10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly report year ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number 001-11981

MMA CAPITAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	52-1449733 (I.R.S. Employer Identification No.)
3600 O’Donnell Street, Suite 600 Baltimore, Maryland 21224 (Address of principal executive offices, including zip code)	(443) 263-2900 (Registrant’s telephone number, including area code) ​

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Shares, no par value Common Stock Purchase Rights Trading Symbol(s) MMAC MMAC Name of each exchange on which registered
Nasdaq Capital Market Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☑

There were 5,706,366 shares of common shares outstanding at November 2, 2020.

MMA Capital Holdings, Inc.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS					2
PART I – FINANCIAL INFORMATION					3
	Item 1.	Financial Statements (Unaudited)		27
		(a)	Consolidated Balance Sheets at September 30, 2020 and December 31, 2019	27
		(b)	Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and September 30, 2019	28
		(c)	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and September 30, 2019	30
		(d)	Consolidated Statements of Equity for the nine months ended September 30, 2020 and September 30, 2019		31
		(e)	Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and September 30, 2019		33
		(f)	Notes to Consolidated Financial Statements	35
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		5
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		62
	Item 4.	Controls and Procedures		62
PART II – OTHER INFORMATION					63
	Item 1	Legal Proceedings			63
	Item 1A.	Risk Factors			63
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			64
	Item 3.	Defaults Upon Senior Securities			65
	Item 4.	Mine Safety Disclosures			65
	Item 5.	Other Information			65
	Item 6.	Exhibits			66
SIGNATURES					S-1

1

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q for the period ended September 30, 2020 (this “Report”) should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Annual Report”), filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”), to which reference is hereby made. This Report contains forward-looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements often include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “focus” “intend,” “may,” “plan,” “potential,” “project,” “see,” “seek,” “should,” “will,” “would,” and similar words or expressions and are made in connection with discussions of future events and future operating or financial performance.

Forward-looking statements reflect our management’s expectations at the date of this Report regarding future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties including the uncertain aspect of the novel strain of coronavirus pandemic, known as COVID-19. Our actual results and financial condition may differ materially from what is anticipated in the forward-looking statements. There are many factors that could cause actual conditions, events or results to differ from those anticipated by the forward-looking statements contained in this Report. For a discussion of certain risks and uncertainties and the factors that could cause our actual results to differ materially because of those risks and uncertainties, see Part II, Item 1A. “Risk Factors” of this Report and Part I, Item 1A. “Risk Factors” of our 2019 Annual Report.

Readers are cautioned not to place undue reliance on forward-looking statements in this Report or that we may make from time to time, and to consider carefully the factors discussed in Part II, Item 1A. “Risk Factors” of this Report and Part I, Item 1A. “Risk Factors” of our 2019 Annual Report in evaluating these forward-looking statements. We do not undertake to update any forward-looking statements contained herein, except as required by law.

2

PART I – FINANCIAL INFORMATION

MMA Capital Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

	As of and for the three months ended
(in thousands, except per common share data)	September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019
Selected income statement data
Net interest income	$	347	$	554	$	559	$	2,276
Non-interest income		8,606		12,587		2,429		10,666
Other expenses		4,907		14,689		7,237		4,213
Net income (loss) from continuing operations before income taxes		4,046		(1,548)		(4,249)		8,729
Income tax (expense) benefit (1)		(1,110)		(1,960)		1,191		60,571
Net income (loss)	$	2,936	$	(3,508)	$	(3,058)	$	69,300
Earnings per share data
Net income (loss): Basic and Diluted	$	0.51	$	(0.60)	$	(0.53)	$	11.84
Net income (loss) from continuing operations before income taxes per share: Basic and Diluted	$	0.70		(0.27)	$	(0.73)	$	1.49
Average shares: Basic and Diluted		5,811		5,807		5,804		5,855
Market and per common share data
Market capitalization	$	128,450	$	131,884	$	141,021	$	181,322
Common shares at period-end		5,815		5,811		5,807		5,805
Share price during period:
High		28.42		29.00		32.70		33.00
Low		22.19		22.11		20.00		29.01
Closing price at period-end		22.51		23.12		24.73		31.80
Book Value per common share: Basic and Diluted		47.74		47.24		47.82		48.43
Adjusted Book Value per common share: Basic and Diluted (2)		38.08		37.37		37.59		38.49
Selected balance sheet data
Cash and cash equivalents	$	21,784	$	24,554	$	23,164	$	8,555
Investments in debt securities		30,305		29,988		29,645		31,365
Investment in partnerships		373,707		375,200		368,598		316,677
Deferred tax assets, net		56,156		57,336		59,394		57,711
Loans held for investment		1,302		1,291		1,271		54,100
All other assets		39,175		38,567		26,000		17,234
Total assets	$	522,429	$	526,936	$	508,072	$	485,642
Debt	$	238,381	$	245,532	$	223,653	$	201,816
All other liabilities		6,430		6,917		6,750		2,701
Total liabilities		244,811		252,449		230,403		204,517
Common shareholders' equity ("Book Value")	$	277,618	$	274,487	$	277,669	$	281,125
Rollforward of Book Value
Book Value - at beginning of period	$	274,487	$	277,669	$	281,125	$	212,910
Net income (loss)		2,936		(3,508)		(3,058)		100,977
Other comprehensive income (loss)		98		229		(453)		(30,064)
Common share repurchases		—		—		(41)		(2,730)
Other changes in common shareholders' equity		97		97		96		32
Book Value - at end of period	$	277,618	$	274,487	$	277,669	$	281,125
Less: Deferred tax assets, net		56,156		57,336		59,394		57,711
Adjusted Book Value (2) - at end of period	$	221,462		217,151	$	218,275	$	223,414

3

(1) The Company recognized a net $57.7 million deferred tax asset (“DTA”) in the fourth quarter of 2019 that was driven by an increase in the amount of net operating loss carryforwards (“NOLs”) that, at December 31, 2019, the Company assessed were more likely than not to be utilized prior to their expiration.

(2) Book Value excluding deferred tax assets (“Adjusted Book Value”) and Adjusted Book Value per share are financial measures that are determined other than in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These non-GAAP financial measures are used to show the amount of our net worth in the aggregate and on a per-share basis, without giving effect to changes in Book Value due to the partial release of our deferred tax asset valuation allowance as of September 30, 2020; June 30, 2020; March 31, 2020 and December 31, 2019. Refer to “Use of Non-GAAP Measures” for more information, including a reconciliation of these non-GAAP financial measures to the most directly comparable historical measures determined under GAAP.

4

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Overview

MMA Capital Holdings, Inc. focuses on infrastructure-related investments that generate positive environmental and social impacts and deliver attractive risk-adjusted total returns to our shareholders, with an emphasis on debt associated with infrastructure, including renewable energy projects. Unless the context otherwise requires, and when used in this Report, the “Company,” “MMA,” “we,” “our” or “us” refers to MMA Capital Holdings, Inc. and its subsidiaries. We were originally organized as a Delaware limited liability company in 1996, converted to a Delaware corporation on January 1, 2019 and are externally managed by Hunt Investment Management, LLC (our “External Manager”), an affiliate of Hunt Companies, Inc. (Hunt Companies, Inc. and its affiliates are hereinafter referred to as “Hunt”).

Our current objective is to produce attractive risk-adjusted returns by investing in the large, growing and fragmented renewable energy market in the United States (“U.S.”). We believe that we are well positioned to take advantage of these and other investment opportunities because of our External Manager’s origination network built off of extensive relationships and credit expertise gathered through years of experience. We also seek to increase the Company’s return on equity by prudently deploying debt and recycling equity out of lower yielding investments that are unrelated to renewable energy and other infrastructure projects.

In addition to renewable energy investments, we continue to own a limited number of bond investments and real estate-related investments, and we continue to have subordinated debt with beneficial economic terms. Further, we have significant net operating loss carryforwards (“NOLs”) that may be used to offset future federal income tax obligations, a portion of which were reported as deferred tax assets (“DTAs”) in our Consolidated Balance Sheets at September 30, 2020, and December 31, 2019. Effective December 31, 2019, we no longer organize our assets and liabilities into discrete portfolios (in each Quarterly Report on Form 10-Q that was filed in 2019, assets and liabilities of the Company were allocated to one of two portfolios, “Energy Capital” and “Other Assets and Liabilities”).

We operate as a single reporting segment.

COVID-19 and Related Business Impacts

General

In many countries, including the U.S., the outbreak of a novel coronavirus (“COVID-19”) has adversely impacted overall economic activity and contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak continues to evolve as many countries, including the U.S., continue to institute or modify quarantines, business closures and operating restrictions, governmental agency closures and restrictions on travel and group gatherings to contain COVID-19.

The long-term impact of COVID-19 on our operational and financial performance will depend on future developments, including the duration, spread and intensity of COVID-19, and the measures taken to control it, all of which remain uncertain and difficult to predict. While we are not able to estimate the long-term effects of these factors on our business at this time, the adverse impact on our business, results of operations, financial condition and cash flows could be material. Refer to Part II, Item 1A. “Risk Factors” of this Report for additional information about risks to our business that are posed by COVID-19.

5

Business Operations

We are managed by our External Manager. We also rely upon other third-party vendors to conduct business operations, including vendors that provide information technology services, legal and accounting services or other support services.

As of September 30, 2020, there were no disruptions to the services provided by the External Manager and support provided by other third parties in connection with our business operations.

Renewable Energy Investments

As of September 30, 2020, the construction and development of renewable energy projects that have been financed through loans made by the Solar Ventures (as defined below) were not significantly impacted by the COVID-19 pandemic as the development and construction of such projects qualified as critical infrastructure or essential services. Furthermore, projects that were financed by loans made by the Solar Ventures did not experience any significant supply chain issues or construction delays during the third quarter of 2020.

All loans made by the Solar Ventures, which were valued at 100% of UPB at September 30, 2020, were assessed to be adequately secured and were expected at September 30, 2020 to be repaid in full. In most cases, the repayment of the Solar Venture loans, or their “take-out,” is dependent upon the refinancing of a given loan or the sale of an underlying renewable energy project to third-parties, both of which typically require some combination of tax credit equity, sponsor equity and construction or permanent debt financing. The Solar Ventures may themselves participate in the take-out of such loans by providing financing, including long-term mezzanine financing or other credit enhancements. Given the macro-economic conditions, uncertainty in the financial markets and our dependence on a functioning renewable energy finance market, we will continue to closely monitor loan performance and expected sources of repayment.

Origination activity at the Solar Ventures during the first nine months of 2020 has not been meaningfully impacted by COVID-19.

Other Investments and Hedging Instruments

The Company’s 80% ownership interest in a joint venture, which owns a mixed-use town center development that consists of hotel tenants, retail tenants and undeveloped land parcels and whose incremental tax revenues secure our tax-exempt municipal bond (“Infrastructure Bond”) (hereinafter, the “SF Venture”), was determined to be other-than-temporarily impaired during the preparation of our second quarter financial statements as of June 30, 2020, given the impacts of the downturn in the economy stemming from COVID-19. Consequently, the Company recognized a related $9.0 million impairment loss in its Consolidated Statements of Operations in the second quarter of 2020. There were no additional impairment charges recognized during the third quarter of 2020.

We are monitoring the economic impact of the COVID-19 pandemic on the performance of our investments and underlying real estate values. Although we have not recognized impairment charges other than that for the SF Venture discussed above, we believe it is reasonably possible that we may be required to recognize one or more material impairment charges over the next 12 months, particularly if underlying economic conditions deteriorate further. Because any such impairment charge will be based on future circumstances, we cannot predict at this time whether we will be required to recognize any further impairment charges and, if required, the timing or amount of any impairment charge.

Hedging instruments used by the Company to manage interest rate and foreign currency risks have performed in accordance with the contractual terms.

6

DTAs

While COVID-19 caused a sharp deterioration in macro-economic conditions, the potential amount and permanence of long-term impacts of those conditions on the Company’s business was uncertain at September 30, 2020. Consequently, the Company did not make an adjustment in the third quarter of 2020 to the carrying value of DTAs that were recognized at December 31, 2019. However, given such uncertainty and other factors, we believe it is reasonably possible that, within the next 12 months, a reduction to the net carrying value of DTAs that is material to the Company’s financial statements could be recognized. However, whether we recognize such a loss and the exact timing and amount of loss recognition depends upon future circumstances and, therefore, cannot be predicted at this time.

Liquidity and Capital Resources

During the first nine months of 2020, COVID-19 has not prevented us from operating our business and making investments.

Through September 30, 2020, the Company was in compliance with all its debt covenants.  

Renewable Energy Investments

We invest in loans that finance renewable energy projects to enable developers, design and build contractors and system owners to develop, build and operate renewable energy systems throughout the U.S. Renewable energy debt in which we invest is primarily structured as senior secured fixed rate loans that are made through joint ventures or directly on our balance sheet. These loans, which are generally short-term in nature, are typically made to borrowers when they are in the late stages of development or in construction of their commercial, utility and community solar scale photovoltaic (“PV”) facilities that are located across different states and benefit from various state and federal regulatory programs. The short duration of loans in which we typically invest also helps us to efficiently manage interest rate risk, mitigate long-term risks such as credit exposure to off-take counterparties and provide us flexibility to target investments although there may be opportunities in the future to originate longer-dated investments that would provide greater insight into our future earnings.

We generally invest in renewable energy investments through the following joint ventures: Solar Construction Lending, LLC (“SCL”); Solar Permanent Lending, LLC (“SPL”); Solar Development Lending, LLC (“SDL”); these joint ventures together with our wholly owned subsidiary, Renewable Energy Lending, LLC (“REL”), are hereinafter referred to as the “Solar Ventures.” We are a 50% investor member in the renewable energy joint ventures in which we invest though we may periodically have a minority economic interest as a result of non-pro rata capital contributions made by our capital partner pursuant to non-pro rata funding agreements between our capital partner and us. Such non-pro rata funding agreements are generally executed in instances when the Company does not have sufficient liquidity at the time of a capital call. Distributions from such ventures are generally made in proportion to the members’ respective economic interests but may be made disproportionately to our capital partner, when our capital partner has made non-pro rata capital contributions, until such time that the amount of equity invested by the Company and its capital partner have come back into equal balance. At September 30, 2020, we had a minority economic interest in two of the Solar Ventures.

Lending Activities of the Solar Ventures

The Solar Ventures typically lend on a senior secured basis collateralized by solar projects, but may also invest in subordinated loans, mezzanine loans and revolving loans and may finance non-solar renewable technologies such as wind and battery storage, or provide equipment financing and other customized debt solutions for borrowers. The Solar Ventures have historically targeted loans that are underwritten to generate internal rates of return (“IRR”) ranging from 10% to 15%, before expenses, with origination fees that range from 1.0% to 3.0% on committed capital and fixed-rate coupons that range from 7.0% to 14.0%. These loans typically range in size from $2 million to over $50 million.

Since their inception in 2015, the Solar Ventures have invested in more than 195 project-based loans that total $2.9 billion of debt commitments for the development and construction of over 760 renewable energy project sites. When completed, these projects are expected to contribute to the generation of over 9.3 gigawatts of renewable energy, thereby eliminating approximately 267.6 million metric tons of carbon emissions over their project lives.

7

The Solar Ventures closed $92.3 million of commitments across five loans during the third quarter of 2020 as compared to $247.5 million across 12 loans during the second quarter of 2020. Additionally, origination volume during the first nine months of 2020 declined to $626.9 million as compared to loan originations made during the first nine months of 2019 of $789.0 million. Declines in origination volumes during these periods were primarily driven by the amount of available capital and a desire to not overextend the Company’s liquidity given our share of unfunded loan commitments of the Solar Ventures and other business needs.

Through September 30, 2020, $1.8 billion of commitments across 143 project-based loans had been repaid with no loss of principal, resulting in a weighted-average IRR (“WAIRR”) of 16.2% that was on average higher than originally underwritten loan IRRs. For the three months ended September 30, 2020, 11 loans totaling $221.1 million of commitments had been repaid, resulting in a WAIRR of 12.4%. WAIRR is measured as the total return in dollars of all repaid loans divided by the total commitment amount associated with such loans, where (i) the total return for each repaid loan was calculated as the product of each loan’s IRR and its commitment amount and (ii) IRR for each repaid loan was established by solving for a discount rate that made the net present value of all loan cash flows equal zero. WAIRR has been higher than the net return on the Company's investments in the Solar Ventures because it is a measure of gross returns earned by the Solar Ventures on repaid loans and does not include the impact of certain items, including: (i) operating expenses of the Solar Ventures; (ii) the amortization of the purchase premium paid by the Company in the second quarter of 2018 to buyout our former investment partner’s interest in REL; and (iii) the opportunity cost of idle capital. 

At September 30, 2020, loans funded through the Solar Ventures had an aggregate unpaid principal balance (“UPB”) and total fair value (“FV”) of $745.8 million, a weighted-average remaining maturity of seven months and a weighted-average coupon of 10.0%. At December 31, 2019, loans funded through the Solar Ventures had an aggregate UPB and total fair value of $654.4 million, a weighted-average maturity of 10 months and a weighted-average coupon of 10.8%.

It should be noted that certain components of the national and some local renewable energy finance markets, such as the Electric Reliability Council of Texas, or “ERCOT”, have been and may further be affected by changing market dynamics, resulting in supply and demand imbalances, particularly for tax equity investments. These market dynamics may materially and negatively impact the Solar Ventures’ loan portfolio in a variety of ways, including, but not limited to, the availability and pricing of tax equity and the deterioration of underlying project value if the price of electricity falls due to competition or waning demand and a project has merchant exposure. The Solar Ventures’ concentration in some of the affected markets could further impact when and how capital invested in late-stage development and construction loans is repaid and re-invested. At September 30, 2020, 54% of the total UPB of outstanding loans of the Solar Ventures was associated with a single sponsor and financed projects located in the ERCOT. Additionally, at September 30, 2020, all but two of the underlying renewable energy projects that the Solar Ventures have lent against, both of which are in ERCOT and whose related financing had an aggregate UPB of $365.9 million, had usual and customary take-out commitments in place as generally required under the loan agreements, and negotiations were actively proceeding to obtain such commitments for the remaining two projects. At September 30, 2020, all Solar Venture loans, including those renewable energy projects in ERCOT, were valued at 100% of UPB, were assessed to be adequately secured and were expected to be repaid in full.

Table 1 provides financial information about the composition of the Solar Ventures’ loan portfolio at September 30, 2020 and December 31, 2019.

