HASI Q1 2026 Earnings Call Transcript

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Date

Thursday, May 7, 2026 at 5:00 p.m. ET

Call participants

• President and Chief Executive Officer — Jeffrey A. Lipson
• Chief Financial Officer — Charles W. Melko
• Chief Operating Officer — Susan D. Nickey

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Takeaways

• Adjusted EPS -- $0.77, reflecting a notable increase from $0.64 in the prior-year period, underpinned by broad revenue growth and no new ATM share issuance.
• Adjusted ROE -- 15.7%, the highest quarterly figure in company history, up from 12.8% last year, attributed to improved equity deployment efficiency.
• Adjusted recurring net investment income -- $101 million, representing a 29% increase year over year.
• Managed assets -- $16.4 billion, up 13% year over year, continuing a trend of diversified portfolio growth.
• Fee-generating assets -- $1.1 billion, a 130% increase over the same period last year.
• New transactions closed -- Over $460 million added to CCH1 and balance sheet holdings, supporting continued platform expansion.
• Portfolio yield -- Increased 90 basis points year over year to 9.2%, aided by new asset yields above 10.5% for the eighth consecutive quarter.
• Gain on sale revenue -- $23 million, with management noting “lower levels of gain on sale for the remaining quarters of the year” are expected due to the high Q1 contribution.
• Private debt placement at CCH1 -- Recent issuance priced at a 195-basis-point spread to the 10-year Treasury, indicating improved asset quality and tighter pricing relative to previous placements.
• Corporate bond issuance and refinancing -- $1 billion raised ($400 million senior at 6% and $600 million junior subnote at 7.125%) to retire $450 million of 8% bonds due 2027 and extend debt maturities, lowering average borrowing cost and lengthening weighted average corporate debt maturity from 7.9 to 12.8 years.
• Current liquidity -- $2.3 billion, sufficient to cover $600 million in notes maturing in June, with the next bond maturity not due until 2028.
• No ATM share issuance -- Zero shares issued during the quarter, with management expecting “minimal equity issuance” for the remainder of the year given internal funding ability.
• Joint venture with Ameresco (Neogenix) -- $400 million initial commitment for a 30% stake in a biofuels platform, with a priority position on cash flows and expected long-term returns above typical project investments.
• Investment pipeline -- Remains above $6.5 billion, characterized by “level of development activity,” ongoing diversification, and robust grid-connected project opportunity.
• CCH1 platform -- $2.3 billion of assets, with sufficient equity and debt commitments to support approximately $5 billion of capacity, and active progress toward launching CCH2.
• Executive changes -- Four executives appointed to expanded investment and risk management roles; Christy Freer named Chief Legal Officer; Marc T. Pangburn transitions to GoodFinch but continues involvement with SunStrong.
• Credit quality -- 98% of the portfolio remains in category one, with only minor migration to category two due to “technical challenges with some of the equipment,” not associated with widespread credit deterioration.
• Residential sector loan performance -- “There is a bit of an uptick in some delinquencies in the residential sector generally. We are seeing a little bit of that in our portfolio as well, but it is tracking well within our original underwriting expectation of charge-offs, and our loans there are all performing. Literally, 100% of the loans in residential are performing. So, again, it is well within our underwriting guidelines, and we are not seeing stress in that portfolio.”
• Adjusted guidance reaffirmed -- Management reiterated 2028 targets of $3.50 to $3.60 adjusted EPS and 17% adjusted ROE.

Summary

HA Sustainable Infrastructure Capital (NYSE:HASI) demonstrated significant profitability improvement and capital efficiency, highlighted by a 15.7% adjusted ROE and zero dilution from equity issuance. The company closed an impactful joint venture with Ameresco, positioning for enhanced returns and strategic growth in the renewable natural gas segment. Progress in corporate debt management resulted in lower borrowing costs, extended maturities, and substantial available liquidity, supporting future asset growth and capital deployment without material share issuance. The robust investment pipeline and elevated fee-generating asset base reinforce management's confidence in its business model and multi-year targets, while leadership transitions broaden the company's bench strength without signaling operational disruption.

