Welcome everybody, thank you for being here today in Annapolis for HASI's first Investor Day. I'm Neha Gaddam, I lead Investor Relations. Before we begin, I'd like to remind you that some of the comments made here today are forward-looking statements subject to risks and uncertainties described in the Risk Factors section of our Form 10-K and filings with the SEC, actual results may differ materially from those stated. Today's discussions also include some non-GAAP measures, a reconciliation to GAAP and non-GAAP are available on our investor presentation on our investor website. All right. Today, on our agenda, we have a great roster of speakers from our leadership team, and they will be covering various aspects of our company.
The presentation's going to last approximately two hours, followed by about a half hour of Q&A where our management team, the executive team, will be available to answer any questions. Then we'll break for lunch. We're very excited to be here today and share our company story with you. I will turn this over to Jeff Lipson, our CEO, who will start us off with some opening remarks.
Thanks. Thanks, Neha, welcome to the first full day of spring in beautiful Annapolis, Maryland. We're so excited to have you guys here today, for those of you joining on the webcast as well. As Neha said, in 10 years as a public company, this is our first Investor Day, and it's a great time for it as the opportunity for the company has never been better. We have prepared what we expect to be a very informative and detailed presentation about our very special company. I wanna highlight a few things before we get started. The first, and hopefully you saw a press release last week, we've rebranded the company as HASI. We call ourselves HASI. We no longer use Hannon Armstrong, or Hannon, or HA. By the way, it's HASI. It's not HASI.
There's no Z, and it's not a weather forecast. It's HASI, rhymes with classy. The other thing I'd like to talk about, which is a little more substantive before we get into the detailed description of our company, is current events. I think I would be remiss if I didn't address some of the things going on in the economy right now. The recent bank failures have put a stress on the banking system, particularly the mid-size and regional banks, and that's clearly top of mind for investors. As many of you know, I was a bank CEO before I came to HASI, and I also spent a good part of my career working in corporate treasury at banks, doing things like managing liquidity and looking at uninsured deposits. I think I have good perspective on this.
Let me kind of break this down in three ways in terms of addressing it. The first is the direct impact on our company, which is very limited, if any. We keep our deposits at J.P. Morgan and Wells Fargo. The bank credit facilities that we have, including our Term Loan A and our revolving line of credit, are all committed through 2025. In this Term Loan A case is fully funded. The banks in those in those facilities are among the largest and most stable banks in the world. We don't really have any direct impact. There's nothing in our liability platform that looks like a deposit. There's no call on our liquidity that could happen. In terms of direct impact, very limited. The second item I'd like to address is enterprise risk management.
The ERM of the banks that have failed is coming under tremendous scrutiny, and I know ERM is now top of mind for many investors as well. I can report that we have a very, very advanced enterprise risk management, particularly for a company our size. We started in 2018 with PwC and have designed an ERM process that's quite detailed. We've worked closely with our board and adopted best practices, and we meet regularly to discuss risk, identify risk, measure risk, mitigate risk. Risk management is always top of mind in our company. The number one risk in risk management is always liquidity. I think we're very well positioned from an ERM perspective. The third item I'd like to address related to current events is the wider impact. What's the wider impact here?
I mentioned I have good perspective on these issues, having been a bank CEO, but that does not allow me to predict the future with any degree of certainty. I think there are a number of ways this could play out. We could continue to see a flow from the mid-size and regional banks into the money center banks. We could see a pullback in lending. We could see wider impacts on the credit markets and the capital markets, as we've seen in fits and starts already. We could see the federal regulators redesign the banking regime and the regulatory framework relatively quickly here. Any of those things are possible. The important thing for us is to be positioned for all of them.
I think we, again, we've positioned the liquidity of our company that any of those scenarios can play out, and we still think we'll be in good shape. The other thing to keep in mind is that in the segment of the market in which we participate, lending is still economic. It's still saving money. It's still a priority of many of the big banks to lend in the clean energy space. There is some possibility that we'll be less impacted in our segment of the market than other segments. Again, this is very early days of the fallout from these bank failures. Our priority is just position the company from a risk management perspective to deal with any of these scenarios.
Neha just presented the agenda, now I wanna take a moment to tell you what we hope you learn today. Jeff Eckel will come up in a few moments and talk about how well-positioned the company is and our resilient business model. I really wanna make number two on this list a point of emphasis. Our team is talented, diverse, and mission-driven. One of the great benefits of an investor day is to allow the investor and analyst community to meet more of our team. Jeff Eckel and myself are well-known to the investor and analyst community, but we have over 100 professionals that really drive our business. As you saw in Neha's agenda, we have 11 different speakers today, which I think will be a great opportunity for everyone to really see the depth of talent that we have.
That doesn't even include our chief human resources officer, our chief legal officer, and our chief technology officer, all critical executives, but we simply didn't have time to include them as speakers today. I will give a brief bio of each speaker as they begin their remarks. You'll learn a simplified vision of our strategy as I'll walk you through. Marc Pangburn will talk about our business model, our capital raising, our liabilities, dividends, and some thoughts on valuation. The remainder of the team will talk about our end markets, our investment process, and our underwriting. Hopefully by the end of the day, you'll learn the five things on this list.
Acknowledging that most people that are here or listening in are familiar with the company, but it never hurts to start with a few basic facts just to ground everybody, including that we have $10 billion of managed assets. We're a 42-year-old company and have been public since 2013. We're about to celebrate our 10th anniversary next month. We provided a 15% annual total shareholder return in those 10 years we've been public, and we've had very significant impact in terms of carbon emissions, and we've measured. Likewise, at the bottom of the slide, our financial performance has been consistent and strong. Here are some notes about the last five years. Our EPS is up 11% per year, our NII 28% per year, and our portfolio 21% per year. We're coming into this period of opportunity with a tremendous track record already.
Now let's begin the formal part of the presentation, and I'll ask Jeff Eckel to come forward. For 24 years, Jeff was the CEO of HASI. His vision, his investment thesis, and his ability to execute on this strategy has resulted in the company we're proudly describing today. He was ahead of his time in understanding the capital needs of the companies and projects facilitating the energy transition, and his leadership over his tenure has been exemplary. Those of us who work for him are so happy he stayed on as Executive Chair, and we're benefiting from his ongoing guidance. Jeff.
Thanks, Jeff. Is this off? No. When you said, 24 years early start, I might have got started a little too early. This was a bit of a rocky road getting this business going. We're at a point where sun sets on my role as CEO, and it starts with Jeff and this his leadership, and we absolutely have the right CEO at this time. I'm super excited for the team to get some exposure today. It's an extraordinary group. As board, and Jeff, good comments on ERM. We have a really strong board that is very focused on risk management. Yeah, everybody likes sustainability and is sympathetic with that theme.
This is a really strong board. I look forward to supporting the team in my role as chairman. 40 years at Hannon, it spans my time here in the 80s, the 90s, all of the 2000s. We've learned three things. Well, no, we learned more than that, but t here are three foundational principles that are built into this structure that I think are just key to understanding the business. The first is partner with the top-tier clients in each asset class. Maybe we're in seven, eight, nine , 10 different asset classes. We always wanna work with a top-tier entity in each asset class. They tend to stay in business longer. They have the same vision about the future for climate solutions. When there are problems, they fix the problems.
These are engineering companies, not financial engineering companies. These are the kind of clients that we can prosper with long term. The second is climate solutions investing is profitable, it's safe, it's growing, it's an enormous opportunity. There's another aspect to this, and Jeff alluded to it, the mission-driven people who are attracted to it. We've been able to have people move. Nobody moves anymore for a job. Move to Annapolis because they wanna work in this. They just simply need to work in this kind of a company, and they appreciate that we're taking this as seriously as any other firm in the industry. It's good to have mission-oriented people on the team. Finally, permanent capital, a very important distinction. When we went public, everybody was worried about fast followers and going to erode our business.
10 years later, I'd take a few slow followers. Permanent capital is the kind of capital that our clients want. These assets are 20, 30, 40, 50-year assets. They want a partner that's invested for the long term, and that's only possible through a permanent capital structure such as HASI. It's a subtle distinction, but it's a really important distinction to our clients. Over the 10 years, as Jeff has mentioned, we've produced good results, continued growth, what's this, an 11% CAGR. It wasn't so easy producing these results. We get there through the diversity of our end markets, diversity of our clients, diversity of the assets. A couple of the headwinds that we faced. When we went public, nobody cared about climate positive, climate solutions.
Maybe there was Ben Block at Ardsley who was somewhat familiar with it. Nobody really cared. I would talk on and on about sustainability, and it was like, "Forget it. We just wanna know what your dividend yield's gonna be." That has certainly changed, but it has been a hard slog to get this message out there. Second, we've had our political headwinds with the White House hostile to climate solutions, and frankly, hostile to science in general. We prospered during those times. We'll take advantage of public policy, and I'll talk about that in a bit, but our business isn't reliant on support of public policy.
Finally, as we've all suffered through COVID and supply chain bottlenecks, inflation and, of course, now, relatively high and rapid escalation of short-term interest rates. Now we have SVB and a whole bunch of other small banks that are having challenges. It's yet another crisis. Jeff did a fantastic job of articulating why we'll be in good shape during yet another crisis. The next slide is usually where people talk about the total addressable market. We busted Google searching for the right slide of our total addressable market. You can get BNEF statistics on renewable energy, Lawrence Livermore National Laboratory statistics on energy efficiency, but it really doesn't capture all of the markets we're in, and it's really a challenge to define what our TAM is.
Instead, we went and said, "Let's just estimate this. We are gonna have orders of magnitude of opportunities for us to invest in across all the carbon displacing industries that we can invest in. We don't perhaps need to identify a total addressable market." It is so large, and you're gonna hear some great presentations about this, that with the Inflation Reduction Act, so many more markets are addressable for us than have ever been in our 10-year history. This opportunity is just fantastic. With that, I'm gonna turn it back to Jeff to talk about our strategy.
Thanks, Jeff. Jeff has articulated the opportunity and how well-positioned the company is. I think well-positioned is a good description. Sometimes we're a company that's well-positioned but not well understood. I think that's a good description of our company, well-positioned and not well understood. That's part of the impetus for even having an investor day, is we sometimes struggle with getting our message out in terms of a good understanding of our company. Part of the feedback we get is, "You guys should simplify the story. Simplify the way you talk about your company. I think that would be very beneficial." I hear that a lot.
In my four-plus years as CFO, I had over 800 investor meetings and analyst meetings. I did listen very carefully to the questions that were asked and the themes that were brought up. My remarks here in the next few minutes were really informed by all those meetings. This is really an attempt, in many ways, to simplify the story. In simplifying the story, let's start with the three most important pillars of our business: climate, clients, assets. Climate, clients, assets. If you understand those three pillars, you already have made some progress in a good understanding of our company. Let's break them down a bit. Climate. As we've said many times, we're the first public company with an exclusively climate positive investment strategy, and we believe we're still the pre-eminent climate pure play company investment firm.
We're investing capital to facilitate the energy transition. As Jeff alluded to, the energy transition is probably the largest macroeconomic trend of this century, and we're providing the capital to facilitate that transition. We measure and report the CarbonCount, the carbon emissions avoided of each of our investments, which is a huge credibility issue. When you say you're climate positive, anybody can say that. We report on it, and we prove it. Climate, this pillar, is in many ways what makes our company unique and differentiated. You'll hear me use that word differentiated quite a bit. Differentiated strategies are the strategies of companies that survive, and we have a differentiated strategy. Climate is our first pillar. Our second pillar is clients. Here, differentiation comes up again. We have a programmatic partnership approach to the business.
We become strategic partners of our clients, not just some random capital provider. We have mouse pads around the office that have our value, our vision, purpose, and values. One of the values that's on every mouse pad in the company is solve client problems. I think that gives you some insight into the mindset of the company. We believe our job is to solve client problems, and it's that approach to the business that results in these strong partnerships. Likewise, we never compete with our clients. Again, makes them a better partner. They think of us as a better partner, and again, a differentiator because many of the competing capital providers in other areas of their business compete with our clients.
Later on, Susan Nickey will talk even in more detail about our client relationships and how we manage them, and we'll have a very interesting testimonial video where you'll hear from our clients directly what they think of HASI. The third pillar of our business is assets. To understand our company, you must understand that we invest at the asset level. We typically don't invest in platforms or companies. We invest in real infrastructure assets that generate income. These are proven technologies. We don't invest at the venture stage, and we don't take technology risk. The result of that is a non-cyclical, lower risk, predictable business. Investing at the asset level creates a very predictable set of cash flows. Climate, clients, assets, a very simple way to understand our business. One step towards simplifying the story.
