Q1 2020 Earnings Call
Forward looking statements are made as of today and the company does not take any responsibility to up.
They any forward looking statements based on new circumstances, a revised expectations. Please note that certain non get financial measures will be discussed on this conference call. A presentation of this information is not intended to be considered and isolation or as a substitute for the financial information presented in accordance with cat.
Conciliation of gap to non gap financial measures is available on our posted earnings release and slide presentation.
Joining me on today's call, our Jeff echoes, the company's chairman C.E.O., and Jeff flips and R.C.F., though with that I'd like to turn the call over to Jeff who will begin on slide three Jeff.
I could Chad and good afternoon, everyone I Hope you and your families are as well as they can be.
I have to admit I've struggled more in preparation for this call that I have for my prior 28 earnings calls.
Do they handed Armstrong is announcing that Fortunately, we maintain a healthy workforce.
Access markets for growth capital.
Are reporting record first quarter earnings continue to manage your portfolio that is performing to expectations and are able and willing to reaffirm guidance for 2020.
That's good news stands in Stark contrast for the impact of this pandemic on people and businesses to date and in the future.
This is my struggle there are so many impacted directly and indirectly. So many first responders in health care workers, taking risk, we had had an armstrong or not directly exposed to.
We are deeply humbled by and grateful for their work.
Rather than jump right into the numbers I won't the highlight a few actions we've taken during the pandemic first we close the office on March 10th earlier than most companies in order to ensure our staff and their family stayed healthy.
Fortunately, we have stayed healthy and will continue to put employee health first.
The good news is that financial service firms are better suited to remote work than most.
Other than the working parents of school age children struggling with school and child care closures. Our team is highly functional.
Second we made significant significant donations to three local organizations, the Maryland food bank, the Y.W.C.A. of Annapolis, Indianapolis lighthouse organizations, providing food security protection for domestic abuse victims and shelter for the homeless.
In our staff will continue to support these and other community organizations during the pandemic.
As for the resiliency of the business I reflected on a number of factors that call. It the hand, and Armstrong business model to prosper in this unprecedented environment.
First virtually all of our investment saves <unk> money. This is a profoundly important distinction there is often missed and more normal times.
Second our clients the leading energy infrastructure companies in in the country in the world or large responsible corporate <unk> citizens, who will survive and prosper as we exit from this crisis.
Finally, the investment pipeline, which drives our future growth remains intact, not only because he's investment save people money in our sponsored by our terrific clients, but also because the underlying theme of investing in climate change solutions is proving a durable asset class and one that we believe will come out of this crisis even stronger.
No onto the numbers for our first quarter results on page four of the slide slide deck.
Today, we're announcing gap earnings per share 35 cents, 67% year over year core earnings per share a 44 cents up 33% year over year later, Jeff L. will detail and new accounting standard and how our definition of core earnings has changed as a result, but until then when I refer to court.
Earnings that is consistent with the last <unk>.
Borders definition to allow investors to compare our results to our guidance.
We raise nearly 550 million and growth capital through April, including $400 million and unsecured green bonds in $150 million inequity through R.A.T.M.
We achieve 40% year over year growth in gap that income excuse me gap net investment income and 52% growth in core net investment income.
We report a portfolio yield of 7.7% and this Jeff L. will detail and a bit our portfolio is performing to expectations and is in great shape.
The close $186 million of transactions compared to 319 million in the first quarter last year, but importantly, still expect full year originations succeed the billion dollar Mark.
And finally at a time when challenging economic conditions and uncertainty about the future, forcing many companies to withdraw guidance. Fortunately for the reasons outlined we remain confident about our ability to whether the current crisis and our reaffirming our guidance for 2020 with core E.P.
S expected to exceed $1.43 per share.
Turning to slide five let's turned or more than two and a half billion dollar pipeline <unk> majority of which is behind the meter. Although you will notice this quarter an increase in grid connected pipeline.
We continue to identify attractive efficiency and renewable opportunities in the federal and municipal markets as well universities schools and hospitals investments that have engineer been engineered before the crisis are generally proceeding while the to be engineering investments, maybe push back a quarter to.
With regard to residential solar deployments of projects already in our pipeline continue even as new originations have understandably slowed as a result of social distancing and the economic downturn.
The quick shift by the residue solar companies to online selling engineering and per permitting has been impressive.
We also continue to look closely at a number of opportunities in the grid connected sector. It's federal tax credits for wind stepped down when project execution is is accelerating potentially leading to new investment opportunities for Hannah.