Table 1: Composition of the Solar Venture’s Loan Portfolio

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Late-stage development	$	244,264	$	298,609
Construction		463,827		321,809
Permanent		2,355		23,597
Other loans associated with renewable energy		35,338		10,345
Total UPB	$	745,784	$	654,360

8

The Solar Ventures had $306.2 million of unfunded loan commitments that required borrowers to meet various conditions set forth in governing loan agreements in order for funding to occur. At September 30, 2020, $147.8 million of such commitments were attributable to the Company based upon its interest in these ventures. Unfunded loan commitments that qualify for funding are anticipated to be funded primarily by capital within the Solar Ventures through a combination of existing loan redemptions and idle capital. Idle capital may arise due to the difficulty of aligning loan repayments with funding obligations on a dollar-for-dollar basis. To the extent capital within the Solar Ventures is not sufficient to meet their funding obligations, additional capital contributions by the members of the Solar Ventures would be required.

Investment Interests and Related Carrying Values

At September 30, 2020, through MMA Energy Holdings, LLC, the Company was a 50% investor member but held economic interests of 43.4%, 50.0% and 42.9% in SCL, SPL and SDL, respectively, and was the sole member in REL. The carrying value and income-related information related to investments that we have made in, or related to, the Solar Ventures are further discussed below. During the third quarter of 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed the full $56.0 million in SCL capital calls and $24.0 million of $39.0 million in SDL capital calls, while the Company contributed the $15.0 million balance, with respect to SDL. In addition, in accordance with a non-pro rata funding agreement between the Company and our capital partner, our capital partner in SCL received distributions of $65.0 million, while the Company received distributions of $15.0 million. As a consequence of these non-pro rata capital contributions and distributions during the third quarter of 2020, our economic interest in SCL and SDL decreased in percentage terms from 44.2% and 43.6% in SCL and SDL, respectively, at June 30, 2020.

Subsequent to September 30, 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed $82.0 million of $97.0 million in SCL and SDL capital calls, while the Company contributed the balance of these capital calls, or $15.0 million, which represented the full $15.0 million of distributions received from the ventures subsequent to the third quarter. As a consequence of these non-pro rata capital contribution and distributions, our economic interest in SCL and SDL decreased to 39.2% and 39.6%, respectively.

In addition to investments in the Solar Ventures, in the fourth quarter of 2019, the Company invested in a loan originated by our External Manager with a $2.1 million commitment made to a special purpose entity that is secured by land, which is subject to a 25-year ground lease to a community solar project, and by the equity interests in the borrower. The UPB and fair value of this loan, which bears interest at a fixed rate of 8.0% and matures in December 2022, was $1.3 million at September 30, 2020.

Table 2 provides financial information about the carrying value of the Company’s renewable energy investments at September 30, 2020 and December 31, 2019.

Table 2:  Carrying Values of the Company’s Renewable Energy Investments

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Equity investments in the Solar Ventures	$	362,403	$	289,123
Loan receivable		1,302		500
Total carrying value	$	363,705	$	289,623

The carrying value of the Company’s equity investments in the Solar Ventures increased $73.3 million during the nine months ended September 30, 2020 as a result of $45.8 million of net capital contributions made and $27.5 million of equity in income in the Solar Ventures that was recognized during the nine months ended September 30, 2020.

9

Investment Income and Return on Investment

The Company applies the equity method of accounting to its equity investments in the Solar Ventures, which are not consolidated by the Company for reporting purposes. Accordingly, the Company recognizes its allocable share of the Solar Ventures’ net income based on the Company’s weighted-average percentage ownership during each reporting period. Separately, the Company recognizes interest income associated with the aforementioned loan using the interest method.

Table 3 summarizes income recognized by the Company in connection with our renewable energy investments for the periods presented.

Table 3:  Income Recognized from Renewable Energy Investments

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2020		2019			Change	2020		2019			Change
Equity in income from the Solar Ventures	$	9,217	$	6,022	$	3,195	$	27,487	$	14,271	$	13,216
Interest income		27		839		(812)		72		1,265		(1,193)
Net gains on loans		11		—		11		22		—		22
Total investment income	$	9,255	$	6,861		2,394	$	27,581	$	15,536	$	12,045

The Company generated an unlevered net return on investment from our renewable energy investments, as measured on a twelve-month trailing basis, of 11.1% and 12.2% for the periods ended September 30, 2020 and September 30, 2019, respectively. These returns were measured on a trailing four quarter basis at each reporting period by dividing total income from renewable energy investments by the average carrying value of renewable energy investments.

Refer to the comparative discussion of our Consolidated Results of Operations for more information about income that was recognized in connection with the Company’s renewable energy investments.

Leveraging our Renewable Energy Investments

On September 19, 2019, MMA Energy Holdings, LLC (“MEH” or “Borrower”), a wholly owned subsidiary of the Company, entered into a $125.0 million (the “Facility Amount”) revolving credit agreement with various lenders. During the first quarter of 2020, the maximum Facility Amount was increased to $175.0 million and the committed amount of the revolving credit facility increased from $100.0 million to $120.0 million upon the joinder of an additional lender and an increase in commitment by one of the existing lenders.

Obligations associated with the revolving credit facility are guaranteed by the Company and are secured by specified assets of the Borrower and a pledge of all of the Company’s equity interest in the Borrower through pledge and security documentation. Availability and amounts advanced under the revolving credit facility, which may be used for various business purposes, are subject to compliance with a borrowing base comprised of assets that comply with certain eligibility criteria, and includes late-stage development, construction and permanent loans to finance renewable energy projects and cash.

Borrowing on the revolving credit facility bears interest at the one-month London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements (subject to a 1.5% floor), plus a fixed spread of 2.75% per annum. The Borrower has also agreed to pay certain customary fees and expenses and to provide certain indemnities. In certain circumstances where the interest rate is unable to be determined, including in the event LIBOR ceases to be published, the administrative agent to the credit agreement will select a new rate in its reasonable judgment, including any adjustment to the replacement rate to reflect a different credit spread. The maturity date of the credit agreement is September 19, 2022, subject to a 12-month extension solely to allow refinancing or orderly repayment of the facility.  

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At September 30, 2020, the UPB and carrying value of amounts borrowed under the revolving credit facility was $103.7 million and the Company recognized $4.3 million of related interest expense in the Consolidated Statements of Operations during the nine months ended September 30, 2020.

The liquidity accessed by the Company through the revolving credit facility has increased the amount of capital invested in the Solar Ventures.

Deferred Tax Assets

Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. DTAs are recognized if we assess that it is more likely than not that tax benefits, including NOLs and other tax attributes, will be realized prior to their expiration.

At September 30, 2020, the reported carrying value of the Company’s net DTA was $56.2 million. A valuation allowance was also maintained at such reporting date against the portion of our DTAs that correspond to federal and state NOL carryforwards that we expected will expire prior to utilization based upon our forecast of pretax book income.

Investments in Bonds

The Company has one tax-exempt municipal bond that financed the development of infrastructure for a mixed-use town center development in Spanish Fort, Alabama and is secured by incremental tax revenues generated from the development. At September 30, 2020, the Infrastructure Bond had a stated fixed interest rate of 6.3% and had a UPB and fair value of $26.7 million and $24.1 million, respectively. During the second quarter of 2020, a financing transaction was executed that involved the sale of this bond investment to a third party with which the Company contemporaneously-executed a total return swap (“TRS”) agreement that also referenced such bond investment. Given the economic interest retained in such bond investment through the TRS agreement, the Company reported the conveyance of such investment as a secured borrowing and, therefore, continued to recognize the Infrastructure Bond on the Company’s Consolidated Balance Sheets.        

At September 30, 2020, we also held one subordinated unencumbered tax-exempt multifamily bond investment with a UPB and fair value of $4.0 million and $6.2 million, respectively.

Real Estate-Related Investments

At September 30, 2020, we maintained an interest in a real estate-related investment through our 80% ownership interest in the SF Venture. The carrying value of this investment was $9.7 million at September 30, 2020.

At September 30, 2020, the Company maintained an 11.85% ownership interest in the South Africa Workforce Housing Fund (“SAWHF”). SAWHF is a multi-investor fund that matured in April 2020. However, the fund does not anticipate fully exiting all its remaining investments until December 31, 2022. On May 22, 2020, the Company received a pro-rata distribution from SAWHF of 7.2 million common shares of a residential real estate investment trust (“REIT”) that is listed on the Main Board of the Johannesburg Stock Exchange. These REIT shares, which trade under the trading symbol “TPF,” are reported at their fair value and are denominated in South African rand. The carrying values of the Company’s equity investments in SAWHF and the REIT were $1.6 million and $2.6 million, respectively, at September 30, 2020.

At September 30, 2020, we also owned one direct investment in real estate consisting of a parcel of land that is currently in the process of development. This real estate is located just outside the city of Winchester in Frederick County, Virginia. During the first nine months of 2020, the Company invested $7.0 million in additional land improvements that were capitalized, increasing the carrying value of our investment. As of September 30, 2020, the carrying value of this investment was $15.4 million.

Other Debt Obligations

At September 30, 2020, the Company had other debt obligations that included subordinated debt, notes payable and other debt used to finance certain non-interest bearing investments and asset related debt that was used to finance interest bearing

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investments. During the second quarter of 2020, the Company closed a $10.0 million lending arrangement that is secured by our direct investment in real estate that is in process of development and a $23.5 million financing arrangement associated with its Infrastructure Bond investment. The carrying value and weighted-average yield of the Company’s other debt obligations was $134.7 million and 2.6%, respectively, at September 30, 2020. Refer to Table 9, “Debt,” for more information.

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SUMMARY OF FINANCIAL PERFORMANCE

Net Worth

Common shareholders’ equity (“Book Value”) increased $3.1 million in the third quarter of 2020 to $277.6 million at September 30, 2020. This change was driven by $3.0 million of comprehensive income and $0.1 million of other increases in common shareholders’ equity.

Book Value per share increased $0.50, or 1.1%, in the third quarter of 2020 to $47.74 at September 30, 2020.

Book Value adjusted to exclude the carrying value of our net DTAs (“Adjusted Book Value”) increased $4.3 million in the third quarter of 2020 to $221.5 million at September 30, 2020. This change was driven by $4.0 million of “Net income from continuing operations before income taxes” and $0.3 million of other increases in Book Value.

Adjusted Book Value per share increased $0.71, or 1.9%, in the third quarter of 2020 to $38.08 at September 30, 2020.

Refer to “Use of Non-GAAP Measures” for more information regarding the reconciliation of Adjusted Book Value and Adjusted Book Value per share to our most comparable GAAP measures.

Comprehensive Income

We recognized comprehensive income of $3.0 million during the third quarter of 2020, which consisted of $2.9 million of net income and $0.1 million of other comprehensive income. In comparison, we recognized $4.9 million of comprehensive income in the quarter ended September 30, 2019, which consisted of $5.6 million of net income and $0.7 million of other comprehensive loss.

The $2.9 million of net income recognized in the third quarter of 2020 was primarily driven by the impact of strong returns on renewable energy investments. Refer to “Consolidated Results of Operations,” for more information.

Net income from continuing operations before income taxes in the third quarter of 2020 was $4.0 million, or $0.70 per share, as compared to $5.6 million of net income in the third quarter of 2019.

Other comprehensive gain of $0.1 million that we reported in the third quarter of 2020 was primarily attributable to net fair value gains that we recognized in connection with our bond investments.

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CONSOLIDATED BALANCE SHEET ANALYSIS

This section provides an overview of changes in our assets, liabilities and equity and should be read together with our consolidated financial statements, including the accompanying notes to the financial statements.

Table 4 provides Consolidated Balance Sheets for the periods presented.

Table 4: Consolidated Balance Sheets

	At		At
	September 30,		December 31,
(in thousands, except per share data)	2020		2019		Change
Assets
Cash and cash equivalents	$	21,784	$	8,555	$	13,229
Restricted cash		17,224		4,250		12,974
Investments in debt securities		30,305		31,365		(1,060)
Investments in partnerships		373,707		316,677		57,030
Deferred tax assets, net		56,156		57,711		(1,555)
Loans held for investment		1,302		54,100		(52,798)
Other assets		21,951		12,984		8,967
Total assets	$	522,429	$	485,642	$	36,787
Liabilities
Debt	$	238,381	$	201,816	$	36,565
Accounts payable and accrued expenses		3,772		2,527		1,245
Other liabilities		2,658		174		2,484
Total liabilities	$	244,811	$	204,517	$	40,294
Book Value: Basic and Diluted	$	277,618	$	281,125	$	(3,507)
Less: Deferred tax assets, net		56,156		57,711		(1,555)
Adjusted Book Value: Basic and Diluted (1)	$	221,462	$	223,414	$	(1,952)
Common shares outstanding: Basic and Diluted		5,815		5,805		10
Book Value per common share: Basic and Diluted	$	47.74	$	48.43	$	(0.69)
Adjusted Book Value per common share (1): Basic and Diluted	$	38.08	$	38.49	$	(0.41)

(1) Adjusted Book Value and Adjusted Book Value per share are financial measures that are determined other than in accordance with GAAP. These non-GAAP financial measures are used to show the amount of our net worth in the aggregate and on a per-share basis, without giving effect to changes in Book Value due to the partial release of our deferred tax asset valuation allowance as of September 30, 2020 and December 31, 2019. Refer to “Use of Non-GAAP Measures” for more information, including a reconciliation of these non-GAAP financial measures to the most directly comparable historical measures determined under GAAP.

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Cash and cash equivalents increased primarily due to proceeds received in connection with financing transactions that closed in the second quarter of 2020 involving the Company’s Infrastructure Bond investment and our direct investment in real estate.  

Restricted cash increased primarily as a result of cash collateral to our counterparty in connection with the aforementioned financing transaction involving the Company’s Infrastructure Bond investment.

Investments in debt securities decreased primarily due to the recognition of net fair value losses in the first nine months of 2020 that were attributable to increases in the market yields of such investments.

Investments in partnerships increased primarily as a result of net capital contributions of $45.8 million that we made to the Solar Ventures and the recognition of $27.5 million of equity in income of our investees. The impact of these items was partially offset by the effects of both a $9.0 million impairment charge recognized in the second quarter of 2020 related to our equity investment in the SF Venture and a $2.9 million distribution from SAWHF of 7.2 million common shares of a listed residential REIT.

Deferred tax assets, net decreased $1.6 million primarily due to the tax impact associated with the recognition of taxable income in the third quarter of 2020 and the establishment of a valuation allowance against deferred tax benefits stemming from the $9.0 million impairment charge associated with the Company’s equity investment in the SF Venture during the second quarter of 2020.

Loans held for investment decreased primarily as a result of the repayment of the Company’s $53.6 million loan receivable from Hunt (the “Hunt Note”) on January 3, 2020.

Other Assets increased primarily as a result of $7.0 million of land improvement costs that were capitalized in connection with a real estate investment that is in process of development and the aforementioned distribution from SAWHF of REIT common shares.

Debt increased primarily as a result of proceeds received in the second quarter of 2020 related to the aforementioned financing transactions involving the Company’s Infrastructure Bond investment and direct investment in real estate that is in process of development. Furthermore, outstanding debt increased due to additional amounts drawn on our revolving credit facility during the first nine months of 2020.  

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CONSOLIDATED RESULTS OF OPERATIONS

This section provides a comparative discussion of our Consolidated Results of Operations and should be read in conjunction with our consolidated financial statements, including the accompanying notes. See “Critical Accounting Policies and Estimates,” for more information concerning the most significant accounting policies and estimates applied in determining our results of operations.

Net Income

Table 5 summarizes net income for the periods presented.

Table 5: Net Income (Loss)

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2020		2019		Change		2020		2019		Change
Net interest income	$	347	$	2,131	$	(1,784)	$	1,460	$	6,440	$	(4,980)
Non-interest income
Equity in income from unconsolidated funds and ventures		8,898		6,024		2,874		26,397		15,643		10,754
Net (losses) gains		(359)		1,477		(1,836)		(2,844)		22,397		(25,241)
Other income		67		80		(13)		69		112		(43)
Other expenses
Other interest expense		(2,169)		(1,207)		(962)		(6,856)		(3,613)		(3,243)
Impairment losses		—		—		—		(8,972)		—		(8,972)
Operating expenses		(2,738)		(2,903)		165		(11,005)		(9,205)		(1,800)
Net income (loss) from continuing operations before income taxes		4,046		5,602		(1,556)		(1,751)		31,774		(33,525)
Income tax expense		(1,110)		(26)		(1,084)		(1,879)		(89)		(1,790)
Net loss from discontinued operations, net of tax		—		—		—		—		(8)		8
Net income (loss)	$	2,936	$	5,576	$	(2,640)	$	(3,630)	$	31,677	$	(35,307)

Net Interest Income

Net interest income represents interest income earned on our investments in bonds, loans and other interest-earning assets less our cost of funding associated with the debt that we use to finance these assets.

Net interest income for the three months and nine months ended September 30, 2020, declined compared to that reported for the three months and nine months ended September 30, 2019, primarily due to the full repayment of the Hunt Note. Furthermore, net interest income for the nine months ended September 30, 2020, declined compared to that reported for the nine months ended September 30, 2019, due to the disposition and redemption of various bond-related investments throughout 2019.

Equity in Income from Unconsolidated Funds and Ventures

Equity in income from unconsolidated funds and ventures includes our allocable share of the earnings or losses from the funds and ventures in which we have an equity interest.

Table 6 summarizes equity in income from unconsolidated funds and ventures for the periods presented.

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Table 6: Equity in Income from Unconsolidated Funds and Ventures

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2020		2019		Change		2020		2019		Change
Solar Ventures	$	9,217	$	6,022	$	3,195	$	27,487	$	14,271	$	13,216
U.S. real estate partnerships		(430)		124		(554)		(1,532)		1,141		(2,673)
SAWHF		111		(122)		233		442		231		211
Equity in income from unconsolidated funds and ventures	$	8,898	$	6,024	$	2,874	$	26,397	$	15,643	$	10,754

Equity in income from the Solar Ventures for the three months and nine months ended September 30, 2020, increased compared to that reported for the three months and nine months ended September 30, 2019, primarily as a result of a significant period-over-period increase in the amount of capital invested.

Equity in income from U.S. real estate partnerships for the three months and nine months ended September 30, 2020, decreased compared to that reported for the three months and nine months ended September 30, 2019, primarily as a result of an increase in net losses attributable to the Company from the SF Venture stemming in large part from both a decline in the net assets of the venture and an increase in undeveloped land license fees associated with the effects of COVID-19. A reduction in 2020 of nonrecurring gains associated with the sale of investment properties by real estate partnerships in which the Company maintained an ownership interest also contributed to this decline. We anticipate that we will continue to recognize equity in losses from the SF Venture for the foreseeable future.