Let's take another step towards simplifying the story. We have a very diverse profile of investments. Everybody, I think, is familiar with our pie chart, with all the asset classes on it. Having that diverse portfolio is a real strength of the business. It creates consistency in our investment pattern because one of those asset classes tends to be always active and available, more than one. It creates a lot of consistency. It creates a lack of concentration risk, so it creates a lower risk profile. All those asset classes, when it gets back to this notion of being not a well understood company, creates an obstacle, I think, in some prospective investors' minds of, "Do I need to really understand all these asset classes to understand the business? That's very intimidating.
Maybe I don't wanna take the time to look at this company. I think the best way to simplify that is to talk about the attributes that are consistent across all those asset classes. That's what I'm gonna do now. There's six attributes that are in virtually all of our investments. The first three will not surprise you unless I've lost you already. It's climate, clients, assets. These are climate positive investments with top-tier clients, and they're invested in real assets. That's three attributes. The other three are first contracted cash flows. In virtually all of our investments, there's a contracted cash flow between some provider of energy and some end user, and we're primarily there to monetize that cash flow. Next, I touched on a little already. Proven technologies, consistent across the portfolio. These are wind, solar, storage, RNG.
These are proven technologies, a common attribute across the business. The sixth attribute is there's a high-quality incented offtaker. By incented, I mean is the offtaker is typically saving money through the project in which they're invested with us and our partner, and therefore they're highly motivated to continue to make the payment. They're high quality offtakers to begin with, whether they be individual pools of high quality individuals or creditworthy companies. Rich Santoroski, later on in the presentation, is going to provide a level of detail of our offtakers that we've never presented before, I think you'll find that interesting. We have the three pillars, and we have the six attributes. Hopefully, the simplification is going along well here. Let me take one more slide on simplification, and that's what I call myth busting.
In all these hundreds and hundreds of meetings that I've had with investors, there are, again, thematic questions that are asked in the context of, "This sounds a little complicated to me, help me understand this." I'm gonna go back and forth between what I call items of perceived complexity about our business that I hear all the time, and how we might put that very succinctly into a simplified framework. The first is no direct peers, in many ways the most important one. Because in the first 30 seconds of looking at a company, an investor is always trying to figure out who are the peers. The peers create a framework for how I should think about this company and who I should compare this company to. In our case, we don't have obvious direct peers.
We don't have public companies doing precisely what we do. That's the starting point in many ways for some of the confusion and this lack of understanding. We've given this a lot of thought over the years, and we've arrived at this conclusion that when you don't have any direct peers, the best alternative is a larger cross-sectional peer group of companies that have some similar attributes, similar end markets, similar corporate structures. Mark, when he gets up here, is gonna talk about a cross-sectional peer group that we suggest you think about when thinking about our company, because we do not have direct peers. On a very similar theme in the first 30 seconds of looking at a company, one asks, "What are you? Are you a finance company, an investment firm, an energy company?
Really, what is the company? In our case, we refer to ourselves as an investment firm. We think that's the most accurate description of our company. We get asked a lot about, "Well, you have both debt and equity investments. We're used to seeing especially lenders that do all loans or alternative asset managers that many of them do all equity. You invest in both debt and equity. How should we think about that?" The simplified framework here, again, is the common attributes. Those attributes I had up a moment ago are consistent across both the debt and equity portfolio. In many cases, the risk profile is actually very similar as well, particularly for the balance sheet debt and equity, where we're in mezzanine debt or structured or preferred equity, which ends up being a very similar risk profile.
It's subordinate to senior debt, but senior to common equity, so the risk profiles between our debt and equity often aren't very much different. I just talked about we have several different asset classes, and the simplified framework there again are the six common attributes I went through a moment ago. You finance your business both on and off balance sheet. Help me understand how that works. Well, again, there's a very simplified framework here that the lower yielding investments we securitize because we can't finance them officially on our balance sheet. They work better on another balance sheet. We take a gain. The higher yielding investments we fund ourselves, leave on our balance sheet, and take many, many years of net investment income. Very simple. We elect REIT status.
A lot of folks get very caught up in what does that really mean for the company. I would say the simplified framework is it's simply a tax election. We almost never make a strategic decision or an investment decision related to REIT compliance. Simply a tax election. If we chose to not elect REIT status and perhaps be a C corp, we think there are alternative paths to having a very tax-efficient structure given the investments that we're involved in. The REIT really doesn't drive anything strategically. We get told often your accounting's very complex. I think the only element of our accounting that's complex is that for our equity method investments, we need to use HLBV, which is indeed complex, but it's GAAP and we're required to use it.
The simplified framework here is that we provide non-GAAP measures that are quite simple, and they simplify what GAAP requires. We'll have a very short video later in the presentation discussing our non-GAAP measures and why we make the adjustment. The final one is cash flow and dividend. Sometimes we're told your cash flow statement's kind of hard to follow and we can't really tie it to dividends as well as we'd like to. We've already simplified the framework here. Starting in the second quarter of 2022, we have a very simple disclosed sources and uses schedule that we tie directly to dividends. We've already simplified the framework there. Hopefully that busted some myths.
Hopefully, these items of perceived complexity that I've heard many, many times in all these meetings now have a very simplified framework that could be well understood. I wanna create a bridge between this notion of simplification and what many of my colleagues are gonna talk about. They're gonna get up here and talk about some very complex energy projects and complex underwriting and the expertise that's necessary to run our business. I wanna create a mental bridge between I was up here talking about all the simplification, and they're talking about all this complexity. I think the simple mental bridge there is we have a simple business model but not a simple business. Simple business model, as I just described. The underlying investments themselves are indeed complex, and that's a good thing. That creates barriers to entry.
That creates an expertise that is hard to replicate, and many of my colleagues will talk about that. That's your mental bridge between simplification and complexity. Let me talk about one last thing now that we have, hopefully, a well-understood company, and that's our value proposition. People in the room, people on the phone evaluate companies all the time, and they probably have the same framework I think about, which is companies need a reason for being. They need a reason to exist. They need to be filling a void. They need to be creating some value, or they're not going to be sustainable for the long term. We certainly believe our company provides a very unique value proposition, in our case, to clients and shareholders. Let's start with clients. Let's go through these. We're a trusted partner of our clients.
We engage in these programmatic relationships that provide efficiencies for multiple transactions. We have market and policy expertise that's valued, and we're flexible in permanent capital, as Jeff alluded to. Think of trust, efficiency, expertise, and flexibility. In a short while, I mentioned this once already, we will have a testimonial video from our clients. I want you to listen very carefully to senior executives at our clients use the word trust, efficiency, expertise, and flexibility over and over again when describing why they work with HASI. It's very powerful, and it is a unique value proposition. We also provide a unique value proposition to shareholders. We provide access to the energy transition in a low-risk structure. There's obviously a lot of investor money that wants to invest in the energy transition, given how large the trend is, as we've talked about already.
To do that in a low-risk structure, we're really the best alternative. That's a unique value proposition. It's also a non-cyclical business model, which is very valued. We know we may be coming into some macroeconomic headwinds here and perhaps even a recession. Our model is fundamentally non-cyclical. Diverse end markets, we talked about a little bit already. If you want access to the energy transition in a non-cyclical way with diversity. We 're, again, a unique value proposition. The other thing we can say about ourselves at the moment is we are appealing as a growth stock. We have a double-digit guidance on EPS growth for the next few years. We could also be considered an income stock. We have a 5%-8% growth rate target in our dividend over the next few years.
Given where we're trading right now, we could be considered, at least for the moment, a value stock with our PE at very low levels, given some of the distress in the market. Again, a very unique value proposition that would be hard for investors to replicate with another company. Hopefully, that created a good understanding of the company and a simplification as well as what our value proposition is. Now I'd like to bring up Marc Pangburn. Marc, as you know, became CEO on March 1st. He joined the company in 2013 and has worked on our investment team, rising to the position of Co-Chief Investment Officer. During that time, among his many accomplishments, building our balance sheet, was he developed and executed on our resi solar strategy.
Prior to HASI, Marc spent time with a solar developer, and before that, was in the Private Capital Investors group at New York Life. Marc.
Thank you, Jeff. Thank you all for being here today. You've heard Jeff and Jeff cover the continuity of our strategy and the massive opportunity ahead. I'll talk about how we're adapting to that opportunity, some additional discussion and disclosures to provide context for how we think about the business, finally, commentary on metric and peer group. We'll start with how we're adapting to the opportunity. I think some of those TAM numbers that Jeff didn't wanna use ended up here. Again, that's just a subset of the opportunity. The energy transition is by far the largest investment opportunity of our lifetime. HASI is extremely well-positioned. We are using a few different sources and graphs to provide context for what that growth could be. We're doing that purposely because no one can attach a specific growth number.
That being said, when considering our leadership role, we're very well-positioned to maintain or grow our market share. That's driven by growth in our current clients, the increasing number of prospective new clients, and the maturation of asset classes that fit our de-risked investment profile. If we can take just a moment to cover some HASI 101. Growth starts for us with transactions closed, yet these don't drive the business forward. Earnings drive the business forward. I'll take some time to connect the dots between the two. Transactions that are closed and funded are portfolio additions. Transactions that are closed but not funded are tracked as such and will become portfolio additions when funded. Finally, a portion of our transactions are sold through our securitization platform, which Nate will touch on later today. Now on to the income side.
First, NII, or net investment income. It's generated by the portfolio, net of interest costs. At $180 million in 2022, it's our primary form of income. Secondly, gain on sale. Gain on sale relates to the sale of investments to our securitization trusts, fees, and residual interest income. Then finally, we're calling out securitization income or SI. Securitization income is the recurring income portion of gain on sale. We're calling it out today because it's a growing portion of gain on sale, and the syndication initiative that Dan will touch on later today would further drive growth in this recurring income. If you've been following us for some time, other than this call-out for SI, there's really nothing new.
The takeaway I'll leave you with on this slide is that a vast majority of the NII that we've estimated to achieve our guidance relates to previously closed transactions. Additionally, the gain on sale business remains very strong for us, but we don't need to grow this business to achieve our guidance. Talked a little bit about growth. You're gonna hear a lot about growth today throughout the presentation. I'd like to cover something that's much more important to us, and that's profitability. We're showing here our illustrative business model. We've talked about it on our earnings calls. We like to talk about it because it's exactly how we think about profitability. We're targeting a long-term 10%-12% ROE.
Given the nature of our investments being focused around long-term cash flowing assets, this provides a very stable base in which to grow and continue EPS growth. I'll touch on some specifics. We're a spread investor. We adjust our target return expectations for current market conditions. Rates are up. Rates are up for everybody, not just HASI, and we're adjusting accordingly. We've identified on our recent earnings calls that our asset yields are up as well. We'll talk about rates for a moment next. The 10-year T as of Friday was 15 basis points higher than its average since 2000. Our business didn't begin when it was below 1%. It didn't end when it was above 4%. Again, just to reiterate, we adjust our return expectations on new investments accordingly. This is fantastic. Rates are up. We're still profitable.
That also means the discount rates are up for the underlying assets, which brings up the question of the opportunity set ahead. Can the economics of the underlying assets support a higher interest rate environment? Again, we are absolutely continuing to see a strong, profitable investment opportunity set in front of us, both in the short term and the long run. The energy transition is accelerating. It'll play out over multiple decades. Its long-term prospects aren't impeded by short-term fluctuations in interest rates, utility rates, power prices, and financing market disruptions. The long-term economic tailwinds for these assets remain strong, driven primarily by cost curves. This also doesn't mean we're immune to market movements. We all have to adapt to volatility to maintain profitability so we can capitalize on the opportunity ahead. Let's touch on some of the tools we're utilizing to maintain our profitability.
I've talked about asset yields. They're up. I'll move on. Our diversified funding platform. Prior to COVID, we primarily funded ourselves with secured debt. In 2020 and 2021, high-yield debt. In 2022, bank debt. In 2023, we're evaluating all of our options, and we anticipate an expanded use of secured debt again. Finally, our hedging activities. We're implementing swaps to extend our liability duration out to the lower cost long end of the yield curve, which also has the benefit of de-risking the business given the long-term nature of our cash flows. I'm going to touch on two of these items a bit more in a moment, but before I do, let me just reiterate, the thing I'd like to leave you with on this slide is that the opportunity set remains very strong. We're going to circle back to this frequently throughout our presentation. Excuse me.
Let's spend some time on our diversified funding platform. Since going public, we've raised approximately $14 billion of capital across eight different funding structures. Our diversified funding platform and its ability to shift between different markets is a powerful tool in maintaining our profitability, in addition to our client relationships, which Susan will touch on in a moment. However, on this slide, what I'd like to do is draw your attention to the right on liquidity. Jeff already touched on it a little bit, but I'd like to provide two additional comments to provide some context. We view the past three years as being a relatively high volatility time in the markets, and we've adjusted our liquidity position accordingly. We talk about it on our quarterly earnings call, so I'm not going to get into too much numbers 'cause those are already out there.
