to be paid under the amortization schedule to meet the required target loan balances as of June 30, 2021 are as follows:

Future minimum maturities

(in millions)

July 1, 2021 to December 31, 2021 $ —

Under the Approval-Based Facility, the applicable valuation percentage is 85 % in the case of certain approved financings and 67 % or such other percentage as the administrative agent may prescribe.

The Approval-Based Facility previously had an outstanding draw with a fixed amortization schedule that was prepaid in the third quarter of 2021.

We have approximately $ 2 million of remaining unamortized financing costs associated with the Secured Credit Facilities that have been capitalized and included in other assets on our balance sheet and are being amortized on a straight-line basis over the term of the Secured Credit Facilities.

Administrative fees are payable annually to the administrative agent under each of the Secured Credit Facilities and letter agreements with the administrative agent.

Under the Rep-Based Facility, we pay to the administrative agent on each monthly payment date, for the benefit of the lenders, certain availability fees for the Rep-Based Facility equal to 0.60 %, divided by 365 or 366, as applicable, multiplied by the excess of the available total commitments under the Rep-Based Facility over the actual amount borrowed under the Rep-Based Facility.

Under the Rep-Based Facility, we pay to the administrative agent on each monthly payment date, for the benefit of the lenders, certain availability fees for the Rep-Based

Facility equal to 0.60 %, divided by 365 or 366, as applicable, multiplied by the excess of the available total commitments under the Rep-Based Facility over the actual amount borrowed under the Rep-Based Facility.

The Secured Credit Facilities contain terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this nature, including various affirmative and negative covenants, 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.

We were in compliance with our covenants as of June 30, 2021.

The Secured Credit Facilities also include customary events of default, including the existence of a default in more than 50 % of underlying financings.

We were in compliance with our covenants as of September 30, 2021.

The Secured Credit Facilities also include customary events of default, including the existence of a default in more than 50 % of the value of underlying financings.

The occurrence of an event of default may result in termination of the credit facilities, acceleration of amounts due under the Secured Credit Facilities, and accrual of default interest at a rate of LIBOR plus 2.00 % in the case of both the Rep-Based Facility and the Approval-Based Facility.

1 unchanged sentence

In April 2021, we entered into a new $ 400 million, 364-day unsecured revolving credit facility pursuant to a revolving credit agreement with a syndicate of lenders, replacing our then-existing $ 50 million unsecured revolving credit facility entered into in February 2021.

As of June 30, 2021, the outstanding balance on this facility was $ 25 million, and it currently bears interest at a rate of 2.325 %.

As of September 30, 2021, the outstanding balance on this facility was $ 25 million, and it currently bears interest at a rate of 2.325 %.

We have approximately $ 1 million of remaining unamortized financing costs associated with the unsecured credit facility that have been capitalized and included in other assets on our balance sheet and are being amortized on a straight-line basis over the term of the unsecured credit facility.

The unsecured revolving credit facility has a commitment fee based on our current credit rating and bears interest at a rate of the LIBOR or prime rate plus applicable margins based on our current credit rating, which may be adjusted downward up to 0.05 % to the extent our Portfolio achieves certain targeted levels of carbon emissions reductions.

As of the inception of the unsecured revolving credit facility, the applicable margins are 2.25 % for LIBOR-based loans and 1.25 % for prime rate-based loans.

2 unchanged sentences

At our option, upon maturity of the unsecured credit facility, we have the ability to convert amounts borrowed into term loans for a fee equal to 2.25 % of the term loan amounts.

CarbonCount © Green Commercial Paper Note Program

In September 2021, we entered into an agreement allowing us to issue commercial paper notes, in amounts up to $ 100 million outstanding at any time.

We obtained an irrevocable direct-pay letter of credit in an amount not to exceed $ 100 million from Bank of America, N.A, to support these obligations which expires in December 2022.

Commercial paper notes will not be redeemable, will not be subject to voluntary prepayment and are not to exceed 397 days.

The proceeds of our commercial paper notes are used to acquire or refinance, in whole or in part, eligible green projects, including assets that are neutral to negative on incremental carbon emissions.