As a final note we occasionally get the question on the impact of low oil prices on our renewable pipeline. The answer is there is virtually zero impact whether the price of oil is $10 or $100. Because oil is not used for electric power generation, except a little bit in Hawaii, hopefully we can put this question to rest for good.
Turning the slide six or balance sheet portfolio is more diverse and longer dated than it was at the end of 2019.
The end of the first quarter, we have 180 investments with an average size of approximately $12 million and weighted average life of approximately 15 years.
Behind the meter market represents over 60% of our portfolio and generates a forward looking yield of 8.1%.
The fact that virtually all of these assets save money for the Apple Gore, It's one of the reasons for a strong credit profile.
I think one of the outcomes of the the crisis is that people will be more focused on the reliability and resiliency of <unk>.
Our where they work and live.
As reliable power is proving even more critical.
This will only help strengthen both our credit profile as well as expand the storage opportunity.
At 30% of our portfolio generating a forward looking yield of 7.1% the grid connected market continues to be driven by both solar land and onshore wind.
In some or 2.1 billion dollar balance sheet portfolio remains well diversified with long dated assets and points to support our projected growth in 2020 and beyond.
Let's turn out a slide seven which highlights a transaction that one from our pipeline to our portfolio and Q1.
We invested $115 million and preferred equity into the Hawkeye energy a landmark public private partnership between N.G. and University of Iowa, Hawkeye Energy was awarded a billion dollar 50 year utility management concession contract and the investment reach financial close on March 10th.
Okay, we'll support the university's energy water and sustainability objectives for two campuses spanning 1700 acres, including meeting at zero carbon energy transition objectives, and becoming cold free in campus energy production on or before 2025.
[laughter].
Innovative in both scoping ambition. It serves as a campus utilities system model for major U.S. universities and research hospitals that looked to achieve their cost and sustainability objectives.
Investment financial profile, a strong with an attractive 50 year risk adjusted return from contract to cash flows from a high investment grade County counterparty.
This is expansion of the higher education P. three market also grows in diverse buys or pipeline and strengthens the portfolio well fully aligning with our planet positive E.S.G. objectives.
Alternate over the Jeff L.
Hill, our financial performance.
[noise], Thanks, Jess [noise].
Summarizing.
Excuse me summarizing our first quarter results slide eight.
<unk> recorded gap earnings per share of 35 cents for the first quarter and increase of 67% over the same period last year due to increases in both interest revenue equity method investment earnings.
Record earnings per share allow me to reiterate our definition that beginning this quarter quarter earnings will now include Cecil related provisions, which I will explain further and a few moments.
However for 2020, we will also disclosed Preprovision court U.P.S.
That is the comparable metric related to prior periods.
Also the metric we're utilizing for our guidance.
Who earnings per share. It was 43 cents for the first quarter to quarter earnings per share only preprovision basis was 44 cents, reflecting 30 per cent increase when 2090.
As we turn to slide nine.
I Wonder highlight the 29 million of coordinate investment income in Q1, 52% increase year over year.
Increase has been the result of growth in our portfolio as well as improvement in our portfolio yield.
We are encouraged by this migration with this to more significant levels of net investment income is this enhances the predictability of our <unk>.
However, we would expect the growth rate according to investment income to moderate someone over the next one to two quarters due to a substantial amount of low yielding castro the balance sheet.
I want to emphasize that even in the midst of an extraordinarily challenging macro economic environment.
Diversified liquidity platform is working as intended.
We primarily fund our business in four ways.
Credit facilities and secured debt public equity and secured financings, both wandered off balance sheet, primarily with life insurance companies.
Despite all of this disruption despite all the disruption in capital markets over the last two months, we have utilized all four of these sources actively and each of them remain open to us.
After a brief period in which none investment grade debt markets, where inaccessible we issued 400 million of Green bones. Soon after the market reopened either tree is actually that was well received by investors Insignificantly oversubscribed.
The substantial fundraising we completed over the last two months positions us extremely well for the current recessionary environment with a substantial amount of cash available to continue to find the creative investments.
We ended the quarter with 173 million unrestricted cash.
Much of a generated from equity or should issue is via R.A.T.M. platform.
And we significantly increased that balance with the debt offering an additional H.T.M. sales in April.
In fact, the H.T.M. is but a successful low costs equity issues platform and we have tend to refresh your registration, allowing for another $350 million of issuance.