I will add that the funding needs we have are largely in our control or highly predictable. They're generally related to investments, which are both in our control or largely in our control and very predictable, or refinancings, which we've disclosed and talked about frequently. Secondly, our hedging activities. Given the market volatility, we have opportunistically entered into $1.4 billion of notional swap amounts relating primarily to our Term Loan A and the expected refinancing of our 2026 bonds. As of 12/31, we have $431 million of floating rate debt. For $400 million of this, we've fixed out the underlying base rate for 10 years. I also talked about profitability. On the previous slide, I showed our illustrative business model. On our Q3 earnings call, we adjusted that business model to account for a higher interest rate environment.
We've now locked in a majority of those rates needed to achieve our ROE targets, meaningfully de-risking future EPS growth. Finally, we've also materially reduced our duration gap. We're comfortable with our position today, but we'll continue to evaluate additional hedging activities on an opportunistic basis. Let me dive in on one specific component of our funding platform, equity raises. When we raise capital to make accretive investments, we have two primary considerations in mind. The first is a target leverage level to maintain our investment-grade rating. We're investment grade rated by Moody's. We think the business is well-positioned in maintaining that rating, and we'll continue to work with the other agencies to seek additional investment-grade ratings over time. Second, most importantly, these raises are accretive to our current shareholders.
There are a number of formulas to describe what it means to be accretive. To us, it means, can we take this capital and invest it into profitable opportunities that drive future EPS growth? To date, during my time today, I focused primarily on earnings, but we've also grown the dividend, and we expect to continue to grow the dividend. There are a number of companies that participate in the energy transition exclusively focused on growth. We believe we're best positioned by continuing to grow the dividend at a slower rate than earnings, leading to a gradual decline in the payout ratio. In the long term, our goal is to source a majority of our equity requirements through retained earnings while also growing the dividend.
We believe the business is best managed to a 50%-60% payout ratio, leading to a balance of income to our shareholders and retain capital for the growing opportunity ahead. We're excited to talk to you about our long-term plans today. That's generally not something that fits well into a quarterly earnings call cadence. Much more importantly, we're excited to execute on those plans, and that starts with cash. We've received a positive reception to date on our new cash disclosure. We'll continue to provide this to investors. We like this disclosure as it ties to our cash flow statement and is based on actual results. That being said, these numbers are in the past, and we're here to provide context for the future. We've talked about the investment profile of our investments.
What I'd like to identify here is that our long-term cash flow profile will be driven by the objectives I talked about on the previous slide. To achieve our goals, by definition, this line will go up, cash flow available for reinvestment. When I said that we'd like to source the majority of our equity requirements through retained earnings, this is the source. Now we're gonna shift topics a bit from the business itself to commentary on metric and peer group. We're not valued today using a consistent metric or a consistent peer group, so we're providing our thoughts for your consideration. We'll start with the metric itself. Jumping right to the conclusion, we feel we're best managed, measured on a PE basis. We manage the business to EPS growth and ROE targets. We work every day to maximize these metrics.
We report extensively on these metrics. We're compensated based on these metrics. Additionally, as new companies in the energy transition mature, we anticipate an increased use of earnings-based metrics, which will further enhance our peer group options. On peer group, as Jeff mentioned, we don't have a direct peer. We do have a number of similarities with other participants in the energy transition. On the left, we have a high degree of overlap in our end markets with renewables equipment and energy services. What HASI provides is a de-risked entry point focused on cash flowing assets. On the right, these are entities that raise capital, invest capital, and earn on those investments in much different ways. What HASI provides is exclusive exposure to the full high-growth energy transition. Where do we fit in?
In the absence of a direct peer, a direct peer group, we feel the best approach would be to take a broad swath of companies that have an overlap with our business. Fundamentally, we believe we should be valued on a PE basis at a number that represents a blend between these different categories. We're coming to the end of my prepared remarks, but before I turn it back to Jeff, I just want to circle back to a few items. Jeff Eckel established our profitable and resilient business model. Jeff Lipson provided a framework to take that profitability into the future. Susan Nickey will cover momentarily how we're best positioned to maintain or grow our market share. Manny, Danielle, and Annmarie will talk about their markets that are generating our profitable opportunity set.
Finally, I look forward to working with you all to adapt our capital structure to the growing opportunity ahead. Thank you very much for your time today.
Thanks, Marc. Great job. Next, I'd like to call on Susan Nickey, who's our chief client officer, and just think of that title. How many companies have their most senior executives go by the title Chief Client Officer? Tells you how valuable our client relationships are. Susan joined HASI in 2014 after having served many senior roles across the renewables industry. At HASI, she leads the business development team and manages client relationships and leads our advocacy efforts. Susan is one of the most respected individuals in our industry. Recently, she was named Chair-Elect of the American Clean Power Association board, the nation's leading clean energy trade group. Susan.
Thanks, Jeff. Good morning. I am so excited to be here today to talk to you about our relentless focus on our clients. To kick off, let's first hear directly from them.
We're moving into a real transformational moment for this sector.
The residential solar market here in the U.S. is very large, has great potential, and we're just getting started.
The renewable transformation we are going through is a once-in-a-lifetime opportunity.
For our industry to accomplish what we all hope it will, during the course of the next decade, it's gonna need to deploy $60 billion-$80 billion a year worth of new infrastructure at least.
We really need a partner that can be with us at that same scale and there for the long term.
We started with one wind project out in Texas 13 years ago. From that crystal grew one of the biggest clean energy companies in the United States.
AES today is a leading developer of renewable projects. Those are solar, wind, and energy storage projects.
ENGIE is focused on large-scale wind, solar, and storage projects throughout North America and the globe. We're doing battery storage projects in both hosted at customer facilities as well as standalone large-scale battery projects. We also are working with universities across the country and the school districts on energy efficiency programs as well.
Ameresco is a cleantech integrator. We're engaged in the deployment of energy efficiency, resiliency, and multiple technologies across renewable energy. We're also an asset owner, developer and operator.
At SunPower, our mission is to make a difference in the lives of consumers all across the United States by helping them adopt clean, renewable energy.
The needs of our customers are constantly changing. The technologies are advancing quickly, but the way that projects can be executed and the way that they can be financed moves just as quickly. HASI's strengths go beyond flexibility. The management team is very attentive to the needs of the customer, especially when it comes to a large relationship like we have. Having access to the right people at the right time is of critical importance, and HASI does that.
The team at HASI has been as engaged in advocacy around the policies that shape our industry as much as any other financing institution. As a group of people who have been here helping to create the clean energy industry over the last three decades, they've got a true understanding of how much goes into creating a policy environment that can nurture growth, that also produces good returns and a safe investing environment for their stakeholders.
We choose HASI because we really believe in the partnership we have with them. Our partnership with HASI goes beyond the transactions that we're signing with them.
Over the past three years, ENGIE North America and HASI have really grown our relationship. We find a common ground and common trust, and that has allowed us to be much more open in our working relationship. They can be there with us in both the good and the bad, and they're there as solution providers.
What I would say about HASI is that they were a partner with us as we were small and struggling to sort out how to develop our first lease products, and they've been as powerful a partner for us as we've gotten larger and much more fast-growing.
As a publicly traded company that's not regulated as a bank or any other type of financing entity, HASI has fundamentally structured itself to maximize operating leverage, pursue new opportunities, and actually execute on behalf of its customers in ways that its competitors just simply can't do.
They're not just focused on how to build a financial services business that's successful exclusively. They're also focused on the bigger picture of how do we work together to really make a difference here in the U.S. on renewable energy. You really need a financial partner that understands that there's a fair amount of variance, and yet at the end of the day, we have to create a product that makes solar affordable for every single consumer in the U.S.
What sets HASI apart is that they have a team of professionals that get in there when the times are challenging. They bring the resources to bear, they bring the knowledge to bear in order to help the situation. For the next 5-10 years, I see our relationship growing. We are gonna more than double our operating base on the renewable side, I think the only thing that's gonna happen is the HASI and ENGIE relationship is gonna continue to grow.
The time is now for the expansion of business here, and we're really looking forward to working with HASI, growing our business together in the future.
It's been apparent to us always that as we've worked on projects with HASI, they see virtues in the same things that we do. They value the types of environmental features that we seek to design into our projects. They value the social outcomes of the investments that we make in communities like West Virginia or transitioning fossil communities like the one where our Daggett project is being executed, and that they also do things right.
The transition to a cleaner energy future requires pioneers, requires innovators like HASI. The partnership between companies like this is what is going to make this future possible.
Wow! Very inspirational for me, that's why we at HASI are excited every day about fulfilling our mission. A big thanks to the executives of our clients for taking time to share their thoughts with you today. As demonstrated by this video, clients are at the center of everything we do at HASI. Our clients conveyed why they choose HASI as their partner. A question you often ask of us. Our client focus means we are passionate about accelerating their businesses to grow and continue to make sure this energy transition accelerates. HASI has institutionalized a programmatic client-centric approach, which has established a strong franchise which will continue to grow and evolve with our clients. What we all just heard, I will continue to talk about throughout my section, is why HASI's strategy is aligned with where our clients are going.
What we all heard from them and their leadership is how they are innovating with each of their individual companies, again, to capitalize on this unprecedented energy transition, which has kicked off and is going to continue to have tremendous growth every day in front of us. They also all conveyed what they need is a financial partner who can scale and help solve their needs as they move forward. That's HASI. Who are our top-tier clients? As you can see here on the left of this chart, you probably recognize most, if not all, of these names. They're the strategics, the world-class engineering and industrial companies who are making the energy transition happen. They have established track records with proven technologies and experienced leadership.
As Jeff said, we've had decades of experience, and we talked about our lessons learned, and that is why our focus is investing with companies who have scalable and repeatable business models in deploying clean energy assets and technologies. We believe that by embedding our financing solutions, we add value in working with them. You can see how this translates as we look at the middle and the second column here, and we've demonstrated that we can programmatically reduce transaction friction so they can focus on their core businesses, and we can continue to translate well in driving financing solutions across existing asset classes, but also as we move forward now with new business sectors and technologies.
We have a demonstrated track record, right here, of building and scaling within existing business lines, but also taking those financing structures and replicating them across multiple business sectors. The right-hand side here highlights our current portfolio. Look at the depth, breadth, and diversity of all those assets, and those are just what's currently in our portfolio. Those numbers would be obviously a lot larger when you look at the decades here that we have invested in finances asset classes. Our clients also appreciate and respect that often we have been in certain sectors, particularly behind the meter in energy efficiency and other asset classes where they are moving and expanding to meet the end user demand. What this does is provides one-stop shopping that facilitates that deep mutual understanding across our organizations and also fosters, importantly, innovation.
Before we dive into the macro trends that are highlighted here on this slide, why is that so important even more with HASI's strategic and programmatic client relationships? It's because, as we talked about, our clients are realigning their businesses for this new energy era. We get an early view of where their business are headed, and we are with them alongside, coming up and brainstorming the new financing solutions that will ultimately be needed when those assets come to the point of being built and developed, so we can provide and embed our financing solutions. Now let's go to these macro trends.
There is no going back from the paradigm shift of the convergence of energy technologies and macro factors, which now for the first time are allowing for the integration of digitalization, data, and IT software solutions that will enable, finally, a decentralized business model, resiliency, and new products and services for end use by the customers. These customers are demanding more clean energy, clean fuels to decarbonize their footprint and meet their net zero goals. Our clients are the companies who are engineering, both behind the meter and at the grid scale, engineering these new integrated solutions that these clients are asking for. 24/7 resilient clean energy, clean fuels, green hydrogen, microgrids, EV infrastructure, and smart energy-efficient buildings.
Again, the scale and acceleration of technology continues to drive down the cost for clean energy, so it will continue to be lower cost than fossil alternatives and very importantly, with increased affordability. Sadly, overnight, we did experience the Ukraine war, again emphasizing the utmost importance of energy reliability and energy security. As we see, the energy transition is now facing these macro tailwinds, and our client-centric focus plays well against this backdrop. We now have, for the first time, an acceleration that is driven by the U.S. enacting long-term energy policy. This makes the U.S. the world's most attractive country to invest in. It's also we've adopted an industrialization policy, which is incenting the building out of local manufacturing, which will help de-risk our supply chain.