We have no commercial paper notes outstanding as of September 30, 2021.

Green commercial paper notes will be issued at a discount based on market pricing, subject to broker fees of 0.10 %.

For issuance of the letter of credit, we will pay 0.95 % on any drawn letter of credit amounts to Bank of America, N.A., and 0.40 % on any unused letter of credit capacity.

Fees paid on the drawn letters of credit may be reduced by up to 0.05 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance as measured by our CarbonCount © metric.

As of September 30, 2021, we have approximately $ 1 million of remaining unamortized financing costs associated with the commercial paper program and associated letter of credit that have been capitalized and included in other assets on our balance sheet and are being amortized on a straight-line basis over the term of the commercial paper program.

The associated letter of credit contains terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this nature, including various affirmative and negative covenants, 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, stock repurchases and dividends we declare.

The letter of credit also includes customary events of default and remedies.

Long-term Debt

4 unchanged sentences

Maturity Carrying Value of Assets Pledged as of

June 30, 2021 December 31, 2020 Interest

Rate Maturity Date June 30, 2021 December 31, 2020 Description

September 30, 2021 December 31, 2020 Interest

Rate Maturity Date September 30, 2021 December 31, 2020 Description

of Assets Pledged

18 unchanged sentences

Scheduled debt service payment requirements are equal to or less than the cash flows received from the underlying receivables.

(4) The total collateral pledged against our non-recourse debt was $ 579 million and $ 723 million as of June 30, 2021 and December 31, 2020, respectively.

In addition, $ 24 million and $ 23 million of our restricted cash balance was pledged as collateral to various non-recourse loans as of June 30, 2021 and December 31, 2020, respectively.

(4) The total collateral pledged against our non-recourse debt was $ 574 million and $ 723 million as of September 30, 2021 and December 31, 2020, respectively.

In addition, $ 25 million and $ 23 million of our restricted cash balance was pledged as collateral to various non-recourse loans as of September 30, 2021 and December 31, 2020, respectively.

We have pledged the financed assets, and typically our interests in one or more parents or subsidiaries of the borrower that are legally separate bankruptcy remote special purpose entities as security for the non-recourse debt.

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We typically act as servicer for the debt transactions.

We are in compliance with all covenants as of June 30, 2021 and December 31, 2020.

We were in compliance with all covenants as of September 30, 2021 and December 31, 2020.

We have guaranteed the accuracy of certain of the representations and warranties and other obligations of certain of our subsidiaries under certain of the debt agreements and provided an indemnity against certain losses from “bad acts” of such subsidiaries including fraud, failure to disclose a material fact, theft, misappropriation, voluntary bankruptcy or unauthorized transfers.

The stated minimum maturities of non-recourse debt as of June 30, 2021, were as follows:

The stated minimum maturities of non-recourse debt as of September 30, 2021, were as follows:

Future minimum maturities

(in millions)

July 1, 2021 to December 31, 2021 $ 14

October 1, 2021 to December 31, 2021 $ 11

Thereafter 308

9 unchanged sentences

Proceeds from the 2026 Notes were used to redeem the 2024 Notes as described below.

The Senior Unsecured Notes are subject to covenants which limit our ability to incur additional indebtedness and require us to maintain unencumbered assets of not less than 120 % of our unsecured debt.

The Senior Unsecured Notes are subject to covenants that limit our ability to incur additional indebtedness and require us to maintain unencumbered assets of not less than 120 % of our unsecured debt.

These covenants will terminate on any date at which the Senior Unsecured Notes have been rated investment grade by two of the three major credit rating agencies and no event of default has occurred.

We are in compliance with all of our covenants as of June 30, 2021 and December 31, 2020.

We are in compliance with all of our covenants as of September 30, 2021 and December 31, 2020.

The Senior Unsecured Notes impose certain requirements in the event that we merge with or sell substantially all of our assets to another entity.

The proceeds of our Senior Unsecured Notes are used to acquire or refinance, in whole or in part, eligible green projects, including assets which are neutral to negative on incremental carbon emissions.

The proceeds of our Senior Unsecured Notes are used to acquire or refinance, in whole or in part, eligible green projects, including assets that are neutral to negative on incremental carbon emissions.

