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Operator
a balanced view of upside opportunities and downside risks, there are scenarios that would result in earnings above our guidance, including a second investment grade rating, which would presumably reduce our debt costs, or expansion of our investment platform resulting in higher transaction volumes, or improved return on underlying investments. Each of these items would have a positive impact on our margin. In summary, this guidance reflects an enthusiastic and confident vision of our company and strategy over the next three years. And we remain optimistic that we have the talent, client relationships, and market opportunity that will result in continued growth and prosperity. Turning to page five, I'd like to reinforce that for many years we have consistently accomplished our disclosed objectives. On our investor day in March of 2023, We discussed several strategic priorities, and in each case, kept our promise. We executed on a seamless CEO and CFO transition, invested at higher yields without incremental risk, expanded our fuels, transport, and nature segment, continued to access diversified sources of debt, were placed on positive outlook by Fitch, discontinued our re-election, and migrated the business to be less reliant on capital markets via capital-led initiatives and dividend policies. It is also worth noting that we expect to achieve our prior earnings guidance in 2024, and we are meeting our dividend guidance with today's announcement. We have an unblemished track record of meeting or exceeding our guidance. Achieving our disclosed objectives reflects both the predictability of our lower-risk business model and the reliability of our messaging. Turning to page six, I'd like to address four items that represent our most frequent investor questions. beginning with policy. We are attentives of public policy and engage in advocacy efforts. However, we do not fundamentally believe that public policy will have a meaningful impact on our business over the guidance period. Our company has been successful in administrations from either party and thrived prior to the IRA. In addition, clean energy demand continues to grow exponentially, including at the state and corporate level, and the levelized cost of energy supports further development. Our company is also well positioned to pivot to a variety of investment alternatives, which further provides comfort that public policy changes are not likely to be impactful to our profitability. Regarding interest rate risk, we have prudently navigated this period of interest volatility, which began in 2022. Since that time, we have not wavered in our execution, implementing a strategy of pricing our investments to produce our targeted margins. These higher-yielding investments do not include higher risk, but rather reflect broad industry adaptation to higher rates. We've also deployed a hedging program, which has allowed us to navigate the higher rate environment successfully and minimize the risk of rates moving further upward. Next, we are often asked about project delays. However, the risk of potential short-term delays in certain asset classes is mitigated by the diversity of our investment strategy, as evidenced by our 2023 investment volumes and our current pipeline. and long-term economic fundamentals will allow our clients to maintain active pipelines. Finally, our ability to fund record volumes in 2023 is proof positive that our liquidity and funding strategy is sound. Our risk to capital markets volatility has largely been muted for 2024 as we have already pre-financed much of our pipeline with recent debt transactions. If markets are attractive, we will consider early refinancing of upcoming maturities but are otherwise in a strong position related to funding needs over the next 12 months. In summary, and as reflected by our new guidance, we believe the business remains well positioned to address any perceived headwinds. And with that, I'd like to turn the call over to Mark.
Fitch
Thank you, Jeff. I'll start on slide seven. Underpinning the guidance Jeff discussed is our pipeline of over $5 billion, which is highly diversified across three markets, eight asset classes, over 30 programmatic clients, and over 150 unique transactions, a portion of which represent greater than $25 billion of Project CapEx from our 10 largest clients. We continue to be excited about growth in all three markets and the growing number of new clients that we can serve. Our pipeline has grown significantly from $3 billion in 2020 to greater than $5 billion in 2024, a reflection of our success and organizational structure that supports programmatic transactions. A unique element of our business is our ability to pivot between asset classes, seeking the most attractive risk-adjusted returns and adapting to market conditions. Our annual closings since 2020 confirm the power of a diverse asset strategy as our volumes are consistent while our growth in the underlying end markets are not. We continue to see a vastly expanded opportunity set in front of us, driven by the underlying demand in all of our markets for energy transition assets and services. Moving on to slide eight, for full year 2023, we are reporting distributable EPS of $2.23. We closed a record volume of new transactions at 2.3 billion. Year over year, our volumes increased 28%. Distributable NII increased 21%. and gain on sale increased 15%. Notably, our portfolio grew 44%, providing a much larger base for long-term recurring income. And looking to the top right, this portfolio growth is at higher yields with incremental on-balance sheet investments yielding greater than 9%, a material shift up relative to prior years. Continuing to the next slide, we have a track record of stable growth on all notable metrics Since 2019, we have grown our distributable EPS by a 12% CAGR, distributable NII by a 28% CAGR, and gain on sale by a 23% CAGR. The total managed