Net (Losses) Gains

Net (losses) gains may include net realized and unrealized gains or losses relating to bonds, loans, derivatives, other assets, real estate and other investments as well as gains or losses realized by the Company in connection with the extinguishment of debt obligations.

The Company recognized net losses for the three months and nine months ended September 30, 2020, compared to net gains reported for the three months and nine months ended September 30, 2019, primarily due to nonrecurring gains of $2.2 million and $26.4 million that were recognized in the third quarter of 2019 and the first nine months of 2019, respectively, in connection with the sale or redemption of bond investments. The impact of these items was partially offset by decreases in net fair value losses of $0.5 million and $1.5 million for the three and nine months ended September 30, 2020, respectively, related to derivative instruments that stemmed from changes in reference interest and foreign exchange rates.

Other Interest Expense

Other interest expense for the three months and nine months ended September 30, 2020, increased compared to that reported for the three months and nine months ended September 30, 2019, primarily due to advances on the Company’s revolving credit facility. The increase in interest expense was partially offset by a reduction in interest expense associated with the subordinated debt that was attributable to a decrease in three-month LIBOR.

Impairment Losses

Impairment losses for the nine months ended September 30, 2020, were attributable to the Company’s equity investment in the SF Venture, which was determined to be other-than-temporarily impaired at June 30, 2020.

Operating Expenses

Operating expenses include management fees and reimbursable expenses payable to our External Manager, general and administrative expense, professional fees and other miscellaneous expenses.

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Table 7 summarizes operating expenses for the periods presented.

Table 7: Operating Expenses

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2020		2019		Change		2020		2019		Change
External management fees and reimbursable expenses	$	(1,836)	$	(1,646)	$	(190)	$	(7,045)	$	(6,042)	$	(1,003)
General and administrative		(388)		(237)		(151)		(1,119)		(855)		(264)
Professional fees		(644)		(608)		(36)		(1,977)		(1,826)		(151)
Other expenses		130		(412)		542		(864)		(482)		(382)
Total operating expenses	$	(2,738)	$	(2,903)	$	165	$	(11,005)	$	(9,205)	$	(1,800)

Operating expenses for the three months ended September 30, 2020, decreased compared to those reported for the three months ended September 30, 2019, primarily due to foreign currency gains that were recognized in the third quarter of 2020 in connection with the remeasurement of foreign currency-denominated assets into U.S. dollars for reporting purposes as the South African rand strengthened against the U.S. dollar during the third quarter of 2020. This decrease was partially offset by (i) an increase in the amount of compensation-related expense reimbursements that were payable to the External Manager and (ii) an increase in director fees that stemmed from the addition of new directors in 2020.

Operating expenses for the nine months ended September 30, 2020, increased compared to that reported for the nine months ended September 30, 2019, primarily due to: (i) an increase in the amount of compensation-related expense reimbursements that were payable to the External Manager as the reimbursement cap increased by $1.0 million for 2020; (ii) a $0.6 million increase in foreign currency losses recognized for nine months of 2020 in connection with the remeasurement of foreign currency-denominated assets into U.S. dollars for reporting purposes as the South African rand weakened against the U.S. dollar during such reporting period; and (iii) an increase in director fees that stemmed from the addition of new directors in 2020.

Income Tax Expense

Income tax expense recognized during the three months ended September 30, 2020, increased compared to that reported for the three months ended September 30, 2019, primarily due the recognition of net income in the third quarter of 2020, which resulted in the accrual of deferred income tax expense, while in 2019 the Company maintained a full valuation allowance against our DTAs.

In addition to the above, income tax expense recognized during the nine months ended September 30, 2020, increased compared to that reported for the nine months ended September 30, 2019, primarily due to the recognition in the second quarter of 2020 of deferred income tax expense to establish a valuation allowance against deferred tax benefits stemming from the $9.0 million impairment loss associated with the Company’s equity investment in the SF Venture. The corresponding DTA was assessed to not be realizable because the decline in fair value of our equity investment was determined to be other-than-temporary.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Liquidity is a measure of our ability to meet potential short-term (within one year) and long-term cash requirements, including ongoing commitments to repay borrowings, fund and maintain our current and future assets and other general business needs. Our sources of liquidity include: (i) cash and cash equivalents; (ii) cash flows from operating activities; (iii) cash flows from investing activities; and (iv) cash flows from financing activities.

Summary of Cash Flows

Table 8 provides a consolidated view of the change in cash, cash equivalents and restricted cash of the Company for the periods presented. At September 30, 2020 and September 30, 2019, $17.2 million and $6.1 million, respectively, of amounts presented below represented restricted cash.

Table 8: Net Increase in Cash, Cash Equivalents and Restricted Cash

	For the nine months ended
(in thousands)	September 30, 2020
Cash, cash equivalents and restricted cash at beginning of period	$	12,805
Net cash provided by (used in):
Operating activities		10,705
Investing activities		(21,939)
Financing activities		37,437
Net increase in cash, cash equivalents and restricted cash		26,203
Cash, cash equivalents and restricted cash at end of period	$	39,008

	For the nine months ended
(in thousands)	September 30, 2019
Cash, cash equivalents and restricted cash at beginning of period	$	33,878
Net cash provided by (used in):
Operating activities		5,243
Investing activities		(60,255)
Financing activities		38,086
Net decrease in cash, cash equivalents and restricted cash		(16,926)
Cash, cash equivalents and restricted cash at end of period	$	16,952

Operating Activities

Cash flows from operating activities include, but are not limited to, interest income on our investments, and income distributions from our investments in unconsolidated funds and ventures.

Net cash flows provided by operating activities during the nine months ended September 30, 2020 increased $5.5 million compared to such net cash flows during the nine months ended September 30, 2019. This net increase was primarily driven by a $13.4 million increase in distributions received from the Company’s investment in the Solar Ventures. The impact of this increase was partially offset by (i) a $3.7 million decline in interest received due to the disposition and redemption of various bond investments and the full repayment of the Hunt Note on January 3, 2020 and (ii) a net $2.2 million increase in interest expense paid that was primarily attributable to the Company’s revolving credit facility.

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Investing Activities

Net cash flows associated with investing activities include, but are not limited to, principal payments; capital contributions and distributions; advance of loans held for investment; and sales proceeds from the sale of bonds, loans and real estate and other investments.

Net cash flows used in investing activities during the nine months ended September 30, 2020 decreased $38.3 million compared to such net cash flows during the nine months ended September 30, 2019. This net decrease was primarily driven by (i) the full repayment of the $53.6 million Hunt Note during the first quarter of 2020, which was a $26.2 million increase in net principal payments received in 2020 as compared to the amount of bond-related sales proceeds received on bonds and loans held for investment in 2019 and (ii) a $10.6 million decrease in cash used for advances on and originations of loans held for investment in 2020 as compared to 2019.

Financing Activities

Net cash flows provided by financing activities during the nine months ended September 30, 2020 decreased $0.6 million compared to such net cash flows during the nine months ended September 30, 2019. This decrease was primarily attributable to a $35.8 million decline in net advances from the revolving credit facility. This decrease was largely offset by (i) $32.9 million of proceeds associated with second quarter 2020 financing transactions associated with the Company’s Infrastructure Bond investment and direct investment in real estate that is in process of being developed and (ii) a $1.5 million decline in debt issuance costs incurred in 2020 as compared to 2019.

Capital Resources

Our debt obligations include liabilities that we recognized in connection with our subordinated debt, revolving credit facility debt and other notes payable. The major types of debt obligations of the Company are further discussed below. We use the revolving credit facility to finance our investments in the Solar Ventures. See Notes to Consolidated Financial Statements – Note 6, “Debt,” for more information.

Table 9 summarizes the carrying values and weighted-average effective interest rates of the Company’s debt obligations that were outstanding at September 30, 2020 and December 31, 2019.

Table 9: Debt

	At				At
	September 30, 2020				December 31, 2019
			Wtd. Avg.				Wtd. Avg.
			Effective				Effective
	Carrying		Interest		Carrying		Interest
(dollars in thousands)	Value (1)		Rate (1)		Value (1)		Rate (1)
Subordinated debt	$	93,774	1.6	%	$	95,488	3.2	%
Revolving credit facility debt obligations		103,700	5.6			94,500	5.6
Notes payable and other debt		17,530	7.3			8,328	13.0
Asset related debt		23,377	2.8			3,500	5.0
Total debt	$	238,381	3.9	%	$	201,816	4.8	%

(1) Carrying value amounts and weighted-average interest rates reported in this table include the effects of any discounts, premiums and other cost basis adjustments. An effective interest rate represents an internal rate of return of a debt instrument that makes the net present value of all cash flows, inclusive of cash flows that give rise to cost basis adjustments, equal zero and in the case of (i) fixed rate instruments, is measured as of an instrument’s issuance date and (ii) variable rate instruments, is measured as of each date that a reference interest rate resets.

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Subordinated Debt

At September 30, 2020 and December 31, 2019, the Company had subordinated debt obligations that had a total UPB of $86.7 million and $88.0 million, respectively. This debt included four tranches that amortize 2.0% per annum over their contractual lives, are due to mature with balloon payments between March 2035 and July 2035 and require the Company to pay interest based upon three-month LIBOR plus a fixed spread of 2.0%. At September 30, 2020 the weighted average interest pay rate on the outstanding debt was 2.3%.

Revolving Credit Facility Debt Obligations

At September 30, 2020 and December 31, 2019, MEH, a wholly owned subsidiary of the Company, had borrowed $103.7 million and $94.5 million, respectively, from the revolving credit facility. This debt obligation, which is guaranteed by the Company and secured by (i) specific assets of the Borrower and (ii) a pledge of all of the Company’s equity interest in the Borrower, which in turn owns our equity investments in the Solar Ventures, matures on September 19, 2022, and is subject to a 12-month extension solely to allow refinancing or orderly repayment of the debt obligation. This debt obligation bears interest equal to one-month LIBOR (subject to a 1.5% floor) plus a fixed spread of 2.75%, which, at September 30, 2020 was 4.25%.

Notes Payable and Other Debt

At September 30, 2020 and December 31, 2019, the Company had notes payable and other debt with a UPB of $17.7 million and $8.4 million, respectively.

At September 30, 2020 and December 31, 2019, $3.9 million and $6.8 million, respectively, of this debt relates to financing that was obtained to complete the purchase of the Company’s 11.85% ownership interest in SAWHF. This debt, which is denominated in South African rand and had an original contractual maturity of September 8, 2020, requires the Company to pay interest based upon the Johannesburg Interbank Agreed Rate (“JIBAR”) plus a fixed spread of 5.15%. At September 30, 2020, the interest rate on this debt was 8.6%. Subsequent to September 30, 2020, the Company and its counterparty agreed to an extension of this debt financing.

At September 30, 2020 and December 31, 2019, $4.4 million and $1.5 million, respectively, of the notes payable and other debt relates to debt obligations to the Morrison Grove Management, LLC principals (“MGM Principals”). This debt bears interest at 5.0%. The $2.9 million debt obligation amortizes over its contractual life and is due to mature on January 1, 2026. The $1.5 million debt obligation is interest only until March 31, 2026 and then amortizes in three equal installments until its maturity date of January 1, 2027.

On June 1, 2020, the Company entered into a $10.0 million construction loan that is secured by our direct investment in real estate that is in the process of development. The initial advance from this debt was $9.3 million and $0.5 million of capacity has been reserved for interest payments. The total amount advanced by the lender will not exceed 65% of the value of the pledged real estate plus 75% of the total development allowable hard costs incurred by the borrower. The loan is prepayable at any time without penalty, with all net proceeds realized from the sale of any portion of the real property required to be used to repay the outstanding UPB of the loan. Construction draws may not exceed a total principal sum of $11.1 million over the life of the facility, with the maximum outstanding UPB at any point in time not to exceed $10.0 million. The contractual maturity date of this facility is June 1, 2023, although the facility is subject to three extension options (at the discretion of the borrower and lender): (i) the first extension term would expire on November 1, 2023; (ii) the second extension term would expire on May 1, 2024 and (iii) the final amortized term would expire three years after the initial term, first extension term and second extension term, as applicable. Amounts drawn from this debt facility are repayable on an interest only basis at a rate of 4.85% with all outstanding principal due at maturity during the initial term, first extension term and second extension term. However, during the final extension term the debt bears interest at a rate of three-month LIBOR plus 3.0% per annum, subject to a 5.0% floor with principal amortization required monthly over the three year extension term. Obligations associated with this debt are guaranteed by the Company. At September 30, 2020, this debt obligation had a UPB of $9.4 million.

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Asset Related Debt

Asset related debt is debt that finances interest-bearing assets of the Company. The interest expense associated with this debt is included within “Net interest income” on the Company’s Consolidated Statements of Operations.

Bond Related Debt

On June 5, 2020, the Company entered into a TRS agreement involving our Infrastructure Bond, which was sold concurrently to our TRS counterparty. Proceeds received in connection with the conveyance of such bond investment were reported as a secured borrowing. The TRS did not receive financial statement recognition because it caused the transfer of such bond investment not to qualify as a sale for reporting purposes. The TRS agreement has a maturity date of June 6, 2022, and requires the Company to pay interest based upon the Securities Industry and Financial Markets Association index rate, subject to a 0.5% floor, plus a spread of 2.0%, which at September 30, 2020, was 2.5%. These payment terms are used to accrue interest related to the secured borrowing that was recognized upon conveyance of the Company’s bond investment. Additionally, as required under the terms of the TRS agreement, the Company pledged cash collateral of $10.0 million representing 37.5% of the referenced bond’s UPB. At September 30, 2020, this debt obligation had a UPB of $23.5 million. Additionally, under the terms of the TRS, the Company’s TRS counterparty is entitled to share in 10% of the increase in fair value, if any, of the Infrastructure Bond between the trade and termination dates of the TRS agreement. For reporting purposes, this provision is treated as a freestanding derivative instrument that is reported on a fair value basis.

Non-bond Related Debt

At December 31, 2019, the Company had a debt obligation to MGM Principals with a UPB of $3.5 million. Upon the full redemption of the Hunt Note on January 3, 2020, this asset related debt obligation to the MGM Principals was reclassified to notes payable and other debt.

Covenant Compliance

At September 30, 2020 and December 31, 2019, the Company was in compliance with all covenants under its debt arrangements.

Off-Balance Sheet Arrangements

At September 30, 2020 and December 31, 2019, the Company had no off-balance sheet arrangements.

Other Contractual Commitments

The Company is committed to make additional capital contributions to certain of its investments in partnerships and ventures. Refer to Notes to Consolidated Financial Statements - Note 3, “Investments in Partnerships,” for more information.

At September 30, 2020 and December 31, 2019, the Company, through its wholly owned subsidiary REL had unfunded loan commitments of $0.8 million and $1.6 million, respectively. Refer to Notes to Consolidated Financial Statements - Note 4, “Loans Held for Investment (“HFI”)” for more information.

The Company uses derivative instruments to hedge interest rate and foreign currency risks. Depending upon movements in reference interest and foreign exchange rates, the Company may be required to make payments to the counterparties to these agreements. Refer to Notes to Consolidated Financial Statements – Note 7, “Derivative Instruments,” for more information about these instruments.

22

Other Capital Resources

Dividend and Share Buyback Policy

The Board makes the final determination regarding dividends and share buyback plans based on our External Manager’s recommendation, which is based on an evaluation of a number of factors, including our financial condition, business prospects, the predictability of recurring cash flows from operations, available cash and other factors the Board may deem relevant. The Board does not believe paying a dividend or repurchasing shares are appropriate at the current time.

Tax Benefits Rights Agreement

Effective May 5, 2015, the Company adopted a Tax Benefits Rights Agreement (the “Rights Plan”) designed to help preserve the Company’s NOLs. In connection with adopting the Rights Plan, the Company declared a distribution of one right per common share to shareholders of record as of May 15, 2015. The rights do not trade apart from the current common shares until the distribution date, as defined in the Rights Plan. Under the Rights Plan, the acquisition by an investor (or group of related investors) of greater than a 4.9% stake in the Company, could result in all existing shareholders other than the new 4.9% holder having the right to acquire new shares for a nominal cost, thereby significantly diluting the ownership interest of the acquiring person. On March 11, 2020, the Board approved an extension of the original five-year term of the Rights Plan until May 5, 2023, or until the Board determines that the plan is no longer needed, whichever comes first. Subsequently, shareholders ratified the Board’s decision to extend the Rights Plan at the Company’s 2020 annual meeting of shareholders.

On January 3, 2018, the Board approved a waiver of the 4.9% ownership limitation with respect to Hunt, increasing the limitation to 9.9% of the Company’s issued and outstanding shares in any rolling 12-month period without causing a triggering event.

At September 30, 2020, the Company had two shareholders who held greater than a 4.9% interest in the Company, one of which was its former Chief Executive Officer and current member of the Board, Michael L. Falcone. On March 11, 2020, the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for open-market share purchases of up to an additional 7,500 common shares, to be completed by December 31, 2020, with the Board reserving all its rights under the Rights Plan for any subsequent purchase. Upon Mr. Falcone’s resignation as Chief Executive Officer on August 12, 2020, he became eligible for Board compensation. Pursuant to the policy of our Governance Committee, each Board member receives one-half of his or her Board compensation in common shares. On November 5, 2020, the Board adopted an Amended and Restated 2012 Non-Employee Directors’ Compensation Plan to coordinate elements of the Rights Plan and share compensation for directors, in addition the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for purposes of his share-based Board compensation.

23

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements is based on the application of GAAP, which requires us to make certain estimates and assumptions that affect the reported amounts and classification of the amounts in our consolidated financial statements. These estimates and assumptions require us to make difficult, complex and subjective judgments involving matters that are inherently uncertain. We base our accounting estimates and assumptions on historical experience and on judgments that we believe to be reasonable under the circumstances known to us at the time. Actual results could differ materially from these estimates. We applied our critical accounting policies and estimation methods consistently in all material respects and for all periods presented and have discussed those policies with our Audit Committee.