• Management stated, “we are already self-funding,” clarifying that anticipated originations can be met with internal capital unless outsized growth occurs.
• Susan D. Nickey cited “more liquidity” emerging in the tax credit market, with the tax transfer segment growing 50% to $42 billion, easing earlier constraints.
• Portfolio average annual realized loss rate remains “less than 10 basis points,” indicating continued stability of underlying investments.
• The Neogenix JV was described as “primarily focused initially on organic growth,” with no near-term plan for public listing or consolidation as a core strategy.

Industry glossary

• ATM (At-the-Market) share issuance: A type of equity offering allowing companies to sell shares directly into the secondary market incrementally as market conditions permit.
• CCH1: HASI’s structured portfolio vehicle used to aggregate and hold investments alongside external limited partners, notably KKR, with distinct debt and equity arrangements. References to "CCH2" would imply a follow-on or parallel structure not yet detailed.
• HLBV (Hypothetical Liquidation at Book Value): An accounting method for allocating gains and losses to tax equity investors in partnerships, commonly resulting in non-cash income or charges based on changes in partner capital accounts.
• RNG (Renewable Natural Gas): Methane produced from organic waste materials, upgraded to pipeline-quality gas used for power generation and transportation fuels.
• Preferred equity: A financing instrument subordinate to senior debt but with priority over common equity in claims on assets and earnings, common in project finance for renewable energy assets.

Full Conference Call Transcript

Jeffrey A. Lipson: Thank you, Aaron, and welcome to our first-quarter 2026 earnings call. We are pleased to report a strong start to 2026 with outstanding financial results and a positive outlook for the business. In Q1, adjusted EPS was $0.77, driven by growth in revenue across the board along with zero new share issuance from our ATM. Adjusted ROE was 15.7%, the highest quarterly level in our history. Adjusted recurring net investment income was up 29% year over year to $101 million, and our managed assets were up 13% year over year to $16.4 billion. As we continue to execute on our 2026 business plan, we are reaffirming our 2028 guidance of $3.50 to $3.60 adjusted earnings per share and adjusted ROE of 17%.

Moving to slide four, it is important to highlight how our Q1 results represent particularly strong performance in light of the ongoing volatile geopolitical and macroeconomic developments impacting financial and energy markets. Most notable, of course, is the Iran war, creating volatility, particularly in oil prices and jet fuel availability. Separately, the increase in power prices in the U.S. has created affordability challenges. Additionally, credit and liquidity challenges have emerged in the private credit sector, with implications across financial and credit markets. Despite these challenges impacting the economy, our business has remained consistently profitable, with ongoing earnings growth as we effectively address this volatility.

In fact, certain of these developments reinforce the value of renewable energy and HA Sustainable Infrastructure Capital, Inc.'s investment thesis. For example, once installed and operational, renewable energy projects have minimal operating costs and do not depend on an ongoing supply of fuels but instead are powered by naturally replenishing resources. Renewable energy projects are less vulnerable to geopolitical volatility and bolster energy independence and national security, and they provide a high degree of cost certainty and visibility. The intermittency of renewables can be increasingly improved by continued storage development.

In addition, beyond the implications for renewable energy, the recent geopolitical and macroeconomic uncertainty has also served to accentuate the prominent attributes underpinning HA Sustainable Infrastructure Capital, Inc.'s business model of offering differentiated capital solutions to clients supported by project cash flows. This business model results in HA Sustainable Infrastructure Capital, Inc. offering our investors low-risk, diversified exposure to growth in U.S. energy transition infrastructure, stability and visibility of long-term predictable revenue, and a proven track record of exceptional risk-adjusted returns. In the face of this backdrop, we continue to demonstrate the resilience of our business and our ability to execute at a high level with strong operating results.

Turning to page five, we closed more than $460 million in new transactions in the quarter that will be held at CCH1 and on our balance sheet, and we increased fee-generating assets 130% year-over-year to $1.1 billion. In terms of the returns on these investments, new asset yields on portfolio transactions closed in the quarter remain over 10.5% for the eighth quarter in a row. Supported by the increase in new asset yields over this period, our portfolio yield rose 90 basis points year-over-year to 9.2%. Finally, we continue to optimize our balance sheet in 2026.