The following are summarized terms of the Senior Unsecured Notes:

21 unchanged sentences

The following table presents a summary of the components of the Senior Unsecured Notes:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in millions)

4 unchanged sentences

Carrying value of Senior Unsecured Notes $ 1,771 $ 1,283

We recorded approximately $ 17 million and $ 34 million in interest expense related to the Senior Unsecured Notes in the three and six months ended June 30, 2021, respectively, compared to approximately $ 12 million and $ 18 million in the three and six months ended June 30, 2020, respectively.

We recorded approximately $ 19 million and $ 53 million in interest expense related to the Senior Unsecured Notes in the three and nine months ended September 30, 2021, respectively, compared to approximately $ 14 million and $ 33 million in the three and nine months ended September 30, 2020, respectively.

Convertible Senior Notes

1 unchanged sentence

Holders may convert any of their Convertible Senior Notes into shares of our common stock at the applicable conversion ratio at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, unless the Convertible Senior Notes have been previously redeemed or repurchased by us.

The following are summarized terms of the Convertible Senior Notes as of June 30, 2021:

The following are summarized terms of the Convertible Senior Notes as of September 30, 2021:

Outstanding Principal Amount Maturity Date Stated Interest Rate Interest Payment Dates Conversion Ratio Conversion Price Issuable Shares Dividend Threshold Amount (1)

(in millions) (in millions)

2022 Convertible Senior Notes $ 150 September 1,

2022 Convertible Senior Notes $ 14 (2)

2022 4.125 % March 1 and September 1 36.8088 $ 27.17 0.5 $ 0.33

2 unchanged sentences

(1) The conversion ratio is subject to adjustment for dividends declared above these amounts per share per quarter and certain other events that may be dilutive to the holder.

(2) During the quarter ended September 30, 2021, $ 136 million in principal amount of 2022 Convertible Senior Notes were converted into 5 million shares of common stock.

For both the 2022 Convertible Senior Notes and the 2023 Convertible Senior Notes, following the occurrence of a make-whole fundamental change, we will, in certain circumstances, increase the conversion rate for a holder that converts its convertible notes in connection with such make-whole fundamental change.

1 unchanged sentence

Additionally, upon the occurrence of certain fundamental changes involving us, holders of the convertible notes may require us to redeem all or a portion of their convertible notes for cash at a price of 100 % of the principal amount outstanding, plus accrued and unpaid interest.

We have a redemption option to call the 2022 Convertible Senior Notes prior to maturity (i) on or after March 1, 2022 and (ii) at any time if such a redemption is deemed reasonably necessary to preserve our qualification as a REIT, with the holder of the notes having the option of converting prior to our redemption becoming effective.

with the holder of the notes having the option of converting prior to our redemption becoming effective.

The redemption price will be equal to the principal of the notes being redeemed, plus accrued and unpaid interest.

In the event of

redemption after March 1, 2022, there will be an additional make-whole premium paid to the holder of the redeemed notes unless the redemption is deemed reasonably necessary to preserve our qualification as a REIT.

In the event of redemption after March 1, 2022, there will be an additional make-whole premium paid to the holder of the redeemed notes unless the redemption is deemed reasonably necessary to preserve our qualification as a REIT.

We may redeem the 2023 Convertible Senior Notes at any time only if such a redemption is deemed reasonably necessary to preserve our qualification as a REIT.

The following table presents a summary of the components of the Convertible Senior Notes:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in millions)

3 unchanged sentences

Carrying value of Convertible Senior Notes

We recorded approximately $ 2 million and $ 4 million in interest expense related to the Convertible Senior Notes in the three and six months ended June 30, 2021, respectively, compared to $ 2 million and $ 4 million for the three and six months ended June 30, 2020, respectively.

We recorded approximately $ 2 million and $ 6 million in interest expense related to the Convertible Senior Notes in the three and nine months ended September 30, 2021 and 2020, respectively .

Commitments and Contingencies

1 unchanged sentence

We are not currently subject to any legal proceedings that are probable of having a material adverse effect on our financial position, results of operations or cash flows.