We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. Management has discussed any significant changes in judgments and assumptions in applying our critical accounting policies with the Audit Committee of our Board. See Part I, Item 1A. “Risk Factors” in our 2019 Annual Report for a discussion of the risks associated with the need for management to make judgments and estimates in applying our accounting policies and methods. We have identified three of our accounting policies as critical because they involve significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on our reported results of operations or financial condition. These policies govern:

● Income taxes;

● fair value measurement of financial instruments; and

● consolidation.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our 2019 Annual Report for a discussion of these critical accounting policies and estimates.

24

ACCOUNTING AND REPORTING DEVELOPMENTS

We identify and discuss the expected impact on our consolidated financial statements of recently issued accounting guidance in Notes to Consolidated Financial Statements – Note 1, “Summary of Significant Accounting Policies.”

25

USE OF NON-GAAP MEASURES

We present certain non-GAAP financial measures that supplement the financial measures we disclose that are calculated under GAAP. Non-GAAP financial measures are those that include or exclude certain items that are otherwise excluded or included, respectively, from the most directly comparable measures calculated in accordance with GAAP. The non-GAAP financial measures that we disclose are not intended as a substitute for GAAP financial measures and may not be defined or calculated the same way as similar non-GAAP financial measures used by other companies.  

Adjusted Book Value represents Book Value reduced by the carrying value of the Company’s DTAs. We believe this measure is useful to investors in assessing the Company’s underlying fundamental performance and trends in our business because it eliminates potential volatility in results brought on by tax considerations in a given year. As a result, reporting upon, and measuring changes in, Adjusted Book Value enables for a better comparison of period-to-period operating performance.

Adjusted Book Value per common share represents Adjusted Book Value at the period end divided by the common shares outstanding at the period end.  

Management intends to continually evaluate the usefulness, relevance, limitations and calculations of our reported non-GAAP performance measures to determine how best to provide relevant information to the public.

Table 10 provides reconciliations of the non-GAAP financial measures that are included in this Report to the most directly comparable GAAP financial measures.

Table 10:  Non-GAAP Reconciliations

	At		At
	September 30,		December 31,
(in thousands, except per share data)	2020		2019
Reconciliation of Book Value to Adjusted Book Value
Book Value (total shareholders' equity), as reported	$	277,618	$	281,125
Less: DTAs, net		56,156		57,711
Adjusted Book Value	$	221,462	$	223,414
Common shares outstanding		5,815		5,805
Reconciliation of Book Value per share to Adjusted Book Value per common share
Book Value (total shareholders' equity) per common share, as reported	$	47.74	$	48.43
Less: DTAs, net per common share		9.66		9.94
Adjusted Book Value per common share	$	38.08	$	38.49

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Item 1. Financial Statements

MMA Capital Holdings, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

	At		At
	September 30,		December 31,
	2020		2019
ASSETS
Cash and cash equivalents	$	21,784	$	8,555
Restricted cash		17,224		4,250
Investments in debt securities (includes $24,099 and $0 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)		30,305		31,365
Investments in partnerships (includes $364,001 and $296,855 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)		373,707		316,677
Deferred tax assets, net		56,156		57,711
Loans held for investment (includes $0 and $53,600 of related party loans at September 30, 2020 and December 31, 2019, respectively)		1,302		54,100
Other assets (includes $17,958 and $0 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)		21,951		12,984
Total assets	$	522,429	$	485,642
LIABILITIES AND EQUITY
Debt	$	238,381	$	201,816
Accounts payable and accrued expenses		3,772		2,527
Other liabilities		2,658		174
Total liabilities		244,811		204,517
Commitments and contingencies (see Note 10)		—		—
Shareholders' equity
Preferred shares, no par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2020 and December 31, 2019		—		—
Common shares, no par value, 50,000,000 shares are authorized (5,706,366 and 5,701,946 shares issued and outstanding and 109,015 and 103,069 non-employee directors' deferred shares issued at September 30, 2020 and December 31, 2019, respectively)		270,111		273,492
Accumulated other comprehensive income ("AOCI")		7,507		7,633
Total shareholders’ equity		277,618		281,125
Total liabilities and equity	$	522,429	$	485,642

The accompanying notes are an integral part of these consolidated financial statements.

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MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020			2019	2020		2019
Interest income
Interest on bonds	$	466	$	481	$	1,490	$	3,106
Interest on loans and short-term investments		49		1,701		185		3,931
Total interest income		515		2,182		1,675		7,037
Asset related interest expense
Bond related debt		168		—		215		428
Non-bond related debt		—		51		—		169
Total interest expense		168		51		215		597
Net interest income		347		2,131		1,460		6,440
Non-interest income
Equity in income from unconsolidated funds and ventures		8,898		6,024		26,397		15,643
Net gains on bonds		—		2,156		—		26,420
Net losses on derivatives		(156)		(679)		(2,451)		(3,993)
Net loss on other assets		(214)		—		(415)		—
Net gains (losses) on loans and extinguishment of liabilities		11		—		22		(30)
Other income		67		80		69		112
Non-interest income		8,606		7,581		23,622		38,152
Other expenses
Interest expense		2,169		1,207		6,856		3,613
External management fees and reimbursable expenses		1,836		1,646		7,045		6,042
General and administrative		388		237		1,119		855
Professional fees		644		608		1,977		1,826
Impairment losses		—		—		8,972		—
Other expenses		(130)		412		864		482
Total other expenses		4,907		4,110		26,833		12,818
Net income (loss) from continuing operations before income taxes		4,046		5,602		(1,751)		31,774
Income tax expense		(1,110)		(26)		(1,879)		(89)
Net income (loss) from continuing operations		2,936		5,576		(3,630)		31,685
Net loss from discontinued operations, net of tax		—		—		—		(8)
Net income (loss)	$	2,936	$	5,576	$	(3,630)	$	31,677

The accompanying notes are an integral part of these consolidated financial statements.

28

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS – (continued)

(Unaudited)

(in thousands, except per share data)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Basic and diluted income per common share:
Income (loss) from continuing operations	$	0.51	$	0.95	$	(0.63)	$	5.38
Loss from discontinued operations		—		—		—		—
Income (loss) per common share	$	0.51	$	0.95	$	(0.63)	$	5.38
Weighted-average common shares outstanding:
Basic and diluted		5,811		5,887		5,807		5,884

The accompanying notes are an integral part of these consolidated financial statements.

29

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income (loss)	$	2,936	$	5,576	$	(3,630)	$	31,677
Other comprehensive income (loss)
Bond related changes:
Net unrealized gains (losses)	$	272	$	961	$	(1,024)	$	997
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		—		(1,851)		—		(26,115)
Income tax (losses) gains		(75)		—		281		—
Net change in other comprehensive income (loss) due to bonds, net of taxes		197		(890)		(743)		(25,118)
Foreign currency translation adjustment		(99)		217		617		162
Other comprehensive income (loss)	$	98	$	(673)	$	(126)	$	(24,956)
Comprehensive income (loss)	$	3,034	$	4,903	$	(3,756)	$	6,721

The accompanying notes are an integral part of these consolidated financial statements.

30

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(in thousands)

	For the nine months ended September 30, 2020
						Total Common
	Common Equity Before					Shareholders’
	AOCI			AOCI		Equity
	Shares	Amount
Balance, January 1, 2020	5,805	$	273,492	$	7,633	$	281,125
Net loss	—		(3,058)		—		(3,058)
Other comprehensive loss	—		—		(453)		(453)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	3		96		—		96
Common share repurchases	(1)		(41)		—		(41)
Balance, March 31, 2020	5,807		270,489		7,180		277,669
Net loss	—		(3,508)		—		(3,508)
Other comprehensive income	—		—		229		229
Common shares (restricted and deferred) issued under employee and non-employee director share plans	4		97		—		97
Balance, June 30, 2020	5,811		267,078		7,409		274,487
Net income	—		2,936		—		2,936
Other comprehensive income	—		—		98		98
Common shares (restricted and deferred) issued under employee and non-employee director share plans	4		97		—		97
Balance, September 30, 2020	5,815	$	270,111	$	7,507	$	277,618

The accompanying notes are an integral part of these consolidated financial statements.

31

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF EQUITY– (continued)

(Unaudited)

(in thousands)

	For the nine months ended September 30, 2019
						Total Common
	Common Equity Before					Shareholders’
	AOCI			AOCI		Equity
	Shares	Amount
Balance, January 1, 2019	5,882	$	175,213	$	37,697	$	212,910
Net income	—		2,882		—		2,882
Other comprehensive loss	—		—		(3,140)		(3,140)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	2		82		—		82
Cumulative change due to change in accounting principle	—		(267)		—		(267)
Balance, March 31, 2019	5,884		177,910		34,557		212,467
Net income	—		23,219		—		23,219
Other comprehensive loss	—		—		(21,143)		(21,143)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	3		83		—		83
Balance, June 30, 2019	5,887		201,212		13,414		214,626
Net income	─		5,576		─		5,576
Other comprehensive loss	─		─		(673)		(673)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	2		66		─		66
Balance, September 30, 2019	5,889	$	206,854	$	12,741	$	219,595

The accompanying notes are an integral part of these consolidated financial statements.

32

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	For the nine months ended
	September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(3,630)	$	31,677
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provisions for credit losses and impairment		8,972		—
Net equity in income from investments in partnerships		(26,397)		(15,643)
Net gains on bonds		—		(26,420)
Net losses on derivatives		2,346		5,539
Net losses on loans, other assets and extinguishment of liabilities		393		30
Current and deferred federal income tax expense		1,789		110
Distributions received from investments in partnerships		24,706		11,317
Depreciation and amortization		430		(1,560)
Foreign currency losses		864		242
Stock-based compensation expense		290		230
Other, net		942		(279)
Net cash provided by operating activities		10,705		5,243
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments and sales proceeds received on bonds and loans held for investment (includes $53,600 and zero from a related party)		53,770		27,591
Advances on and originations of loans held for investment		(702)		(11,279)
Investments in partnerships and real estate		(130,206)		(168,971)
Capital distributions received from investments in partnerships		55,199		92,404
Net cash used in investing activities		(21,939)		(60,255)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing activity		112,385		45,000
Repayment of borrowings		(74,184)		(4,709)
Debt issuance costs		(723)		(2,205)
Repurchase of common shares		(41)		—
Net cash provided by financing activities		37,437		38,086
Net increase (decrease) in cash, cash equivalents and restricted cash		26,203		(16,926)
Cash, cash equivalents and restricted cash at beginning of period		12,805		33,878
Cash, cash equivalents and restricted cash at end of period	$	39,008	$	16,952

The accompanying notes are an integral part of these consolidated financial statements.

33

MMA Capital Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS – (continued)

(Unaudited)

(in thousands)

	For the nine months ended
	September 30,
	2020		2019
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	6,431	$	4,426
Income taxes paid		112		16
Non-cash investing and financing activities:
Unrealized losses included in other comprehensive income		(126)		(24,956)
Debt and liabilities extinguished through sales and collections on bonds		—		37,606
Decrease in investments in debt securities and common shareholders' equity due to change in accounting principle		—		267
Increase in loans held for investment and decrease in investment in partnerships due to secured lending		—		8,392
	At		At
	September 30,		September 30,
	2020		2019
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	21,784	$	10,837
Restricted cash		17,224		6,115
Total cash, cash equivalents and restricted cash shown in statement of cash flows	$	39,008	$	16,952

The accompanying notes are an integral part of these consolidated financial statements.

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MMA Capital Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1— Summary of Significant Accounting Policies

Organization

MMA Capital Holdings, Inc. focuses on infrastructure-related investments that generate positive environmental and social impacts and deliver attractive risk-adjusted total returns to our shareholders, with an emphasis on debt associated with infrastructure, including renewable energy projects. Unless the context otherwise requires, and when used in these Notes, the “Company,” “MMA,” “we,” “our” or “us” refers to MMA Capital Holdings, Inc. and its subsidiaries. We were originally organized as a Delaware limited liability company in 1996, converted to a Delaware corporation on January 1, 2019, and are externally managed by Hunt Investment Management, LLC (our “External Manager”), an affiliate of Hunt Companies, Inc. (Hunt Companies, Inc. and its affiliates are hereinafter referred to as “Hunt”).

Our current objective is to produce attractive risk adjusted returns by investing in the large, growing and fragmented renewable energy market in the United States (“U.S”). We believe that we are well positioned to take advantage of these and other investment opportunities because of our External Manager’s origination network built off of extensive relationships and credit expertise gathered through years of experience. We also seek to increase the Company’s return on equity by prudently deploying debt and recycling equity out of lower yielding investments that are unrelated to renewable energy and other infrastructure projects.

In addition to renewable energy investments, we continue to own a limited number of bond investments and real estate-related investments, and we continue to have subordinated debt with beneficial economic terms. Further, we have significant net operating loss carryforwards (“NOLs”) that may be used to offset future federal income tax obligations, a portion of which were reported as deferred tax assets (“DTAs”) in our Consolidated Balance Sheets at September 30, 2020 and December 31, 2019. Effective December 31, 2019, we no longer organize our assets and liabilities into discrete portfolios (in each Quarterly Report on Form 10-Q that was filed in 2019, assets and liabilities of the Company were allocated to one of two portfolios, “Energy Capital” and “Other Assets and Liabilities”).  

We operate as a single reporting segment.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Company evaluates subsequent events through the date of filing with the U.S. Securities and Exchange Commission (“SEC”).

Changes in Presentation

We have made certain reclassifications to prior year financial statements in order to enhance their comparability with current year financial statements.

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, commitments and contingencies, and revenues and expenses. Management made estimates in certain areas, including the determination of the Company’s valuation allowance established against its DTAs as well as in the fair value measurement of bonds and derivative instruments. Actual results could differ materially from these estimates.

35

Principles of Consolidation

The consolidated financial statements include the accounts of the Company as well as those entities in which the Company has a controlling financial interest, including wholly owned subsidiaries of the Company. All intercompany transactions and balances have been eliminated in consolidation. Equity investments in unconsolidated entities where the Company has the ability to exercise significant influence over the operations of the entity, but is not considered the primary beneficiary, are accounted for using the equity method of accounting.

Accounting Guidance

Adoption of Accounting Standards

Accounting for Financial Instruments

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This guidance amends the amortization period for certain callable debt securities held at a premium, shortening the period to the earliest call date. We adopted this new guidance on its effective date of January 1, 2019. Upon adoption of this guidance, the Company assessed that certain of our bond investments were being held at a premium resulting in a reduction in amortization periods used for interest income recognition. Accordingly, during the first quarter of 2019, the Company recognized a cumulative effect adjustment of $0.3 million charge to retained earnings.

Accounting for Income Taxes

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance permits companies to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) from AOCI to retained earnings and also requires new disclosures. We adopted this guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Stock Compensation

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This guidance expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. We adopted this new guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Fair Value Measurement

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This guidance eliminates certain disclosure requirements for fair value measurements, requires public entities to disclose certain new information and modifies some disclosure requirements. We adopted this guidance on its effective date of January 1, 2020. The adoption of this guidance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Rate Reform

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This guidance is elective and is provided for contract modifications that meet certain Codification topics and subtopics. The optional amendment of this new guidance is effective March 12, 2020 through December 31, 2022. We did not make any elections provided by this new guidance and, therefore, the

36

adoption of these accounting principles did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Issued Accounting Standards Not Yet Adopted

Accounting for Financial Instruments – Credit Losses

In November 2019, the FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates.” This guidance gives private companies, not-for-profit organizations, and certain smaller reporting companies additional time to implement FASB standards on credit losses, leases, derivatives and hedging and intangible-goodwill and other (ASC 350). Because the Company is a smaller reporting company the following “credit loss” ASUs will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Improvements.” This guidance is intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. This guidance establishes an impairment methodology that reflects lifetime expected credit losses rather than incurred losses. This guidance requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This guidance is intended to clarify aspects of accounting for credit losses, hedging activities, and financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This guidance provides transition relief for entities adopting ASU 2016-13. This guidance allows entities to elect the fair value options on certain financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This guidance amends certain aspects of the FASB’s new credit losses standard, including an amendment requiring entities to include certain expected recoveries in the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In February 2020, the FASB issued ASU No. 2020-02, “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update).” This guidance updates certain SEC guidance in the Codification for the issuance of SEC Staff Accounting Bulletin 119 and effective date related to the leases standard. This new guidance is effective upon issuance on February 6, 2020. However, because the Company is a smaller reporting company the ASU will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of this new guidance on our consolidated financial statements.

Accounting for Financial Instruments – General

In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments.” This guidance amends certain topics including fair value option disclosures and credit losses. This guidance is effective upon issuance on March 9, 2020 for some topics and on January 1, 2023 for topics relating to credit loss. The adoption of this guidance that is effective upon issuance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows. For those aspects of the new guidance that

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are not effective until January 1, 2023, we are evaluating the potential impact of the new guidance on our consolidated financial statements.

Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. We are evaluating the potential impact of the new guidance on our consolidated financial statements.

Note 2—Investments in Debt Securities

At September 30, 2020 and December 31, 2019, the Company’s investments in debt securities consist of one subordinated multifamily tax-exempt mortgage revenue bond and one tax-exempt infrastructure bond. These investments are classified as available-for-sale for reporting purposes and are measured on a fair value basis in our Consolidated Balance Sheets.

Multifamily tax-exempt bonds are issued by state and local governments or their agencies or authorities to finance affordable multifamily rental housing. Generally, the only source of security on these bonds is a mortgage on the underlying property. The Company’s non-amortizing subordinated cash flow bond principal is due in full in November 2044.

The Company’s infrastructure bond financed the development of infrastructure for a mixed-use town center development in Spanish Fort, Alabama and is secured by incremental tax revenues generated from the development and its landowners (this investment is hereinafter referred to as our “Infrastructure Bond”). At September 30, 2020, the Company’s Infrastructure Bond amortizes on a scheduled basis and has a stated maturity date of December 2048.

The following tables provide information about the unpaid principal balance (“UPB”), amortized cost, gross unrealized gains and fair value (“FV”) associated with the Company’s investments in bonds that are classified as available-for-sale:

	At
	September 30, 2020
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,715	$	20,761	$	3,338	$	24,099		90%
Multifamily tax-exempt bond		4,000		—		6,206		6,206		155%
Total	$	30,715	$	20,761	$	9,544	$	30,305		99%

	At
	December 31, 2019
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,885	$	20,797	$	4,542	$	25,339	94%
Multifamily tax-exempt bond		4,000		—		6,026		6,026	151%
Total	$	30,885	$	20,797	$	10,568	$	31,365	102%

(1) Amortized cost consists of the UPB, unamortized premiums, discounts and other cost basis adjustments, as well as other-than-temporary-impairment (“OTTI”) recognized in “Impairments” in our Consolidated Statements of Operations.