As Chuck will provide greater detail on shortly, we were active issuing low-cost, long-duration debt and redeeming higher coupon debt while issuing no ATM shares in the quarter. Turning to slide six, we highlight the investment activity for the quarter, including a robust Q1 total volume of $637 million, of which $462 million will be held by CCH1 and on our balance sheet. This volume keeps us on pace for the $2 billion to $3 billion expectation for 2026 that we discussed on the Q4 call. The investments were well diversified and underwritten with attractive risk-adjusted returns. Our investment platform is continuing to deliver on our goals and fueling the continued growth in our profitability.

Turning to page seven, on Monday, we jointly announced with Ameresco the creation of Neogenix, a newly formed joint venture representing the spin-off of Ameresco's biofuels business. We are excited about co-investing in what we expect to be the premier developer and owner-operator of biofuels projects. Ameresco has been a partner of HA Sustainable Infrastructure Capital, Inc. for over 20 years across more than 60 investments, and we have tremendous familiarity and confidence in Mike Bakas and their team.

This investment fits well into the HA Sustainable Infrastructure Capital, Inc. business model, as it includes a very strong partner; an asset class, renewable natural gas, in which we have extensive experience; operating projects that we were able to diligence; a business model well suited to current and expected future market demand; and a structure that provides a priority position on cash flows. Neogenix's existing portfolio of operating projects allows the company to have scale from day one and a strong pipeline of identified development opportunities that will facilitate future growth.

Our investment in the venture is initially $400 million, and we will own 30% of the enterprise with a priority position on cash distributions until a hurdle return is achieved. Our long-term expected return on investment is higher than our typical investment given the large upside potential of the business. Turning to page eight, our pipeline remains greater than $6.5 billion as end-market dynamics, including consolidation, continue to result in a wide variety of developers and sponsors seeking project-level capital. In addition, power demand continues to result in an elevated level of development activity and policy items are well understood and workable. I also want to mention a definitional change.

We first introduced the concept of what we call the next frontier on our Q4 2024 call to illustrate the tremendous growth opportunities for the business. We continued to pursue certain of these asset classes, and we will disclose closings as they occur. However, from a presentation perspective, we have recategorized these into the three existing core segments and an other sustainable infrastructure category as appropriate, in order to simplify our disclosure. And with that, I would like to turn the call over to Chuck to discuss our financial results and funding activity in greater detail.

Charles W. Melko: Thanks, Jeff. We are continuing to build off the success achieved in 2025 and have had a great start to the year. We have increased our adjusted EPS to $0.77 per share in the first quarter compared to $0.64 per share in the same period last year. Our adjusted earnings increased 31% from Q1 last year to $102 million in Q1 this year. This increase is predominantly driven by the growth in our investments in CCH1 and our portfolio. Our focus on being more efficient with the deployment of equity capital has contributed to our higher adjusted ROE this quarter at 15.7% compared to 12.8% in the same period last year.

The marginal ROE that we are generating is making an impact, and we are benefiting from the reduction of share issuances that we need to fund the growth of our business. While we achieved growth in our adjusted EPS, our GAAP results included an HLBV loss related to the timing of tax credit sale proceeds distributed to tax equity investors, and we expect this HLBV accounting will fully reverse next quarter.

On the next slide, we have seen growth in our adjusted recurring net investment income of 29% to just over $100 million, and this source of income is not only generating a good base of recurring earnings, but is also growing into a larger component of our overall earnings relative to our other sources of income, as we illustrated on last quarter's call. Our gain on sale this quarter was $23 million, and as we often highlight, our gain on sale income does not increase quarter to quarter on a trend line.

While we do expect full-year gain on sale to be similar to last year, because of the higher level of gain on sale this quarter it is reasonable to expect lower levels of gain on sale for the remaining quarters of the year. The other component of our revenues that consist of upfront fees from CCH1 and other advisory-related fees continue to increase and contributed $9 million to our earnings this quarter. On the next slide, as we close transactions, they become managed assets, which are held either on our balance sheet directly or indirectly through CCH1. These transactions can also be held in securitization trusts where we typically hold a residual interest.

We generate upfront and ongoing income from these transactions, and a growing base results in more earnings. Our managed assets are now at $16.4 billion, up 13% year-over-year. We are continuing to see the high-quality performance of these assets that are reflective of our prudent underwriting, with an average annual realized loss rate of less than 10 basis points. The portfolio continues to be well diversified, and in addition to the diversity of asset classes, each of the individual investments also typically consists of multiple projects with uncorrelated cash flows.

