What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-02 compared with 2024-05-08 · 273 added, 173 removed, 926 unchanged (33% of the section changed)

Financial Statements

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

March 31, 2024 (unaudited) December 31, 2023

June 30, 2024 (unaudited) December 31, 2023

Cash and cash equivalents $ 145,695 $ 62,632

29 unchanged sentences

See accompanying notes.

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

For the Three Months Ended March 31,

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

2024 2023 2024 2023

Interest income $ 62,779 $ 48,222 $ 131,471 $ 91,330

15 unchanged sentences

Net income (loss) attributable to non-controlling interest holders

404 — 1,926 492

Net income (loss) attributable to controlling stockholders $ 26,540 $ 13,522 $ 149,566 $ 37,628

4 unchanged sentences

See accompanying notes.

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(DOLLARS IN THOUSANDS)

Three Months Ended March 31,

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

2024 2023 2024 2023

Net income (loss) $ 26,944 $ 13,522 $ 151,492 $ 38,120

Unrealized gain (loss) on available-for-sale securities and securitization assets, net of tax benefit (provision) of $ 1.7 million for the three months ended March 31, 2024 and $( 0.3 ) million for the three months ended March 31, 2023

Unrealized gain (loss) on available-for-sale securities and securitization assets, net of tax benefit (provision) of $ 1.5 million and $ 3.2 million for the three and six months ended June 30, 2024 and $ 0.3 million and $ 0.0 million for the three and six months ended June 30, 2023

( 4,562 ) ( 5,308 ) ( 9,650 ) 3,568

Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of $( 7.1 ) million for the three months ended March 31, 2024 and $ 0.3 million for the three months ended March 31, 2023

Unrealized gain (loss) on interest rate swaps, net of tax benefit (provision) of $( 5.9 ) million and $( 12.9 ) million for the three and six months ended June 30, 2024 and $ 1.1 million and $ 1.4 million for the three and six months ended June 30, 2023

16,666 30,651 37,896 ( 1,116 )

1 unchanged sentence

Comprehensive income (loss) attributable to non-controlling interest holders

566 526 2,286 548

Comprehensive income (loss) attributable to controlling stockholders $ 38,482 $ 38,339 $ 177,452 $ 40,024

See accompanying notes.

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

2 unchanged sentences

Shares Amount

Balance at December 31, 2023 112,174 $ 1,122 $ 2,381,510 $ ( 303,536 ) $ 13,165 $ 49,364 $ 2,141,625

Balance at March 31, 2024 113,476 $ 1,135 $ 2,415,118 $ ( 227,820 ) $ 29,111 $ 55,871 $ 2,273,415

Net income (loss) — — — 26,541 — 403 26,944

5 unchanged sentences

Dividends and distributions — — — ( 47,998 ) — ( 899 ) ( 48,897 )

Balance at June 30, 2024 115,152 $ 1,152 $ 2,467,512 $ ( 249,277 ) $ 41,052 $ 62,728 $ 2,323,167

Balance at March 31, 2023 91,658 $ 917 $ 1,946,904 $ ( 297,708 ) $ ( 32,820 ) $ 41,522 $ 1,658,815

Net income (loss) — — — 13,522 — — 13,522

Unrealized gain (loss) on available-for-sale securities and securitization assets — — — — ( 5,238 ) ( 70 ) ( 5,308 )

Unrealized gain (loss) on interest rate swaps — — — — 30,055 596 30,651

Issued shares of common stock 15,104 151 335,566 — — — 335,717

Equity-based compensation — — 901 — — 2,679 3,580

Issuance (repurchase) of vested equity-based compensation shares 8 — ( 118 ) — — — ( 118 )

Conversion of Convertible Notes — — 2 — — — 2

Dividends and distributions — — — ( 42,227 ) — ( 729 ) ( 42,956 )

Balance at June 30, 2023 106,770 $ 1,068 $ 2,283,255 $ ( 326,413 ) $ ( 8,003 ) $ 43,998 $ 1,993,905

See accompanying notes.

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Non-controlling interests Total

Shares Amount

Balance at December 31, 2023 112,174 $ 1,122 $ 2,381,510 $ ( 303,536 ) $ 13,165 $ 49,364 $ 2,141,625

Net income (loss)

— — — 149,566 — 1,926 151,492

Unrealized gain (loss) on available-for-sale securities and securitization assets — — — — ( 9,527 ) ( 123 ) ( 9,650 )

4 unchanged sentences

Dividends and distributions — — — ( 95,307 ) — ( 1,777 ) ( 97,084 )

Balance at March 31, 2023 91,658 $ 917 $ 1,946,904 $ ( 297,708 ) $ ( 32,820 ) $ 41,522 $ 1,658,815

Balance at June 30, 2024 115,152 $ 1,152 $ 2,467,512 $ ( 249,277 ) $ 41,052 $ 62,728 $ 2,323,167

Balance at December 31, 2022 90,837 $ 908 $ 1,924,200 $ ( 285,474 ) $ ( 10,397 ) $ 35,509 $ 1,664,746

Net income (loss)

— — — 37,628 — 492 38,120

Unrealized gain (loss) on available-for-sale securities and securitization assets — — — — 3,521 47 3,568

Unrealized gain (loss) on interest rate swaps — — — — ( 1,127 ) 11 ( 1,116 )

Issued shares of common stock 15,867 159 358,814 — — — 358,973

Equity-based compensation — — 1,675 — — 9,803 11,478

Issuance (repurchase) of vested equity-based compensation shares 66 1 ( 1,436 ) — — — ( 1,435 )

Conversion of convertible notes — — 2 — — — 2

Dividends and distributions — — — ( 78,567 ) — ( 1,864 ) ( 80,431 )

Balance at June 30, 2023 106,770 $ 1,068 $ 2,283,255 $ ( 326,413 ) $ ( 8,003 ) $ 43,998 $ 1,993,905

See accompanying notes.

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

12 unchanged sentences

Change in accrued interest on receivables and investments ( 33,242 ) ( 14,518 )

Cash received (paid) upon hedge settlement 19,261 —

Other 455 ( 2,375 )

3 unchanged sentences

Equity method investment distributions received 11,426 4,203

Proceeds from sales of equity method investments 2,107 —

Purchases of and investments in receivables ( 347,343 ) ( 317,805 )

2 unchanged sentences

Proceeds from sale of real estate 115,767 —

Purchases of investments and securitization assets — ( 12,969 )

Posting of hedge collateral ( 1,140 ) ( 13,380 )

5 unchanged sentences

Principal payments on credit facilities ( 701,792 ) ( 235,000 )

Proceeds from issuance of term loan 250,000 —

Principal payments on term loan ( 561,023 ) ( 4,788 )

19 unchanged sentences

Equity method investments retained from securitization transactions

Equity method investments retained from sale of assets upon establishment of co-investment structure 54,655 —

Deconsolidation of non-recourse debt 51,233 32,923

1 unchanged sentence

See accompanying notes.

HANNON ARMSTRONG SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Hannon Armstrong Sustainable Infrastructure Capital, Inc.

(the “Company”) actively partners with clients to deploy real assets that facilitate the energy transition, which we refer to as “climate solutions”.