See Note 8, “Fair Value,” which describes factors that contributed to the $1.1 million decrease in the reported fair value of the Company’s investments in debt securities for the nine months ended September 30, 2020.

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Nonaccrual Bonds

At September 30, 2020 and December 31, 2019, the Company had no bonds that were on nonaccrual status.

Bond Sales and Redemptions

There were no sales or redemption in full of investments in bonds during the three months and nine months ended September 30, 2020.

The Company received cash proceeds in connection with the sale or redemption in full of investments in bonds of $2.4 million and $26.6 million for the three months and nine months ended September 30, 2019.

The following table provides information about gains or losses that were recognized in the Company’s Consolidated Statements of Operations in connection with the Company’s investments in bonds:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gains recognized at time of sale or redemption	$	—	$	2,156	$	—	$	26,420

Note 3—Investments in Partnerships

The following table provides information about the carrying value of the Company’s investments in partnerships and ventures:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Investment in Solar Ventures	$	362,403	$	289,123
Investments in U.S. real estate partnerships		9,706		19,822
Investment in South Africa Workforce Housing Fund ("SAWHF")		1,598		7,732
Total investments in partnerships	$	373,707	$	316,677

Investments Related to the Solar Ventures

At September 30, 2020, we were a 50% investor member in the renewable joint ventures in which we invest though we may periodically have a minority economic interest as a result of non-pro rata capital contributions made by our capital partner pursuant to a non-pro-rata funding agreement between the Company and our capital partner. Distributions from such ventures are generally made in proportion to the members’ respective economic interests but may be made disproportionately to our capital partner, when our capital partner has made non-pro rata capital contributions, until such time that the amount of equity invested by the Company and its capital partner have come back into equal balance. At September 30, 2020, the Company held 43.4%, 50.0% and 42.9% economic interests in Solar Construction Lending, LLC (“SCL”), Solar Permanent Lending, LLC (“SPL”), Solar Development Lending, LLC (“SDL”), respectively, and was the sole member in Renewable Energy Lending, LLC (“REL”), respectively (collectively referred to as the “Solar Ventures”).

At September 30, 2020, the carrying value of the Company’s equity investments in SCL, SPL and SDL was $239.8 million, $0 and $122.6 million, respectively. None of these investees were assessed to constitute a Variable Interest Entity (“VIE”) and the Company accounts for all of these investments using the equity method of accounting. At September 30, 2020, these joint ventures had $305.4 million of unfunded loan commitments that required borrowers to meet various conditions set forth in governing loan agreements in order for funding to occur. At September 30, 2020, $147.0 million of such commitments were attributable to the Company based upon its interest in these ventures. The unfunded loan commitments that qualified for funding, were anticipated to be funded primarily by capital within the joint ventures through a combination of existing loan redemptions and idle capital. To the extent capital within the joint ventures is not sufficient to meet their funding obligations additional capital contributions by the members would be required.

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During the third quarter of 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed the full $56.0 million in SCL capital calls and $24.0 million of $39.0 million in SDL capital calls, while the Company contributed the $15.0 million balance with respect to SDL. In addition, in accordance with a non-pro rata funding agreement between the Company and our capital partner, our capital partner in SCL received distributions of $65.0 million, while the Company received distributions of $15.0 million. As a consequence of these non-pro rata capital contributions and distributions during the third quarter of 2020, our economic interest in SCL and SDL decreased in percentage terms from 44.2% and 43.6% in SCL and SDL, respectively, at June 30, 2020.

Subsequent to September 30, 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed $82.0 million of $97.0 million in SCL and SDL capital calls, while the Company contributed the balance of these capital calls, or $15.0 million, which represented the full $15.0 million of distributions received from the ventures subsequent to the third quarter. As a consequence of these non-pro rata capital contribution and distributions, our economic interest in SCL and SDL decreased to 39.2% and 39.6%, respectively.

The Company paid $5.1 million for the buyout of our prior investment partner’s ownership interest in REL, on June 1, 2018, which was allocated to the net assets acquired based upon their relative fair values. This allocation resulted in a cumulative basis adjustment of $4.5 million to the Company’s investments that is amortized over the remaining investment period of SCL. The amortization expense related to the Company’s basis difference was $0.2 million for the three months ended September 30, 2020 and September 30, 2019, and $0.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. At September 30, 2020 and December 31, 2019, the unamortized balance of the Company’s basis difference was $2.5 million and $3.1 million, respectively.

The following table provides information about the carrying amount of total assets and liabilities of all renewable energy related investees in which the Company had an equity method investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets (1)	$	837,977	$	706,792
Other liabilities (2)		4,988		22,135

(1)Assets of these ventures are primarily comprised of loans that are carried at fair value.

(2)Other liabilities of these ventures are primarily comprised of interest reserves.

The following table provides information about the gross revenue, operating expenses and net income of all renewable energy related investees in which the Company had an equity method investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	23,123	$	16,081	$	69,540	$	38,367
Operating expenses		1,403		1,144		4,945		4,687
Net income and net income attributable to the entities		21,754		14,940		64,585		33,749

Investments in U.S. Real Estate Partnerships

At September 30, 2020, the $9.7 million reported carrying value of investments in U.S. real estate partnerships represented the Company’s 80% ownership interest in a joint venture that owns and operates a mixed-use town center and undeveloped land parcels in Spanish Fort, Alabama (“SF Venture”). Based upon the venture’s operating agreement, the Company has the right to a preferred return on its unreturned capital contributions with the exception of such contributions that have been contributed for the payment of undeveloped land license fees, which have a lower priority of repayment; as well as the right to share in excess cash flows of the real estate venture. As of September 30, 2020, the Company held an 80% economic interest based upon the partnership’s distribution waterfall. This entity was determined not to be a VIE because

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decision-making rights are shared equally among its members. Accordingly, the Company accounts for this investment using the equity method of accounting.

During the second quarter of 2020, our equity investment in the SF Venture was determined to be other-than-temporarily impaired due to the downturn in the economy that stemmed from the novel coronavirus (“COVID-19”) pandemic. In this regard, the Company adjusted the carrying value of such investment to its fair value as of such reporting date and recognized a $9.0 million impairment loss in our Consolidated Statements of Operations during the second quarter of 2020.  

The following table provides information about the total assets, debt and other liabilities of the U.S. real estate partnerships in which the Company held an equity investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	50,406	$	51,718
Debt		6,752		6,426
Other liabilities		20,307		20,493

The following table provides information about the gross revenue, operating expenses and net loss of U.S. real estate partnerships in which the Company had an equity investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	648	$	624	$	1,839	$	1,920
Operating expenses		515		437		1,623		1,380
Net loss and net loss attributable to the entities		(538)		(727)		(1,937)		(1,288)

Investment in SAWHF

SAWHF was determined not to be a VIE, and therefore, the Company accounts for this investment using the equity method of accounting. At September 30, 2020, the carrying value of the Company’s 11.85% equity investment in SAWHF was $1.6 million, which reflects a $6.1 million decline from December 31, 2019, due to: (i) a distribution from SAWHF of 7.2 million shares of a residential real estate investment trust (“REIT”) listed on the Johannesburg Stock Exchange (“JSE”) and whose carrying value is classified within “Other Assets” in the Company’s Consolidated Balance Sheets; (ii) investment dispositions; and (iii) foreign currency translation losses that were attributable to the weakening of the South African rand against the U.S. dollar during the first nine months of 2020. See Note 5, “Other Assets,” for more information regarding the distributed REIT shares held by the Company.

The following table provides information about the carrying value of total assets and other liabilities of SAWHF:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	13,785	$	56,356
Other liabilities		91		130

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The following table provides information about the gross revenue, operating expenses and net income of SAWHF:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	57	$	1,321	$	1,574	$	4,090
Operating expenses		119		236		755		722
Net income (loss) and net income (loss) attributable to the entity		790		(1,092)		1,911		1,690

Note 4—Loans Held for Investment (“HFI”)

We report the carrying value of HFI loans at their UPB, net of unamortized premiums, discounts and other cost basis adjustments and related allowances for loan losses, except in instances where we have elected the fair value option as further discussed below.

The following table provides information about the UPB and fair value adjustments that were recognized in the Company’s Consolidated Balance Sheets related to loans that it classified as HFI:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
UPB	$	1,280	$	54,100
Fair value adjustments		22		—
Loans HFI, net	$	1,302	$	54,100

On January 3, 2020, the entire $53.6 million UPB of the Hunt Note was fully repaid. At September 30, 2020 and December 31, 2019, the Company had one and two HFI loans, respectively, that had a combined UPB and fair value of $1.3 million and $54.1 million, respectively.

The Company elected the fair value option for one of its HFI loans that had a UPB and fair value of $1.3 million and $0.5 million at September 30, 2020 and December 31, 2019, respectively. The fair value option was elected upon its recognition so as to minimize certain operational challenges associated with accounting for this loan.

At September 30, 2020 and December 31, 2019, the Company had no HFI loans that were on nonaccrual status or that were past due in scheduled principal or interest payments and still accruing interest.

Unfunded Loan Commitments

At September 30, 2020 and December 31, 2019, the Company, through its wholly owned subsidiary of REL, had $0.8 million and $1.6 million, respectively, of unfunded loan commitments.

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Note 5—Other Assets

The following table provides information related to the carrying value of the Company’s other assets:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Other assets:
Real estate owned	$	15,384	$	8,397
Debt issue costs		2,297		2,675
Equity investments		2,574		—
Derivative assets		569		597
Accrued interest receivable		551		853
Other assets		576		462
Total other assets	$	21,951	$	12,984

Real Estate Owned (“REO”)

The following table provides information about the carrying value of the Company’s REO held for use, net:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Land improvements	$	12,765	$	5,778
Land		2,619		2,619
Total	$	15,384	$	8,397

Land improvements are depreciated over a period of 15 years.

The Company’s investments include the Company’s REO, which consists of a parcel of land that is currently in the process of being developed. During the first nine months of 2020, the Company invested $7.0 million in additional land improvements that were capitalized as part of the carrying value of such investment. Since REO has not been placed in service, no depreciation expense was recognized in connection with this land investment for the three months and nine months ended September 30, 2020 and September 30, 2019, nor were any impairment losses recognized by the Company during these periods in connection with REO.

Debt Issuance Costs

During the first quarter of 2020, the Company incurred, but deferred in the Consolidated Balance Sheets, $0.5 million of additional debt issuance costs in connection with the execution by MMA Energy Holdings, LLC (“MEH” or “Borrower”), a wholly owned subsidiary of the Company, of a credit agreement for a revolving credit facility with various lenders. These additional costs were due to the joinder of an additional lender and an increase in commitment by one of the existing lenders. These costs are being amortized ratably over the three-year term of the revolving credit facility. During the three months and nine months ended September 30, 2020, the Company recognized $0.3 million and $0.8 million of interest expense in the Company’s Consolidated Statements of Operations related to the amortization of debt issuance costs for the revolving credit facility. At September 30, 2020 and December 31, 2019, the unamortized balance of debt issuance costs was $2.3 million and $2.7 million, respectively. See Note 6, “Debt,” for more information.

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Equity Investments

On May 22, 2020, the Company received a $2.9 million pro-rata distribution from SAWHF of 7.2 million shares of a residential REIT that are listed on the Main Board of the JSE. These REIT shares, which trade under the trading symbol “TPF,” are reported at their fair value and are denominated in South African rand. During the nine months ended September 30, 2020, the Company recognized $0.4 million in “Net loss on other assets” within the Company’s Consolidated Statements of Operations. At September 30, 2020, the carrying value of these shares was $2.6 million. See Note 8, “Fair Value,” for more information.

Derivative Assets

At September 30, 2020 and December 31, 2019, the Company recognized $0.6 million of derivative assets. See Note 7, “Derivative Instruments,” for more information.  

Note 6—Debt

The table below provides information about the carrying values and weighted-average effective interest rates of the Company’s debt obligations that were outstanding at September 30, 2020 and December 31, 2019:

	At				At
	September 30, 2020				December 31, 2019
			Wtd. Avg.				Wtd. Avg.
			Effective				Effective
	Carrying		Interest		Carrying		Interest
(dollars in thousands)	Value (4)		Rate (4)		Value (4)		Rate (4)
Other Debt
Subordinated debt (1)
Due within one year	$	2,225	1.6	%	$	2,212	3.2	%
Due after one year		91,549	1.6			93,276	3.2
Revolving credit facility debt obligations
Due within one year		—	—			—	—
Due after one year		103,700	5.6			94,500	5.6
Notes payable and other debt (2)
Due within one year		4,072	14.0			6,828	14.7
Due after one year		13,458	5.2			1,500	5.0
Total other debt		215,004	4.0			198,316	4.8
Asset Related Debt
Notes Payable and Other Debt
Bond related debt (3)
Due within one year		275	2.8			—	—
Due after one year		23,102	2.8			—	—
Non-bond related debt
Due within one year		—	—			650	5.0
Due after one year		—	—			2,850	5.0
Total asset related debt		23,377	2.8			3,500	5.0
Total debt	$	238,381	3.9	%	$	201,816	4.8	%

(1) The subordinated debt balances include net cost basis adjustments of $7.0 million and $7.4 million at September 30, 2020 and December 31, 2019, respectively, that pertain to premiums and debt issuance costs.

(2) Included in Other Debt – notes payable and other debt were unamortized debt issuance costs of $0.1 million at September 30, 2020 and December 31, 2019.

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(3) Included in Asset Related Debt – notes payable and other debt – bond related debt were unamortized debt issuance costs of $0.1 million at September 30, 2020.

(4) Carrying value amounts and weighted-average interest rates reported in this table include the effects of any discounts, premiums and other cost basis adjustments. An effective interest rate represents an internal rate of return of a debt instrument that makes the net present value of all cash flows, inclusive of cash flows that give rise to cost basis adjustments, equal zero and in the case of (i) fixed rate instruments, is measured as of an instrument’s issuance date and (ii) variable rate instruments, is measured as of each date that a reference interest rate resets.

Covenant Compliance and Debt Maturities

The following table provides information about scheduled principal payments associated with the Company’s debt agreements that were outstanding at September 30, 2020:

	Asset Related Debt
(in thousands)	and Other Debt
2020	$	4,529
2021		2,278
2022		128,550
2023		11,222
2024		1,813
Thereafter		83,197
Net premium and debt issue costs		6,792
Total debt	$	238,381

At September 30, 2020, the Company was in compliance with all covenants under its debt obligations.

Other Debt

Other debt of the Company finances non-interest-bearing assets and other business activities of the Company. The interest expense associated with this debt is classified as “Interest expense” under “Other expenses” on the Consolidated Statements of Operations.

Subordinated Debt

The table below provides information about the key terms of the subordinated debt that was issued by MMA Financial Holdings, Inc. (“MFH”), the Company’s wholly owned subsidiary, and that was outstanding at September 30, 2020:

(dollars in thousands)			Net Premium				Interim
			and Debt		Carrying		Principal
Issuer	UPB		Issuance Costs		Value		Payments (1)	Maturity Date	Coupon
MFH	$	25,611	$	2,152	$	27,763	Amortizing	March 30, 2035	three-month LIBOR plus 2.0%
MFH		23,288		1,954		25,242	Amortizing	April 30, 2035	three-month LIBOR plus 2.0%
MFH		13,424		1,042		14,466	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
MFH		24,408		1,895		26,303	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
Total	$	86,731	$	7,043	$	93,774

(1) The subordinated principal amortizes 2.0% per annum.

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Revolving Credit Facility Debt Obligations

On September 19, 2019, MEH entered into a $125.0 million (the “Facility Amount”) revolving credit agreement with various lenders. During the first quarter of 2020, the maximum Facility Amount increased to $175.0 million and the committed amount of the revolving credit facility increased from $100.0 million to $120.0 million upon the joinder of an additional lender and an increase in commitment by one of the existing lenders.

Obligations associated with the revolving credit facility are guaranteed by the Company and are secured by specified assets of the Borrower and a pledge of all of the Company’s equity interest in the Borrower, which holds the equity interests in the Solar Ventures, through pledge and security documentation. Availability and amounts advanced under the revolving credit facility are subject to compliance with a borrowing base comprised of assets that comply with certain eligibility criteria, and includes late-stage development, construction and permanent loans to finance renewable energy projects and cash.

The revolving credit facility contains affirmative and negative covenants binding on the Borrower that are customary for credit facilities of this type. Additionally, the credit agreement includes collateral performance tests and the following financial covenants of the Company and its consolidated subsidiaries: minimum debt service coverage ratio, maximum debt to net worth, minimum consolidated net worth and minimum consolidated net income.

Borrowing under the revolving credit facility bears interest at the one-month London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements (subject to a 1.5% floor), plus a fixed spread of 2.75% per annum. At September 30, 2020, the LIBOR base rate plus the fixed spread was 4.25%. At September 30, 2020, the weighted-average effective interest rate of the Company’s obligation was 5.6%. The Borrower has also agreed to pay certain customary fees and expenses and to provide certain indemnities. In certain circumstances where the interest rate is unable to be determined, including in the event LIBOR ceases to be published, the administrative agent to the credit agreement will select a new rate in its reasonable judgment, including any adjustment to the replacement rate to reflect a different credit spread. The maturity date of the credit agreement is September 19, 2022, subject to a 12-month extension solely to allow refinancing or orderly repayment of the facility.  

At September 30, 2020, the UPB and carrying value of amounts borrowed from the revolving credit facility was $103.7 million. The Company recognized $1.5 million and $4.3 million of related interest expense in the Consolidated Statements of Operations for the three months and nine months ended September 30, 2020, respectively.

Notes Payable and Other Debt

At September 30, 2020, the UPB and carrying value of notes payable and other debt that was used to finance the Company’s 11.85% ownership interest in SAWHF was $3.9 million. This debt, which is denominated in South African rand, had an original contractual maturity date of September 8, 2020 and requires the Company to pay its counterparty a rate equal to the Johannesburg Interbank Agreed Rate (“JIBAR”) plus a fixed spread of 5.15%. At September 30, 2020, the JIBAR base rate was 3.4% and this debt obligation’s weighted-average effective interest rate, which is recalculated over the life of the debt instrument when JIBAR resets and incorporates the impact of the unamortized balance of debt issuance costs into its derivation, was 14.5%. Subsequent to September 30, 2020, the Company and its counterparty agreed to an extension of this debt financing.