The earnings power of our portfolio, demonstrated by our portfolio yield, has increased to 9.2% and is a result of the continued closing of transactions into our portfolio at higher yields. The CCH1 assets in which we hold 50% of the equity in our portfolio are now $2.3 billion and are providing a growing stream of ongoing management fees. We also just recently completed a private debt placement at CCH1, in which the notes were priced at a spread of 195 basis points to the 10-year Treasury, a tighter spread than the previous issuance.

This is further validation of the quality of the assets that we are investing in and a contributor to the increasing returns on our investments in CCH1. On the next slide, we are continuing to realize a lower cost of capital and successfully manage our liability structure, as demonstrated through the transactions that we executed in February. We issued a total of $1 billion in bonds, between a $400 million senior bond priced at 6% and a $600 million junior subnote priced at 7.125%. The proceeds of these transactions were used to retire our remaining $450 million senior bonds due 2027 with an 8% coupon and create additional liquidity for the upcoming $600 million maturity.

The outcome of these transactions resulted in a lower cost of capital, as the spread on our senior bonds improved 50 basis points and the subordination premium on the junior subnotes improved by 48 basis points from the most recent issuances. The maturity profile of our debt platform was significantly extended, the senior bond offering a 10-year maturity and on our junior subnote, a 30-year maturity. Adjusting for the upcoming 2026 maturity, which we have already reserved for with our existing liquidity, the weighted average maturity of our corporate term debt extended from 7.9 years to 12.8 years.

On the next slide, I have already made some brief comments on the topics outlined here, but these items really emphasize the benefits of our capital platform. First is our liquidity position. It is a real strength to our business to have the flexibility and timing to access the market and raise capital opportunistically and reduce our costs. We currently have $2.3 billion available, a portion of which we plan to use to pay off the $600 million of remaining notes due in June. After this maturity, our next corporate bond is not due until 2028.

Lastly, with our focus on funding more investment with the need for less additional equity, the use of CCH1, issuance of junior subnotes, and the higher reinvested portfolio cash resulted in no additional shares issued through our ATM in the first quarter, and we are on track to issue a minimum amount in 2026 based on our current funding expectations. When coupled with the growth in our managed assets, we are on track to meaningfully accelerate our profitability. I will now turn the call back to Jeff.

Jeffrey A. Lipson: Thanks, Chuck. Turning to slide 14, we display our sustainability and impact highlights noting our cumulative carbon count and water count numbers, reflecting the significant impact of our investment strategy. Let us wrap up on slide 15. We reiterate the themes of strong returns in the business, coupled with ongoing access to low-cost capital, that will continue to drive our business towards achieving our guidance levels. I will conclude by addressing the management changes announced today. First, I would like to welcome Christy Freer to our executive team as our Chief Legal Officer and look forward to working with Christy. Next, I want to acknowledge Marc T.

Pangburn for his tremendous contribution to HA Sustainable Infrastructure Capital, Inc. over the last 12 years, as Marc has been instrumental in closing countless important transactions that have led to our success. In his new role at GoodFinch, we will continue to work closely with Marc, and he will continue to provide value for HA Sustainable Infrastructure Capital, Inc. by optimizing our SunStrong business. Our prosperity has always been a function of numerous dedicated and talented individuals. The four executives identified in today's press release are all enormously talented and have already built teams and contributed significantly to HA Sustainable Infrastructure Capital, Inc.'s success.

I have full confidence in each of them and their expanded roles, and I am thrilled we have this depth of talent in our organization. Anne Marie Reynolds, who recently closed Neogenix, and Manny Halli Miriam, who recently closed SunZea, are extremely well qualified to be our Co-Chief Investment Officers. They both possess outstanding leadership qualities and significant commercial acumen as well as a track record of success. Daniella Shapiro, who has grown our BTM business significantly over the last four years, and Vero Amon, who has upgraded our risk management infrastructure, are both accomplished leaders who will do a tremendous job as our Co-Chief Risk Officers and Investment Committee members.

They both possess leadership, credit, and commercial skills extremely well suited to their critical roles. I am very excited by these executive appointments, and I congratulate all. Operator, please open the line for questions.

Operator: We will now open the call for questions. We will now begin the question and answer session. If you would like to ask a question, please press star and one. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from Vikram Bagri with Citi. Please state your question.