The tax credits enacted and other incentives not only will accelerate the growth of wind and solar, but they immediately improved the economics of new emerging sectors. That includes standalone storage, green hydrogen, transportation. Also we have the electrification of the built environment for residential, C&I, for cities, for transportation, but are also benefiting from other incentives that were adopted last year. Our clients are positioned to quickly pivot to meet the demand for both green electrons and green molecules. We are positioned right alongside of them. Our clients are ambitious, as you heard. We can only provide this morning a snippet of their collective visions about how they are transforming their individual businesses to align with the energy transition and to grow and maintain their market shares. Our business outlook and our business plan and our outlook are very focused on being aligned with our partners.
First, understanding the market opportunity, understanding where our business strategies or our clients' business strategies are headed, and then how to provide the financing solutions that will embed in their businesses to scale and grow along with them. We are selective in our partnerships, specifically to be able to execute efficiently over time and to build on success. We have confidence in our pipeline forecast because it's derived from the strength of our programmatic client partnerships. As you heard, their growth aspirations are tremendous. We are solving one of their most fundamental priorities, which is having a finance partner who can continue to grow and expand with their ambitions. This is the cornerstone of our business approach: alignment on climate, developing strategic partnerships with our clients, and investing alongside of them in assets that generate recurring returns over a long-term timeframe. This approach, as importantly, delivers built-in growth.
We believe our focus on a client-centric programmatic approach across all segments with those world-class industry leaders embeds us in this tremendous growth trajectory ahead. We've heard common themes today from our clients on why they value the relationship with HASI. Let's peel that back, and I'd like to focus more granularly. First, we are more than a financial investor. We are a long-term partner, and long is decades. It's in the asset lives we invest in, 20, 30 years plus. It's in our individual relationships across the industry. It's with our long-term historic partners, as you saw, and it will be in the future with our newer partnerships by the nature of the investments that we make. To recap, why do our partners choose us as their financial partner? First, trust. You've heard our clients say the value of HASI as a trusted financial partner.
We do not compete with our clients. We are committed to funding their projects. Execution certainty and flexible capital. It's really so important so that they can have the capital that will accelerate at the right risk-adjusted cost to grow their businesses. Creativity, another key differentiator described of the HASI team in finding clients solutions. Our extensive industry expertise and knowledge. This lets us be proactive in our portfolio management engagement in an increasingly complex energy business. Going above and beyond. HASI was one of the 13 founding members of the American Clean Power Association, known as ACP. The powerful organization now that can help drive the policies we need for a long-term energy, clean energy to continue to grow and prosper. That was evidenced last year by the comprehensive historic legislation that was passed. Money talks. We bring a financial investor perspective to those conversations.
As the chair- elect of ACP, I look forward to continuing to advocate proactively for an economically prosperous long-term clean energy industry that will be enabled by more such policies. We need to that to attract the trillions of capital required for this energy transition and infrastructure investment. When we say client-centric, we mean HASI is about a value add, full life cycle partner. For sure, when our clients said we are just getting started in the chance and opportunity of a lifetime, we thank you for joining us.
Great job, Susan. I hope everybody really enjoyed that video. Next, we're going to hear from our three managing directors who run each of our business segments, beginning with Manny Haile-Mariam. Manny runs our grid-connected investment team. He joined HASI in 2021. Prior to joining HASI, Manny was with GE Energy Financial Services for 15 years and held multiple executive roles in principal investments, capital markets, and portfolio management. Manny also spent four years in Asia and has invested around the world. Manny.
Thank you, Jeff. Good morning, everyone. I will cover our grid-connected market, how we play within the market, and some thoughts around our outlook. Our grid-connected business is made up of our utility scale, wind, solar, and storage investments. As of the end of 2022, there was 250 GW of installed capacity within this market across the country. Over the last 10 years, there was well over 250% increase in installed capacity within this market. Now, as tremendous as that growth trajectory has been, this market still makes up less than 20% of the power generation mix within this country, and there is still significant potential for growth.
In fact, what keeps us excited is that the fundamentals and the momentum for this market has never been stronger, and it is well-positioned to transform the power generation mix within this country and play a critical role in decarbonization. Looking ahead, by 2030, there is 400 gigawatts of incremental grid-connected renewable capacity forecasted. To put that into perspective, that is 2.5 times what's been built over the same period in the last seven years. Tremendous potential for growth. As you see on the right-hand side, we highlight some of the key catalysts that are driving this growth. The first one is technology. Technology improvements have helped reduce the cost of manufacturing by well over 60%, making renewables not only clean, but more cost-effective than any other alternative. The second one is corporates and utilities' demand for clean generation.
Grid-connected renewable generation is essential for corporates and utilities to be able to meet their renewable energy targets, which has led to high demand in power purchase agreements, helping facilitate long-term contracts for grid-connected projects. Lastly, as you've heard Susan Nickey and Jeff Eckel talk about, we have an energy policy with the Inflation Reduction Act, providing over 10 years of stability and certainty to large energy companies that need to deploy capital and take risk, helping accelerate the development and build-out of renewable transactions.
With these fundamentals, there's well over $150 billion of capital required by 2030, setting this market up as a great opportunity for HASI to invest in a market with great potential for growth, allowing us to scale our business, a market that will have a meaningful impact on climate change, and play an essential role in reducing the impact of carbon from power generation, and a market that could potentially add 1.1 million jobs by 2030 to local communities across the country. In terms of our strategy, as both Jeff and Susan touched on, it's all centered around our clients and investments focused on climate solution. Our clients are some of the top energy companies in the industry with sophistication and expertise in development, construction, operations, trading, asset management.
As Jeff talked about, our investments are focused at the asset level, typically ensuring they're de-risked with no development risks. Our clients typically come to us with the need to recycle capital to grow their business. We try to differentiate ourselves and add value by understanding the objective of our clients on every single transaction, being solution-oriented, with the goal of offering financing solutions that allows them to optimize value or solve problems. In addition, after we close an investment, we leverage the expertise we have within our portfolio management team to be a strong partner during the operational phase of our projects. You'll hear Rich talk about that as he covers our portfolio management section. Our current grid business has $1.7 billion in investments. Our investments have strong contracts with investment-grade off-takers, diversified across nine different markets.
Looking ahead, over the next 12 months, we've got over $2 billion of identified pipelines of investments with some of the top energy companies in the industry. Our outlook, as I mentioned, are strong given the fundamentals we've talked about. There are some headwinds, particularly with respect to delays in interconnection queue lines, still some supply chain constraints. With that said, there is 135 gigawatts of announced projects, either in late-stage development or construction. The pipeline of projects that require financing is robust. The technology transformations and cost reductions we've talked about will continue, and more and more projects will get built for economic reasons rather than to meet renewable portfolio standards.
Lastly, you will see us participate with key market stakeholders to be a key advocate to the build-out of transmission, as that is a key factor to enabling the strong penetration of renewables and a critical factor as we evaluate new opportunities. To wrap it up, we are very excited about this market, excited about our partnership with our clients. We believe we're well-positioned to take advantage of the tremendous growth we see ahead. Thank you.
Thanks, Manny. The next segment of our business we'll be happy to talk about is our behind-the-meter investments, which is managed by Daniela Shapiro. Daniela joined us in 2022. Prior to joining HASI, she was the CFO of Guzman Energy and held various other executive positions in clean energy, including at SoCore Energy in most recent years. In addition to her corporate executive roles, Daniela worked 10 years in banking, deploying capital in energy and infrastructure assets, including as a tax equity investor. Daniela is also an electrical engineer. Daniela.
Thank you, Jeff. Good morning, everyone. Still with us? Hang in there. There's lunch at the end of the tunnel. I'm very excited to be here today and talk to you about our behind-the-meter business. We've created a very good business in this segment, and I will start by talking about the futures of this business and then where we are today. Our investments on this business are mostly characterized by portfolios that have to aggregate a number of smaller projects to achieve economies of scale. We also have in our portfolio a diverse stream of revenues, the majority of which is highly contracted with high-quality creditors or creditworthy entities. Another characteristic of these portfolios is that they have to fund over an extended period of time, typically 6 to 18 months.
That requires a lot of execution capability and discipline. Those are the things that HASI became really, really good at. We have tremendous experience in this market. We have over two decades funding federal energy efficiency businesses, and we have created a lot of opportunities in the market by mastering a programmatic approach that allow us to underwrite and fund these projects efficiently. Where we are today. We have about $2.5 billion of behind-the-meter investments in our portfolio, spread out into residential solar, community solar, C&I merch projects. Behind-the-meter also includes certain energy-as-a-services business that we securitize, and therefore, they're not reflected in this number. Nate will spend more time later talking about our securitized business. We have a wealth of clients in this segment, from energy services companies, to renewable developers, to vertically integrated energy transitions companies.
Some very great brand names, some emerging names. Our pipeline is also strong and growing. We have a lot of recurring business in this segment for the reasons Susan mentioned earlier, most importantly, because we can be extremely efficient on underwriting and funding this business. This business is all about efficiency. We are also focused on growing our client base and financing more of the products with our existing clients. As I'll talk later, you'll see we have very good reasons to be excited about the growth prospect of our pipeline. The behind-the-meter business has grown substantially in the last decade, and we are at a very, very important moment of our regulatory standpoint right now, as Susan had mentioned before.
This segment has grown enabled by matured technologies such as solar, now more so by newer technologies such as storage, battery storage, EVs, demand response softwares. With this great momento momentum that we're living on this industry, WoodMac is projecting that we are going to invest about $130 billion in this industry through 2026. As you guys can see from this graph, the majority of those investments are going towards solar in the earlier years, but the product matrices start to change as you look farther out. For that reason, we keep a very good eye on new energy as a services business model out there that try to combine the value of all of these solutions to provide even more value to the end customers.
The demand drivers in this segment are really strong. We have a lot more corporates and municipalities setting very high sustainability goals, but also the economics are there. This segment has, you know, you're seeing like energy retail rates going up, which makes this product more and more economic as we go. I'm yet to find someone in this industry that doesn't believe that retail rates will continue to go up. The other piece of it is that the tools in the toolbox are also expanding. We have quite a bit more digital solutions that try to integrate a lot of these other new technologies that are coming to the market. We have conversations at the RTO and ISO levels about market designs that give full value to distributed energy resources.
All of those things are aligning and making the prospect for growth in this segment really, really enticing. To talk about our investment approach, I'll keep with the framework that Jeff Lipson mentioned earlier of climate, clients, and assets. On the climate side, the one interesting thing about this segment is that it really reaches the core of our communities. You know, solutions for the homes we live in, the business we go to work, the places we go for fun. Another interesting thing is that the regulatory environment are allowing otherwise marginalized communities to really participate on the energy transition. Like the community solar programs, for example, require that a minimum of low-income participants subscribe to the solar gardens. On the IRA, we have adders for energy communities for low-income communities. This is very important because it allows the solutions to penetrate deeper into the economy.
If we are to solve climate change, that's exactly the kind of depth we need. Very, very important. This asset class is very important from an environmental and social perspective. On the client side, I've already mentioned, how diverse our clients are in this segment, from international companies to local developers. All of them have common goals, which are smart, cost-effective, and non-competitive capital. Those are the things that HASI understood from the get-go and built an entire business model about providing exactly those values to our customers. I was a client of HASI in my past life. At that time, I was bringing in a new equity partner into one of our DG portfolios, and that equity partner had something that HASI couldn't offer on its own. It was they were tax-efficient.
HASI, at that point, was a cash equity investor on a legacy portfolio. As the time went by, we could clearly see the difference in the partner. HASI was always willing to sit at the table and work with us to solve any things that came across that weren't expected. They were also offering to run more analysis with the broader database they had to help us make decisions and really thinking of that partnership as a long-term investment. This other partner, on the other hand, was more your typical financier, and the feedback was always more transactional rather than like this long-term value of partnership.
When our next portfolio came on, HASI came to us with this synthetic tax capacity by joining forces with a tax equity provider and therefore solving for, you know, the advantage that the other guy had. That's the kind of creativity and connectivity that you can expect of HASI. Obviously, that was the last thing we needed to be able to award this portfolio to them, and so we did. As you all know, that partnership with ENGIE only grew faster and way above and beyond DG portfolios from there. If you guys indulge me for a couple more minutes, I want to talk about a more recent example.
As you know, interest rates went up, the market dislocate. One of our C&I customers decided that they want to go out to the market and see if they could find more competitive cost of capital for a newer portfolio. They did, and they ultimately enter into exclusivity with another party. It's very disappointing to us, but we also felt very comfortable that what we had put forth were terms that we could live in and that we needed to make that transaction accretive to us. Well, a couple of months later, they come back to us, disappointed, aggravated, and somewhat embarrassed that this other party had completely retreated on them at the very last minute. They were in a situation that they need to close that transaction within the month.