At September 30, 2020, the UPB and carrying value of notes payable and other debt obligations to the Morrison Grove Management, LLC principals (“MGM Principals”) was $4.4 million. This debt bears interest at 5.0%. The $2.9 million debt obligation amortizes over its contractual life and is due to mature on January 1, 2026. The $1.5 million debt obligation pays interest only until March 31, 2026 and then amortizes in three equal installments until its maturity date of January 1, 2027.

On June 1, 2020, the Company entered into a $10.0 million construction loan that is secured by our direct investment in real estate that is in the process of development. The initial advance from this debt was $9.3 million and $0.5 million of capacity that has been reserved for interest payments. The total amount advanced by the lender shall not exceed 65% of the value of pledged real estate and 75% of the development allowable hard costs incurred by borrower. The loan is prepayable at any time without penalty, with all net proceeds realized from the sale of any portion of the real property required to be used to repay the outstanding UPB of the loan. Construction draws may not exceed a total principal sum of

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$11.1 million over the life of the facility, with the maximum outstanding UPB at any point in time not to exceed $10.0 million. The contractual maturity date of this facility is June 1, 2023, although the facility is subject to three extension options (at the discretion of the borrower and lender): (i) the first extension term would expire on November 1, 2023; (ii) the second extension term would expire on May 1, 2024 and (iii) the final amortized term would expire three years after the initial term, first extension term and second extension term, as applicable. Amounts drawn from this debt facility are repayable on an interest only basis at a rate of 4.85% with all outstanding principal due at maturity during the initial term, first extension term and second extension term. However, during the final extension term the debt bears interest at a rate of three-month LIBOR plus 3.0% per annum, subject to a 5.0% floor with principal amortization required monthly over the three year extension term. Obligations associated with this debt are guaranteed by the Company. At September 30, 2020, the UPB and carrying value of this debt obligation was $9.4 million and $9.3 million, respectively.    

Asset Related Debt

Asset related debt is debt that finances interest-bearing assets of the Company. The interest expense associated with this debt is included within “Net interest income” on the Consolidated Statements of Operations.

Bond Related Debt

On June 5, 2020, the Company entered into a total return swap (“TRS”) agreement related to our Infrastructure Bond. The Company conveyed its interest in such bond investment to a counterparty in exchange for cash consideration while simultaneously executing a TRS agreement with the same counterparty for purposes of retaining the economic risks and returns of such investments. The conveyance of the Company’s interest in such bond was treated for reporting purposes as a secured borrowing while the TRS agreement that was executed simultaneously with such conveyance did not receive financial statement recognition since such derivative instrument caused the conveyance of the Company’s interest in this bond not to qualify as a sale for reporting purposes.

At September 30, 2020, under the terms of this TRS agreement, which has a maturity date of June 6, 2022, the counterparty is required to pay the Company an amount equal to the interest payments received on the underlying bond (UPB of $26.7 million with a pay rate of 6.3% at September 30, 2020). The Company is required to pay the counterparty a rate that is based upon the Securities Industry and Financial Markets Association (“SIFMA”) index rate, subject to a 0.5% floor, plus a spread of 2.0% (notional amount of $23.5 million with a pay rate of 2.5% at September 30, 2020). Additionally, as required by the TRS agreement, the Company pledged cash collateral of $10.0 million representing 37.5% of the referenced bond’s UPB. Furthermore, under the terms of the TRS, the Company’s TRS counterparty is entitled to share in 10% of the increase in fair value, if any, of the conveyed Infrastructure Bond between the trade and termination dates of the TRS agreement. For reporting purposes, this provision is treated as a freestanding derivative instrument that is reported on a fair value basis.

Non-bond Related Debt

During the first quarter of 2020, the $3.5 million debt obligation to MGM Principals was reclassified to Other Debt upon the full repayment of the Hunt Note.

Letters of Credit

The Company had no letters of credit outstanding at September 30, 2020 and December 31, 2019.

Note 7—Derivative Instruments

The Company uses derivative instruments for various purposes. Pay-fixed interest rate swaps, interest rate basis swaps and interest rate caps are used to manage interest rate risk. Foreign currency forward exchange agreements are used to manage currency risk associated with the financing of our SAWHF equity investment.

Derivative instruments that are recognized in the Consolidated Balance Sheets are measured on a fair value basis. Because the Company does not designate any of its derivative instruments as fair value or cash flow hedges, changes in fair value of these instruments are recognized in the Consolidated Statements of Operations as a component of “Net losses on

47

derivatives.” Derivative assets are presented in the Consolidated Balance Sheets as a component of “Other assets” and derivative liabilities are presented in the Consolidated Balance Sheets as a component of “Other liabilities.”

The following table provides information about the carrying value of the Company’s derivative instruments:

	Fair Value
	At				At
	September 30, 2020				December 31, 2019
(in thousands)	Assets		Liabilities		Assets		Liabilities
Basis swaps	$	—	$	618	$	318	$	—
Interest rate caps		53		—		227		—
Interest rate swaps		—		1,886		52		—
Foreign currency forward exchange		516		—		—		117
Gain share arrangement (1)		—		24		—		—
Total carrying value of derivative instruments	$	569	$	2,528	$	597	$	117

(1) Refer to Note 6, “Debt” for more information.

The following table provides information about the notional amounts of the Company’s derivative instruments:

	Notional Amounts
	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Basis swaps	$	35,000	$	35,000
Interest rate caps		35,000		35,000
Interest rate swaps		35,000		35,000
Foreign currency forward exchange		3,915		4,685
Total notional amount of derivative instruments	$	108,915	$	109,685

The following table provides information about the net losses that were recognized by the Company in connection with its derivative instruments:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Total return swaps (1)	$	—	$	—	$	—	$	(42)
Basis swaps (2)		29		(273)		(907)		(526)
Interest rate caps		(20)		(234)		(174)		(797)
Interest rate swaps (3)		(28)		(441)		(2,072)		(2,717)
Foreign currency forward exchange		(149)		269		726		89
Gain share arrangement		12		—		(24)		—
Total net losses of derivative instruments	$	(156)	$	(679)	$	(2,451)	$	(3,993)

(1) The accrual of net interest payments that are made in connection with TRS agreements that are reported as derivative instruments are classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.2 million for the nine months ended September 30, 2019.

(2) The accrual of net interest payments that are made in connection with basis swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.1 million for the three months and nine months ended September 30, 2020. Net cash received was $0.1 million and $0.2 million for the three months and nine months ended September 30, 2019, respectively.

(3) The accrual of net interest payments that are made in connection with interest rate swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash paid was $0.1 million for the three months and nine

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months ended September 30, 2020, while the net cash received was de minimis for the three months ended September 30, 2019 and $0.2 million for the nine months ended September 30, 2019.

Note 8—Fair Value

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis are presented in the first table below in this Note. From time to time, we may be required to measure at fair value other assets on a nonrecurring basis such as certain loans held for investment or investments in partnerships. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets.

Fair Value Hierarchy

The Company measures the fair value of its assets and liabilities based upon their contractual terms and using relevant market information. A description of the methods used by the Company to measure fair value is provided below. Fair value measurements are subjective in nature, involve uncertainties and often require the Company to make significant judgments. Changes in assumptions could significantly affect the Company’s measurement of fair value.

GAAP establishes a three-level hierarchy that prioritizes inputs into the valuation techniques used to measure fair value. Fair value measurements associated with assets and liabilities are categorized into one of the following levels of the hierarchy based upon how observable the valuation inputs are that are used in the fair value measurements.

● Level 1:  Valuation is based upon quoted prices in active markets for identical instruments.

● Level 2:  Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs or significant value drivers are observable in active markets.

● Level 3:  Valuation is generated from techniques that use significant assumptions that are not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.

Recurring Changes in Fair Value

The following tables present the carrying amounts of assets and liabilities that are measured at fair value on a recurring basis by instrument type and based upon the level of the fair value hierarchy within which fair value measurements of our assets and liabilities are categorized:

	At
	September 30,		Fair Value Measurements
(in thousands)	2020		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	30,305	$	—	$	—	$	30,305
Loans held for investment		1,302		—		—		1,302
Equity investments		2,574		2,574		—		—
Derivative instruments		569		—		569		—
Liabilities:
Derivative instruments	$	2,528	$	—	$	2,528	$	—

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	At
	December 31,		Fair Value Measurements
(in thousands)	2019		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	31,365	$	—	$	—	$	31,365
Loans held for investment		500		—		—		500
Derivative instruments		597		—		597		—
Liabilities:
Derivative instruments	$	117	$	—	$	117	$	—

Changes in Fair Value

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2020:

	Investments in		Loans Held for
(in thousands)	Debt Securities		Investment
Balance, July 1, 2020	$	29,988	$	1,291
Net gains included in earnings (1)		—		11
Net change in AOCI (2)		272		—
Impact from sales or redemptions		—		—
Impact from settlements (3)		45		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $11 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $0.3 million of net unrealized gains recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2019:

	Investments
	in Debt
(in thousands)	Securities
Balance, July 1, 2019	$	35,236
Net change in AOCI (1)		(890)
Impact from sales or redemptions		(264)
Impact from settlements (2)		39
Balance, September 30, 2019	$	34,121

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $1.9 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments.

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The following table provides information about the amount of realized and unrealized gains that were reported in the Company’s Consolidated Statements of Operations for the three months ended September 30, 2019, related to activity presented in the preceding table:

	Net losses on
(in thousands)	bonds (1)
Additional realized gains recognized	$	2,156
Total net gains reported in earnings	$	2,156

(1) Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2020:

	Investments
	in Debt		Loans Held for
(in thousands)	Securities		Investment
Balance, January 1, 2020	$	31,365	$	500
Net gains included in earnings (1)		—		22
Net change in AOCI (2)		(1,024)		—
Impact from loan originations / advances		—		780
Impact from settlements (3)		(36)		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $22 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $1.0 million of net unrealized losses recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2019:

	Investments
	in Debt		Derivative
(in thousands)	Securities		Assets
Balance, January 1, 2019	$	97,190	$	1,130
Net losses included in earnings		—		(195)
Net change in AOCI (1)		(25,118)		—
Impact from sales or redemptions		(37,633)		—
Impact from settlements (2)		(318)		(935)
Balance, September 30, 2019	$	34,121	$	—

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $26.1 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments. Included in this amount is $0.3 million of cumulative transition adjustment to retained earnings that was recognized in connection with the Company’s adoption of ASU No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-10):  Premium Amortization on Purchased Callable Debt Securities” on January 1, 2019.

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The following table provides information about the amount of realized and unrealized gains (losses) that were reported in the Company’s Consolidated Statements of Operations for the nine months ended September 30, 2019, related to activity presented in the preceding table:

	Net gains on		Net losses on
(in thousands)	bonds (1)		derivatives (2)
Change in unrealized losses related to assets and liabilities held at January 1, 2019, but settled during 2019	$	—	$	(195)
Additional realized gains recognized		26,420		152
Total net gains (losses) reported in earnings	$	26,420	$	(43)

(1)Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

(2) Amounts are classified as “Net losses on derivatives” in the Company’s Consolidated Statements of Operations.

Fair Value Measurements of Instruments That Are Classified as Level 3

Significant unobservable inputs presented in the tables that follow are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change, or based on qualitative factors, such as nature of the instrument, type of valuation technique used and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs that are referenced in the tables below:

● Market yield – is a market rate of return used to calculate the present value of future expected cash flows to arrive at the fair value of an instrument. The market yield typically consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, Municipal Market Data or SIFMA index rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instrument’s cash flows resulting from risks such as credit and liquidity. A significant decrease in this input in isolation would result in a significantly higher fair value measurement.

● Capitalization rate – is calculated as the ratio between the NOI produced by a commercial real estate property and the price for the asset. A significant decrease in this input in isolation would result in a significantly higher fair value measurement.

● NOI annual growth rate – is the amount of future growth in NOI that the Company projects each property to generate on an annual basis over the 10-year projection period. These annual growth estimates take into account the Company’s expectation about the future increases, or decreases, in rental rates, vacancy rates, bad debt expense, concessions and operating expenses for each property. Generally, an increase in NOI will result in an increase to the fair value of the property.

● Valuation technique weighting factors – represent factors that, in the aggregate, sum to 100% and that are individually applied to two or more indications of fair value considering the reasonableness of the range indicated by those results.

● Contract or bid prices – represents a third-party sale agreement or purchase offer executed in connection with the pending sale of an affordable housing property that secures one of the Company’s bond investments. In instances where multiple purchase offers have been received an average of the offers received is utilized. Estimated proceeds from the sale, or average offers, of such property that are determined to be allocable to a bond investment are used to measure the investment’s fair value at a given reporting date.

The tables that follow provide quantitative information about the valuation techniques and the range and weighted-average of significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model to measure fair value. The significant unobservable inputs for Level 3 assets and liabilities that are valued using dealer pricing are not included in the tables, as the specific inputs applied are not provided by the dealer.

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	Fair Value Measurement at September 30, 2020
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	24,099	Discounted cash flow	Market yield		7.5	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,206	Discounted cash flow	Market yield		7.2			N/A
				Capitalization rate		6.4			N/A
Loans held for investment		1,302	Discounted cash flow	Market yield		7.1			N/A

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

	Fair Value Measurement at December 31, 2019
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average (2)
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	25,339	Discounted cash flow	Market yield		7.0	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,026	Discounted cash flow	Market yield		7.3			N/A
				Capitalization rate		6.2			N/A
				Valuation technique weighting factors:
				• NOI annual growth rate (50% weighting factor)		0.7			N/A
				• Bid price (50% weighting factor)	$	16,611			N/A
Loans held for investment		500	Discounted cash flow	Market yield		8.0	%		8.0	%

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

(2) Weighted-averages are calculated using outstanding UPB for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Nonrecurring Changes in Fair Value

At June 30, 2020, the Company’s equity investment in the SF Venture was assessed to be other-than-temporarily impaired. Consequently, the Company adjusted the carrying value of such investment to its fair value as of such reporting date, which was estimated by determining the Company’s share of the net asset value (“NAV”) of the SF Venture at June 30, 2020, where the assets and liabilities of the SF Venture were adjusted to their fair values as of such reporting date and a discount for lack of marketability was then applied to the Company’s share of the measured NAV of the SF Venture. The Company recognized a $9.0 million impairment loss in adjusting this investment’s carrying value to its measured fair value. Because of the limited observability of certain valuation inputs that were used to measure the fair value of this equity investment, it was classified as level 3 in the fair value hierarchy at June 30, 2020. There were no nonrecurring fair value adjustments recognized by the Company during the three months ended September 30, 2020 and September 30, 2019 and nine months ended September 30, 2019.

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Additional Disclosures Related To The Fair Value of Financial Instruments That Are Not Carried On The Consolidated Balance Sheets at Fair Value

The tables that follow provide information about the carrying amounts and fair values of those financial instruments of the Company for which fair value is not measured on a recurring basis and organizes the information based upon the level of the fair value hierarchy within which fair value measurements are categorized. Assets and liabilities that do not represent financial instruments (e.g., premises and equipment) are excluded from these disclosures.

	At
	September 30, 2020
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	21,784	$	21,784	$	—	$	—
Restricted cash		17,224		17,224		—		—
Liabilities:
Notes payable and other debt - bond related		23,377		—		—		23,509
Notes payable and other debt - non-bond related		17,530		—		—		16,872
Revolving credit facility obligations		103,700		—		—		103,700
Subordinated debt issued by MFH		93,774		—		—		44,122

	At
	December 31, 2019
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	8,555	$	8,555	$	—	$	—
Restricted cash		4,250		4,250		—		—
Loans held for investment		53,600		—		—		54,276
Liabilities:
Notes payable and other debt - non-bond related		11,828		—		—		10,888
Revolving credit facility obligations		94,500		—		—		94,500
Subordinated debt issued by MFH		95,488		—		—		46,934

Valuation Techniques

Cash and cash equivalents and restricted cash – The carrying value of these assets approximated fair value due to the short-term nature and negligible credit risk inherent in them.

Loans held for investment – Fair value is measured using a discounted cash flow methodology pursuant to which contractual payments are discounted based upon market yields for similar credit risks.

Notes payable and other debt – Fair value is measured by discounting contractual cash flows using a market rate of interest or by estimating the fair value of the collateral supporting a debt arrangement, taking into account credit risk.

Subordinated debt – Fair value is measured by discounting projected contractual payments of principal and interest using the instrument’s estimated market yield, which was 10.5% and 11.7% at September 30, 2020 and December 31, 2019, respectively. As outlined in the table above, at September 30, 2020, the aggregate fair value was measured at $44.1 million. At September 30, 2020, the measured fair value of this debt would have been $54.2 million and $36.6 million had its market yield been 8.0% and 13.0%, respectively. The measured fair value of this debt is inherently judgmental and based on management’s assumption of market yields. There can be no assurance that the Company could repurchase the remaining subordinated debt at the measured fair values reflected in the table above or that the debt would trade at that price.

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Revolving credit facility debt obligations – Fair value of these debt obligations is measured by discounting projected contractual payments of interest and principal using an estimated market yield.

Note 9—Guarantees and Collateral

Guarantees

The Company has guaranteed the performance of payment obligations of certain of its subsidiaries under various debt agreements to third parties. The Company has guaranteed all MFH payment obligations and performance under the terms of the Company’s subordinated debt. However, the Company’s guarantee of the subordinated debt is subordinated to repayment of any senior debt of the Company. Additionally, contemporaneously with the execution of the revolving credit facility, the Company agreed to guarantee all payment and performance obligations of MEH under the credit agreement to the lenders. Furthermore, the Company agreed to guarantee all payment and performance obligations of the borrower associated with financing obtained in the second quarter of 2020 related to our direct investment in real estate that is in process of development. Currently, the Company expects that it will not need to make any payments under these guarantees.

Collateral and Restricted Assets

The following tables summarize assets that are either pledged or restricted for the Company’s use at September 30, 2020 and December 31, 2019:

	At
	September 30, 2020
			Investments						Total
	Restricted		in Debt		Investments in			Other	Assets
(in thousands)	Cash		Securities		Partnerships			Assets	Pledged
Debt related to the revolving credit facility	$	1,110	$	—	$	362,403	$	—	$	363,513
Debt related to TRS agreement		10,020		24,099		—		—		34,119
Debt related to the Company's REO		250		—		—		15,384		15,634
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,374		—		1,598		2,574		5,546
Interest rate swaps		4,462		—		—		—		4,462
Other		8		—		—		—		8
Total	$	17,224	$	24,099	$	364,001	$	17,958	$	423,282

	At
	December 31, 2019
					Total
	Restricted		Investments in		Assets
(in thousands)	Cash		Partnerships		Pledged
Debt related to the revolving credit facility	$	1,070	$	289,123	$	290,193
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,369		7,732		9,101
Interest rate swaps		1,803		—		1,803
Other		8		—		8
Total	$	4,250	$	296,855	$	301,105

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Note 10—Commitments and Contingencies

Operating Leases

The Company had no future rental commitments at September 30, 2020.