Vikram Bagri: Good evening, everyone. To start off, I wanted to dig into this new JV with Ameresco. I understand the return on that project is higher than where you have been tracking recently. Could you clarify what the yields or returns are on that investment? Also, if you can clarify, relative to your 30% equity interest, what would be the initial cash flow for your take of cash flow initially? And then finally, how do you see this JV evolve? Is this going to be a vehicle for consolidation or organic growth? Do you envision this JV to take the company public at some point, or Ameresco buys you out in the long term? And then I have a follow-up.

Thank you.

Jeffrey A. Lipson: Sure, Vikram. Thanks for the question. I would say the venture is primarily focused initially on organic growth. There may be consolidation over time in terms of buying other platforms, but that is not the principal objective. There is a critical mass of operating projects going in day one, and there is a very strong pipeline that the team there has developed, so it is a little bit more focused on organic growth. In the long term, whether we someday jointly take this public is much too early to say.

We are kicking it off this month, so again, we are focused on building this up into something very special, but the exit strategy is a little premature to talk about. In terms of our cash flow, the initial investment based on the operating projects is roughly $100 million. The other $300 million will go in as additional projects are developed. And then you asked about our cash flow coming back. That is not something we would disclose. Obviously, we have an expectation based on contracts of a certain amount of cash coming back, and it has a very strong cash yield, but we will not disclose that specifically.

Vikram Bagri: Got it. And then as a follow-up, I see you moved two receivables from category one to category two. Can you provide more details on that? Fully understanding that this is relatively small for you, I am just trying to understand in which market you are seeing some stress. Are these residential solar assets, utility scale, RNG? Are both the assets in the same sector? Any color you can share on that would be helpful. Thank you.

Charles W. Melko: Hey, Vikram. This is Chuck. To set the stage here, you definitely hit on the point that we have very small amounts in that category. It is not often you see too much moving into that category, and we still have 98% of our portfolio in the category one bucket. The item that moved in there is a project that is having some technical challenges with some of the equipment, and it needs a little bit more investment to correct the issue at hand with the equipment itself. There are various plans to get that project where it needs to be on our original economics, and we certainly think there is a good outlook for that.

We track projects every quarter, and when we see something moving in one direction that we need to pay attention to, we will not hesitate to put it in category two because we are paying attention to it.

Operator: Our next question comes from Christopher J. Dendrinos with RBC Capital Markets. Please state your question.

Christopher J. Dendrinos: Great. Thank you. Maybe to follow up on Vikram’s question and ask this more directly. There are some challenges going on in the residential space right now, and a few other folks have highlighted some credit challenges. Are you seeing any of that on your end, and is there any kind of risk exposure there that you could speak to?

Jeffrey A. Lipson: I would say generally, no. There is a bit of an uptick in some delinquencies in the residential sector generally. We are seeing a little bit of that in our portfolio as well, but it is tracking well within our original underwriting expectation of charge-offs, and our loans there are all performing. Literally, 100% of the loans in residential are performing. So, again, it is well within our underwriting guidelines, and we are not seeing stress in that portfolio.

Christopher J. Dendrinos: Got it. Thanks. And then, maybe as a follow-up here, the tightness in the tax equity markets has been broadly highlighted. Some of the banks are maybe taking a step back near term, waiting for Treasury clarity. Is that translating to any sort of funding opportunity for you where maybe there is a hole in the cap stack and you are able to fill it here?

Jeffrey A. Lipson: I am going to respond to the part about the tightness in the market in terms of refilling gaps in the capital stack. That is usually not the dynamic. Tax equity obviously serves a specific purpose in terms of the tax attributes, and it would be hard to substitute traditional HA Sustainable Infrastructure Capital, Inc. capital for that tranche. For the first part of the question around the tightness of tax equity, I am going to ask Susan to address it.

Susan D. Nickey: Thanks. A couple of comments. First, regarding tightness, it is important to note that reports from last year indicate the tax equity market actually grew significantly. The Crux platform tracks some of that data, and the total market increased 26% to $63 billion. Very importantly, the tax transfer market, which is still in its third year, grew 50% to $42 billion. At the end of the year, some corporates—now nearly 25% of Fortune 1000 companies are in the market—were dealing with their own understanding of where their corporate tax bill would settle with the change in the tax laws.