June 30, 2024

HA Sustainable Infrastructure Capital, Inc., formerly known as Hannon Armstrong Sustainable Infrastructure Capital, Inc.

prior to July 2, 2024 (the “Company”), actively partners with clients to deploy real assets that facilitate the energy transition, which we refer to as “climate solutions”.

Our investments take various forms, including equity, joint ventures, land ownership, lending, and other financing transactions.

12 unchanged sentences

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-month periods ended March 31, 2024 and 2023, 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 six-month periods ended June 30, 2024 and 2023, 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.

6 unchanged sentences

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.

should consolidate these entities under the provisions of ASC 810.

We also have certain subsidiaries we deem to be voting interest entities that we control through our ownership of voting interests and accordingly consolidate.

19 unchanged sentences

We typically recognize earnings one quarter in arrears for these investments to allow for the receipt of financial information.

Our proportionate share of any revenue earned from equity method investees is eliminated through the income (loss) from equity method investment line of our income statement.

We evaluate quarterly whether the current carrying value of our investments accounted for using the equity method have an other than temporary impairment (“OTTI”).

12 unchanged sentences

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.

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.

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.

The purchases and proceeds from receivables that we intend to sell at origination are classified as operating activities in our consolidated statements of cash flows.

24 unchanged sentences

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.

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

operations as incurred.

Our initial investment is classified as investing activities and income collected for rental income is classified as operating activities in our consolidated statements of cash flows.

48 unchanged sentences

Derivatives are recorded at fair value.

If a derivative is designated as a cash flow hedge and meets the highly effective threshold, the change in the fair value of the derivative is recorded in AOCI, net of associated deferred income tax effects and is recognized in earnings at the same time as the hedged item.

For any derivative instruments not designated as hedging instruments, changes in fair value would be recognized in earnings in the period that the change occurs.

5 unchanged sentences

When our collateral account with any particular counterparty is in an asset position, we include inflows and outflows related to those collateral postings within investing activities in our statement of cash flows.

The inflows and outflows related to instruments designated as cash flow hedges are included within our statement of cash flows in the same section as the hedged item, which is typically operating activities for our instruments which hedge interest rate risk exposures.

Interest rate derivative contracts contain a credit risk that counterparties may be unable to fulfill the terms of the agreement.

45 unchanged sentences

The restricted stock and other equity-based awards are included if they are dilutive using the treasury stock method.

The treasury stock method assumes that theoretical proceeds received for future service provided is used to purchase shares of

treasury stock at the average market price per share of common stock, which is deducted from the total shares of potential common stock included in the calculation.

The treasury stock method assumes that theoretical proceeds received for future service provided is used to purchase shares of treasury stock at the average market price per share of common stock, which is deducted from the total shares of potential common stock included in the calculation.

When unvested grants are dilutive, the earnings allocated to these dilutive unvested grants are not deducted from the net income attributable to controlling stockholders when calculating diluted earnings per share.

13 unchanged sentences

2023-07, we will provide the disclosures required by ASC Topic 280, Segment Reporting.

Other accounting standards updates issued before May 8, 2024, and effective after March 31, 2024, are not expected to have a material effect on our consolidated financial statements and related disclosures.

Other accounting standards updates issued before August 2, 2024, and effective after June 30, 2024, 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 March 31, 2024 and December 31, 2023, only our residual assets related to our securitization trusts, our derivatives, and our investments were carried at fair value on the consolidated balance sheets on a recurring basis.

As of June 30, 2024 and December 31, 2023, only our residual assets related to our securitization trusts, our derivatives, and our 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 determined on an individual asset basis.

As of March 31, 2024

As of June 30, 2024

Fair Value Carrying

17 unchanged sentences

Derivative liabilities 3 3 Level 2

(1) The amortized cost of our investments as of March 31, 2024, was $ 9 million.

(1) The amortized cost of our investments as of June 30, 2024, was $ 8 million.

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

The amortized cost of our securitization residual assets net of allowance for credit losses as of March 31, 2024 was $ 263 million.

The amortized cost of our securitization residual assets net of allowance for credit losses as of June 30, 2024 was $ 287 million.

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

25 unchanged sentences

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, with changes in fair value recorded through AOCI:

For the three months ended March 31,

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

2024 2023 2024 2023

(in millions)

4 unchanged sentences

Unrealized gains (losses) on securitization residual assets recorded in OCI ( 5 ) ( 5 ) ( 12 ) 4

Provision for loss on securitization residual assets — —

Balance, end of period $ 238 $ 204 $ 238 $ 204

4 unchanged sentences

(in millions)

March 31, 2024 $ 37 $ 160 $ 1 $ 46 20 65

June 30, 2024 $ 23 $ 177 $ 1 $ 52 18 73

December 31, 2023 24 164 0.3 41 11 66

(1) Other than the assets discussed in Note 5, loss positions are due to interest rates movements and is not indicative of credit deterioration.

(1) Other than the assets for which there is a reserve as discussed in Note 5, loss positions are due to interest rates movements and is not indicative of credit deterioration.

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

In determining the fair value of our securitization residual assets, we used a market-based risk-free rate and added a range of interest rate spreads of approximately 1 % to 6 % based upon transactions involving similar assets as of March 31, 2024 and December 31, 2023.

The weighted average discount rates used to determine the fair value of our securitization residual assets as of March 31, 2024 and December 31, 2023 were 6.9 % and 6.6 %, respectively.

The weighted average discount rates used to determine the fair value of our securitization residual assets as of June 30, 2024 and December 31, 2023 were 6.9 % and 6.6 %, respectively.

Non-recurring Fair Value Measurements

8 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

7 unchanged sentences

The outstanding OP units not held by us represent approximately 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 redeemed by non-controlling interest holders during the three months ended March 31, 2024 or March 31, 2023.

No OP units were redeemed by non-controlling interest holders during the six months ended June 30, 2024 or June 30, 2023.

We have also granted to members of our leadership team and directors LTIP Units pursuant to our equity incentive plans.

7 unchanged sentences

The following summarizes certain transactions with securitization trusts:

As of and for the three months ended March 31,

As of and for the six months ended June 30,

(in millions)

11 unchanged sentences

In computing gains and losses on securitizations, we use discount rates based on a review of comparable market transactions including Level 3 unobservable inputs, which consist of base interest rates and spreads over these base rates.

Depending on the nature of the transaction risks, the all-in discount rate ranged from 6 % to 8 % for the three months ended March 31, 2024.

As of March 31, 2024 and December 31, 2023, our managed assets totaled $ 12.9 billion and $ 12.3 billion, respectively, of which $ 6.5 billion and $ 6.1 billion, respectively, were securitized assets held in unconsolidated securitization trusts.

As of March 31, 2024 and December 31, 2023, these trusts held $ 6.0 billion and $ 5.6 billion, respectively, of notes due to investors.

Depending on the nature of the transaction risks, the all-in discount rate ranged from 6 % to 8 % for the six months ended June 30, 2024.

As of June 30, 2024 and December 31, 2023, our managed assets totaled $ 13.0 billion and $ 12.3 billion, respectively, of which $ 6.8 billion and $ 6.1 billion, respectively, were securitized assets held in unconsolidated securitization trusts or other investors’ portions of assets held in co-investment structures.