They asked us, "Can you help us?" At that point, we were very, very busy with, trying to close three other transactions at the same time frame. We took a deep breath, we looked at the situation constructively, here we are just a few days from delivery on that 30-days challenge. I'm convinced that from the lessons they learned and the approach we took, that partnership is only growing stronger and stronger over time. That's how HASI works. On the asset side, I've already talked about how these portfolios have to aggregate a lot of smaller sites to be cost-effective. That's the kind of discipline that HASI really has mastered over the time. We have a very disciplined underwriting process.
We have our forward flow process to fund those projects over an extended period of time. Those things add a lot of value to our customers. The economics in this asset class are also very attractive. Part of it is because it's a less crowded market. A lot of folks out there are trying to fund these projects efficiently, but they either didn't try hard enough or for whatever reason, they haven't succeeded. We have. As a result, the projects that we invest in are profitable projects, profitable to us, profitable to our clients. Another thing I wanna touch base here is this idea that on this asset class, solutions are becoming more intertwined. It used to be like a one product. You put a solar system on a rooftop.
Now it's more about, you know, solar plus batteries, you know, then you add EV. Energy efficiency now goes together with resilience, the electrification of the home. Those are trends that are going to continue to drive growth in this, in this segment. In fact, we are starting to see some of those opportunities trickling into our pipeline already. Very, very exciting prospect here. Despite any near-term challenges, be it delayed IRA guidance, the macroeconomic environment, the geopolitical environment, we are still very, very, very bullish on this segment. We think the economics are strong and will continue to be strong. The demand is there and will continue to be there, if nothing else, because electricity price will drive more solutions.
Also we think there are a lot more technologies and tools out there and a regulatory will to make this segment really propel growth. We feel that we're very well positioned for the reasons I mentioned before. We have been really good at tackling the inherited inefficiencies of this segment and transforming those into opportunities. We will continue to add value to our customers, existing and new, and ultimately our shareholders. A lot of work ahead of us, but I'm very excited with where we are. Thank you very much for your time today.
Thanks, Daniela. You've heard from Manny and Daniela, who oversee most of what's on our balance sheet today. We often are asked what's next? Where are you gonna take the business next? In that regard, I'm gonna call upon Annmarie Reynolds to talk about our Fuels, Transport & Nature segment of the business, which has recently been rebranded as such. Annmarie joined the team in 2022. She has a background in mechanical engineering, and spent her career working in all aspects of the energy and climate business, including plant operations, energy trading, risk management, and customer solutions. She joined AES. Excuse me. She joined HASI from AES, where she worked for 22 years in various leadership positions, including Chief Risk Officer, Chief Commercial, and Chief Customer Officer. Annmarie.
Thanks, Jeff. I was reflecting as I was sitting here that in my career at AES, I watched renewable electricity move from boutique to mainstream. It seems that we've heard from our colleagues, the market forces, the demand opportunity, the regulatory and policy framework, and the compelling economics for the end consumer, I mean, that is moving at an exponential pace. I'm gonna switch gears and take you beyond electricity and really talk about building next business lines for HASI, because we know the energy transition requires change and infrastructure beyond electricity. Where do we look? We don't have to look too far, because you can see 75% of emissions are outside of the electricity sector, and that's really the opportunity that we're focused on.
I'm gonna take you through each of these briefly and talk about the solution potentials we see here, as well as readiness to scale. How close are these? If we start in transportation, we see vehicles that need clean fuels to charge them, electricity conversion and charging infrastructure, airplanes to be powered by sustainable aviation fuels. When we go to industrial, we see emissions driven by thermal processes that have the opportunity for clean fuels like RNG and green hydrogen. We see chemical processes that create a lot of emissions that have the opportunity to be rethought, reinvented, retested to create low carbon materials. Finally, to capture carbon for utilization and for storage.
When we move to ag and the built environment, which is really where C&I and residential lives, we see a lot of waste, and this waste is feedstock fuel for renewable RNG and other sustainable fuels. There's also opportunities for advanced buildings and sustainable ag. We're focused 80% of our time on those things that we think are ready now, but that are on the precipice of scaling, like the scaling that we see in the electricity sector, and that's RNG and fleet decarbonization. We take a consistent approach to the business. It's about climate, clients, and assets. On the climate side, it's very straightforward. It needs to be material, it needs to be measurable and consistent with all of the other HASI transactions. We put a CarbonCount on every deal we do. With clients, we're looking to follow our existing network.
You've heard about how they are expanding beyond electricity as well, and their customers and end consumers need to clean their Scope 1 and Scope 2 emissions. We did this recently with our first transaction in RNG with Ameresco, who's a clean tech integrator with two decades of experience and relationship with HASI. We invested $125 million in a portfolio of landfill gas and wastewater treatment, upgrading equipment to pipeline-quality renewable natural gas. We also want to expand our network and capture the next generation, top-tier clients in these new sectors. We did that with Zum, a disruptive leader in student transportation, operating in four states and expanding, where we funded a fleet of vehicles to serve the LA USD, which is a unified school district.
Most recently, with our latest closed transaction, also in renewable natural gas with a company called Bioenergy DevCo. They are a global leader in organic recycling. They take food waste and turn it into pipeline-quality natural gas, as well as, soil treatments for enhanced soil quality. These things create the programmatic relationships and growing pipeline to build these new businesses on. We're looking at real assets, proven technology, and replicable structures. These things we're talking about are not pilots, not proof of concept. Upgrading and capturing methane has been done for a long time and has reached a commercial tipping point. What are the market indicators of expansion? Why do we think it's ready? When we think of readiness and why now, what are the things we look at?
I'm gonna walk through RNG as an example, but it's consistent with what you've heard in the electricity sector and renewable electricity. One, we're looking at demand. Renewable natural gas has gotten its start as a vehicle fuel, and that's just 4% of the gas demand potential. We talked on the first slide about the industrial needs, the home heating needs, as well as to power into the power grid and charge the new electric vehicles. State and federal policy tailwinds. At the center here we have the EPA Federal Renewable Fuel Standard. That, along with California's Low Carbon Fuel Standard, has propelled RNG to where it is today. What's happened recently or since then, we see the.
IRA with significant biogas incentives, up to 50% ITC on qualified biogas property and up to $1 a gallon equivalent PTC through the 45Z credits. We see tons of state and local action. 15 states with clean fuel standards at various phases of advancement, and 30-plus utility and regulatory actions promoting RNG. What you don't see on this slide is also the tracking system. Like we saw in renewable energy or electricity, we have organizations like Green-e and M-RETS who have expanded their tracking system to include Renewable Thermal credits, the accreditation and certainty that end customers need to verify that what they're getting is a green product. Finally, it always comes down to cost, right? What are the market drivers?
When we think about the decarbonization potential, along with wind, solar, and storage, biomethane upgrade to pipeline quality that can leverage the existing gas transmission and distribution system and make beneficial use of this gas that is being produced otherwise, it's just the lowest cost alternative to decarbonize. What does it look like to build the next business line? HASI has an incredible network of existing clients and partners, and we have opportunities coming in all the time across all of these different new sector potentials. We leverage an internal scorecard. It's very consistent with the common attributes that Jeff mentioned earlier, but tailored specifically to newer segments, where we look at readiness based on the technology maturity, the total addressable market, the strength of the value proposition, time to scale, and climate impact. We look at the strategic fit.
Why is HASI the right investor for this? We look at the client base stage. Are they early? Are they expanding and consolidating? We look at any client overlap. How many of our existing clients are doing things in this? What opportunity does that create to work together and leverage those relationships? We look at infrastructure, asset-based collateral coverage, predictable cash flows, and the cash flow profile. Based on that, we're able to assess these opportunities as they come in quickly. We pride ourselves on being agile and fast, and that a fast no, not yet, is sometimes more valuable than a, "Well, let's keep going, and let's see if we can make something happen." We'll give a not yet, a ready when. We see a lot of opportunities that we say, "You know what?
This is ready now." We can structure it and size it, create a term sheet, and at that point, it goes into our pipeline, which has already grown to over $600 million. It's focused, where we focus 80% of our time on RNG and fleet. Fuels or RNG specifically is dominating at 60%, with fleet opportunities 20%. Nature, which has been a historic area of focus through ecological restoration, has been and will continue to be an important part of HASI investment. We have a 10% of what next. These are deals we expect to do in the next 12 months, but they're sectors that are not ready today to scale, but we see potentially on the precipice.
We believe by doing live deals and engaging with the clients and going through that structuring discussion, that we learn fastest, establish our point of view, and will increase our readiness for those sectors. It ends with unique funding opportunities, where we bring flexible capital and a programmatic approach, and again, real asset investment. We are not a research or R&D arm for the company. We are investing and growing the next business line that we hope to stand up alongside grid connected and behind the meter in a 3-5-year timeframe from first transaction to fully standing business line. Thank you.
Thanks, Annmarie. You may have noticed when I introduced Manny, Daniela, and Annmarie, that they've all joined the company within the last two years, which I think is a strong testament to our recruiting effort and how desirable we are as an employer, and our ability to bring in top-tier talent. It's always good to combine new top-tier employees with folks who have good institutional memory, well represented by Nate Rose, who's been with the company since 2000, and has been instrumental in virtually all aspects of the business over the last 22 years. Nate's here today to talk specifically about our securitization platform. Nate.
Thank you, Jeff. Our securitization platform has been a highly profitable, consistent, and growing business since 2000, which is when we closed our first federal energy efficiency securitization. Coincidentally, that was the same year I started with HASI, and I helped close that transaction along with Jeff Eckel and Dan McMahon. Since 2000, we've expanded to seven distinct sub-asset classes, which coincides with the growth we've seen over the past five to six years in our gain on sale. Over that time, we have securitized over $7.5 billion of volume across 600 individual transactions. This has demonstrated the consistency, breadth, and magnitude of this platform. What helps support the profitability of this platform is that we have executed with over 15 individual institutional investors, and most are still active today. That breadth of investor activity allows us to increase volume while maintaining competitive pricing.
This has also led to HASI maintaining a dominant market share, including over 50% historically in federal energy efficiency. The platform has led to the development of an impressive set of clients, which has helped lead to our pristine track record. As mentioned on previous earnings calls, since we often close our securitizations simultaneously with our asset closings, we have very limited interest rate risk. Any interest rate risk can be measured in days or weeks, not months or years. I wanted to highlight the value add of the securitization platform to HASI. The platform provides a steady and growing source of income to HASI, and our long-term history with clients and investors makes execution predictable and efficient. We are able to execute with limited internal and external resources.
As mentioned in our last slide, our engagement with multiple investors keeps pricing attractive and allows us to enhance value. Continually executing with investors provides market feedback and allows us to be more competitive and responsive to clients, also increasing market share. Since transactions are privately negotiated with large institutional investors, we do not rely on any public ABS markets or rating agencies. We often get the question of why do these institutional investors work with HASI instead of going direct to our clients. We retain equity in our securitization trusts and defer cash flows to provide a first loss position for our investors. This equity has never been called on, but investors find comfort in this enhancement and that we put our money where our mouth is. We also provide diligence and expertise that they do not have in-house.
We are the most experienced and credible investor in these markets with many years of historical performance data. In addition, our performance has been pristine with no credit losses to date. No other investor can replicate what we have built over the past 22 years. Lastly, we provide ongoing servicing and the ability to accumulate transactions for critical mass. Investors are not staffed to provide these services, and most have minimum investment thresholds. For these reasons, we have maintained decades-long relationships with our investors, and they have not chosen to replicate what we do. For economic value add to HASI, as most know, we book a gain on sale when we close a securitization that's made up of cash received up front and the future value of any deferred cash flows. We also have two other important sources of economics.
First, because we own our trusts and retain equity in them, we benefit from any residual value in the assets and any modification or termination fees. Often our clients request changes, and we either can invest further money or benefit from fees that are produced. We capture this upside while most of our competitors are not able to, as they do not have the capital to replicate our structure. As an example, in 2022, we received just over $6 million in this additional upside from our securitization platform. Second, we have ongoing recurring income, primarily from servicer fees and income earned on our securitization assets. On this last slide, we are highlighting the breadth of the platform. We have moved from securitizing just federal energy efficiency assets to now having seven distinct sub-asset classes.
We are not disclosing the specific sub-asset classes that we have added over the past 13 years for competitive purposes. However, the majority of these sub-asset classes are contained in our public sector asset class, and we are also highlighting the common attributes on this slide. As would be expected, these assets are very high credit quality, have long-term fixed cash flows, and generally low yields. These qualities make them attractive to large institutional investors and make them look a lot like our historic sub-asset class, federal energy efficiency. Thank you very mu ch for your time.
Thanks a lot, Nate. Now I'd like to call upon our chief risk officer and co-head of portfolio management, Rich Santoroski. Rich joined HASI in 2020. He spent 12 years at AES. He has 35 years energy experience overall.