assets has almost doubled to $12.3 billion, highlighting the increasing scale in the business. One key ratio reflecting the benefit of scale is the growth in our key performance metrics relative to SG&A. Year over year, combined NAI and gain on sale increased by 19%, while SG&A only increased by 2%. While we are happy with this result directionally, we believe there are more benefits to gain as we scale. On slide 10, our portfolio yield increased to 7.9%, while the portfolio grew by 1.9 billion. This growth compares to the previous three-year annual average of 700 million. In the fourth quarter, We funded 609 million of new and previously closed investments and anticipate funding additional commitments of 500 million through 2024. Additionally, with the growth in FTN and community solar, our portfolio has attained a higher level of diversification in 2023. On slide 11, our focus on profitable growth has contributed to maintaining healthy margins throughout 2023 with a portfolio yield of 7.9 compared to interest expense of 5.0. In 23, we made incremental investments at an average yield greater than 9%, with new cost of debt, 7%. And we expect that over time, we will benefit from improved cost of funds if the second investment grade rating can be attained. To provide another data point, in our recent corporate debt offering materials, we identified a near-term investment opportunities, which are anticipated to yield 11%. This results in ROEs of mid to high teens relative to where the offering priced. Looking along the bottom of the slide, in past quarters, we've provided additional context to address questions on our 25 and 26 bond refinancings. As a reminder, the base rate for the expected bond refinancings are currently hedged around 3%. Based on market spreads, a theoretical refinancing would result in a blended cost of debt of 5.6%, resulting in a 12.5% ROE. Turning to slide 12, our funding platform was critical to our success in 2023. Starting on the top left with over 930 million, our liquidity remains robust. The total liquidity includes approximately 300 million of corporate unsecured debt and non-recourse secured debt, both of which closed in January. Our current leverage is two times debt to equity and 92% is either fixed or hedged. Over the past 12 months, we've raised $1.9 billion of debt, a vast majority of which was used to fund portfolio growth. Importantly, we utilized all sources of debt available to us, highlighting our diverse funding platform. The recent high yield offering, secured debt raise, and existing liquidity substantially address our growth debt capital needs for 2024. We will consider opportunistic windows for refinancing or extending our 25 debt maturities throughout the course of this year. While liquidity for balance sheet funding remains strong, we continue to progress our capital light initiatives to further diversify our funding platform. In summary, our execution to date, current liquidity, and go-forward plan position us extremely well to capitalize on the opportunity ahead. I'll now turn the call back to Jeff.
Operator
Thanks, Mark. Turning to slide 13, we summarize a few of our sustainability and impact highlights from 2023. including our alignment with the EU taxonomy and other items related to advocacy, disclosure, and philanthropic priorities, as well as summarizing the impact of our investments as measured by our carbon count metric. We'll conclude on slide 14. As I reflect on my first year as CEO of HACI, I am extremely proud of our many accomplishments in 2023, and I remain confident that our three-year business planning process has concluded that all of the components of long-term success are in place. As I said on Investor Day back in March, HACI is the preeminent climate pure play with a differentiated strategy that allows investors to access the growth trajectory of the energy transition in a low risk business model. This strategy of focusing on climate positive asset level investing with the leading sponsors and developers continues to be successful and provide ongoing shareholder value. Our business model has proven resilient despite many headwinds, and our new guidance reflects a path forward to consistent profitability and less reliance on capital markets. I thank our dedicated team for their outstanding achievements in 2023 and their enthusiasm and commitment to our future success. Thank you for joining the call, and I'll ask the operator to open the line for questions.
Mark
Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. The participants use speaker equipment and may be necessary to pick up your handset before pressing the star key. Our first question is from Brian Lee with Goldman Sachs. Please proceed with your question.
Brian Lee
Hey, good afternoon, everyone. Thanks for taking the questions. Maybe just starting off with the longer-term three-year earnings growth outlook, can you kind of give us a sense? I don't know if you think about it in that context, but you mentioned how portfolio yields have moved higher. You gave us an indication of kind of what the cost of capital is today. What are you making into your sort of medium to longer-term outlook? maybe tail end of that forecast in terms of where you think yields kind of settle out and then where also you think cost of capital and then obviously spreads could ultimately sort of settle in that forecast horizon.
Operator
So thanks for the question, Brian. I would say in our base case, we primarily use the forward curve rather than making any of our own predictions related to rates. And from a credit spread perspective, we're using credit spreads on both the investment side and the debt side fairly similar to where they are today and projecting that forward. You know, with obviously some range on that as we build out the guidance, and that's in part why guidance has some range to it. But I would say as our general baseline, those are the numbers we're using for rates and credit spreads.
Brian Lee
Okay. Again, my question was more around, you know, it sounds like there's some opportunistic assets, and I know there's been some segment makeshift, you know, namely more FTN versus historical. Like, is there opportunity in that three-year horizon to kind of drive portfolio yields higher and hence, you know, earn kind of a higher, you know, return spread from that vantage point? I guess that was sort of... the angle I was taking with that question, just give it a big shift in potential for, I guess, refinancing at the same time.
Operator
Sure. And I think I did, and I'll just reiterate what I said in my prepared remarks. I think I did say there's upside to guidance, and it's mostly around debt costs could be lower than we forecasted, especially if we get that second investment grade rating. Volumes could be higher, particularly if we go into some new markets that are not necessarily into our base plan, but that we're thinking about. And then the third one I identified was that the return on the individual investment level could be higher than we forecasted, which I think is the one that's responsive to your question. So yes, there is an opportunity for yields over the next three years to be a bit wider than we forecasted, and that would be an upside to our guidance.
Brian Lee
Okay, fair enough. And then maybe one more question for me, and I'll pass it along. There's been a lot made in the press about some of the challenges in the residential solar segment in the U.S., and I know you have some hot exposure there. Can you remind us, as you head into 2024, where that mix lies in your portfolio, what you're embedding in the near-term view as to additional growth there? uh with some of these um you know publicized bankruptcies and uh developers having some challenges in the marketplace uh how are you sort of navigating that credit risk what's what's embedded in kind of your your portfolio exposure if you will thank you sure and maybe what i'll do brian is i'll start out and and mark and susan may add to my answer as well but i would say as a baseline
Operator
First of all, that our ResiSolar portfolio itself is performing very well, and we are at the asset level, and the homeowners continue to make payments on their leases, and we are very comfortable with our exposure, and it is performing. I will say, obviously, some of the sponsors are going through some challenges, mostly related to cost structure and other business challenges at the corporate level, And we've been very supportive working with them. We were very involved with SunPower over the past several weeks, getting various waivers in place, as they reported this morning. And we remain a supportive partner. We do think it will be an ongoing portion of our business, but a relatively modest portion of the business going forward, given some of those challenges. So I do think we will close certain transactions in 2024 related to ResuSolar, very similar in risk profile to what we've done in the past. But if there's a bit of a slowdown there as those companies do some restructuring and different things and maybe see lower demand, that won't have a meaningful impact on our business and it really won't affect what we've put out there in terms of guidance.
Fitch
I think, Jeff, you covered that well. Just two additional details. All of our investments, whether it is within Resi Solar or other asset classes, are structured to have some level of replaceability of the operator. And so that is the primary means by which our risk is really isolated at the asset level. The other, and I think Jeff covered the portfolio exposure already, in terms of the pipeline, it's really just not a material part of our pipeline. As Jeff mentioned, we do anticipate it will continue to be a part of our go-forward business on a new closing basis. But as you look at the expansion and diversification of our business across multiple different asset classes, it has shrunk in terms of its pipeline exposure for us.
Brian Lee
Okay, great. Appreciate all the color. I'll pass it on. Thank you.
Mark
Thanks, Brian. Our next question is from Chris Cutler with B. Reilly Securities. Please proceed with your question.
Brian
Hi, guys. Thanks for taking my questions. Maybe you could just break down some of the assumptions around the growth components here going from 24 to 26 within the guidance between distributable NII and some of the episodic pieces. I know in the past you've kind of given a little bit more granularity there, but just curious how we should be thinking about, you know, from those two components standpoint.
Fitch
Sure, thanks, Chris. So I think the primary area to focus on when trying to think about our business as either NII or gain on sale as it relates to guidance is that we do not need to see any incremental growth in gain on sale to achieve guidance. So we'll, of course, continue to work to maximize that to the best we can, but it is not baked into guidance.
Brian
Got it. That's great to hear. And then maybe just housekeeping, can you talk about the gap income from equity method investments there? That was, you know, a lot higher than it's ever been. So I'm just kind of curious, you know, if you could walk us through that piece.
Fitch
Sure. So the primary driver for that is the HLBV pass-through from some of our solar projects. that generally happens at initiation of an investment, primarily related to the tax credits coming through.
Brian
Okay, that makes sense. I'll hop in the queue. Thanks, guys.
Fitch
Thanks, Chris. Thank you.
Mark
Our next question is from Noah Kay. It's Oppenheimer and Company. Please proceed with your question.
Noah Kay
Thanks for taking the questions. You know, I think If we had looked back to the start of 2023 and looked to where 2023 ended, we would have been surprised that fuels, transport, and nature was 30% of the origination mix. Clearly, you're giving some information on the pipeline mix, as always, but talk to us about the incremental growers this year. Where are you bullish by asset class and You know, what, if I think back to your Investor Day presentation, are some watch items in terms of, you know, either new asset classes or maturing asset classes where you expect more participation?
spk00
Hey, thanks, Mel. This is Susan Nicky. As we talked about in our Investor Day presentation, we're very client-centric focused, and not only with our existing clients, but as we add new clients and sectors, We look for the leading strategic and industrial companies that will do not only the first transaction but programmatic repeats of transactions in existing asset classes, but also as they themselves expand into new sectors. I see that's what you see represented as we look going forward. As we look in the pipeline, that follows from a top-down approach of looking at where our clients are forecasting their growth and then how we fit into that capital stack in their projects. So we have a diversified base and are seeing strong demand in energy as well as fuel as companies and states want to continue to see growth in demand but also in decarbonization.
Operator
And I'd add one thing to Susan's answer and looking at page seven, we hopefully have the deck with you there. Our cadence is such that we have different leading asset classes in subsequent years. And I actually don't think we ourselves would have necessarily, in your hypothetical, if we dialed back to the beginning of 23, predicted that FTN would have been 30%, community solar 18%. The pace of closings, we obviously know our pipeline very well, but the pace of closings is outside of our control. And therefore, that short-term prediction of what's going to hit in 24 can be a little difficult, but think of our pipeline as more than two times what we need to be successful, and therefore it gives us the confidence that enough will hit that we will meet our guidance.
Noah Kay
Thanks, Jeff and Susan. This is slightly around clarifying the cadence of distributable EPS. If I look at the dividend guidance for this year of 166, you know, if we just took the midpoint of the payout ratio guidance, it would, you know, imply distributable U.S. for 2024 a fair bit north of the prior midpoint. And so without putting too much of a fine point on it and understanding EPS can be lumpy, should we think about a potentially higher growth rate in 2024 versus the 8% to 10% based off of your, you know, pipeline in funding visibility?
Operator
No, I don't think so. It certainly could turn out that way, but that's not the way I would propose you think about it. I do think if we stick somewhere near the midpoint of the guidance over the next three years and have dividend increases that I can't quite articulate right now publicly, of course, but something in in terms of future dividend increases, the math would be that you would end up in that 60 to 70% through 24, 5, and 6. So I think that's the math on how that was built.
Noah Kay
Go ahead, Mark.
Fitch
Sorry. Sure, no worries. You mentioned midpoint of payout. I would think of it more as a midpoint of EPS with payout fluctuating to achieve the guidelines that Jeff already laid out. Yep.
Noah Kay
Yep, so that would argue for a little bit higher payout in 2024. Last sort of housekeeping questions. You know, it looked like portfolio cash inflows all in were down slightly year over year. Primary delta or one of them seemed to be collections from the equity method affiliates. So just trying to understand the timing on that. Is there a catch-up in 2024? Any color there would be helpful.
Fitch
Sure. Sure. So just as a, for some context, the total portfolio collections was higher and around $500 million, and that is relative to an average portfolio of $5.3 billion, which is roughly a 10% cash yield, and that has been somewhat consistent over time. The two primary drivers that you mentioned, as we've discussed before, for new transactions, the cash expectation during the tax equity window is a little bit lower, and then it flips to be higher thereafter, and given the substantial growth in the portfolio, that dynamic's on display here. The other dynamic, which we've actually talked about a few times throughout the course of the year, and you might have seen in some other asset owners, is wind performance. In 2023 wind, we've seen poor wind performance. It was a P99 year, which means we would not expect it to continue. And additionally, given our preference, we expected, as you already identified, a delay of distributions and not a loss. So, yes, we do see line of sight into those starting to catch up, and we've already reflected any updates into our guidance and portfolio yield. Very helpful.
Operator
Sorry, go ahead, Jeff. Sorry. I just want to make sure we're not talking past each other on guidance and there's good understanding. So to get more specific on your math question a moment ago, if we hit the midpoint of our guidance in 2024, that would be 9% growth, which would be 243. If I divide the 166 dividend by 243, I get 68%, which is right in that 60% to 70% range. Yep. Hopefully that holds together. I just want to make sure we're not talking past each other.
Noah Kay
Yeah, absolutely. It's at the higher end of the payout, but that makes perfect sense. Thanks, Jack.
Mark
Okay. Our next question is from Davis Sunderland with Baird. Please proceed with your question.
Noah Kay
Hey, guys. Thanks for taking my question. Brian and Noah kind of already asked in a different roundabout way, so I don't mean to beat a dead horse here, but I guess maybe asking...
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