As of June 30, 2024 and December 31, 2023, these trusts held $ 6.2 billion and $ 5.6 billion, respectively, of notes due to investors.

We have an allowance for losses on securitization residual assets related to assets secured by property assessed clean energy liens, as a result of our estimates of cash flows due to prepayments on certain of these assets.

1 unchanged sentence

The following table reconciles our beginning and ending allowance for loss on securitization residual assets:

Three months ended March 31, 2024 Three months ended March 31, 2023

Three months ended June 30, 2024 Three months ended June 30, 2023

Government Commercial Government Commercial

3 unchanged sentences

Ending balance $ — $ 3 $ — $ —

As of March 31, 2024, there were no material payments from debtors to the securitization trusts that were greater than 90 days past due.

Six months ended June 30, 2024 Six months ended June 30, 2023

Government Commercial Government Commercial

(in millions)

Beginning balance $ — $ 3 $ — $ —

Provision for loss on securitization assets — — — —

Ending balance $ — $ 3 $ — $ —

As of June 30, 2024, 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 $ 120 million of our securitization residual assets.

3 unchanged sentences

Our Portfolio

As of March 31, 2024, our Portfolio included approximately $ 6.4 billion of equity method investments, receivables, real estate and investments on our balance sheet.

As of June 30, 2024, our Portfolio included approximately $ 6.2 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 climate solutions projects.

3 unchanged sentences

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 March 31, 2024, which is assessed quarterly:

The following is an analysis of the Performance Ratings of our Portfolio as of June 30, 2024, which is assessed quarterly:

Portfolio Performance

28 unchanged sentences

As they are part of large portfolios, they are not classified separately.

As of March 31, 2024, our allowance for losses on receivables was $ 52 million based on our expectation of credit losses over the lives of the receivables in our portfolio.

During the three months ended March 31, 2024, we increased our reserve by approximately $ 2 million, due to new loans and loan commitments made during the period.

Below is a summary of the carrying value, loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

As of June 30, 2024, our allowance for losses on receivables was $ 48 million based on our expectation of credit losses over the lives of the receivables in our portfolio.

During the three months ended June 30, 2024, we decreased our reserve by approximately $ 4 million, driven by a large payment on a loan with a reserve and the contribution of loans with reserves to a co-investment structure.

Below is a summary of the carrying value, loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

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

5 unchanged sentences

Total $ 2,817 $ 430 $ 48 $ 3,124 $ 423 $ 50

(1) As of March 31, 2024, this category of assets includes $ 1.6 billion of mezzanine loans made on a non-recourse basis to special purpose subsidiaries of residential solar companies which hold residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries.

(1) As of June 30, 2024, this category of assets includes $ 1.5 billion of mezzanine loans made on a non-recourse basis to bankruptcy-remote special purpose subsidiaries of residential solar companies which hold residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries.

These residential solar assets typically contain back-up servicer provisions to allow for continuity of operations in the event the project sponsor is unable to fulfill its duties in that capacity.

Risk characteristics of our commercial receivables include a project’s operating risks, which include the impact of the overall economic environment, the climate solutions sector, the effect of local, industry, and broader economic factors, the impact of any variation in weather and trends in interest rates.

2 unchanged sentences

For those assets in Performance Rating 1, the credit worthiness of the obligor combined with the various structural protections of our assets cause us to believe we have a low risk we will not receive our invested capital, however we recorded a $ 48 million allowance on these $ 2.8 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.

(2) As of March 31, 2024, our government receivables include $ 9 million of U.S.

(2) As of June 30, 2024, our government receivables include $ 8 million of U.S.

federal government transactions and $ 28 million of transactions where the ultimate obligors are state or local governments.

5 unchanged sentences

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

Three months ended March 31, 2024 Three months ended March 31, 2023

Three months ended June 30, 2024 Three months ended June 30, 2023

Government Commercial Government Commercial

3 unchanged sentences

Ending balance $ — $ 48 $ — $ 44

Six months ended June 30, 2024 Six months ended June 30, 2023

Government Commercial Government Commercial

(in millions)

Beginning balance $ — $ 50 $ — $ 41

Provision for loss on receivables — ( 2 ) — 3

Ending balance $ — $ 48 $ — $ 44

We have no receivables 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 March 31, 2024:

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, 2024:

Total Less than 1

5 unchanged sentences

In the first quarter of 2024, we sold $ 100 million carrying value of land and related intangibles, and we retain a residual interest in those assets in the form of an equity method investment.

The components of our real estate portfolio that we own directly as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024 December 31, 2023

The components of our real estate portfolio that we own directly as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024 December 31, 2023

(in millions)

5 unchanged sentences

We have made non-controlling equity investments in a number of climate solutions projects that we account for as equity method investments.

As of March 31, 2024, we held the following equity method investments:

As of June 30, 2024, we held the following equity method investments:

Investee Carrying Value

1 unchanged sentence

Jupiter Equity Holdings LLC $ 604

Daggett Renewable HoldCo LLC 447

Lighthouse Renewable HoldCo 2 LLC 367

CarbonCount Holdings 1 LLC 66

Other equity method investments 1,887

Total equity method investments $ 3,371

(1) Included in the Lighthouse Renwables Portfolio discussed below.

Lighthouse Renewables Portfolio

We have entered into certain agreements relating to the acquisition, ownership and management of preferred cash equity investments in four 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 investments in the preferred cash equity interests of the Lighthouse Partnerships of approximately $ 896 million through March 31, 2024, and the partnerships have a combined book balance of $ 1.1 billion as of that date.

Alongside the project sponsor and under terms outlined in the partnership agreement, we have made $ 20 million in working capital loans to the Lighthouse Partnerships primarily for payments related to winter storm Uri.

Those working capital loans are included in our Related Party Transactions disclosures below.

The Renewables Portfolio features contracted cash flows with a diversified group of predominately investment grade corporate, utility, university and municipal offtakers.

Each of the Lighthouse Partnerships are or will be governed by a limited liability company agreement between us and the sponsor serving as managing member and contain customary terms and conditions.

Most major decisions that may impact each of the Lighthouse Partnerships, its subsidiaries or its assets, require a unanimous vote of the representatives present at a meeting of a review committee in which a quorum is present.

The review committee is a four person committee, which includes two of our representatives and two sponsor representatives.

Through each Lighthouse Partnership, commencing on a certain date following the effective date of the applicable limited liability company agreement, we will be entitled to preferred distributions until certain return targets of the Renewables Portfolio are achieved.

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.

Jupiter Equity Holdings LLC

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 March 31, 2024, we have made capital contributions to Jupiter of approximately $ 562 million related to these projects reflecting final funding true-ups after all projects reached substantial completion.

As of June 30, 2024, we have made capital contributions to Jupiter of approximately $ 562 million related to these projects reflecting final funding true-ups after all projects reached substantial completion.

Alongside the project sponsor and under terms outlined in the partnership agreement, we have made $ 77 million in loans to Jupiter for both payments related to winter storm Uri as well as for payments to allow for the restructuring of certain power purchase agreements and tax equity arrangements, which we expect to increase both near-term cash flows and expected lifetime return.

8 unchanged sentences

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.