To reiterate our motivation for raising this debt and equity was our confirmation from our clients that are pipeline transactions continue to move forward.
Also note we have limited refinance risk as we have no material recourse debt maturities until September 2022, when our convertible bonds mature and that given these maybe settled in shares this maturity does not necessarily reflect the cash neat.
We also have limited interest rate risk as the vast majority of our assets and liabilities are fixed rate.
Turning to slide 11, the credit quality of our portfolio remain stable as depicted in the Pie chart on the right.
All of our government and the vast majority of our commercial obligors enjoy investment grade ratings.
In addition to the obligations of our residential solar assets.
Include approximately 150000, hi credit quality consumers located across 22 states.
And in our equity method investments, we are typically prefer to the investment structure.
Well, it's like 12 as they discussed that are last call. We highlight that'd be getting this year, we have implemented the new accounting standard referred to as Cecil.
Similar to the method that banks in many finance companies have utilized for years.
As a result, we have created an allowance for losses on the balance sheet and recorded a provision on the income statement for certain of our assets.
Notably equity method investments are excluded from C. So.
For the first quarter, we recorded approximately 650000, a provisional expense, hence the one penny difference in court U.P.S. mentioned earlier.
It's.
[laughter] expectations of portfolio performance.
We've also included for reference a simple example of the timing impact of Cecil income recognition in the appendix of today's presentation.
Further to give investors additional transparency, it's where portfolios performance, we provided a new disclosure table one slide 12.
Currently 99 per cent of our portfolios performing.
1% is performing slightly below or metrics books, a low probability of lots of invested capital.
And $8 million of assets are performing below significantly below our metrics. However, please note the investments in category three have been fully reserve foreign 2019.
Three to slide 13, we also providing detail on the credit attributes of our residential solar investments.
Including the customer savings component that Jeff referenced earlier.
Modest monthly payment amounts.
Widespread usage of A.C.H. psycho scores well above national averages.
Transferability of panels.
Portfolios <unk> granularity in geographic diversity.
We'd also highlight that these portfolios have been under by multiple sophisticated investors in rating agencies as part of the senior debt financing these same pools of assets.
<unk>.
Debt financing if there are also structured with an identified backup servicing plan.
Towards the bottom of the slide reflect that we have substantial equity providing credit and has spent for our mezzanine investments.
We can report that since the covert 19 pandemic commenced [noise].
Based on information, we receive to date and other <unk>.
Look disclosures the increase in customer delinquencies into furrows in the underlying portfolio have not been significant.
However, we continue to work closely with our solar partners to monitor the portfolio given the current macro economic environment.
We've also included in the appendix a slight outlining the collection procedures of the solar providers.
We hope these enhanced ethic quality disclosures are helpful to investors you better understanding our credit risk and portfolio performance.
Without altering the call back over to Jeff.
Thanks.
Turning to slide 14, I will highlight notable recent developments on the E.S.G. front that continue to demonstrate our leadership.
Following our most recent green Bon offering we joined the NASDAQ sustainable Bond network network, which sharpens accountability for issuers and should it hands liquidity for Green bond investors.
In addition to the donation donations I mentioned at the beginning of the call to support Coven 19 relief efforts by local charities. We also offered 100 per cent match of employee charitable contributions and an employee bonus to help with hardship expenses.
Also invite you to check out or 2019 impact report, which we publish in March and you can find on our website.
Well that seems like a long time ago that we publish that report.
Well I believe we get appropriate credit for environmental and governance practices and most quarters, the social element a V.S.G. is generally not.
Is visible to investors.
In this crisis has passed and it will I'm certain that the investments we have made in our staff and our community will elevate the s. and social to equal visibility in prominence with the E.N.G. and investors eyes and you as investors investors should see the financial benefit from our unwavering commitment industry leading.
E.S.G. business practices.
I'll conclude on slide 15, we believe our core markets and clients foolproof strong and capable of continuing to develop an engineer programatic high quality long dated assets for us to invest in for our portfolio.
That portfolio is geographically and technologically diverse in over 180 investments and is shown strength in class financial crises by being on correlated to the general business cycle.
Are durable capital structure is Jeff detailed with ample liquidity conservative leverage and access to diverse funding sources will allow us to make investments and grow the business.
Finally, we remain focused on a sizable and growing investment opportunities in climate change solutions that our clients continue to create.