Litigation and Other Legal Matters

In the ordinary course of business, the Company and its subsidiaries are named from time to time as defendants in various litigation matters or may have other claims made against them. These legal proceedings may include claims for substantial or indeterminate compensatory, consequential or punitive damages, or for injunctive or declaratory relief.

The Company establishes reserves for litigation matters or other loss contingencies when a loss is probable and can be reasonably estimated. Once established, reserves may be adjusted when new information is obtained. At September 30, 2020, we had no significant litigation matters and we were not aware of any other claims that we believe would have a material adverse impact on our financial condition or results of operations.

Other Risks and Uncertainties

We are monitoring the economic impact of the COVID-19 pandemic on the performance of our investments and underlying real estate values. Although we have not recognized impairment charges other than that for the SF Venture discussed above, we believe it is reasonably possible that we may be required to recognize one or more material impairment charges over the next 12 months, particularly if underlying economic conditions continue to deteriorate. Because any such impairment charge will be based on future circumstances, we cannot predict at this time whether we will be required to recognize any further impairment charges and, if required, the timing or amount of any impairment charge.

With respect to recognized DTA, the Company’s assessment of the likelihood of realizing tax benefits related to DTAs recognized in the fourth quarter of 2019 did not change in the third quarter of 2020. That is, while COVID-19 caused a sharp deterioration in macro-economic conditions, the potential amount and permanence of long-term impacts of those conditions on the Company’s business was uncertain at September 30, 2020. Consequently, the Company did not make an adjustment in the third quarter of 2020 to the carrying value of DTAs that were recognized at December 31, 2019. Nonetheless, given such uncertainty and other factors, we believe it is reasonably possible that, within the next 12 months, a change to the carrying value of recognized DTAs that is material to the Company’s financial statements could be recognized. However, the exact timing and amount of loss recognition depends upon future circumstances and, therefore, cannot be predicted at this time.

Note 11—Equity

Preferred Share Information

On January 1, 2019, as part of the Company’s conversion to a corporation, the Company was authorized to issue 5,000,000 of preferred shares, in one or more series, with no par value. As of September 30, 2020, the Board of Directors (“Board”) has not authorized any of these shares to be issued and no rights have been established for any of these shares.

Common Share Information

As of September 30, 2020, the Company was authorized to issue 50,000,000 common shares. The following table provides information about net (loss) income to common shareholders as well as provides information that pertains to weighted-average share counts that were used in per share calculations as presented on the Consolidated Statements of Operations:

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	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Net income (loss) from continuing operations	$	2,936	$	5,576	$	(3,630)	$	31,685
Net loss from discontinued operations		—		—		—		(8)
Net income (loss)	$	2,936	$	5,576	$	(3,630)	$	31,677
Basic and diluted weighted-average shares (1)		5,811		5,887		5,807		5,884

(1) Includes common shares issued and outstanding, as well as deferred shares of non-employee directors that have vested but are not issued and outstanding.

Common Shares

Effective May 5, 2015, the Company adopted a Tax Benefits Rights Agreement (the “Rights Plan”) to help preserve the Company’s net operating losses (“NOLs”). In connection with adopting the Rights Plan, the Company declared a distribution of one right per common share to shareholders of record as of May 15, 2015. The rights do not trade apart from the current common shares until the distribution date, as defined in the Rights Plan. Under the Rights Plan, the acquisition by an investor (or group of related investors) of greater than a 4.9% stake in the Company, could result in all existing shareholders other than the new 4.9% holder having the right to acquire new shares for a nominal cost, thereby significantly diluting the ownership interest of the acquiring person. On March 11, 2020, the Board approved an extension of the original five-year term of the Rights Plan until May 5, 2023, or until the Board determines the plan is no longer required, whichever comes first. Subsequently, shareholders ratified the Board’s decision to extend the Rights Plan at the Company’s 2020 annual meeting of shareholders.

On January 3, 2018, the Board approved a waiver of the 4.9% ownership limitation for Hunt, increasing this limitation to the acquisition of 9.9% of the Company’s issued and outstanding shares in any rolling 12-month period without causing a triggering event.

At September 30, 2020, the Company had two shareholders who held greater than a 4.9% interest in the Company, one of which was its former Chief Executive Officer and current member of the Board, Michael L. Falcone. On March 11, 2020, the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for open-market share purchases of up to an additional 7,500 common shares, to be completed by December 31, 2020, with the Board reserving all its rights under the Rights Plan for any subsequent purchases. Upon Mr. Falcone’s resignation as Chief Executive Officer on August 12, 2020, he became eligible for Board compensation. Pursuant to the policy of our Governance Committee, each Board member receives one-half of his or her Board compensation in common shares. On November 5, 2020, the Board adopted an Amended and Restated 2012 Non-Employee Directors’ Compensation Plan to coordinate elements of the Rights Plan and share compensation for directors, in addition the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for purposes of his share-based Board compensation.

Accumulated Other Comprehensive Income

The following table provides information related to the net change in AOCI for the three months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2020	$	6,726	$	683	$	7,409
Net unrealized gains (losses)		272		(99)		173
Income tax losses		(75)		—		(75)
Net change in AOCI		197		(99)		98
Balance, September 30, 2020	$	6,923	$	584	$	7,507

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The following table provides information related to the net change in AOCI for the three months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2019	$	13,397	$	17	$	13,414
Net unrealized gains		961		217		1,178
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		—		(1,851)
Net change in AOCI		(890)		217		(673)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2020	$	7,666	$	(33)	$	7,633
Net unrealized (losses) gains		(1,024)		617		(407)
Income tax gains		281		—		281
Net change in AOCI		(743)		617		(126)
Balance, September 30, 2020	$	6,923	$	584	$	7,507

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2019	$	37,625	$	72	$	37,697
Net unrealized gains		997		162		1,159
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(26,115)		—		(26,115)
Net change in AOCI		(25,118)		162		(24,956)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

Note 12—Stock-Based Compensation

On January 8, 2018, the Company engaged the External Manager through the execution of a management agreement with the External Manager (the “Management Agreement”) to externally manage the Company’s operations. In connection therewith, all employees of the Company were hired by the External Manager. The Company has stock-based compensation plans (“Plans”) for non-employee Directors (“Non-employee Directors’ Stock-Based Compensation Plans”) and stock-based incentive compensation plans for employees (“Employees’ Stock-Based Compensation Plans”).

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The following table provides information related to total compensation expense that was recorded for these Plans:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Non-employee Directors’ Stock-Based Compensation Plans	$	223	$	133	$	611	$	461

Employees’ Stock-Based Compensation Plans

At September 30, 2020, there were 571,066 share awards available to be issued under Employees’ Stock-Based Compensation Plans. While each existing Employees’ Stock-Based Compensation Plan has been approved by the Board, not all of the Plans have been approved by the Company’s shareholders. The Plans that have not been approved by the Company’s shareholders are currently restricted to the issuance of only stock options. As a result, of the 571,066 shares available under the plans, 73,556 are available to be issued in the form of either stock options or shares, while the remaining 497,510 shares available for issuance must be issued in the form of stock options. Since the Company has no employees, the Company does not expect to issue any of these shares or options.

Non-Employee Directors’ Stock-Based Compensation Plans

The Non-employee Directors’ Stock-based Compensation Plans authorize a total of 1,130,000 shares for issuance, of which 372,494 were available to be issued at September 30, 2020. The Non-employee Directors’ Stock-based Compensation Plans provide for grants of non-qualified common stock options, common shares, restricted shares and deferred shares.

The Non-employee Directors’ Stock-based Compensation Plans provide for directors to be paid $120,000 per year for their services. In addition, the Chairman receives an additional $20,000 per year, the Audit Committee Chair receives an additional $15,000 per year and the other committee chairs receive an additional $10,000 per year. Under this plan, 50% of such compensation is paid in cash and the remaining sum through common share-based grants. In the event that a receipt of shares by a director would potentially result in a trigger event of the Tax Benefits Rights Agreement, such compensation shall be paid in cash, absent action by the Board to specifically exempt such share payment prior to the issuance date.

The table below summarizes non-employee director compensation, including cash, vested options and common and deferred shares, for services rendered for the nine months ended September 30, 2020 and September 30, 2019. The directors are fully vested in the deferred shares at the grant date.

				Common		Deferred		Weighted-average
				Shares		Shares		Grant Date		Options		Directors' Fees
		Cash		Granted		Granted		Share Price		Vested		Expense
September 30, 2020	(1)	$	320,625		5,720		5,946	$	24.91		—	$	611,250
September 30, 2019			230,625		1,667		5,628		31.61		—		461,250

(1) During the first quarter of 2020, the Board approved the addition of two independent directors. Furthermore, during the third quarter of 2020, our former Chief Executive Officer became a non-employee director.

Note 13—Related Party Transactions and Transactions with Affiliates

Transactions with Hunt

External Management Fees and Expense Reimbursements

On January 8, 2018, the Company sold certain businesses and assets (the “Disposition”) and entered into the Management Agreement. At the time of the Disposition, all employees of the Company were hired by the External Manager. In consideration for the management services being provided by the External Manager, the Company pays the External Manager a base management fee, which is payable quarterly in arrears in an amount equal to (i) 0.50% of the Company’s

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first $500 million of common shareholders’ equity determined in accordance with GAAP in the U.S. on a fully diluted basis, adjusted to exclude the effect of (a) the carrying value of the Company’s DTAs, and (b) any gains or losses attributable to noncontrolling interests (“GAAP Common Shareholders’ Equity”); and (ii) 0.25% of the Company’s GAAP Common Shareholders’ Equity in excess of $500 million. Additionally, the Company agreed to pay the External Manager an incentive fee equal to 20% of the total annual return of diluted common shareholders’ equity per share in excess of 7%, which excludes the effects of the Company’s DTAs. The Company also agreed to reimburse the External Manager for certain allocable overhead costs including an allocable share of the costs of (i) noninvestment personnel of the External Manager and an affiliate thereof who spend all or a portion of their time managing the Company’s operations and reporting as a public company (based on their time spent on these matters) and (ii) the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) based on the percentage of their time spent managing the Company. Reimbursement of compensation-related expenses is, however, subject to an annual cap of $2.5 million through 2019 and $3.5 million thereafter, until the Company’s GAAP common shareholders’ equity exceeds $500 million.

The current term of the Management Agreement extends to December 31, 2022 and automatically renews thereafter for additional two-year terms. Either the Company or the External Manager may, upon written notice, decline to renew or terminate the Management Agreement without cause, effective at the end of the initial term or any renewal term. If the Company declines to renew or terminates the Management Agreement without cause or the External Manager terminates for cause, the Company is required to pay a termination fee to the External Manager equal to three times the sum of the average annual base and incentive management fees, plus one times the sum of the average renewable energy business expense reimbursements and the employee cost reimbursement expense, in each case, during the prior two-year period. The Company may also terminate the Management Agreement for cause. No termination fee is payable upon a termination by the Company for cause or upon a termination by the External Manager without cause.

For the three months and nine months ended September 30, 2020 and September 30, 2019, no incentive fee was earned by our External Manager. During the three months ended September 30, 2020 and September 30, 2019, the Company recognized $1.8 million and $1.6 million, respectively, and $7.0 million and $6.0 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, of management fees and expense reimbursements payable to our External Manager in its Consolidated Statements of Operations. At September 30, 2020 and December 31, 2019, $1.8 million and $1.2 million, respectively, of management fees and expense reimbursements was payable to the External Manager.

Loans HFI and Investment in Partnerships

As consideration for the Disposition, Hunt agreed to pay the Company $57.0 million and to assume certain liabilities of the Company. The Company provided seller financing through a $57.0 million note receivable from Hunt that had an initial term of seven years, prepayable at any time and bearing interest at the rate of 5% per annum. On October 4, 2018, the Company’s receivable from Hunt increased to $67.0 million as part of Hunt’s election to take assignment of the Company’s agreements to acquire (i) the LIHTC business of Morrison Grove Management and (ii) certain assets pertaining to a specific LIHTC property from affiliates of Morrison Grove Management, LLC (these agreements are collectively referred hereinafter to as the “MGM Agreements”). On December 20, 2019, Hunt prepaid $13.4 million of the note receivable and as a result, the UPB of the note was $53.6 million at December 31, 2019. During the three months and nine months ended September 30, 2019, the Company recognized $0.8 million and $2.5 million, respectively, of interest income associated with this note receivable in the Consolidated Statements of Operations. At December 31, 2019, $0.7 million of accrued interest was payable by Hunt. On January 3, 2020, the note receivable was fully repaid.

On April 1, 2019, the Company purchased Hunt’s 30% ownership interest in SDL that pertained to an investment in a specific loan for $11.3 million, which represents the price that was projected to cause the Company and Hunt to achieve the same internal rate of return (“IRR”) on the amount of capital each had invested in the loan for the period of time that each party was invested in the loan. In this regard, upon full repayment of the loan, a post-purchase true-up payment may have been required to be made by one party to the other depending upon the actual IRR achieved by each party on the investment. Due to continuing involvement by Hunt as the transferor, the transfer did not qualify as a purchase for reporting purposes and, as a result, cash consideration paid by the Company was reported as a loan receivable that is secured by the interest in SDL that Hunt conveyed to the Company. On December 20, 2019, the Company and Hunt terminated all obligations relating to the post-purchase true-up payment and, as a result, the Company derecognized this loan receivable and increased its investment in partnership in SDL.  

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On December 20, 2019, the Company sold to Hunt a loan and three limited partner interests in partnerships that own affordable housing and in which our ownership interest ranged from 74.25% to 74.92%. This loan had a UPB and carrying value of $1.1 million and $0.3 million, respectively, while the three limited partner interests had a carrying value of $0.9 million at the time of sale. The Company received $3.1 million in sales proceed and recognized $1.9 million of gains in the Consolidated Statements of Operations.

Investment in Debt Securities

On April 25, 2019, the Company received $13.1 million of net proceeds from the sale of an affordable housing property that secured one of the Company’s non-performing bond investments. Hunt, as bond servicing agent, waived $0.9 million of servicing fees that were otherwise due and payable in priority to the Company’s bond investment. As a result, the Company received $0.9 million of additional bond redemption proceeds that we otherwise would not have received.

Note 14—Segment Information

At September 30, 2020 and December 31, 2019, the Company operates as a single reporting segment. Therefore, all required segment information can be found in our consolidated financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings and submissions to the SEC under the Exchange Act is recorded, processed, and reported within the time periods specified in the SEC’s rules and forms. These controls and procedures include those designed to ensure that information is accumulated and communicated to management, including our interim Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

An evaluation was conducted under the supervision and with the participation of management, including the CEO and CFO, on the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) under the Exchange Act. Based on this evaluation, the interim CEO and CFO concluded that our disclosure controls and procedures were effective at September 30, 2020.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the three months ended September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of legal proceedings see Notes to Consolidated Financial Statements – Note 10, “Commitments and Contingencies,” which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

We are supplementing the risk factors described under Part I, Item 1A, “Risk Factors,” in the 2019 Annual Report with the additional risk factor set forth below. The matters discussed below should be read in conjunction with the risk factors set forth in the 2019 Annual Report.    

The novel coronavirus (“COVID-19”) and actions taken to mitigate its spread and economic impact, or other outbreak of disease or similar public health threat, could adversely impact or cause disruption of our financial condition and results of operations.

The impact and duration of the COVID-19 pandemic and actions taken by governmental and public health authorities to mitigate its spread, such as instituting quarantines, limiting business operations and travel, restricting group meetings and “shelter in place” orders, have led to significant volatility and negative pressure in financial markets, increases in unemployment and reductions in consumer and business spending.

We believe that our ability to operate and our level of business activity has been and is likely to continue to be impacted by the effects of COVID-19 and could in the future be impacted by another pandemic, and that such impacts could have a material adverse effect on our business, financial condition and results of operations. Factors that may adversely impact our financial condition and results of operations related to COVID-19, or potentially another pandemic, include the following:

● the availability of permanent loans, tax credit equity and other monetization events that are the primary sources of repayment of loans made by the Solar Ventures may be limited, which could lead to impairment of loans made by the Solar Ventures and we may lose some or all of our investment;

● the value of renewable energy infrastructure projects that secure loans made by the Solar Ventures could decline, which would negatively impact the value of loans made by the Solar Ventures, potentially permanently and materially;

● the disruption in the credit markets could cause a lack of opportunity for future loans through a reduced pipeline of loans for investment by the Solar Ventures as well as a reduced availability of other infrastructure investments. Additionally, if the Company is unable to fund its share of capital contributions to the Solar Ventures as a result of an inability to access the debt and equity capital markets, or our capital partner becomes unwilling or unable to continue to contribute its share of capital to the Solar Ventures, which could cause the Solar Ventures to default on their lending commitments to their borrowers, which would adversely affect our business, cash flows and financial condition and result in damage to our and our External Manager’s reputation;

● if we are unable to access the debt or equity capital markets in order to satisfy financial obligations to our capital partner under various non-pro rata funding agreements, our capital partner may have the right to either (i) cause the Solar Ventures to make special distributions disproportionately to it (without distribution to us) of net cash flow from any capital transactions (subject to limitations provided in such non-pro rata funding agreements) or (ii) enter into a mutually agreeable definitive amendment (to be negotiated in good faith) to the relevant operating agreements of the Solar Ventures reflecting the majority funding position of the Company’s capital partner;  

● construction or development of renewable energy or other infrastructure projects that are being or could be financed through loans made by the Company or Solar Ventures may be unable to proceed on a timely basis or at all due to, among other things, government mandated restrictions or moratoriums on construction or the inability to source the necessary construction personnel, equipment or parts;

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● significant uncertainty and volatility with respect to the current and future values of real estate-related assets as COVID-19 is expected to continue to have a significant impact on local, national and global economies and has resulted in a world-wide economic slowdown. The impact of COVID-19 on our investments is uncertain; however, it is expected to have a negative impact on the overall real estate market. In addition, lower transaction volume may result in less data for assessing real estate values. This increases the risk that our asset values may not reflect the actual realizable value of our underlying properties at any given time, as valuations and appraisals of our properties and real estate-related assets are only estimates of market value as of the end of the period and may not reflect the changes in values resulting from COVID-19. In addition, this impact is occurring rapidly and is not immediately quantifiable. To the extent real estate or other asset values decline after the date we disclose our asset values, whether related to COVID-19 or otherwise, new investors may overpay for their investment in our common stock, which would heighten their risk of loss;

● restrictions on business operations and re-openings or an economic downturn is likely to negatively impact the development activity related to our equity investment in the SF Venture. Moreover, revenues generated by tenants of the SF Venture may be reduced or the SF Venture may have to grant concessions to tenants both of which could cause losses related to our equity investment in the SF Venture. These factors led to the impairment of our investment in the SF Venture during the second quarter of 2020;

● should economic conditions further deteriorate and cause declines in the value of our investments that would be assessed to be other-than-temporary in nature, we would recognize additional impairment losses related to such investments;

● personnel of our External Manager, including our executive officers and other employees of the External Manager that support our operations may become ill and unavailable; and

● third-party vendors we rely on to conduct our business, including vendors that provide IT services, legal and accounting services, or other operational support services may become unable to deliver services or support to the Company.