Daggett Renewable HoldCo LLC

We have preferred equity interests in Daggett Renewable HoldCo LLC (“Daggett”) which owns two utility-scale solar projects developed and managed by the project sponsor.

We have made investments in the preferred cash equity interests of

Daggett of approximately $ 238 million through June 30, 2024.

The Daggett projects feature contracted cash flows with a diversified group of predominately investment grade utility offtakers.

Daggett is governed by a limited liability company agreement between us and the sponsor serving as managing member and contain customary terms and conditions.

Most major decisions that may impact Daggett, its subsidiaries or its assets, require a unanimous vote of the representatives present at a meeting of a review committee in which a quorum is present.

The review committee is a four person committee, which includes two of our representatives and two sponsor representatives.

Commencing on a certain date following the effective date of the applicable limited liability company agreement, we will be entitled to preferred distributions until certain return targets of each investment are achieved.

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

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

Lighthouse Renewables HoldCo 2 LLC

We have preferred equity interests in Lighthouse Renewables HoldCo 2 LLC (“Lighthouse 2”) which owns three onshore wind and utility-scale solar and solar-plus-storage projects, all developed and managed by the project sponsor.

We have made investments in the preferred cash equity interests of the Lighthouse 2 of approximately $ 420 million through June 30, 2024.

Alongside the project sponsor and under terms outlined in the partnership agreement, we have made $ 20 million in working capital loans to Lighthouse 2 primarily for payments related to winter storm Uri.

Those working capital loans are included in our Related Party Transactions disclosures below.

The Lighthouse 2 projects feature contracted cash flows with a diversified group of predominately investment grade corporate and university offtakers.

Lighthouse 2 is governed by a limited liability company agreement between us and the sponsor serving as managing member and contain customary terms and conditions.

Most major decisions that may impact Lighthouse 2, its subsidiaries or its assets, require a unanimous vote of the representatives present at a meeting of a review committee in which a quorum is present.

The review committee is a four person committee, which includes two of our representatives and two sponsor representatives.

Subject to customary exceptions, no member of Lighthouse 2 can transfer any of its equity ownership in Lighthouse 2 to a third party without approval of the review committee of Lighthouse 2.

We use the equity method of accounting to account for our preferred equity interests in Lighthouse 2, and have elected to recognize earnings from this investment one quarter in arrears to allow for the receipt of financial information.

CarbonCount Holdings 1 LLC

On May 4, 2024, we, through our indirect subsidiary, HASI CarbonCount Holdings 1, LLC (“HASI CarbonCount”), a Delaware limited liability company, and Hoops Midco, LLC (“KKR Hoops”), an investment vehicle established as a Delaware limited liability company and managed by an affiliate of Kohlberg Kravis Roberts & Co.

(“KKR”), entered into agreements to acquire interests in CarbonCount Holdings 1 LLC (“CCH1”), established to invest in certain eligible climate positive projects across the United States, as further described below.

CCH1 has been formed as a Delaware limited liability company.

HASI CarbonCount and KKR Hoops have each commited $ 1 billion to CCH1 to be invested in clean energy assets during an 18 month investment period.

In addition, HASI, through its indirect subsidiaries, Hannon Armstrong Securities, LLC (the “Broker-Dealer”) and CarbonCount Holdings Manager LLC (the “Asset Manager”, and, together with the Broker-Dealer, the “Service Providers”), is engaged by CCH1 pursuant to a services agreement (the “Services Agreement’) to provide certain services to CCH1.

CCH1 is governed by a board of directors (“the Board”) which will initially be composed of four directors, two of whom will be appointed by us and two of whom will be appointed by KKR Hoops.

Actions of the Board generally require the affirmative vote of at least three out of four directors.

Pursuant to the service agreement, the Board has delegated to the Service Providers certain rights and powers to manage the day-to-day business and affairs of CCH1, while retaining control over the significant decision making of CCH1.

We account for our investment in CCH1 as an equity method investment.

The Broker-Dealer sources investment opportunities for CCH1 pursuant to the terms of the Services Agreement.

Through the Broker-Dealer, HASI is obligated to present all of the investment opportunities it identifies that fit within certain predetermined criteria to the Board until either joint venture party’s commitment has been fully invested or upon the date that the 18-month investment period described above expires or is earlier terminated.

The investment criteria under the Services Agreement includes investment opportunities that we would typically have originated on our balance sheet.

CCH1 pays the Broker-Dealer, for provision of the services provided, an upfront fee on each funding of investments generally equal to 1 % of the total cash consideration funded by CCH1 to the applicable investment counterparty.

pays the Asset Manager, for provision of the services provided by it, ongoing fees in respect of asset management and administering the management and operation of CCH1, payable when deducted from CCH1’s cash available for distribution.

The fee payable to the Asset Manager is calculated on the basis of certain performance thresholds and will generally not be less than 0.5 % of invested capital per annum, subject to certain limited exceptions, nor more than 1.00 %.

At inception, and prior to KKR’s acquisition of its interest in CCH1, we seeded CCH1 with equity method investments and receivables which were previously on our balance sheet with a combined book value of $ 108 million, and which are expected to have a total invested amount of $ 191 million once fully funded.

We received approximately $ 55 million from KKR for the purchase of their share of the net assets of CCH1, resulting in the deconsolidation of CCH1 by us.

There were no material differences between the amounts paid by KKR and the carrying values of the contributed assets, resulting in no material gain or loss upon deconsolidation and no material basis differences established.

CCH1 will recognize income from its equity method investees one quarter in arrears to allow for its receipt of financial information.

Related Party Transactions

Of our receivables, approximately $ 1.0 billion are loans made to entities in which we also have non-controlling equity investments of approximately $ 876 million.

Of our receivables, approximately $ 834 million are loans made to entities in which we also have non-controlling equity investments of approximately $ 874 million.

Typically, these equity method investments are LLCs taxed as partnerships that we have entered into with various renewable energy project sponsors, such as SunPower Corporation.

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The following table provides additional detail on these related party transactions:

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

(in millions)

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Unsecured revolving credit facility

As of March 31, 2024, we have an unsecured revolving credit facility pursuant to a revolving credit agreement with a syndicate of lenders which matures in February 2025 with a maximum outstanding borrowing amount of $ 915 million.

In the second quarter of 2024, we amended the facility to have a maximum outstanding borrowing amount of $ 1.25 billion and extended the maturity date to April 2028.

There were no changes to the pricing terms.

At the time of the amendment, we drew an additional $ 275 million from the facility, which we used to make a partial prepayment on our unsecured term loan facility as further discussed in Note 8.

As of March 31, 2024, the outstanding balance on this facility was $ 201 million, and it currently bears interest at a weighted average rate of 7.25 %.

As of March 31, 2024, we have approximately $ 2 million of remaining unamortized financing costs associated with the unsecured revolving 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 revolving credit facility.

The unsecured revolving credit facility has a commitment fee based on our current credit rating and bears interest at a rate of SOFR or prime rate plus applicable margins based on our current credit rating, which may be adjusted downward up to 0.10 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance, as measured by our CarbonCount © metric.

As of the inception of the unsecured revolving credit facility, the applicable margins are 1.875 % for SOFR-based loans and 0.875 % for prime rate-based loans, plus an additional 0.10 %.