Thank you for joining us today stay well and operator will open the line for questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speaker phone please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
At this time, we will paused momentarily to assemble our roster.
Our first question comes from Chris Van Horn would be Riley F.B.R. Please go ahead.
Good afternoon, Thanks for taking my call and hope everyone as well.
<unk>.
I'm I'm wondering if you could give us you know maybe a real time update how <unk>, how how the month of April has progressed and and you know how how's your conversations with the pipeline has have been going.
<unk> I.
Kind of hard to address April I think.
You could <unk> take from particularly my comments on the pipeline and reaffirmation of guidance that.
We've not.
To anything in April that would change what our view was at the end of the quarter.
Most of the assets in construction are considered a central services, we've not seen any notable a reduction in construction.
And I I think the Keith maybe a a key thing to think about is when we see an investment opportunity say like the University of Iowa, there's been a year or two of selling a an engineering and originating and structuring that investment before we see it there.
As a stock of those assets sitting out there in our clients pipeline that we fully expect to be able to tranzact on and 2020.
I mentioned that some <unk>.
Assets that haven't been sold their engineered yet might have I have one or two quarter delay I think that's quite possible and I think most of the clients believe they can play catch up at the end of the year and.
Get get their pipelines back in tact.
Got it okay, Great and then you know when you look at your pipeline I imagine there's a lot of you know military recover men [noise] exposure and and just curious it or or you know even municipal a down to municipal level I'm wondering if you're seeing any budget effects.
Affecting that pipeline or or if because of the the scope of work is to save money, you're actually seeing an increase in demand, which I think you'll go to to a little bit.
Yeah, I think I mean, the federal government, obviously, they can issue that and.
And make more dollars. We we we've been through this through several financial crisis with the the federal government and you know the the issue they'll have the same remote working issues as any employed person, but from a credit standpoint <unk>.
That has not has never been an issue and we don't anticipate it.
For the let's say the <unk> municipal University schools and hospitals, they obviously can't issued that and one should worry about credit, but you hit it exactly on the answer.
Is.
These assets save them money to not pay us, we'll eventually cost them more money.
And.
Also the credit profile of particularly the municipal exposure, we've got is quite high.
Got it great.
And I guess finally, you know the the the Reggie solar piece of portfolio.
It seems like it's it's someone holding up mainly due to the the high psychos score.
But you know <unk> your conversations with the Servicers is.
Which candidate the the temperature moving forward and and how do they see that playing out.
Well I think some powers doing their call right now Sunrun has reported I'm not sure about the event.
Yeah.
But in talks with Sunpower and son runs comments.
You are giving the impression and we have we have zero.
We have the information that Jeff said that that that.
Assets are performing.
But there's a sense of optimism among sunpower and son runs that.
This is actually an asset class that people value more post crisis. Then then they might have pre crisis.
It we're still early days, but we love the credit profile of what we've we've got and where we are in the capital stack in these transactions.
Jeff anything you would add to that answer.
No nothing other than to reiterate what I said and they're prepared remarks that we're not see.
Significant deferrals or delinquencies, yet, but we're watching it very closely and we have underwritten it as a priority payment and we continue to have that thesis that this is a priority payment to to the customers.
Okay, great. Thank you so much of the time in stay safe and healthy.
<unk>.
The next question is from Julianne Doodle and Smith was bank of America. Please go ahead.
Hey, this is actually <unk> failing in 5 million.
Yeah.
Fast I just wanted to ask what your expectation die for the paint several fractionations Grad just given the circumstances name <unk> I can't on South I can't think some <unk>.
Seem to get pretty confident on 2020 origination that's that's conversations that I'm dying.
And just yeah my car on that.
Oh.
<unk> 21 question.
You know I think.
The.
The companies that we're dealing with.
Are actually looking at this in many respects as an opportunity.
To accelerate the.
Infrastructure from from less sustainable infrastructure to more sustainable.
There are other companies and other energy industries, who are not looking at all optimistically about.
2020, or 2021, those on our clients so.
Given that it is early days and we don't have a vaccine how long. This last is really quite quite the right question and we're no better at answering it than anybody else, but to the extent.
Construction projects are getting done that save people money, our clients are going to do them and we'll have I think a a good pipeline one.
Other way to look at it on your is.
I've read emphasize that we expect to get to a billion dollars and close transactions in 2020.
Carry a more than two and a half billion dollar pipeline.