As we move into this year, some of that tightening that has been reported is easing, and we are seeing and hearing from stakeholders, including Crux, that there is starting to be more liquidity as corporate buyers know where they are settling out, providing some uplift. The second issue, which is a bit different, concerns the FEOC rules related to clean energy tax credits being transferred and not to foreign entity of concern ownership. That relates to 2026 tech-neutral tax credits, not 2025 or before, where substantial safe-harbored pipelines through 2023 will cover many players who already have their inventory set.

We expect the IRS and Treasury to continue issuing guidelines; people are waiting for that guidance to be clarified on tax credit ownership. There is precedent, but ambiguity leads some tax equity investors and banks to wait for clarity, which should come. That guidance is important for the whole industry—nuclear, carbon capture, geothermal, all the technologies need that guidance. Lastly, we want to keep working to expand the tax credit market given continuing growth in supply with all the different projects being built across technologies and manufacturing. HA Sustainable Infrastructure Capital, Inc. is working with the industry and American Clean Power to develop standardization documents to help facilitate growing the corporate tax credit market.

Christopher J. Dendrinos: Thanks. Maybe just a quick follow-up: will this have any bearing on the investment pace that you are going at right now?

Susan D. Nickey: Not in our pipeline. As we discussed, our sponsors—certainly across grid-connected, and as Sunrun and others have mentioned—have safe-harbored their pipelines through 2030, if not the next two years. So it would not directly impact what we are seeing in terms of growth.

Operator: Our next question comes from Benjamin Joseph Kallo with Baird. Please state your question.

Benjamin Joseph Kallo: Hi. Good evening. My first question is just on CCH1 and the capacity left there under that agreement. And then, following that, has anything changed with your partner in their appetite to invest more after that first tranche?

Jeffrey A. Lipson: Thanks, Ben. On the second part of the question, no. Our partner has continued to express significant enthusiasm around the partnership, and as evidenced by the upsize late last year, has shown a strong willingness to continue to invest. As we disclosed on page 11, the assets are $2.3 billion. The commitments are a bit higher than that for some things that are in CCH1 that just have not funded yet. As we mentioned last quarter, as structured right now and given our pipeline, we certainly have enough capacity for this year. And we are working on a CCH2. We have started to commence some activity there.

I cannot say too much in terms of detail, but we certainly intend to have that up and going by the time CCH1 capacity has been utilized.

Charles W. Melko: I will also add some context for the capacity that we have. We have roughly about $5 billion of capacity available, and that is comprised of the equity commitments between us and KKR of roughly about $3 billion. As we mentioned on our call here, we have issued some debt at CCH1. Keeping our leverage ratio at CCH1 under 1x—anywhere between 0.5x to 1.0x debt to equity—gets you to a total of $5 billion, compared to the $2.3 billion that we currently have in there.

Benjamin Joseph Kallo: Okay, great. On your cost of capital, could you talk about how much you think you can reduce your cost of capital? I know you have done a lot. But going from 2025, I think on slide 17 you had 5.8% interest expense over average debt balance; it ticked up in Q1. Could you explain that a bit, and how much more you think you can reduce your total cost of capital going forward?

Charles W. Melko: The uptick you are seeing in Q1 is largely attributable to the issuance that we have done on the junior subordinated notes. They carry a little bit higher of a coupon, but from an overall cost of capital standpoint, because we get 50% equity credit for purposes of our leverage ratios with the rating agencies, we issue fewer shares. So while we are paying a slightly higher coupon in interest expense, we are issuing less equity. Overall, it is a benefit to our cost of capital. If you took out from that 6.1% the interest expense related to those hybrids, the debt cost is relatively flat, around 5.8% or so compared to last year.

On how much further it can go, we have seen a benefit from reduction of spreads on the debt that we are issuing, in large part due to our efforts getting out there and talking to the investment grade investor market. We have had some success with that. We are still relatively new to the market, so there is a little bit of improvement we could see on the spread. But as you know, spreads across the board are a little tight in the investment-grade market, and they can only go so far. With the guidance we have out there, do we need this to go lower? No, we absolutely do not.

With the margins and the yields we are seeing on our assets and the equity efficiency we are achieving, we do not need it to go down further to increase our returns.