We have an unsecured revolving credit facility pursuant to a revolving credit agreement with a syndicate of lenders.

In the second quarter of 2024, we increased the maximum outstanding borrowing amount of this facility to $ 1.25 billion, and extended the maturity to April 2028.

As of June 30, 2024, the outstanding balance on this facility was $ 317 million, and it currently bears interest at a weighted average rate of 7.01 %.

As of June 30, 2024, we have approximately $ 10 million of remaining unamortized financing costs associated with the unsecured revolving 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 revolving credit facility.

The unsecured revolving credit facility has a commitment fee based on our current credit rating and bears interest at a rate of SOFR or prime rate plus applicable margins based on our current credit rating, which may also be adjusted downward up to 0.10 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance, as measured by our CarbonCount © metric.

The current applicable margins are 1.625 % for SOFR-based loans and 0.625 % for prime rate-based loans, plus an additional 0.10 %.

The unsecured revolving credit facility has a commitment fee based on our current credit rating.

The unsecured revolving credit facility contains terms, conditions, covenants, and representations and warranties that are customary and typical for transactions 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 can declare.

The unsecured revolving credit facility contains terms, conditions, covenants, and representations and warranties that are

customary and typical for transactions 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 can declare.

The unsecured revolving credit facility also includes customary events of default and remedies.

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CarbonCount Green Commercial Paper Note Program

As of March 31, 2024, we have a CarbonCount Green Commercial Paper Note Program (the “commercial paper program”) that allows 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 June 2024.

In the second quarter of 2024, we extended the maturity date of the letter of credit to April 2026 and increased the maximum amount outstanding under the letter of credit to $ 125 million.

There were no changes to the pricing terms.

As of June 30, 2024, we have a CarbonCount Green Commercial Paper Note Program (the “commercial paper program”) that allows us to issue commercial paper notes at any time.

In the second quarter of 2024,we increased the capacity of the program to allow for up to $ 125 million outstanding at any time, and extended the maturity of the program to April 2026.

We obtained an irrevocable direct-pay letter of credit in an amount not to exceed $ 125 million from Bank of America, N.A, to support these obligations which expires in April 2026.

Bank of America provides a direct-pay letter of credit to the noteholders in the same amount of each commercial paper note.

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An amount equal to the proceeds of our commercial paper notes are allocated to either the acquisition or refinance of, in whole or in part, eligible green projects, including assets that are neutral to negative on incremental carbon emissions.

As of March 31, 2024, we have $ 65 million of commercial paper notes outstanding under the facility which matures in 2024, which together bear an average total borrowing rate of 6.77 %.

As of June 30, 2024, we have $ 110 million of commercial paper notes outstanding under the facility, which together bear an average total borrowing rate of 6.73 %.

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

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Fees paid on the drawn letters of credit may be reduced by up to 0.1 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance as measured by our CarbonCount metric.

As of March 31, 2024, we have no remaining unamortized financing costs associated with the commercial paper program and associated letter of credit.

As of June 30, 2024, we have no remaining unamortized financing costs associated with the commercial paper program and associated letter of credit.

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.

Senior secured revolving credit agreement

In the second quarter of 2024, we entered into a senior secured revolving credit agreement with a maximum outstanding principal amount of $ 100 million which matures in 2029.

Under the terms of the senior secured revolving credit agreement, we will pledge collateral to the facility in the form of certain qualifying land assets or assets secured by land and will be allowed to borrow up to 80 % of our cash amount invested in the collateral pledged.

Any loans under the agreement bear interest at a rate of Term SOFR plus 1.90 %, and interest is due quarterly.

The rate of interest can be reduced by up to 0.10 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance as measured by our CarbonCount metric.

There is a commitment fee of 0.20 % of the used capacity of the agreement, which is paid quarterly.

The senior secured revolving credit agreement contains terms, conditions, covenants, and representations and warranties that are customary and typical for transactions 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 can declare.

The senior secured revolving credit agreement also includes customary events of default and remedies.

As of June 30, 2024, we had no balance outstanding on the senior secured revolving credit agreement, and availability under the revolving credit agreement of $ 22 million based on the pledged collateral.

We had approximately $ 1 million in unamortized financing costs associated with the senior secured revolving credit agreement, which are included in other assets.

Long-term Debt

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Maturity Carrying Value of Assets Pledged as of

March 31, 2024 December 31, 2023 Interest

Rate Maturity Date March 31, 2024 December 31, 2023 Description

June 30, 2024 December 31, 2023 Interest

Rate Maturity Date June 30, 2024 December 31, 2023 Description

of Assets Pledged

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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 $ 304 million and $ 239 million as of March 31, 2024 and December 31, 2023, respectively.

These amounts include $ 15 million and $ 11 million of restricted cash pledged for debt service payments as of March 31, 2024 and December 31, 2023, respectively.

(4) The total collateral pledged against our non-recourse debt was $ 306 million and $ 239 million as of June 30, 2024 and December 31, 2023, respectively.

These amounts include $ 15 million and $ 11 million of restricted cash pledged for debt service payments as of June 30, 2024 and December 31, 2023, 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 were in compliance with all covenants as of March 31, 2024 and December 31, 2023.

We were in compliance with all covenants as of June 30, 2024 and December 31, 2023.

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 March 31, 2024, were as follows:

The stated minimum maturities of non-recourse debt as of June 30, 2024, were as follows:

Future minimum maturities

(in millions)

April 1, 2024 to December 31, 2024 $ 6

July 1, 2024 to December 31, 2024 $ 7

Thereafter 84

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We have outstanding senior unsecured notes issued jointly by certain of our subsidiaries which are guaranteed by the Company and certain other subsidiaries (the “Senior Unsecured Notes”).

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 March 31, 2024 and December 31, 2023.

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

These covenants terminated during the second quarter of 2024 as a result of the Senior Unsecured Notes having been rated investment grade by two of the three major credit rating agencies and no event of default having occurred.

We are in compliance with all of our remaining covenants as of June 30, 2024 and December 31, 2023.

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

We allocate an amount equal to the net proceeds of our Senior Unsecured Notes to the acquisition or refinance of, 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:

Subsequent to June 30, 2024, we issued $ 700 million principal amount of Senior Unsecured Notes due in July 2034 (“2034 Notes”), which bear interest at a rate of 6.375 %.

The notes were issued for gross proceeds of $ 695 million, resulting in a yield to maturity of 6.476 %.

We used a portion of the proceeds from this issuance to redeem the outstanding principal amount of the 2025 notes.

The following are summarized terms of the Senior Unsecured Notes as of June 30, 2024:

Outstanding Principal Amount Maturity Date Stated Interest Rate Interest Payment Dates Redemption Terms Modification Date

(in millions)

2025 Notes $ 400 April 15, 2025 6.00 % April 15 and

2025 Notes $ 400 (1)

April 15, 2025 6.00 % April 15 and

October 15th N/A

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September 15, 2030 3.75 % February 15th and August 15th N/A

(1) Subsequent to June 30, 2024, we redeemed the 2025 Notes using proceeds from the issuance of the 2034 Notes.

There was no premium paid upon redemption.