Now the problem historically with our pipeline is things move to the right I'm sure things will move to the right, but that right just happens to be 2021, and I do believe new new transactions will.
Surface to to fill in the transactions that we moved from pipeline to portfolio.
With respect to Securitizations, Jeff you want to take it or.
Oh God.
Sure you know again to forecast gain on sale in 2021 would be would be challenging.
You know on your most of what we securitize is energy efficiency transactions that market remains strong, but I would I think we'd be hesitant to be definitive about what 2021 gain on sale would look like this.
Except maybe I would add that the insurance companies or who the buyers of our gain on sale our.
Functioning open we're doing business with them and just as we did a no wait no nine.
They they have insurance premium money coming in to have to reinvest it and then this extremely low interest rate environment. They have no choice, but to to do to keep doing transactions and that's that's good news for us.
I had thanks, and just to follow up just a coffee at the classes, where you've seen rest opportunities today, maybe and eat me Affleck huh mm offering.
Oh, I think yeah. The P. three area for those of you don't know a p. three is well it's not.
Paycheck protection plan at our context, it's public private partnerships, you know thrilled to being the transaction with N.G. and supporting them.
The offering that they're making too.
The P. three customers is really compelling one and I I think they're going to have a lot of success in this market and we look forward to participating in future transactions, we're certainly saying.
Governments continue to go after their sustainability goals, which is largely achieved through efficiency, but also through solar and storage.
And then as I mentioned, the wind industries, having maybe not the.
The Hoover record that they were planning on having and 2020, but they're going to have a a terrific year and that creates opportunities for us as well.
I think I think I'll jump back in again.
The next question is from no. Okay with Oppenheimer. Please go ahead.
Oh.
Good afternoon. Thanks for taking the question Hi, how are Ya and thanks for providing that extremely transparent view of the help of the business.
And frankly doing so in a manner that fits the company's values.
<unk> I I'm not sure. If you were alluding to this or that potential opportunity, but it's something we've been thinking about there's.
Quite a lot of discussion about you know what the the built environment needs to look like and how in that needs to change as we all hopefully do go back to work and re congregate. Some of the partners that you have you know for for institutional building.
[noise], Hi, commercial building improvement.
You know that they've been talking about this <unk> <unk> <unk>, there's quite a lot that may need to be done.
The perspective of making buildings more resilient and now really funny public health perspective, as well you know that it's not strictly talking about energy saving but it is light saving some of these measures being considered so I'm wondering if since you're talking about social aspect of your business without expanding your opportunity to at all.
Ah no. It's a great question I did a web in R. for the life to save energy on Johnson's controls.
2020 survey of building energy managers and <unk> completed in 2019, so <unk> and someone out of date, but the entire web in R. was focused at least my comments on.
What is actually changing now and the scope of supply for energy service companies for buildings.
You need you need a lot more air circulation post coven environment than you did before and you need you v. filters in that circulation system.
People aren't going to our employees aren't going to come back to work unless they know the building is safe and and we fully encourage that so we're actually looking into some of those technologies for our own office, it's early days and how to get them done, but absolutely. This increases the scope of supply for the energy.
Service companies and and you know it goes from gosh, we get to save money too.
Good Lord we get a a a safe building that is very valuable so as I think everybody is.
Realizing.
That virtually everything has changed that is one area that I think our clients are are very quick to off the blocks to to seize that opportunity.
Okay. Appreciate that in maybe just a quick more pragmatic one near term you you mentioned this this central Russia when projects in the pipeline you know just at this point because I love to like there's sufficient tax equity.
It's a really fun that Russia projects, if the cost of tax equity you know increase is due to scarcity <unk>.
How does that position you.
You should pots and that would be helpful.
Sure I, Yeah I think.
In most markets you see.
Life isn't fair in in a crisis and large companies have access to in this case tax equity that smaller companies don't.
To the extent, they're scarcity, the and it's not clear to us that it tax equity has become a scarcer, we're seeing commitments get follow through on the end transactions closed.
But it's going to be Ah argh.
Or large clients, who are getting what available capacity there is.
If there are other projects that need tax equity and can't get it that's pretty hard to for us to bridge in the short term with actual cash equity, but in terms of the the wind opportunity to we're talking about we do not see and I think the wind industry Association has confirmed it is not saying.
A a notable.
Pickup in tax equity Mark.
Okay, that's very helpful I could.
Thank you know a stay safe.
[laughter] Hello.