In connection with some of our transactions, we have provided certain limited representations, warranties, covenants and/or provided an indemnity against certain losses resulting from our own actions, including related to certain investment tax credits.

As of June 30, 2021, there have been no such actions resulting in claims against the Company.

Guarantees and other commitments

We have made a guarantee related to the financing of one of our joint venture entities that owns debt securities of energy efficiency projects.

The entity entered into a financing arrangement where we have guaranteed the obligations of the entity related to this financing, which includes collateral posting requirements as well as repayment of the financing at maturity in December 2021.

As of June 30, 2021, our maximum obligation under this guarantee is approximately $ 60 million.

As of September 30, 2021, our maximum obligation under this guarantee is approximately $ 60 million.

We have executed a separate agreement with our joint venture partner pursuant to which it is liable for 15 % of this obligation repayable to us.

As of September 30, 2021, there have been no such actions resulting in claims against the Company.

The COVID-19 global pandemic has brought forth uncertainty and disruption to the global economy.

As of June 30, 2021, we have not recorded any contingencies on our balance sheet related to COVID-19 with the exception of any allowances related to our receivables described in Note 6 to our financial statements in this Form 10-Q.

As of September 30, 2021, we have not recorded any contingencies on our balance sheet related to COVID-19 with the exception of any allowances related to our receivables described in Note 6 to our financial statements in this Form 10-Q.

To the extent COVID-19 continues to cause dislocations in the global economy, our financial condition, results of operations, and cash flows may be adversely impacted.

We recorded an income tax (expense) benefit of approximately $( 6 ) million and $( 13 ) million for the three and six months ended June 30, 2021, respectively compared to a $ 1 million and $( 1 ) million income tax (expense) benefit in the three and six months ended June 30, 2020, respectively.

For the three and six months ended June 30, 2021 and 2020, our income tax (expense) benefit was determined using the federal tax rate of 21%, and combined state tax rates, net of federal benefit, of approximately 3 % for 2021 and 4 % for 2020.

We recorded an income tax (expense) benefit of approximately $ 1 million and $( 12 ) million for the three and nine months ended September 30, 2021, respectively, compared to a $( 2 ) million and $( 3 ) million income tax (expense) benefit in the three and nine months ended September 30, 2020, respectively.

For the three and nine months ended September 30, 2021 and 2020, our income tax (expense) benefit was determined using the federal tax rate of 21%, and combined state tax rates, net of federal benefit, of approximately 3 % for 2021 and 4 % for 2020.

Dividends and Distributions

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5/4/2021 7/2/2021 7/9/2021 0.35

8/5/2021 10/1/2021 10/8/2021 0.35

(1) This dividend was treated as a distribution in 2021 for tax purposes.

11 unchanged sentences

Q1 2021 ATM 1.639 63.55 103

Q2 2021 None — — —

Q3 2021 ATM 0.857 57.56 49

(1) Net proceeds from the offerings are shown after deducting underwriting discounts, commissions and other offering costs.

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We have issued equity awards that vest from 2022 to 2025 subject to service, performance and market conditions.

During the six months ended June 30, 2021, our board of directors awarded employees and directors 419,946 shares of restricted stock, restricted stock units and LTIP Units that vest from 2022 to 2024.

As of June 30, 2021, we have concluded that it is probable that the performance conditions will be met for previously issued restricted stock awards with performance conditions.

During the nine months ended September 30, 2021, our board of directors awarded employees and directors 434,159 shares of restricted stock, restricted stock units and LTIP Units that vest from 2022 to 2025.

As of September 30, 2021, we have concluded that it is probable that the performance conditions will be met for previously issued restricted stock awards with performance conditions.

Refer to Note 4 to our financial statements in this Form 10-Q for background on the LTIP Units.

For the three and six months ended June 30, 2021 we recorded $ 4 million and $ 10 million of stock based compensation, respectively, compared to $ 4 million and $ 8 million during the three and six months ended June 30, 2020.

Of the current six-month period expense, $ 2 million is related to the acceleration of compensation expense related to an employee with a change in employment status which occurred in the first quarter of 2021.