(2) Prior to this date, we may redeem, at our option, some or all of the 2026 Notes for the outstanding principal amount plus the applicable “make-whole” premium as defined in the indenture governing the 2026 Notes plus accrued and unpaid interest through the redemption date.

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(5) We issued the $ 375 million aggregate principal amount of the 2030 Notes for total proceeds of $ 371 million ($ 367 million net of issuance costs) at an effective interest rate of 3.87 %.

We may redeem the 2025 or 2030 Notes in whole or in part at redemption prices defined in the indenture governing the 2025 or 2030 Notes plus accrued and unpaid interest though the redemption date.

We may redeem the 2030 Notes in whole or in part at redemption prices defined in the indenture governing the 2030 Notes plus accrued and unpaid interest though the redemption date.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

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Carrying value of Senior Unsecured Notes $ 2,523 $ 2,319

We recorded approximately $ 34 million in interest expense related to the Senior Unsecured Notes in the three months ended March 31, 2024, compared to approximately $ 19 million in the three months ended March 31, 2023, respectively.

We recorded approximately $ 34 million and $ 68 million in interest expense related to the Senior Unsecured Notes in the three and six months ended June 30, 2024, respectively, compared to approximately $ 19 million and $ 38 million in the three and six months ended June 30, 2023, respectively.

Convertible Notes

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

The following are summarized terms of the Convertible Notes as of March 31, 2024:

The following are summarized terms of the Convertible Notes as of June 30, 2024:

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

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

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Carrying value of Convertible Notes

We recorded approximately $ 6 million in interest expense related to our Convertible Notes in the three months ended March 31, 2024 compared to $ 2 million for the three months ended March 31, 2023, respectively.

We recorded approximately $ 6 million and $ 13 million in interest expense related to our Convertible Notes in the three and six months ended June 30, 2024 compared to $ 2 million and $ 5 million for the three and six months ended June 30, 2023, respectively.

In order to mitigate the potential dilution to our common stock upon exchange of the 2028 Exchangeable Senior Notes, we entered into privately-negotiated capped call transactions (“Capped Calls”) with certain counterparties.

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CarbonCount Term Loan Facility

We have entered into a CarbonCount Term Loan Facility (“the unsecured term loan facility”) with a syndicate of banks which has an outstanding principal amount of $ 524 million.

We have entered into a CarbonCount Term Loan Facility (“the unsecured term loan facility”) with a syndicate of banks which has an outstanding principal and accrued interest amount of $ 251 million.

Principal amounts under the term loan facility will bear interest at a rate of Term SOFR plus applicable margins based on our current credit rating, which may be adjusted downward up to 0.10 % to the extent our Portfolio achieves certain targeted levels of carbon emissions avoidance, as measured by our CarbonCount © metric.

As of March 31, 2024, the applicable margin is 2.125 % plus 0.10 %, and the current interest rate is 7.50 %.

As of June 30, 2024, the applicable margin is 1.875 % plus 0.10 %, and the current interest rate is 7.26 %.

The coupon on any drawn amounts will be reset at monthly, quarterly, or semi-annual intervals at our election.

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We intend to allocate an amount equal to the net proceeds of this offering to the acquisition or refinancing of, in whole or in part, new and/or existing eligible green projects, which include assets that are neutral to negative on incremental carbon emissions.

As of March 31, 2024, the unsecured term loan facility has a maturity date of October 31, 2025, and loans under the unsecured term loan facility can be prepaid without penalty.

Loans under the unsecured term loan facility can be prepaid without penalty.

In the second quarter of 2024, we extended the maturity date to 2027, with no changes to the pricing terms, and used proceeds from our unsecured revolving credit facility to make a partial prepayment of $ 275 million on the unsecured term loan facility to reduce the outstanding principal balance.

Principal payments which were due under the term loan facility as of March 31, 2024 are as follows:

Amounts which were due under the term loan facility as of June 30, 2024 are as follows:

Future maturities

(in millions)

April 1, 2024 to December 31, 2024 $ 19

July 1, 2024 to December 31, 2024 $ 7

Unamortized Financing Costs ( 5 )

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The secured term loan also includes customary events of default and remedies.

As of March 31, 2024, the outstanding principal balance is $ 172 million, the interest rate is 7.67 %, and we have financing receivables pledged with a carrying value of $ 409 million.

As of June 30, 2024, the outstanding principal and accrued interest balance is $ 171 million, the interest rate is 7.69 %, and we have financing receivables pledged with a carrying value of $ 411 million.

In the first quarter of 2024, we removed $ 45 million of pledged assets as collateral, and made a principal payment of $ 28 million.

We have $ 3 million of remaining unamortized financing costs associated with the Secured Term Loan that have been netted against the loan on our balance sheet and are being amortized on a straight-line basis over the term of the Secured Term Loan Facility.

Principal payments which were due under the Secured Term Loan Facility as of March 31, 2024 are as follows:

Amounts which were due under the Secured Term Loan Facility as of June 30, 2024 are as follows:

Future maturities

(in millions)

April 1, 2024 to December 31, 2024 $ 3

July 1, 2024 to December 31, 2024 $ 4

Unamortized Financing Costs ( 3 )

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Interest Rate Swaps

In connection with several of our long-term borrowings, including floating-rate loans from our Term Loan Facility, unsecured revolving credit facility, Secured Term Loan and the anticipated refinancings of certain of our Senior Unsecured Notes we have entered into the following derivative transactions that are designated as cash flow hedges as of March 31, 2024:

Instrument type Hedged Rate Notional Value Fair Value as of

Index March 31, 2024 December 31, 2023 Term

Index June 30, 2024 December 31, 2023 Term of derivative and forecasted transactions

$ in millions

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Interest rate swap Overnight SOFR 3.09 % 600 23 7 June 2026 to June 2033

Interest rate swap Overnight SOFR 3.08 % 400.0 19 8 April 2025 to April 2035

Interest rate swap Overnight SOFR 3.08 % 400 — (1)

8 April 2025 to April 2035

Interest rate collar 1 month SOFR 3.70 % - 4.00 %

250 3 — May 2023 to May 2026

Interest rate swap Overnight SOFR 4.41 % 85.0 ( 2 ) ( 4 ) September 2023 to June 2033

Interest rate swap Overnight SOFR 4.39 % 42.5 ( 1 ) ( 2 ) September 2023 to June 2033

Interest rate swap Overnight SOFR 4.42 % 42.5 ( 1 ) ( 2 ) September 2023 to June 2033

Interest rate swaps Overnight SOFR 4.39 % to 4.42 %

170 ( 3 ) ( 8 ) September 2023 to June 2033

$ 2,220 $ 44 2

(1) This swap was financially settled in June 2024, for a benefit of $ 19 million.

The $ 19 million is in AOCI as of June 30, 2024 and will be amortized into interest expense over the term of the 2034 Notes.

(2) Interest rate collar consists of a purchased interest rate cap of 4.00 % and a written interest rate floor of 3.70 %.

(3) Consists of three interest rate swaps with identical maturities and effective dates.

The fair values of our interest rate derivatives designated and qualifying as effective cash flow hedges are reflected in our consolidated balance sheets as a component of other assets (if in an unrealized gain position) or accounts payable, accrued expenses and other (if in an unrealized loss position) and in net unrealized gains and losses in AOCI.