At AES, he was the chief risk officer and co-managed AES growth efforts. He also spent eight years in private equity, focused on electricity generation in emerging markets. Rich also spent more than a decade at New York State Electric & Gas Utility. Rich has an electrical engineering degree from Penn State.
Thanks. Good morning. Our portfolio management team is ready to support profitable and disciplined growth. There's three drivers of this readiness. It's people, it's data, and it's clients. People. We have an experienced team. We got individuals with 20, 30, couple of us with 35 years industry experience. We drive an underwriting process that's disciplined and robust. It's supported by internal and external subject matter experts. The depth of our internal team is unique. We know this. Our clients tell us. Craig Cornelius of Clearway quoted, "One of the things that I think is a real distinguishing feature of HASI is its true depth of experience around assets in the markets that we operate in," end quote. He's right. We know the assets. We know the markets. We know operations. We know regulatory. We know policy. We know details. We understand the transmission system. We understand curtailment.
We do this because our team includes engineers. We have former power traders. We have transmission experts, utility planners. We have quants. We have people that understand the analytics to forecast power production from renewable assets. We also have former hedge fund quants who simply know how to analyze data. We push the industry as well. We were a big part of bringing together industry participation to address system-wide basis issues in the Southwest Power Pool. To date, this coordination resulted in providing comments to FERC Notice of Proposed Rulemaking related to grid operations and interconnection, and we organized an in-person meeting in Little Rock to meet with the SPP leadership to identify our concerns with the system. Data. Data drives our underwriting. We just try to get smarter. We don't compete with our clients. We have access to detailed operations and commercial data across multiple clients.
A level and a volume of information that itself is unique. We've also invested in the systems and the software to be able to analyze this. Data drives insights, drives better business decisions, and better underwriting. It's a constant feedback loop. Imagine investing in residential solar for 9+ years, multiple clients. That's a lot of data. We understand the resi solar class. We also understand its risks, like defaults and delinquencies. Clients. We're a big part of our clients' business. We're often afforded involvement and influence in excess of what our governance would generally provide. You might say we punch above our weight. It's because we help. Dave Carroll at ENGIE quoted, "What sets HASI apart is they have a team of professionals that get in there when the times are challenging. They bring the resources to bear, they bring the knowledge to bear in order to help the situation."
You may recall in Q1 2022, we lowered the booking rate on one of our grid-connected portfolios. The reason for the reduction was the basis risk in SPP I described. I mentioned earlier some of our industry efforts we've taken. We've also worked side by side with our client to address problematic contracts. To date, we've restructured five contracts to mitigate or eliminate the basis risk for a period of time. While this doesn't solve the problem, it certainly makes it much better. This is a busy slide, and there's no need to focus on all of it now. It's basically intended to address a question that we're often asked: what matters?
This table identifies the key elements we consider for underwriting in the first column, what introduces variability in the second column, and what we monitor post-close in the third. While the list isn't exhaustive, it covers the most important elements. They're all inherently linked. What we learn from monitoring our operating assets informs our next underwriting. There's five asset class listed here. I'll speak to the first two in the interest of time. Residential solar. The underwriting metrics we consider are credit quality. What happens post-contract and regulatory issues like NEM 3.0 in California. What's the main driver of variability? It's revenue. Are our customers paying? Post-close, what can we learn from the data with a focus on delinquencies and defaults?
A few people have mentioned this already, but inflation and other drivers of higher utility power rates recently make both existing and new resi solar an even more compelling investment for the customers as it increases their savings. Grid connect. For underwriting, we focus on production, the effectiveness of hedges in the market. There's a significant overlap between the experience of our subject matter experts in this asset class. It used to be, to forecast power prices, all you needed to know was the price of gas. Now, for renewables, the growth of renewables themselves is as or more important as it drives the hourly capture price. When it's windy in Texas, power prices are generally low. I don't like jargon like best in class, but I think in this case it applies. We use best-in-class tools to help support this analysis.
We work very closely with a company called REsurety that provides market and risk intelligence for renewable assets and the tools to analyze them. Post-close, we focus on improvements, analyzing operating data with a focus on production and hedge performance, and trying to identify the ways to optimize. Our programmatic investment strategy is often mistaken to result in concentration of risk with our key clients. That's clearly not the case. Our credit risk lies with the ultimate customer. Residential and community solar represent 43% of our 10-year cash flow forecast. As we've described earlier, these are strong credit quality, highly diverse, and enjoy significant savings relative to the alternatives available to them. Delinquent community solar customers can be promptly re-replaced. Corporate and utility customers make up a little bit less than 10% of our portfolio, and are primarily investment grade.
Many of them are the corporate off-takers to our grid connect investments. They're also a diverse group with no single customer representing more than 2% of our forecast cash flow. Finally, the remaining portfolio includes super senior payments, public sector or independent system operators, all high credit quality. For clarity, this doesn't mean that 18% of our cash flow is based on spot power sales. A portion is swapped to fixed with virtual power purchase agreements. Simply put, we have a diverse portfolio of credit quality investments whose operating and financial data is instrumental in informing our team with the insights that continue to refine and improve our underwriting capabilities. Thank you.
Thanks, Rich. Now I'd like to call on Dan McMahon, our other co-head of portfolio management and head of syndications. Similar to what I said to Nate Rose, Dan McMahon joined the company in 2000 and has been instrumental in building the business over the last 22 years in a variety of positions. As I said, now he's the co-head of portfolio management and leading our very important syndication effort that he's here to talk about. Dan's also a member of our investment committee.
Thanks, Jeff. As Jeff noted, I've been with HASI for 23 years now. During that time, both as a private company and as a public company, one thing we've done successfully is access multiple sources of capital in order to fund ourselves and take advantage of the current investment landscape. You know, Marc Pangburn, in his slides earlier, mentioned our strategy for having a diversity and a diversified sources of capital. We have securitized debt, we've got unsecured debt, we've got commercial paper, we've got Term Loan A, et cetera. We now see syndication as a way to further evolve our sources of capital and believe that all stakeholders can benefit from our recent initiative to expand our syndication capabilities.
What we're looking to do with the syndication platform is to expand upon our existing infrastructure and expertise, doing securitization business and our on-balance sheet investments. Essentially, we wanna develop a third leg of the stool, so to speak, where we will partner with institutional investors on transactions that we'd otherwise do 100% on our balance sheet. Through syndication, we can diversify our funding platform, de-risk portfolio concentration, all while earning recurring fees that will increase profitability. As several of my colleagues have discussed here today, the energy transition and IRA are creating incredible climate-positive investment opportunities here in the U.S. HASI has a top-tier roster of programmatic clients and many of the key asset classes that benefit from these macroeconomic and legislative tailwinds. One compelling attribute for investors about our platform is that we originate unique product lines.
Discussion earlier about residential, C&I, community solar, RNG, fleet decarbonization, and other sustainable infrastructure. There's simply not an ability for institutional investors to have access to these markets. Syndication enables us to utilize our existing origination, underwriting, execution, portfolio management, and investor reporting teams and processes to manage money for both our account and for the benefit of the co-investors. We believe this creates great alignment of interests and avoids adverse selection and valuation issues that might otherwise exist between HASI and a co-investment partner. I also wanna note the importance of our proprietary CarbonCount methodology, where we are able to objectively and transparently calculate and report on the environmental impact of all of our investments. Nearly every investor that we have spoken to has some corporate environmental initiative or mandate, and many have researched our CarbonCount methodology, and we generally receive very positive feedback.
This is a key attraction for investors that are looking to invest with us. In closing, and I've kept my presentation brief as we're getting to the end here. Through syndication, HASI can benefit from stable asset management revenues that will boost profitability. We also see diversification of our funding sources as a positive, particularly in times of extreme market volatility. Lastly, we believe that syndication creates a good alignment of interest between HASI and our shareholders and prospective co-investors. Thank you for your time.
Thanks, Dan. All right, I talked earlier about one of the items of perceived complexity is our accounting. To simplify our accounting a bit, I'm gonna call upon Chuck Melko, our Chief Accounting Officer and Treasurer. Chuck joined HASI in 2016 after 14 years with PwC, and he's responsible for all of our accounting, financial reporting, and capital markets activities. Many investors got to know Chuck much better last summer when he was called upon to simplify some of our accounting concepts in many investor meetings. Chuck.
Thanks, Jeff. Good morning, everybody. I'd like to start with emphasizing something that was mentioned earlier in Jeff's myth-busting section, that our accounting is largely consistent with industry practice. There is one particular area that may require a little bit more of an in-depth understanding, that area is equity method accounting. Prior to my role at HASI, as Jeff mentioned, I was at PwC international office, where my role was to help companies think through complex accounting topics in the energy and financial services industries. Topic that frequently came up was equity method accounting and how to determine income allocations under the HLBV methodology. It is a very complex calculation, if any of you are familiar.
The challenges that these companies had were how to calculate it, and then once they calculated it, how to make sense of the outcome when it may look to be inconsistent with the economics of the transaction. That's precisely why we make a non-GAAP adjustment for our equity method investments. We prepared a short four-minute video to talk a little bit more on this topic. Let's take a look.
Understanding the basics of HASI's financial statements. The investments we make take different forms depending on our client needs and whether we hold the investments on our balance sheet or sell them to others. The resulting accounting models that are applied generally consist of loan, operating lease, securitization, or equity method accounting. For each of our different types of transactions, they're consistent with commonly applied GAAP and industry practice. For our non-GAAP distributable earnings measure, the treatment is largely consistent with GAAP, except for the earnings related to our equity method investments. As illustrated here, our accounting is largely identical to others in our industry. Let's spend a few minutes discussing the one area where there may be a difference with our equity method investments or EMI for short. Starting with the GAAP financial statements, the income recognition model is the hypothetical liquidation at book value method or HLBV.
HLBV develops an income allocation based on the change in claim on net assets of the investee after adjusting for any contributions or distributions. These allocations are presented in the income from EMI line in our GAAP financial statements. To take a simple example, if there are no contributions or distributions in the period, and our claim on the net assets at the beginning of the period is $100, and the claim on the net assets at the end of the period is $105, the HLBV income is $5. The challenge with utilizing this required methodology is that if a tax equity investor receives tax benefits, their claim goes down, and ours will go up, resulting in HLBV income even though our economics are unchanged. This is the primary driver for the use of our non-GAAP distributable earnings adjustment for these investments.
Given the earnings profile of the GAAP accounting and the profile of our economic returns used for distributable earnings, let's try to simplify this picture. As just mentioned, the HLBV GAAP income may have large allocations in the early years attributed to tax equity's receipt of tax benefits, which can be seen by the downward sloping line here. Our assessment of our economics earned in each period is represented by the dotted line and is our underwritten returns expected over the life of the investment, which will adjust as actual and expected economic performance changes. We utilize this line as our income recognition profile for distributable earnings. The cash flow profile is represented by the third line. As you can see, there may be timing differences on earnings and cash received.
Our distributable earnings methodology more closely aligns with the cash economics in any one period when compared to the income resulting from HLBV. Let's talk about cash flow from our EMI. In our GAAP cash flow statement, cash distributions are allocated between operating cash flows and investing cash flows and are determined in part by how much equity method income has been recognized using HLBV for each investment. To understand how much cash has been received for these investments, you'll need to add the following three captions: EMI HLBV income from the income statement, the equity method adjustment from the operating section of the cash flow statement, and distributions received from equity method investments in the investing section of the cash flow statement. The aggregate of these three amounts will equal the total cash received from our EMI.
To recap, we apply different accounting models to our transactions depending on their form. This accounting is in accordance with GAAP and is commonly used in the industry. Because of the pattern of earnings that results from the application of HLBV, we provide a supplemental non-GAAP adjustment to our EMI earnings to reflect the economics earned during the period. We hope that this primer provides a useful overview of our financial statements. For more information, please refer to our annual report and other SEC filings on our investor page at investors.hasi.com.
Okay. I promised it was short, right? Hopefully that video provided a short simplification in understanding our GAAP accounting for our equity method investments and then our distributable earnings adjustment. Another measure that I think is useful to understand our financial performance, it's mentioned a few times earlier, is distributable NII or net investment income. That measure does include this adjustment that was just discussed for equity method investments, and it is a pretty good indicator of the margins that are earned on our portfolio. I think if you understand our distributable NII measure and then begin to understand better the adjustments that are made in the accounting for our equity method investments, you'll hopefully have built a decent foundation to start to begin to simplify your understanding of our financial statements. Thank you.
Thanks, Jeff. I certainly hope and expect you agree with my number 2, what you will learn today, that we have a very strong team. I'm so thrilled everyone got a chance to speak, and the investor and analyst community got a chance to hear from so many of our senior executives. Now let's move towards a wrap-up. This is a point in the presentation where many companies would talk specifically about their ESG attributes. In our case, we don't think that's particularly necessary. ESG has been woven through all the conversation today and is just embedded in our business. It's not a separate distinct component of our business. I would call out a few things. You see an icon of our 2021 impact report up there.