Operator: A reminder to all participants: to ask a question, please press star and one on your telephone keypad. Our next question comes from Maheep Mandloi with Mizuho Securities. Please state your question.

Maheep Mandloi: Thanks for taking the questions. Maybe just on the investment with Ameresco’s Neogenix, if you could talk about the rationale—what motivated you to invest? Is it somewhat similar to what we have seen with the residential solar side, which helps with ITC, or something else that helps you capture more value for the RNG assets?

Jeffrey A. Lipson: Sure. Thanks, Maheep. As I mentioned in the prepared remarks, some of the attributes that really attracted us here were, first and foremost, the partnership we have with Ameresco and the trust and familiarity we have with their team. It is very consistent with how we have built the business with programmatic partners. Here, we were able to diligence all of the investments day one. RNG is something we are very familiar with, and we have been very active in RNG, as you know, so it is an asset class we well understood.

There was great alignment with the Ameresco team on what we want to do with this business going forward—what the relative structure of the parties would be in terms of ownership and cash flows. It is a real opportunity for us to do something perhaps slightly different than we have done in the past, but with very similar attributes, and with more upside than most of what we do at the project-level investing.

Maheep Mandloi: Appreciate it. On the risk of overcomplicating it, Ameresco talked about $2 million to $4 million of net income to you for this year from Neogenix. Is that the framework we should think about and build upon going forward, or how should we think about the modeling here?

Jeffrey A. Lipson: From a HA Sustainable Infrastructure Capital, Inc. perspective, our accounting, of course, is different than Ameresco’s. Our accounting here will be simply an equity method investment, consistent with what we have done in the past. We underwrote this in terms of cash-on-cash IRR, and we are going to account for it consistent with how we have accounted for our other equity method investments. There is no pass-through of direct income as part of our accounting.

Charles W. Melko: Maheep, I think Ameresco’s release for that number simply took 30% of the total EBITDA expectations for the project. As we have mentioned, this is an investment that is very similar to what we do, where it is a structured equity investment. When you have structured equity investments, we are focused on the cash-on-cash returns. There are targeted returns that we go after, and it is not as simple as just taking 30% of the total project EBITDA.

Operator: Our next question comes from Noah Duke Kaye with Oppenheimer & Co. Please state your question.

Noah Duke Kaye: Thanks for taking the questions, and hope you are all well. First, on the 12-month pipeline—you replenished this quarter over quarter, still greater than $6.5 billion. It looks like the largest percentage increase, and therefore dollar increase, was in grid-connected assets, which tracks with the increase in grid-scale renewables being deployed. Can you comment on what drove that uptick? Are these primarily mezz debt, pref equity, or of a different nature?

Jeffrey A. Lipson: Thanks, Noah. I always caution against too much precision on pipeline disclosure—it is greater than $6.5 billion and it is a 12-month pipeline, so there is always a little bit of judgment involved. But to answer your question, grid-connected does have a very strong pipeline. The vast majority of it is with programmatic partners that HA Sustainable Infrastructure Capital, Inc. has worked with before, and the majority is preferred equity on solar projects. That is the majority of that slice of the pipeline.

Noah Duke Kaye: Very helpful. Thanks. This was a quarter with zero ATM issuance. The progress from the company on becoming more capital-light—we are all seeing it. I think the deck says minimal equity issuance expected for 2026. Not asking you to put a finer point on that, but from an equity perspective, how close do you feel this business is to a self-funding model?

Jeffrey A. Lipson: I would say very close. You can interpret “minimal” as, if the volume of fundings this year is within the expectation that we set, that could very well be zero. If we are a little more successful than that estimate and end up doing $4 billion to $5 billion, then certainly you would see us issue more equity—but that is accretive equity, and that would reflect a really big year in terms of new originations. That is a good scenario as well. But if we hit the expectation range that we established, we are already self-funding.

Charles W. Melko: I will also add that we have seen an uptick in transaction closings, and looking forward, we do expect some growth in that number. If you go back to the slide we prepared last quarter showing how far each dollar of equity goes, we are making much better progress on how little equity we need to issue when making our fundings. In the future, if we are issuing equity, the percentage of that equity relative to total fundings should be a much lower percentage than you have seen historically.

Operator: Ladies and gentlemen, that was the last question for today. The conference call of HA Sustainable Infrastructure Capital, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.

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