As of March 31, 2024, all of our derivatives were designated as hedging instruments which were deemed to be effective.

As of March 31, 2024, we hold $ 54 million of collateral related to our interest rate derivatives, and we have posted $ 6 million of collateral.

We have netted $ 52 million of the liability associated with that collateral against the derivative asset in other assets on our balance sheet, with the remaining liability in accounts payable, accrued interest, and other.

As of June 30, 2024, all of our derivatives were designated as hedging instruments which were deemed to be effective.

As of June 30, 2024, we hold $ 33 million of collateral related to our interest rate derivatives, and we have posted $ 6 million of collateral.

We have netted our $ 33 million of the liability associated with that collateral against the derivative asset in other assets on our balance sheet, with the remaining liability in accounts payable, accrued interest, and other.

We have netted $ 4 million of the asset associated with that collateral included in accounts payable, accrued expenses and other, with the remaining in other assets.

The below table shows the benefit (expense) included in interest expense as a result of our hedging activities for the three months ended March 31, 2024 and 2023, respectively.

Three months ended March 31,

The below table shows the changes in our AOCI balance related to our interest rate derivatives designated and qualifying as effective cash flow hedges:

(Amounts in millions)

Beginning Balance - January 1, 2023 $ —

Changes in fair value 7

Amounts released into interest expense ( 6 )

Ending Balance - December 31, 2023 $ 1

Changes in fair value 67

Amounts released into interest expense ( 6 )

Ending Balance - June 30, 2024 $ 62

The below table shows the benefit (expense) included in interest expense as a result of our hedging activities for the three and six months ended June 30, 2024 and 2023, respectively.

We expect a benefit of $ 3 million to be released out of AOCI into interest expense over the 12 months following June 30, 2024.

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

(in thousands)

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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 March 31, 2024, there have been no such actions resulting in claims against the Company.

As of June 30, 2024, there have been no such actions resulting in claims against the Company.

As a part of broader project restructuring in order to increase our expected cash flows from the investment, we alongside the project sponsor, made guarantees to support the working capital needs of two of the project companies owned by Jupiter, an equity method investee.

The guarantees are in effect until the tax equity investors in those project companies achieve their target preferred returns, and our contractual maximum under these guarantees is $ 53 million, and is limited to $ 20 million in any particular calendar year.

As of March 31, 2024, we have no liability recorded as a result of these guarantees as we believe it is not probable we will be required to perform under them.

As of March 31, 2024, we have not been asked to perform under them.

As of June 30, 2024, we have no liability recorded as a result of these guarantees as we believe it is not probable we will be required to perform under them.

As of June 30, 2024, we have not been asked to perform under them.

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

We received $ 73 million of the proceeds of this financing arrangement, and in turn 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 August 2024.

As of March 31, 2024, our maximum obligation under this guarantee is approximately $ 87 million.

As of June 30, 2024, our maximum obligation under this guarantee is approximately $ 87 million.

We believe the likelihood of having to perform under the guarantee is remote, have recorded no liability associated with this guarantee, and presently have not been required to post collateral as the assets of the joint venture entities are enough to support the financing obligation.

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.

We recorded an income tax (expense) benefit of approximately $( 46 ) million for the three months ended March 31, 2024, compared to a $( 1 ) million income tax (expense) benefit in the three months ended March 31, 2023.

For the three months ended March 31, 2024 and 2023, 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 4 % for 2024 and and 3 % for 2023.

We recorded an income tax (expense) benefit of approximately $( 10 ) million and $( 57 ) million for the three and six months ended June 30, 2024, compared to a $ 2 million and $ 0.2 million income tax (expense) benefit in the three and six months ended June 30, 2023.

For the three and six months ended June 30, 2024 and 2023, 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 4 % for 2024 and 3 % for 2023.

Dividends and Distributions

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5/7/2024 7/3/2024 7/12/2024 $ 0.415

8/1/2024 10/4/2024 10/18/2024 $ 0.415

(1) This dividend is treated as a distribution in the year following the record date for tax purposes.

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Q1 2024 ATM 1.193 25.89 (3)

Q2 2024 ATM 1.662 31.42 (3)

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

4 unchanged sentences

We have issued equity awards that vest from 2024 to 2028 subject to service, performance and market conditions.

During the three months ended March 31, 2024, our board of directors awarded employees and directors 711,830 shares of restricted stock, restricted stock units and LTIP Units that vest from 2025 to 2028.

During the six months ended June 30, 2024, our board of directors awarded employees and directors 777,160 shares of restricted stock, restricted stock units and LTIP Units that vest from 2025 to 2028.

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

For the three months ended March 31, 2024 we recorded $ 7 million of stock based compensation, respectively, compared to $ 8 million during the three months ended March 31, 2023, respectively.

For the three and six months ended June 30, 2024 we recorded $ 8 million and $ 15 million of stock based compensation, respectively, compared to $ 4 million and $ 11 million during the three and six months ended June 30, 2023, respectively.

We have a retirement policy which provides for full vesting at retirement of any time-based awards that were granted prior to the date of retirement and permits the vesting of market-based or performance-based awards that were granted prior to the date of retirement according to the original vesting schedule of the award, subject to the achievement of the applicable market or performance measures.

Employees are eligible for the retirement policy upon meeting age and years of service criteria.

The total unrecognized compensation expense related to awards of shares of restricted stock and restricted stock units was approximately $ 34 million as of March 31, 2024.

The total unrecognized compensation expense related to awards of shares of restricted stock and restricted stock units was approximately $ 27 million as of June 30, 2024.

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

10 unchanged sentences

Forfeited ( 1,669 ) 27.90 —

Ending Balance — March 31, 2024 312,087 $ 28.43 $ 8.9

Ending Balance — June 30, 2024 297,452 $ 28.35 $ 8.4

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

11 unchanged sentences

Forfeited ( 14,864 ) 70.04 ( 1.0 )

Ending Balance — March 31, 2024 80,438 $ 44.39 $ 3.6

Ending Balance — June 30, 2024 79,790 $ 44.40 $ 3.6

(1) As discussed in Note 2, 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 — March 31, 2024 670,583 $ 29.53 $ 19.9

Ending Balance — June 30, 2024 560,971 $ 29.99 $ 16.9

(1) See Note 4 for information on the vesting of LTIP Units.

12 unchanged sentences

Forfeited ( 86,274 ) 65.28 ( 5.6 )

Ending Balance — March 31, 2024 535,608 $ 42.87 $ 23.0

Ending Balance — June 30, 2024 535,608 $ 42.87 $ 23.0

(1) See Note 4 for information on the vesting of LTIP Units.

9 unchanged sentences

Forfeited — — —

Ending Balance — March 31, 2024 128,024 $ 25.96 $ 3.3

Ending Balance — June 30, 2024 128,024 $ 25.96 $ 3.3

(1) See Note 4 for information on the vesting of LTIP Units.

2 unchanged sentences

NOL Stockholder Rights Plan

We have a Tax Benefits Preservation Plan (“the Plan”), which is designed to protect our tax benefits in connection with any “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986.

As of June 30, 2024, we had a Tax Benefits Preservation Plan (“the Plan”), which is designed to protect our tax benefits in connection with any “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986.