Thank Chris from Cowan is up next Oh, sorry, I missed the angel. Thanks for taking the question here I just want to touch on see if there were any new opportunities never popping up outside of your traditional scope that it's you know projects you companies kinda face liquidity issues near term I'm, just giving you.
Have beefed up the war chest year, when they get your thoughts.
Yeah. It's.
It's a fair question Christie.
The bias we have in picking through projects.
And investable opportunities is.
Oh can we do repeat business with this programatic investment that we talk about so often.
That's the way our business makes money, we are less likely to be opportunistic and a one off transaction even if.
Somebody needs more capital than than they thought they did.
That's really not.
Kind of our way of working and Fortunately most of our clients are are large companies, who have I have a tremendous access to liquidity. So we're not saying.
No train wrecks that allow us to be more opportunistic.
But you know.
I I would say that it's.
We've seen an increase in our cost of capital and as the stock price has lowered and the.
A unsecured that price more expensive Lee then the prior issuance.
That is.
A something that you know, we'll be able to in this market I think.
Adjust pricing to make sure that.
The price and cost of capital moves out in parallel lines.
Oh, so just kind of the the price that you're discussing has dislocation markets changed out with either.
You know some of the projects that you're looking at now we're essentially the you know and sharing somebody when you duty and so different projects.
Yeah, I think there was.
Maybe in March in early April.
Failure to recognize that the world had changed a bit but now that we're in May I think everybody's pretty much got them all that.
<unk>.
The.
The finance markets have have changed and and capital is getting paid I think a more fair price then it was pre crisis.
Oh, that's good to hear and then just last when you <unk> windows good tied wind as an area of the pipeline that seems to be growing can you talk a bit about the <unk>, what can be sustainable infrastructure side, and where the increased opportunities are there.
Yeah. So that's a lot of that a storm water remediation. We continue to do that business. Those transactions are primarily state level credits, so a a very and and the highest rated states. So very very good transactions for us to to add to the back.
Won't shade and covert or 19 or not there's the states are still under mandate to do these projects and they simply have to do them then they're clearly construction projects with a lot of social distancing.
There.
Often out in the woods or along a highway whether there aren't people. So we're pretty confident that that those will continue.
You know there are other sustainable infrastructure projects and.
[noise] embarrassing transmission lines and things like that that you know like they've always been a bit episodic, but when they come.
They they should be good transactions as well for a.
Post Cove at a environment.
Oh, and then just last one you know how how it's gonna be origination profit change I understand you know wouldn't programatic relationships and pull out easier, but just on the yeah. It sounds like things seemed to be well on track I just wanted to see for their any areas, where yeah, there are delete or log jams.
Within that process.
And again typically.
We're the projects that may experience, those long jams or supply chain problems.
We probably wouldn't have seen for another six to 12 to 18 months anyways. So they may be out there and but it's it's it's it's in the future for us the the projects that we're investing and I generally are are well supplied.
And and able to proceed so as so much of.
This new environment, there's still a lot to learn and a lot to understand but.
Super impressed with our clients the.
The ability of them too.
Turn on a dime and change the way, they're working and and fix things. These are these are really capable companies and it's great to have them as clients.
That's good year, hoping to keep next.
The next question is from Stephen Bird was Morgan Stanley. Please go ahead.
Hey, good afternoon hope y'all are doing while hi, Stephen.
A lot of my questions have been addressed I wanted to just touch on on Hawkeye pretty sizeable investment and it just wanting to understand in terms of the impacts to guidance for for 2020, how to how to think about the impacts <unk> given given the size of the investment.
I mean.
Let's see I'm looking at Jeff here, how would you answer I think.
We would we obviously have just reiterate a guidance we expected to put a <unk> a substantial amount of assets into the ended a portfolio. This is one of them that's been in our pipeline for awhile.
Not sure it fundamentally changes you know 2020 result.
The good thing about infrastructure investments like these as they they moved glacially up and down and the things in our pipeline are generally.
I'm going to happen so I'm not sure. There's a 2020 impact anything you would address.
No I mean, our guidance is based on obviously, a certain level investments and the I went transaction.
Was a component of that that we've now checked off so it it certainly helps.
<unk> helps facilitate us reaffirming I've got.
Yep, that's great, but I check yeah, no <unk> had aren't glad to close it on March 10th the same day, we were closing the office so.
Stuff got close I'm more extent.
Very good that's all I had thank you thanks, Dave.
The next question is from Philip Shin with Ross Capital Partners. Please go ahead.
