HASI Recurring Investment Income Rises 23% YTD

HA Sustainable Infrastructure Capital Inc. (NYSE: HASI) reported stronger year-to-date adjusted earnings and recurring investment income in the third quarter of 2026, supported by portfolio growth and higher asset yields that more than offset increased borrowing costs. The company reaffirmed its 2028 adjusted earnings guidance and said 2026 investment activity was tracking toward the high end of its target range.

HASI recorded third-quarter adjusted earnings per share of $0.82. For the nine months ended September 30, adjusted earnings increased 21% year over year to $309 million, while adjusted EPS rose 15% to $2.34. Adjusted return on equity reached 15.6%, up 220 basis points from the prior-year period.

Adjusted recurring net investment income rose 23% to $330 million year to date. Gain-on-sale, origination-fee and other income declined 10% to $46 million, but origination-fee and other income alone increased to $27 million from $7 million.

Higher yields support investment margins

The portfolio yield increased to 9.2% for the first nine months of 2026 from 8.5% in 2025, while yields on new portfolio investments exceeded 11%. Interest expense as a percentage of average debt rose more modestly, to 6.1% from 5.8%, expanding the net investment margin to 3.1% from 2.7%.

HASI said its exposure to rate movements is limited by the structure of its assets and liabilities. As of September 30, 87% of debt was fixed-rate or hedged, while only about 5% of the investment portfolio consisted of floating-rate receivables. The company also uses forward-starting swaps to align the duration of assets and liabilities.

Short-term funding costs improved despite higher rates during the year. HASI said average short-term borrowing costs declined by more than 80 basis points year to date, with its commercial paper program costing an average of 85 basis points less than its revolving credit facility. The company issued more than $5.4 billion of commercial paper, including rollovers, through the third quarter at an average discount rate of about 4.25%.

Transaction activity and managed assets expand

HASI closed more than $1 billion of new transactions during the third quarter. Balance-sheet and CCH1 transactions totaled $2.5 billion through September, an increase of 146% from the comparable 2025 period. Management said the company remained on track for the high end of its $2 billion to $3 billion full-year target for new balance-sheet and CCH1 transactions.

Managed assets increased 26% year over year to $19 billion, while HASI’s portfolio rose 20% to $9.1 billion. Assets within the CCH1 co-investment structure grew 231% to $3.9 billion. The portfolio remained diversified across more than 10 asset classes, with residential solar and storage representing 33%, onshore wind 17%, grid-connected solar and storage 16%, and renewable natural gas 14%.

The company reported a greater than $6.5 billion 12-month investment pipeline as of September 30. Behind-the-meter projects represented 44% of the pipeline, grid-connected investments 30%, fuels, transport and nature 19%, and other sustainable infrastructure 7%.

During the quarter, HASI significantly expanded its partnership with Invenergy through a 2.7-gigawatt portfolio of utility-scale solar, solar-plus-storage and wind projects. The portfolio covers 10 projects across seven states and is supported by long-term power purchase agreements with investment-grade offtakers. About 850 megawatts were operating, with the remaining projects expected to be funded as they reach commercial operation through the first quarter of 2027.

HASI also highlighted the growth of SunStrong Management, in which its equity stake was valued at $41 million at quarter-end, compared with $6 million in the fourth quarter of 2024. SunStrong manages more than 5 gigawatts of solar capacity and over 160 electric-vehicle charging systems. It serves about 450,000 solar customers, more than four times the number at the end of 2024, and expects revenue growth of more than 40% in 2026.

Capital position and outlook

HASI ended the quarter with $2 billion of liquidity and a debt-to-equity ratio of 1.8 times, within its target range of 1.5 to 2.0 times. The company made no at-the-market equity issuances during the first nine months and expects minimal ATM issuance for the full year.

In September, HASI replaced a $156 million secured term loan due in 2028 with a new $175 million facility priced at Term SOFR plus 1.25%, a spread 100 basis points lower than the previous loan. A subsequent $400 million CCH1 note issuance in October brought cumulative senior notes outstanding in that structure to $1.5 billion.

Management continues to expect adjusted EPS of $3.55 to $3.65 and adjusted ROE above 17% in 2028. It also expects adjusted EPS to grow about 10% in 2026. The company reaffirmed its target to reduce its dividend payout ratio below 50% by 2028 and below 40% by 2030, although dividends remain subject to quarterly board approval.

HASI did not provide GAAP guidance, citing the assumptions required to forecast earnings under the hypothetical liquidation at book value method used for certain equity-method investments.

Credit performance remained broadly stable, with about 98% of the portfolio classified as performing. Average annual realized losses on managed assets were 0.09% over the 10 years ended September 30. However, the company said remediation costs associated with project assets consolidated after it exercised protective rights on two loans were higher than initially expected, reducing estimated net cash flows. HASI recognized the related economic loss in its non-GAAP measures.

The company’s outlook also remains subject to interest rates, capital availability, regulatory changes, renewable-energy supply-chain disruptions and the effects of the One Big Beautiful Bill Act on the U.S. climate-solutions market and broader economy.