The total unrecognized compensation expense related to awards of shares of restricted stock and restricted stock units was approximately $ 22 million as of June 30, 2021.

For the three and nine months ended September 30, 2021 we recorded $ 4 million and $ 14 million of stock based compensation, respectively, compared to $ 4 million and $ 12 million during the three and nine months ended September 30, 2020.

Of the current nine-month period expense, $ 2 million is related to the acceleration of compensation expense related to an employee with a change in employment status that occurred in the first quarter of 2021.

The total unrecognized compensation expense related to awards of shares of restricted stock and restricted stock units was approximately $ 19 million as of September 30, 2021.

We expect to recognize compensation expense related to our equity awards over a weighted-average term of approximately 2 years.

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Forfeited ( 50 ) 63.59 —

Ending Balance — June 30, 2021 183,042 $ 37.57 $ 6.9

Ending Balance — September 30, 2021 197,255 $ 38.89 $ 7.7

A summary of the unvested shares of restricted stock units that have market-based vesting conditions that have been issued is as follows:

12 unchanged sentences

Forfeited — — —

Ending Balance — June 30, 2021 81,846 $ 35.52 $ 2.9

Ending Balance — September 30, 2021 81,846 $ 35.52 $ 2.9

(1) As discussed in Note 2 to our financial statements in this Form 10-Q, restricted stock units with market-based vesting conditions can vest between 0 % and 200 % subject to both the absolute performance of the Company's common stock as well as relative performance compared to a group of peers.

12 unchanged sentences

Forfeited — — —

Ending Balance — June 30, 2021 384,046 $ 43.15 $ 16.6

Ending Balance — September 30, 2021 384,046 $ 43.15 $ 16.6

(1) See Note 4 to our financial statements in this Form 10-Q for information on the vesting of LTIP Units.

11 unchanged sentences

Forfeited — — —

Ending Balance — June 30, 2021 347,478 $ 31.61 $ 11.0

Ending Balance — September 30, 2021 347,478 $ 31.61 $ 11.0

(1) See Note 4 to our financial statements in this Form 10-Q for information on the vesting of LTIP Units.

6 unchanged sentences

The computation of basic and diluted earnings per common share of common stock is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

15 unchanged sentences

Weighted-average number of OP units 559,686 321,261 459,848 301,582

As of June 30, 2021 As of June 30, 2020

As of September 30, 2021 As of September 30, 2020

Participating securities:

8 unchanged sentences

We have non-controlling unconsolidated equity investments in renewable energy and energy efficiency projects as well as in a joint venture that owns land with long-term triple net lease agreements to several solar projects.

We recognized income (loss) from our equity method investments of approximately $ 22 million and $ 77 million during the three and six months ended June 30, 2021, respectively, compared to $( 1 ) million and $ 16 million during the three and six months ended June 30, 2020, respectively.

We recognized income (loss) from our equity method investments of approximately $( 7 ) million and $ 70 million during the three and nine months ended September 30, 2021, respectively, compared to $ 17 million and $ 33 million during the three and nine months ended September 30, 2020, respectively.

We describe our accounting for non-controlling equity investments in Note 2 to our financial statements in this Form 10-Q.

2 unchanged sentences

Lighthouse Renewable HoldCo LLC (1)

Jupiter Equity Holdings LLC Vivint Solar Asset 3 Holdco Parent LLC Other Investments (2)

Summit Ridge Capital Holdings, LLC Vivint Solar Asset 3 Holdco Parent LLC Other Investments (2)

(in millions)

Balance Sheet

As of March 31, 2021

As of June 30, 2021

Current assets $ 87 $ 11 $ 11 $ 51 $ 60 $ 636 $ 856

10 unchanged sentences

Income Statement

For the three months ended March 31, 2021

For the six months ended June 30, 2021

Revenue 67 6 ( 71 ) 6 11 4 23

1 unchanged sentence

Net income (loss) 2 ( 3 ) ( 88 ) ( 5 ) 4 ( 283 ) ( 373 )

For the three months ended March 31, 2020

For the six months ended June 30, 2020

Revenue 61 — — 1 — 118 180

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements