Item 8.01 Other Events.
On March 6, 2017, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (we, us, our or the
Company) filed a preliminary prospectus supplement relating to the offer and sale of shares of common stock (the Offering) pursuant to an effective registration statement on Form S-3 (333-215229). In contemplation of this
Offering, we are filing this Current Report on Form 8-K to report the following:
First Quarter 2017 Update
From January 1, 2017 to March 3, 2017, we completed over $250 million in transactions, including making a $144 million investment in
February 2017 to acquire over 4,000 acres of land that is leased under long-term contracts to over 20 individual solar projects. The projects which are part of the February land acquisition have aggregate capacity of over 690 megawatts direct
current.
We financed a portion of the February land acquisition with an approximately $100 million loan agreement, which Hannon Armstrong
Capital, LLC, our operating subsidiary (the Borrower), entered into with Deutsche Bank AG (the Loan Agreement). The Loan Agreement is secured by the membership interests in the subsidiaries of the Borrower that own direct or
indirect interests in the projects and all personal property of such subsidiaries. We anticipate entering into long-term nonrecourse debt in the same manner as we did with our HASI Sustainable Yield Bond 2015-1 prior to the Loan Agreement expiring
in August 2017.
Residential Solar Portfolio Update
We have approximately $289 million of loans which are supported by portfolios of residential solar leases, held in bankruptcy remote special
purpose entities (SPEs) that are performing in line with our expectations. SunPower Corporation, who originated these consumer leases and who we rely on for certain limited indemnities, warranties and other obligations such as servicing
the leases, recently announced that they are not in compliance, and do not expect to be in compliance for 2017, with a debt-to-EBITDA leverage covenant in one of their loan agreements, due in part to a restructuring they have undertaken as result of
changes in the broader solar market. According to SunPowers disclosure, they are not in default under this loan which has an outstanding balance of $5 million that is cash collateralized. The SPEs, and not SunPower, are the source of repayment
under our loans. SunPowers obligations, as servicer, consist primarily of billing, monitoring payments by homeowners to a third-party lockbox and customer service.
In connection with the loans described above, we borrowed approximately $248 million in nonrecourse debt that is secured by this residential
solar portfolio. This nonrecourse debt included the same debt-to-EBITDA covenant referred to above to monitor changes in SunPowers credit, as is typical for a servicer. As a result, our lenders are entitled to apply approximately $1 million of
the cash flow after payment of principal and interest to us each quarter to further reduce the principal balance on our loan. We continue to monitor the situation and anticipating having further discussions with our lenders and with SunPower but at
the present time, do not anticipate any other impact.
Legal Opinions
Prior to and in contemplation of the Offering, we have received the legal opinions of Clifford Chance US LLP (the
Legal Opinion) relating to the shares being legally issued, fully paid, and nonassessable when issued. A copy of the Legal Opinion, which is based on and subject to the qualifications and assumptions set forth
therein, is attached to this Form 8-K as Exhibit 5.1. Prior to and in contemplation of the Offering, we have also received the tax opinion of Clifford Chance US LLP (the Tax Opinion) to the effect that (x) commencing
with our taxable year ended December 31, 2013, we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and our current and proposed method of operation
will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and (y) the statements set forth or incorporated by reference in the prospectus used in the Offering under the caption
U.S. Federal Income Tax Considerations, as modified and supplemented by the statements in the Companys annual report on Form 10-K for the year ended December 31, 2016 (the Form 10-K) under the captions
Risks Related to Our Taxation as a REIT and U.S. Federal Income Tax Legislation, are correct in all material respects. A copy of the Tax Opinion which is based on and subject to the additional limitations and qualifications
disclosed therein, is attached to this Form 8-K as Exhibit 8.1.