Our 2022 impact report will be on our website within a couple of weeks. I think it's a very powerful document. I certainly encourage all of our investors and analysts to read it as it details all the impact our business has on the environment and other social causes. Likewise, I'll call out our HASI Foundation there on the top right. Just in the first few years, we've already given nearly $4.5 million to the foundation, and we've granted that money to organizations that are at the intersection of social justice and climate change. I'll call out Chad Reed, who's been a real driver of the foundation, who many of the investors and analysts know because he used to run investor relations, and Chad's here with us today as well.
Many of our employees, by the way, have gotten very involved in some of these grantees as well, which has been very satisfying. We have very high employee retention in many ways because of our mission-driven aspect of our business. We receive a laundry list of awards. Just to call out one of them, the CDP has given us an A rating for environmental disclosure and transparency. Just to give you an idea, we're one of 283 companies to get an A rating out of 15,000 that have applied. Our transparency and disclosure around environmental impact is really second to none and something we're very proud of. Let's sum up by reminding ourselves that this is a very unique and differentiated business model focused on climate, clients, and assets.
We're giving investors access to the entire energy transition. We have a partnership model that you heard over and over again, and you heard directly from our clients how powerful that is. It's a non-cyclical and lower risk business model. We sure hope this was very helpful and educational, and that you all learned something in this deeper dive about our company. Now I'm going to invite my colleagues, Jeff, Susan, and Marc to sit up here, and we'll take questions. The remainder of the team will also have a microphone if we want to point any of the questions in their direction as well. Thank you very much. We have some microphone runners if need be.
Thank you for the great presentation. We really get to see a good depth of expertise here across the firm. On the topic of simplification, and I think one of the topical things in the industry now, thinking of spread, asset yields rising, the cost of debt, a bit dynamic here. Is there a scenario where maybe, on the one hand, you could even provide us in real time how that spread moves? We see it on the aggregate assets. Something might have north of 8% yield, north of 7%. We could do the math on cost of debt. How do you think that looks on a dynamic basis today?
Do you find yourself in a scenario where you would be walking away from more assets if asset yields kind of rise more slowly than the cost of debt on the front end? A bit of a overarching question on how you think this spread business moves, but where are we today in real time? Do you think you might be providing that to us over time?
Sure. We positioned the company well coming into what became the rising rate environment by loading up on liquidity and doing large transactions when rates were low. That's allowed us to be in a position to continue to grow the business without having to raise quite as much capital, particularly public capital. For example, for the entire year of 2022, we didn't do a single public debt transaction and still were able to grow the business. That really was prudent because it bought us time to build the portfolio with some higher yielding assets once we entered this higher rate environment. The dynamic, as you suggested, Moses, is challenging because sometimes investments have a long gestation period, whereas markets move quickly. We have to manage that very carefully.
We do invest at a spread to our cost of capital, to our cost of funds, and we do it on a very disciplined basis. Yes, there are times where we pass on transactions when markets on the investment side haven't moved fast enough or a particular client, you know, is unwilling to work with us on a yield that makes sense given our current cost of funds. We'd rather walk away from transaction than do an unprofitable transaction.
Yeah, that's very helpful. Chris Souther from B. Riley. Just, you know, kind of piggybacking on Moses's question there. You know, talk through, you know, the plan around refinancing. You know, I think you mentioned some hedging strategies for the 2026 bonds. If you could kind of walk through that and just, you know, the kind of longer-term plan as we do. You know, obviously, we have very low interest bonds that you guys issued several years ago that, you know, if you refinance them today would be at pretty different rates, right? Kind of the, you know, factors around balance sheet growth that kind of give you confidence around, you know, we're gonna be in a good position in, 2026 plus when we're refinancing.
Sure. Thanks, Chris. I think the most notable item in terms of low coupon financing that we'll have to refinance is our billion-dollar transaction, which matures in 2026. A couple of things to mention there. One is the chart that Marc had up there on the illustrative business model is more of a long-term illustrative business model.
Embedded in the assumptions, and I think we talked about this in the third quarter call a bit, was that we could refinance that bond as much as 350 or 400 basis points higher than the actual maturing bond itself and still be within the range that was presented in the illustrative business model, in part because of what I said a moment ago, that we've rebuilt the portfolio with some higher yielding investments. Secondly, as Mark talked about today, and this is very recent news, we've now locked in through a forward starting swap, the base rate at which we will issue the refinancing bond in 2026 itself. We have a forward starting swap that starts in three years that fundamentally locks in the base rate.
You can't hedge the credit spread, so we still, as we sit here today, don't know what the credit spread on that bond will be when we go to refinance it, but we have locked in the base rate.
Got it. Just another one. Maybe walk through the decision-making process around syndication. You know, I think that the securitization versus balance sheet has always been pretty clear around just being yield-driven. Is it just as simple as kind of size, or is there, you know, strategic types of, you know, transactions that, you know, your particular syndication partners might be looking for? Just any color there would be helpful. Thanks.
Sure. Let me talk about the purpose of it. You know, we talked many times today about diversifying our funding sources, and syndication is just another step in that direction, and particularly given volatility in the capital markets makes more sense than ever. I would note that our syndication effort will take time to build up. It's not something we've done a lot historically, and you probably won't see an impact on our financial statements for at least a couple of years, certainly outside the guidance period. In terms of the investments that our syndication partners are most interested in, I think Dan's learning a lot right now. He's had many conversations in the past several months, and we're learning where the most appetite is. It'll be ultimately a nice additional tool in the toolbox in terms of funding the business.
It will result in some fees. We'll obviously take a management fee on anything that we syndicate. I think it makes perfect sense for us at that moment. It makes logical sense that there's a lot of money out there that wants to be part of the energy transition, doesn't have the access that we do, certainly doesn't have the diversity that we do, and there are a lot of candidates for which it makes perfect sense to co-invest with us, given our access to the clients and markets you heard so much about today.
Yep. Okay, thanks. Good morning, Mark Strouse, J.P. Morgan. Thanks for the presentation. Can we go back to the kind of the emerging opportunities you're looking at within the Fuels, Transport & Nature. Is the idea that that will, you know, as those markets mature over the next three to five years, that the illustrative ROE of 10%-12% or, yeah, 10%-12% is what you're looking for? Is there an opportunity that that could be potentially even higher, just, kind of early nature of that business?
I think that's still the long-term target. There's obviously a potential it could be higher. I think part of what you're getting at is that some of the investments in the FTN segment will be a higher yield than some of the things we're seeing historically that are a little more mature, and I would confirm that fact. I think there's good reason to pursue the opportunities that Annmarie was talking about, one of which is we'll get some higher yield there. Eventually those markets will mature and so on. That's the cycle. I would not guide towards a higher ROE just yet, but I do think we're seeing some higher yielding opportunities there.
Okay. Just a quick follow-up on the competitive landscape. I mean, just maybe since the passage of the IRA, maybe even, you know, before that, just talk about the competitive environment. Does the IRA invite a lot of new potential competitors coming in that may not have your programmatic relationships today, but you might be looking to ramp that up over time?
Susan, I'm gonna ask you to take that one.
Sure, Jeff. I think as we've talked about the IRA bringing in, like you said, new competitors, the size and the scale and the growth opportunity that that's now unleashing, which is just getting kicked off and will expand, provides a lot of room. I think as we're also looking at a more complicated business environment and the strategics who can bring integrated solutions, we're partnered with the right companies who will continue to have a market share that's growing and expanding even faster. That's why we're well positioned and continue right laser focused here.
I would just add, Money is a necessary prerequisite to compete, but that's all it is. The world's awash in capital. It's the expertise of this team that is really so valued by the clients. This is a very team.
If I could just add one more comment. You actually hit the nail on the head. They don't have the same approach that we do. In the peer group, I identified asset managers as one of the categories. Asset managers obviously have raised a lot of money that's been out in the news. That being said, they compete with our clients directly. They want to invest, but they also invest in platforms which compete with our clients, which completely changes the dynamic on the competitive landscape. Our clients are not looking to bring in competitors to provide their competitors access and information on how they operate assets.
Good morning. Noah Kaye from Oppenheimer. Thanks for the presentation and for taking all these questions. Certainly the growth of the team has been a theme today, and it's great to have the opportunity to hear from folks that we don't always get to hear from. I think in that vein, I'd like to ask if it's all right, I'd like to ask Manny and Daniela and Annmarie why each of you joined HASI and what you've learned being in the company to date. The world's obviously changed, as it seems to so often, quite a bit since the time that you joined. I'd love to hear about your experience and your thought process.
Manny, do you wanna go first? You've been long--
Sure. Thank you for that question. There's a number of reasons why I joined. Prior to here, I was with GE almost 20 years. Really, the mission-driven purpose of the company for me was big. I've done a lot of transactions in the U.S., outside the U.S. I saw the future of where energy transition was going, and not just obviously, yields are important, but the mission-driven, how passionate the organization is about it, and frankly, not just looking at traditional renewable markets, but also that ambition to plant seeds to invest in where the future is going, to me, was great.
Frankly, from the overall team perspective and how they work together, the family-oriented nature of the company, given how, you know, 20 people, some 15 years ago to where we are today, to me, the culture here was really the biggest draw in addition to the mission-centered approach of the company.
Thanks, Manny. For me, it's not that different. As I mentioned before, I was a client of HASI, so I could really experience that differentiated approach. When I call from Susan and Marc saying, "Hey, we have this opportunity on an area that I'm actually very passionate about," that was a no-brainer for me. I've known the team for a number of years. I know these people are serious. They know what they're doing, and they what they put out there in terms of mission and drive is not just, you know, something that you say, it's really ingrained. It's part of really what we are trying to achieve.
The opportunity to work with such a talented team, on an area that I'm very passionate about and having experienced the HASI differentiated approach is really a no-brainer for me.
I'm probably gonna be really repetitive here. Being the last. I will say I had a wonderful 22-year career at AES, and when I joined AES, for those who are familiar with the company, it was a highly decentralized company, and so tens of thousands of employees, but it literally felt like I was part of a 12-person team getting things done. The AES of today is much more, of course, large corporation and centralized. Maybe something different than what we talked about here for me was the opportunity to get back to that small team. AES, like HASI, is very mission-driven, so for me, it's always been about energy and the environment. There's a huge opportunity here.
I saw the chance to work with a group of really smart, bright, talented people trying to have as big an impact as possible and who had fun creating, solving problems with clients to make things go faster. It seemed like a no-brainer. I'm very excited to be here.
Is it okay if I take one more? Thanks. It's actually for Susan. you know, one of the interesting things is how some of the customers that provided testimonials, that those relationships with the company have really expanded, right, over the past several years. How should we think about the opportunity, potentially the pipeline, to either bring on new programmatic partners, you know, or significantly scale up with some of the folks who maybe today are, you know, more limited to one asset class but are looking for opportunities to participate more fully with you?
I think it's twofold. You know, with new programmatic clients that we add, we had a couple that were on that column, and they provided testimonial, too, that even over the last two years, as their markets are expanding and growing so fast and are now even turbocharged, we will continue to take the partnerships that we've already set up with them and double and triple those and close efficiently, not only small transactions, where we have to be very, very efficient and spend time with them after we closed every deal. What are the lessons learned to do the next one with tighter efficiency, lower cost? That's not just about the cost of a transaction, but we all are limited by the resources of the people that we have here to do this.
I think that's one part of continuing to build that out within a segment. They're expanding as those technologies I talked about are integrated to now adding battery storage, whether it's in community solar, grid-connected, resi, but looking at electrification of the home, putting in EV infrastructure. Our knowledge across those assets makes those projects larger. There's more volume that too, in terms of the transaction complexity, service offerings, but how we're investing. With that, because success breeds success. I think as you look at the kind of clients' names here that are the industry leaders, when we announce we've closed a transaction with one of those companies, the other top-tier companies say, "Gee, why are they partnering with HASI?
There must be something different there." They're also trying to make sure that they can grow, scale, and be efficient with a smart financial partner. That lets us allow clients who come to us to be the next addition in across, I'd say, across the scale into our proven markets. Then as Annmarie talked about, grow with them in new markets they're entering and add new market leaders who we can show them. SunPower talked about that. We're good at recognizing who's gonna be the potential next leader in a sector that's emerging, how can we take our combined experience to help them grow, not only execute on the closing, but then develop their reporting, have the type of feedback with our data to make sure that their assets and portfolio perform.