He got back to the questions, we're now becoming.
As many others are you know many conference call. So apologies if you've already address this but wanted to see if you could give us a little more color on how the Reggie solar investments are going I know you have I believe you have three.
<unk>, it's on the strong with some power.
<unk> 10, one other one can you compare and contrast, the performance from.
Each of those different Ah portfolios and you know son, Ron gave some interesting data yesterday about.
Oh, they're delinquencies you know 30, 60, 90 120 days.
Through March and April or at the lowest level from the past six months. So it was wandering and so perhaps they thought some color right. There on sunrise, but can you comment on how how your three different ports lawyers are performing.
So fill we would not comment on their portfolios individually, that's just not something that we're able to disclose than they are each of our three partners or public companies. So as you alluded to you know there's there is some data out there that they're providing I think what we have said.
If you missed it was that you know deferrals and delinquencies have not increase significantly as a result of the pandemic so far but obviously, we're keeping a close I own it given the macro economic trends, we have right now.
And we've under written this our investment thesis here is that this is a priority payment you know for the consumers at the top of the consumer waterfall so to speak.
<unk> you know for reasons that we've outlined most notably that it does save the money.
And in many other things which are on on page 13 of the.
Slide deck. So that's that's how we've sort of.
Thought about it and so far it's holding up a watching closely I think would be our message there.
Okay, so, but as we go through this pandemic and given the performance about half the class for you guys and and you have lots of other aren't investment options are you more encouraged more or less encourage you know they they're they're going to continue to originate you expect to take on meaningfully more megawatts or.
<unk> report falling over time.
Yeah, we certainly we we like what we've invested in we certainly are open to future residential solar investments. One thing I think has been fascinating is and I think I'd fencer set of Sunrun is what they plan to do it.
Two years, they did in 30 days in terms of going to.
Online selling engineering and permitting sunrun exactly the same.
Yeah, some power exactly the same rapidity of change.
That does.
Wonders for sales, but what it really does for those guys is reduced or cost of customer acquisition and selling and so you could look at this is you know that.
The impact is going to make them more profitable, which is you know quite a good fact for us.
Great one of the one if I may.
Data centres in the gross there's a pretty phenomenal and there's a lot of renewables going into their yeah. That's why you guys have not talk about exposure to that and market, but do you see on the horizon potential to get some exposure to that that data center gross.
Well I I do think some of the P.P. off takers and portfolios, we bought a would represent some of those those companies.
It's.
Yeah, absolutely going to be a growing market and they have.
A big impact and so I'm glad they have big sustainability goals. It's certainly a market that we will like can continue to.
To see opportunities huh.
Right Oh, Thank you both all pass it on.
They will fill thanks.
The next question is from David Khattar would bear. Please go ahead.
Hey, guys. Thanks for taking the question and I'm, sorry, if I'm, a they're getting something out he touched on like seeing portfolio yield continue to move higher you looking at Com com portfolio, how <unk>, how much more room, you have to rotate from lower yielding assets off there.
The rotation of lower yielding assets is primarily complete.
So you know movements in portfolio yield will likely going for it would be much more affected.
What the incremental assets are on the balance sheet and and when and if any.
Pay off or syndicated.
But we don't.
Sort of forecast publicly you know our our yield I would say directly.
As Jeff alluded to a few moments ago.
You know the price of risk has increased and there's been some resetting you know costs of capital.
And so that may have a positive impact on on our yield but I think it's it's a little too early to tell them yeah.
<unk> and then shifting to kind of capital <unk> and she'd some more that you 2020, as we think of you know future capital raises how much data you comfortable reading there what are you view as kind of the upper limit.
Well.
Now that we're an active participant established name in the high yield market I don't think there's any meaningful limitation on the amount we could issue given the size of that market and if we you know if we are upgraded a is certainly it would make the same comment around the highgrade market as well so the limitation is only.
What we can do with that money and what kind of leverage profile, we want to maintain and so you know it's not it's not a market limitation. So we'll raise that.
Consistent with maintaining you know roughly the leverage profile, we have today and the amount of of investment opportunity we have in the pipeline.
So it's not a debt targets so to speak.
Under said that's up on that's all I had guys. Thanks.
You say well.
Just concludes our question and answer session and the conference. It's also now concluded. Thank you pretending today's presentation you me now disconnect.
Yeah.
Yeah.
Hmm.
Hmm.
Yeah.
Oh.
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