Under the Plan, we declared a dividend distribution of one right (a “Right”) for each outstanding share of our common stock to be paid to all record holders of our common stock at the close of business on November 21, 2023.

1 unchanged sentence

As of December 31, 2023, we had approximately $ 666 million of NOLs and $ 31 million of tax credits available that may be used to offset future taxable income.

Pursuant to the Plan, if a stockholder (or group) becomes a 5 % stockholder without meeting certain exceptions, the Rights become exercisable upon board approval and entitle stockholders (other than the 5 % stockholder or group causing the rights to become exercisable) to purchase additional of our common shares at a significant discount, resulting in significant dilution in the economic interest and voting power of the 5 % stockholder or group causing the Rights to become exercisable.

Stockholders owning 5 % or more of our outstanding shares at the time the Plan was adopted were grandfathered and will only cause the Rights to distribute and become exercisable if they acquire any additional HASI shares.

Under the Plan, the Board has the ability to determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights

shall not become exercisable if such person becomes a 5 % stockholder.

The adoption of the Plan and the dividend distribution will not have an impact on our consolidated financial statements.

On July 1, 2024, we entered into an amendment which caused the Rights under the Plan to expire on July 1, 2024, effectively terminating the Plan at that time in anticipation of the effectiveness of the Company’s reincorporation as a Delaware corporation on July 2, 2024.

The Company’s Delaware Certificate of Incorporation includes Charter Tax Benefit Provisions which are intended to replace the Tax Benefits Preservation Plan.

Pursuant to the Plan, during the period in which it existed, if a stockholder (or group) became a 5 % stockholder without meeting certain exceptions, the Rights became exercisable upon board approval and entitled stockholders (other than the 5 % stockholder or group causing the rights to become exercisable) to purchase additional of our common shares at a significant discount, resulting in significant dilution in the economic interest and voting power of the 5 % stockholder or group causing the Rights to become exercisable.

Stockholders owning 5 % or more of our outstanding shares at the time the Plan was adopted were grandfathered and would have only caused the Rights to distribute and become exercisable if they acquire any additional HASI shares.

Under the Plan, the Board had the ability to determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights shall not become exercisable if such person becomes a 5 % stockholder.

The adoption of the Plan and the dividend distribution did not, and the termination of the plan will not, have an impact on our consolidated financial statements.

Earnings per Share of Common Stock

4 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(in millions, except share and per share data)

14 unchanged sentences

Weighted-average number of OP units 1,529,282 1,331,877 1,461,584 1,259,246

As of March 31, 2024 As of March 31, 2023

As of June 30, 2024 As of June 30, 2023

Participating securities:

Unvested restricted common stock and unvested LTIP Units with time-based vesting conditions outstanding at period end 858,423 630,420

Three Months Ended March 31,

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

2024 2023 2024 2023

Potentially dilutive securities as of period end that were not dilutive for the presented periods:

5 unchanged sentences

Equity Method Investments

We recognized income from our equity method investments of approximately $ 159 million during the three months ended March 31, 2024, respectively, compared to $ 22 million during the three months ended March 31, 2023, respectively.

We recognized income from our equity method investments of approximately $ 27 million and $ 185 million during the three and six months ended June 30, 2024, respectively, compared to $ 2 million and $ 25 million during the three and six months ended June 30, 2023, respectively.

We describe our accounting for non-controlling equity investments in Note 2.

As of June 30, 2024 and December 31, 2023, we had 47 and 46 investments, respectively, which we accounted for under the equity method.

The majority of these investees are limited liability companies taxed as partnerships wherein we participate in cash distributions and tax attributes according to pre-negotiated profit-sharing arrangements.

The limited liability company agreements do not define a fixed percentage of our ownership of these entities, and our claims on the net assets of each investment changes over time as preferred investors achieve their pre-negotiated preferred returns.

The following is a summary of the consolidated balance sheets and income statements of the entities in which we have a significant equity method investment.

5 unchanged sentences

As these swaps are settled, the projects will sell power at the higher market price, offsetting the loss recognized on the energy hedges.

Jupiter Equity Holdings LLC Daggett 2 Targetco LLC

Other Investments (1)

Jupiter Equity Holdings LLC Daggett Renewable Holdco LLC Other Investments (1)

(in millions)

Balance Sheet

As of December 31, 2023

As of March 31, 2024

Current assets $ 45 $ 59 $ 970 $ 1,074

10 unchanged sentences

Income Statement

For the year ended December 31, 2023

For the three months ended March 31, 2024

Revenue 20 12 229 261

1 unchanged sentence

Net income (loss) ( 33 ) 1 ( 52 ) ( 84 )

For the year ended December 31, 2022

For the three months ended March 31, 2023

Revenue 26 — 130 156

2 unchanged sentences

(1) Represents aggregated financial statement information for investments not separately presented.

Subsequent Event

CCH1 has been formed as a Delaware limited liability company.

Upon the closing, HASI CarbonCount and KKR Hoops will each commit $ 1 billion to CCH1, to be invested in clean energy assets during an 18 month investment period.

In addition, HASI, through its indirect subsidiaries, Hannon Armstrong Securities, LLC (the “Broker-Dealer”) and CarbonCount Holdings Manager LLC (the “Asset Manager”, and, together with the Broker-Dealer, the “Service Providers”), will be engaged by CCH1 pursuant to a services agreement (the “Services Agreement’) to provide certain services to CCH1.

CCH1 will be governed by a board of directors (“the Board”) which will initially be composed of four directors, two of which will be appointed by us and two of which will be appointed by KKR Hoops.

Actions of the Board generally require the affirmative vote of at least three out of four directors.

The Board will, pursuant to the Services Agreement, delegate to the Service Providers certain rights and powers to manage the day-to-day business and affairs of CCH1 with control over the significant decision making of CCH1 remaining with the Board.

The Broker-Dealer will source investment opportunities for CCH1 pursuant to the terms of the Services Agreement.

Through the Broker-Dealer, HASI will be obligated to present all of the investment opportunities it identifies that fit within certain predetermined criteria to the Board until either Member’s commitment has been fully invested or upon the date that the 18-month investment period described above expires or is earlier terminated.

The predetermined criteria within the Services Agreement does not alter our planned pipeline and includes investment opportunities that we would typically have originated on our balance sheet.

CCH1 will pay the Broker-Dealer, for provision of the services provided by it, an upfront fee on each funding of investments generally equal to 1 % of the total cash consideration funded by CCH1 to the applicable investment counterparty.

CCH1 will also pay the Asset Manager, for provision of the services provided by it, ongoing fees in respect of asset management and administering the management and operation of CCH1, payable when deducted from CCH1’s cash available for distribution.

The fee payable to the Asset Manager will be calculated on the basis of certain performance thresholds and will generally not be less than 0.5 % of invested capital per annum, subject to certain limited exceptions nor more than 1.00 %.

At inception, we seeded CCH1 with equity method investments and receivables which were previously on balance sheet at a combined book value of $ 108 million as of March 31, 2024, and which are expected to have a total invested amount of $ 191 million once fully funded.

We expect to receive approximately $ 55 million from KKR for the purchase of their share of the seeded assets on or before May 17, 2024.

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