I think if that helped answer your question, that with this environment of such growth opportunity in front of our clients and prospective clients, they're very concerned about how fast they can move forward with the financial partner, not necessarily going out every single time and running a process because there's just too much pace ahead of us.
Thank you.
I would add, Noah. Susan, you were a developer. Daniella, you were a developer. Annmarie, Mark, you were a developer, Rich. We know what it's like being on their side. Their job is so much harder than ours. If we go in with that understanding and that appreciation of how hard it is for them to do what they're doing, and we make it easier, boy, right there, you distinguish yourself immensely. I think every one of the big players that's out there comes to that conclusion eventually, that t hey need the kind of partner we are.
Hi. Thanks. It's Ben Kallo from Baird. Just maybe on Noah's question, just as the complexity of projects increase, how has that changed your, you know, your risk mitigation there? Maybe, you know, you guys mentioned quite a bit about the investment committee. Could you just talk to us about, you know, the investment committee, what's who's it composed of?
Sure. I'll let Rich Santoroski, if he would, answer the first part of that question. The second part of the question, the investment committee today is myself, Rich Santoroski, and Dan McMahon. We comprise the investment committee at the current time. Rich, you wanna answer the first part of that question, please?
Sure. I mean, I think addressing the complexity is just building the team. A lot of what I was trying to talk about was we need to understand transmission system, we need to understand technology. It is the in-house capability of understanding the complexity of the assets that we're investing in by bringing in people that have done that. I mean, a bunch of us here are engineers, have been in aspects of utilities for a whole lot of our lives. You know, we've brought in power traders, quants, and others. It's understanding that. The other thing I mentioned was by not competing and getting the data we get from the operating assets, we get smarter.
We understand the data, the risks, and the uncertainties of these asset classes because we see data across multiple clients, and we understand it, and we're able to sort of think about the risk mitigation strategies to sort of effectively move into those asset classes.
Thank you. Oh, go ahead.
I'll add that the other form of the other form of risk mitigation is just simply structural protection. We've spent two years researching RNG before we made our first investment, but RNG is an area where we just by definition have less experience than some of the renewable asset classes or energy efficiency asset classes we've been investing in for some time. We noted in the announced transaction from our Q3 call is that it was a first lien position. That's another area, just cash flow, waterfall structuring that adds risk mitigation as well.
Okay, thank you. Maybe to Jeff, in your initial remarks, and you've done it several times, you've alluded to not having to have a restructure, and you could have, you know, tax advantages and other types of structures, a C corp. How should we expect that to play out? Do you do that just from a risk perspective or why do you say that?
It's, you know, we've said publicly a couple times we're taking a long-term look at that reelection and determining whether that's going to be the right long-term structure for us. We've not concluded upon that. You know, when we do, we will provide ample disclosure and description of exactly what the corporate structure would be going forward, whether there'd be any changes in dividend policy and those items. I t's something we're taking a hard look at now. W e'll have more to say on that as we move throughout this year.
Thank you. Sangita Jain from KeyBanc Capital Markets. Thanks for taking my question. I have a question about the residential solar asset class. A lot of investors seem to be wary, at least in the short term, on that segment. Could you share what your observations are and your expectations for this segment in 2023?
Sure. Maybe Marc, you want to take that one?
Sure. I think we've seen the concerns show up primarily around NEM 3.0 and growth opportunities. I'll actually divide it into two different categories. One, performance on the portfolio, and two, growth opportunities. Performance on the portfolio, what we rely on is the data we receive across hundreds of thousands of different systems on a frequent basis. Again, the data that we have and that we receive is showing continued strong performance of the underlying assets that we're invested in. On the growth side, I think our comments would largely align with most of the residential solar players. We're seeing an increased level of activity prior to the implementation of NEM 3.0.
Would anticipate some level of moderation after that. We continue to reiterate that our belief, the long-term fundamentals remain very strong. That is focused very much on both the IRA and the continued increase in retail rates. T hey don't need to increase it 20% a year like they have been for this asset class to still save their customers money.
I would add the pipeline today does have several residential solar transactions in it, so I wouldn't expect a necessary slowdown in the short term. I would reemphasize the diverse nature of our portfolio, and that if there was a pause for whatever reason in installations, which again is not exactly what we're predicting, it wouldn't dramatically impact our business.
As a quick follow-up, is it safe to assume that as rates rise and power prices, at least for the time being, kind of flatten versus year-over-year, that the headroom that residential solar developers are seeing is still enough for that growth path to continue in the short term?
To be completely honest, we are, given the diverse nature of our business and all the areas that we focus on, I'd say we're probably not solving for what we see in terms of the value proposition over a six-month period. We're primarily focused on the pipeline that's being generated by our partnership with our clients and the long-term prospects. On both fronts, we see the pipeline there. We're working on transactions today, and we can tend to, excuse me, continue to see the long-term, fundamentals very supportive.
Great. Thanks so much.
Thank you.
Jeff, yeah, curious about syndication. First, correct me if I'm, you know, if this is correct, but I think of syndication as you're putting less equity in for a project, you get equity plus fees equals, you know, potentially a higher ROE. The question is around sort of your long-term nature of that, because I think you have European clients already, looking, you know, into North America. They have commitments to try and buy down, right, their admissions. IRA just made it easier. They have a lower cost of equity capital. You know, adding all that up and that you already have relationships, I'm curious why you're not more bullish on that sooner?
Good question, Kenny. We're bullish on the idea, we're bullish on the concept for many of the reasons that you articulated in your question. My comments, just take them as being a little cautious on timing. As an entity that has not historically been an active syndicator of assets in the format that we're looking at right now, it takes some time to have these conversations, to build a little bit of a track record, to confirm the structure that some of these potential partners would like to engage in. It's just not an overnight process, but I think all the dynamics that you outlined, we completely agree with. It is something we're very excited about.
If I could quickly jump in, not on Kenny's question, but on the residential solar area. I think maybe one of the newer two-week-old concerns is that a significant portion of the residential solar market was funded by regionals or really credit unions feeding into loan companies. If there's a sort of capital gap there, could you see yourself spreading into more even tier one or tier two players? Typically, we think of you as, you know, there's SunPower, there was Vivint in the past, Sunrun, some of those companies. Can you sort of fill that gap to some degree and actually, irrespective of where the growth of that business goes for that segment, excuse me, you could be growing market share as a structured finance provider?
Well, I think there's a broader question there, I'll let Marc answer the more specific question. There is a broader question embedded in there of are we entering sort of a deleveraging phase? This is what I opened with is no one's quite sure what's going to happen next, but there's certainly one scenario where banks do start to pull back more generally, and the availability of credit goes down, and the world itself goes into a more of a deleveraging phase. That could be in some ways an opportunity for us if we're still active in a world where there's not a lot of bank lending. Of course, we're not going to be typically a senior lender based on yield, but it may broadly open up opportunities for us if we enter a deleveraging phase.
But to your specific question, maybe I'll let Marc answer that.
Sure. I do anticipate that we'll continue to evaluate new client partnership opportunities within the residential solar asset class. Resi is a space where we have been extraordinarily focused around partnering with the top players for things like consumer compliance and all of the intricate details of that asset class that are somewhat unique compared to grid-connected or some of the other areas that we're focused on. When we do look to new client partnerships, it'll be focused on the same fundamental values that we find in our clients.
Sticking with California NEM , the way that they've structured that, I think most people would agree requires a lot of kinda behavioral changes from homeowners now with how the rules are set up. How are you underwriting? I get it from a longer term perspective. How are you underwriting kind of the risk near term of kind of more complex sales cycles and homeowners maybe not completely understanding what they're getting into, initially and potentially, you know, kinda increase in delinquency and default rates?
Okay.
We certainly aren't underwriting sales cycles. That's really the responsibility of our clients. We're underwriting asset cash flows. On your I assume your comment is largely driven around the incentive to include things like storage as part of NEM 3.0. I would say that your specific question around is really a consumer compliance one, and that falls into the bucket I just mentioned, being a key diligence focus for us with all of our clients in residential solar. The remainder is really focused around underwriting the asset cash flows. Those will are generally bundled as part of the same customer contract. W e'll focus on, you know, understanding the fundamentals of the under useful life of the assets and how they continue to save the customers money.
But from just a contracted cash flow perspective, we're largely underwriting that lease contract.
Good morning, Keith Mills from Trillium Asset Management. Thank you so much for this investor day. It was very informative. Two questions for you. The first is for Jeff Eckel. Jeff Lipson described the company as a simple business model with complex investments. A fair amount of your presentations today were focused on accounting. As you look at the board in your role as Executive Chair, as you look at the board, there's not really anybody on the board who has accounting CPA audit type of experience. Do you plan going forward to have, you know, add an individual with that type of experience so that there's governance oversight with those types of skills and qualifications?
Great question. Steve Osgood is the chair of our audit committee, and he is most certainly an accountant and has been CFO of two public companies in the storage sector, and he's been an utterly brilliant addition to the board. In addition, he's also on the board of another public company, which is a tremendous input. Rich Osborne also is on the board. He's former CFO of Duke. He's not an accountant, but he's one of the best risk managers on the board. We are always looking to add talent. You may have noticed we added Kimberly Reed, who is the former CEO and Chairman of the EXIM Bank, resurrected under the Trump administration. She's bringing a tremendous set of skills to the board.
We feel very comfortable with the staffing on our audit committee and nothing like last summer to test that. That was really, I think, Jeff Eckel, you articulated as a crisis in confidence in our accounting, and Chuck Melko did a brilliant job and was very well supported by the audit committee, in particular, Steve Osgood. We'll always keep adding. We have a really good skill matrix. I think it's being updated in the proxy, where you can evaluate the CPA expert qualities among all the directors, risk management, et cetera.
Second question for Jeff Lipson. The company's G&A and compensation expense has grown 30%-50% in each of the last twi years. I think we have an understanding of why based on the talent we saw today. Going forward over the next 3-5 years, what should we expect those two expense lines to grow at?
I wouldn't give you a specific number, but I would say you should expect it to moderate. We were in a very high-growth phase in the last three or so years. You know, we've doubled the company in terms of staffing since we went home for COVID, which was three years ago yesterday. We've also been in tight labor markets, and we've also been very successful, so we've provided significant increases for some of our folks. I think on a percentage basis, it'll start to moderate. Perhaps more importantly than the rate of growth in compensation is operating leverage. Is it gonna grow faster or slower than revenue? That's where I'm focused. Over the next three to four years, we have a very significant focus on growing revenues faster than expenses.
Will operating leverage be a part of your executive incentive comp?
That's up to the compensation committee of the board. I couldn't answer that for myself.
Okay. Thank you.
Yeah.
Hey, Jeff. Thanks, everyone for the great presentations. Just, sort of a two-part question. One, how is the turmoil in the financial markets impacting your due diligence right now, if at all? Just recognizing that maybe some of these banks were involved in, you know, some deals that you're working on. Then, two, I think there's a worry generally in the market that if there is a pullback in some of these banks lending to the space, you know, deal opportunities could go down. If you could kind of just speak to that fear as well.
Thanks, Reggie. Just to clarify, when you say due diligence, are you referring to due diligence of individual investments or which due diligence in particular?
Yes. Yes.
Has the market turmoil changed the way we due diligence a new investment?
That's right. Yeah.
Got it. I'm gonna maybe ask Rich to answer that or if Marc wants to. I would say, as a preface to their answer, in the last three years, it's challenging to define current turmoil. If you're referring to specifically the post-SVB world, although it feels like about three months, it's been about 10 days, I think, since SVB was in receivership. I don't think in 10 days we've necessarily changed our approach. With that as a preface, if Marc or Rich wants to answer that. Yeah, if you wanna.
Just add, perhaps one clarification that a significant majority of the investments we make are around either, excuse me, are when projects are already operational, where I think the risk you're identifying is there a bank that won't be able to make and to fund a commitment it's made? Generally, when we're investing, all of this funding commitment has already been made. Whether that bank goes out of business after they've made their, they've funded the deal is not really we see as a major credit concern for the project itself.
To the second part of your question, again, I go back to my opening comments. What happens next is still a little too raw to predict. Could there be a period here where our clients take a pause because they're having trouble working with their banks because things really go south over the next couple of weeks? That is certainly one scenario, but it's too early to tell what's exactly gonna play out there.
If it's okay to just add one other thing?
I do.
I just think to, you know, Jeff's early beginning comments, I mean, our exposure is extremely limited, and I just wanna emphasize that our underwriting and diligence is robust. You know, while we always intend to sort of look back and get smarter, I do feel confident that we actually are addressing all the real issues that could potentially come up in the process we have in place today.
Any other questions before we close out? Okay, not seeing any. Again, wanna thank you guys so much for coming. To folks who are viewing the webcast, thank you for listening as well. Thank you.