The rapid development and fluidity of the circumstances resulting from COVID-19 preclude any prediction as to the duration and extent of its adverse impact and makes it more difficult to determine the fair value of investments, especially those that rely on estimates and are inherently judgmental. Nevertheless, COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance, financial condition, volume of business, results of operations and cash flows.

To the extent COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of the risk factors included in the 2019 Annual Report, including, but not limited to, those relating to our revolving credit facility, our exposure to changes in interest rates, our exposure to collateral calls associated with agreements we used to hedge interest rate risk, our investments in bonds and real estate and the lack of liquidity related to our non-cash assets.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None for the three months ended September 30, 2020.

Use of Proceeds from Registered Securities

None for the three months ended September 30, 2020.

Issuer Purchases of Equity Securities

None for the three months ended September 30, 2020.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Description	Incorporation by Reference
3.1	Certificate of Incorporation of MMA Capital Holdings, Inc.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 2, 2019
3.2	By-laws of MMA Capital Holdings, Inc.	Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 2, 2019
10.1	Amended and Restated MMA Capital Holdings, Inc. 2012 Non-Employee Directors’ Compensation Plan
10.2	Amended and Restated Limited Liability Company Operating Agreement of Solar Construction Lending, LLC.
10.3	First Amendment to Limited Liability Company Operating Agreement of Solar Construction Lending, LLC.
10.4	Second Amendment to Limited Liability Company Operating Agreement of Solar Construction Lending, LLC.
10.5	Limited Liability Company Operating Agreement of Solar Development Lending, LLC.
10.6	First Amendment to Limited Liability Company Operating Agreement of Solar Development Lending, LLC.
10.7	Second Amendment to Limited Liability Company Operating Agreement of Solar Development Lending, LLC.
31.1	Certification of Interim Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Interim Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation

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Exhibit No.	Description	Incorporation by Reference
101.LAB	Inline XBRL Taxonomy Extension Labels
101.PRE	Inline XBRL Taxonomy Extension Presentation
101.DEF	Inline XBRL Taxonomy Extension Definition
104	Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		MMA CAPITAL HOLDINGS, INC.
Dated:	November 9, 2020	By:	/s/ Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Interim Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

By:	/s/ Gary A. Mentesana	November 9, 2020
Name:	Gary A. Mentesana
Title:	Interim Chief Executive Officer (Principal Executive Officer)
By:	/s/ David C. Bjarnason	November 9, 2020
Name:	David C. Bjarnason
Title:	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

S-1

EX-10.1

Exhibit 10.1

MMA CAPITAL HOLDINGS, INC.

AMENDED AND RESTATED
2012 NON-EMPLOYEE DIRECTORS’ COMPENSATION PLAN

(Effective November 5, 2020)

1.Purpose.  The purpose of this Amended and Restated 2012 Non-Employee Directors’ Compensation Plan (the “Plan”) of MMA Capital Holdings, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company and its shareholders by providing a means to attract and retain highly qualified persons to serve as non-employee directors of the Company and to promote ownership by such directors of a greater proprietary interest in the Company, thereby aligning such directors’ interests more closely with the interests of shareholders of the Company.

2.Definitions.  In addition to terms defined elsewhere in the Plan, the following are defined terms under the Plan:

(a)“Code” means the Internal Revenue Code of 1986, as amended from time to time.  References to any provision of the Code include regulations thereunder and successor provisions and regulations thereto.

(b)For purposes of the Plan, a “Change in Control” shall have occurred if:

(i)Any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any entity controlling, controlled by or under common control with the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of either the combined voting power of the Company’s then outstanding voting securities or the then outstanding Shares (in either case, other than as a result of an acquisition of securities directly from the Company);

(ii)during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this Section 2(b)) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

(iii)the shareholders of the Company approve a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse share split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 75% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 75% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the

failure to meet such 75% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or

(iv)the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

Notwithstanding the foregoing, no event or condition shall constitute a Change in Control to the extent that, if it were, a 20% tax would be imposed upon or with respect to any award under Section 409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a Change in Control to the maximum extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without causing the imposition of such 20% tax.  

(c) “Deferred Share” means a credit to a Participant’s deferral account under Section 8 which represents the right to receive one Share upon settlement of the deferral account.  Deferral accounts, and Deferred Shares credited thereto, are maintained solely as bookkeeping entries by the Company evidencing unfunded obligations of the Company.

(d)“Distribution Date” means the date or dates on which Deferred Shares will be distributed to the Participant.  Distributions may be made on Separation from Service, death, a specified date, or pursuant to a fixed schedule.  The timing of distributions shall be subject to such limitations as may be required to comply with the provisions of Section 409A of the Code.  Notwithstanding the foregoing, distributions due upon a Separation from Service and death shall be made no later than 90 days after the occurrence of such event.

(e)“Exchange Act” means the Securities Exchange Act of 1934, as amended.  References to any provision of the Exchange Act include the rules promulgated thereunder and successor provisions and rules thereto.

(f)“Fair Market Value” of a Share means, as of any given date, (i) if Shares are then listed on a national securities exchange or quoted or reported on a national quotation system, the closing sales price of a Share on the exchange or system for the applicable date, or, if such day was not a trading day, the closing sales price for the most recent trading day prior to such date on such exchange or system, (ii) if Shares are not then listed on a national securities exchanges or quoted on a national quotation system but are then traded on an over-the-counter market or PORTAL, the closing sales price for the most recent trading day prior to such date if at least 50,000 shares were traded on such date, and if not, then the average of the closing bid and asked prices for the Shares in such over-the-counter market or PORTAL for the last preceding date on which there was a sale of such Shares in such market or PORTAL, or (iii) if Shares are not then listed on a national securities exchange, quoted on a national quotations system or traded on an over-the-counter market or PORTAL, such value as may be determined by the Board by whatever means or method as to which the Board, in the good faith exercise of its discretion, shall at such time deem appropriate.  For purposes of determining the average Fair Market Value of a Share during a period of days, only trading days shall be taken into account.

(g)“Fiscal Quarter” means a fiscal quarter of the Company.

(h)“Option” means the right, granted to a director under Section 9, to purchase a specified number of Shares at the specified exercise price for a specified period of time under the Plan.  All Options will be non-qualified stock Options.

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(i)“Participant” means any person who, as a non-employee director of the Company, has been granted a Share, Deferred Share or Option which remains outstanding under the Plan.

(j)“Rule 16b-3” means Exchange Act Rule 16b-3 as from time to time in effect and applicable to the Plan and Participants.

(k)“Separation from Service” means a Participant’s separation from service with the Company and its subsidiaries.  Notwithstanding the foregoing, with respect to any award that is subject to Section 409A of the Code, Separation from Service shall be interpreted within the meaning of Section 409A(a)(2)(A)(i) of the Code.

(l)“Share” means a common share of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 7; provided, however, that to the extent any class of common shares are readily tradable on an established securities market, such common shares shall be designated as the Shares for purposes of this Plan.

(m)“Total Annual Compensation” shall be determined as follows:

i. “Base Compensation”.  Base Compensation shall be $120,000.00 per annum, payable quarterly; and

ii. “Chairperson Compensation”.  In addition to the Base Compensation, an additional fee is payable quarterly to any director that serves as chairperson of the Board, or chairperson of any of the designated committees of the Board.  The additional fees are follows:

1. Chairperson of the Board - $20,000 per annum

2. Audit Committee - $15,000.00 per annum

3. Governance Committee - $10,000.00 per annum

4. Compensation Committee - $10,000.00 per annum

The Board may amend the amounts in this Section from time to time, in its sole discretion, subject to the Company’s charter, By-laws, and applicable laws.

(n)“Total Quarterly Compensation” shall equal 1/4 of the Total Annual Compensation.

3.Shares Available Under the Plan.  Subject to adjustment as provided in Section 10, the total number of Shares reserved and available for issuance under the Plan is 2,000,000.  Such Shares may be authorized but unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant.  For purposes of the Plan, Shares credited to a Participant’s deferral account will not be considered to be available, except for purposes of issuance upon the settlement of such account;  provided, however, that, if the Deferred Share is forfeited, the Shares credited in respect of a Deferred Share will again be available for issuance under the Plan.

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4.Administration of the Plan.  The Plan will be administered by the Board of Directors of the Company (the “Board”); provided, however, that any action by the Board relating to the Plan will be taken only if, in addition to any other required vote, such action is approved by the affirmative vote of a majority of the directors who are not then eligible to participate in the Plan.  The Board shall have authority to (i) determine the number of Shares, Deferred Shares or Options to be credited to each Participant, and (ii) determine or impose conditions on such Shares, Deferred Shares and Options under the Plan as it may deem appropriate.  The Participant shall take whatever additional actions and execute whatever additional documents the Board may in its reasonable judgment deem necessary or advisable in order to carry out or effectuate one or more of the obligations or restrictions imposed on the Participant pursuant to the express provisions of the Plan.  In addition, notwithstanding any other provision of the Plan, the Board shall administer the Plan, and exercise authority and discretion under the Plan, to satisfy the requirements of Section 409A of the Code or any exemption thereto.

5.Eligibility.   Each individual who, on any date on which Shares, Deferred Shares or Options are to be granted or cash is to be paid under Section 6, is a director of the Company and is not an employee of the Company or any subsidiary of the Company will be eligible, at such date, for the compensation described in Section 6 (subject to any deferral election under Section 8), except if, pursuant to an agreement between the individual and the Company, the individual is not eligible for the Plan.  No other person will be eligible to participate in the Plan.

6.Quarterly Compensation.  Compensation for service on the Board during a Fiscal Quarter for each eligible director, as defined in Section 5 above, shall be made partly in cash and partly in Shares, Deferred Shares or Options, as described in this Section 6.

(i)Cash Payment.  For services during a Fiscal Quarter, each eligible director shall receive a cash payment equal to 50% of the Total Quarterly Compensation amount, except as described in item (iii) of this Section.  Payment with respect to a Fiscal Quarter shall be made on the last day of such Fiscal Quarter (or as soon as practicable thereafter, but in no event later than the date specified in Treas. Reg. § 1.409A-1(b)(4)(i)).  

(ii)Shares, Deferred Shares or Options.  For services during each Fiscal Quarter, each eligible director shall be granted Shares, Deferred Shares or Options in an amount equal to 50% of the Total Quarterly Compensation, except as described in item (iii) of this Section.

(iii)Coordination with Tax Benefits Rights Agreement.  In the instance where shares granted under paragraph (ii) of this Section would result in the issuance of shares to a person that results in ownership of greater than 4.9% of the shares outstanding, or would further increase ownership of an Exempted Person, as defined in the Tax Benefits Rights Agreement adopted on May 5, 2015, as amended on March 12, 2020 (the “Rights Agreement”), the director shall receive 100% of his or her compensation in cash pursuant to paragraph (i) of this Section, absent specific action of the Board to define the issuance of the additional shares to the Exempted Person as an Exempted Transaction in accordance with the terms of the Rights Agreement.

7. Shares. Each Participant receiving compensation relating to his or her service as a director in the form of Shares shall be made in accordance with this Section 7.    Shares shall be vested on the last business day of the Fiscal Quarter to which they relate, and, unless deferred pursuant to pursuant to Section 8, shall not be subject to restriction from any voluntary or involuntary sale, transfer, pledge, anticipation, alienation, encumbrance or assignment, other than those imposed by operation of law.  The Share price will be equal to the average Fair Market Value of a Share during the 30-calendar day period ending on the last

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business day of such Fiscal Quarter. Shares granted under the Plan may be evidenced in such manner as the Board shall determine.

8.Deferred Shares.  Each Participant receiving compensation relating to his or her service as a director in the form of Shares, as specified in Section 6, may elect to receive Deferred Shares in lieu of Shares.  If so elected, payment of Deferred Shares shall be made in accordance with this Section 8.

(a)Elections.  Each director who elects to defer payment of Shares awarded for service in a given calendar year under Section 6 and instead elects to receive Deferred Shares for such given calendar year must file a written election with the Secretary of the Company no later than December 31 of the year preceding such calendar year; provided, however, that any newly elected or appointed director may file an election for any year not later than 30 days after the date such person first became a director (with respect to Shares not earned as of the date of such election).  In no event may an election be made after the last date that such election must be made in order to comply with the provisions of Section 409A of the Code.  Each election may specify a Distribution Date for the Shares to which it pertains.  Except as provided under this Section 8(a), and in Section  8(b) below , an election for a calendar year (or in the case of a new Participant, the remainder of a calendar year) is irrevocable.  An election under this Section  8(a) must specify the following:

(i)The percentage of the Shares awarded to the Participant for such calendar year that are to be deferred in the form of Deferred Shares under the Plan; and

(ii)The Distribution Date of Deferred Shares.  If the Distribution Date is not specified in an initial or annual election, Shares subject to the election shall be settled 30 days after the Participant’s Separation from Service with the Company.  Any election to be paid upon a cessation of service as a director (or as soon as practicable thereafter) shall be settled upon a Separation from Service (or as soon as practicable, but no later than 90 days, thereafter).

(b)Change in Election.  A director may change the Distribution Date with respect to Deferred Shares on an annual basis by making a subsequent election; provided that the subsequent election must, except as may otherwise be permitted under the rules applicable under Section 409A of the Code, (A) not be effective for at least one year after such election, or, in the case of payments to commence at a specific time, be made at least one year before the first scheduled payment and (B) defer the commencement of distributions (and each affected distribution) for at least five years.

An election by a director shall be deemed to be continuing and therefore applicable to subsequent Plan years as to both percentage and settlement date unless the director revokes or changes such election for a future year by filing a new election form by the due date for such form specified in this Section 8(a).

(c)Deferred Share Account.  The Company will establish a deferral account for each Participant who elects to receive Deferred Shares under this Section 8.  At any date on which Shares would otherwise be payable to a Participant who has elected to receive Deferred Shares, the Company will credit such Participant’s deferral account with a number of Deferred Shares equal to the number of Shares granted under Section 6 for which the Participant has elected to receive Deferred Shares.  The amount of Deferred Shares so credited shall include any fractional amounts calculated to at least two decimal places.

(d)Crediting of Dividend Equivalents.  Whenever dividends are paid or distributions are made with respect to Shares, a Participant to whom Deferred Shares are then credited in a deferral account shall be entitled to receive, as dividend equivalents, an amount equal in value to the amount of the dividend paid or property distributed on a single Share multiplied by the number of Deferred Shares (including any

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fractional Share) credited to his or her deferral account as of the record date for such dividend or distribution.  Such dividend equivalents shall be credited to the Participant’s deferral account as a number of Deferred Shares determined by dividing the aggregate value of such dividend equivalents by the Fair Market Value of a Share at the payment date of the dividend or distribution.  No distributions shall be made with respect to such dividend equivalents until the Participant’s Distribution Date applicable to the Deferred Shares associated with the dividend equivalents.

(e)Settlement of Deferred Shares.  The Company will settle the Participant’s deferral account by delivering to the Participant (or his or her beneficiary) a number of Shares equal to the number of whole Deferred Shares then credited to his or her deferral account (or a specified portion in the event of any partial settlement), together with cash in lieu of any fractional share remaining at a time when less than one whole Deferred Share is credited to such deferral account.  Such settlement shall be made on the Distribution Date specified or deemed specified in the Participant’s election filed in accordance with this Section 8.

(f)Unforeseen Emergency.  Notwithstanding the foregoing provisions of this Section 8, a Participant may receive any amounts deferred by the Participant in the event of an “Unforeseeable Emergency.”  For these purposes, an “Unforeseeable Emergency,” as determined by the Board in its sole discretion, is a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but only where such severe financial hardship is not and may not be relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship.  The determination of whether a financial hardship constitutes an Unforeseeable Emergency shall be made in accordance with the provisions of Section 409A(a)(2)(B)(ii) of the Code.  The amount distributed shall be limited to the amount necessary to satisfy the emergency need (which amount may include amounts necessary to pay federal, state and local income taxes that will be incurred in connection with the distribution).  In the event of a distribution on account of an Unforeseeable Emergency, any deferral election that is in effect on behalf of the Participant for the calendar year of distribution shall be cancelled.

(g)Nonforfeitability.  The interest of each Participant in any Deferred Shares (and the deferral account relating thereto) at all times will be nonforfeitable.

(h)Compliance with Section 409A.  Notwithstanding anything herein to the contrary, all distributions of Deferred Shares shall be made in accordance with the provisions of Section 409A of the Code and the Plan shall be interpreted consistent with this intention.

9.Options.  Each Participant receiving compensation relating to his or her service as a director in the form of Shares, as specified in Section 6, may elect to receive Options in lieu of Shares.  If so elected, payment of Options shall be made in accordance with this Section 9.  

(a)Exercise Price.  The exercise price per Share purchasable upon exercise of an Option will be equal to 100% of the Fair Market Value of a Share on the date of grant of the Option.

(b)Option Expiration.  A Participant’s Option will expire at the earlier of (i) ten years after the date of grant or (ii) one year after the date the Participant ceases to serve as a director of the Company for any reason.

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(c)Exercisability.  No Option may be exercised unless and until it has become exercisable in accordance with this Section 9(c).  A Participant’s Option received upon initial election will become exercisable on the next anniversary of the director’s initial election; provided, however, that a Participant’s Option will become immediately exercisable in full at the time the Participant ceases to serve as a director due to death or disability or upon a Change in Control; and provided further, that a Participant’s Option may be exercised after the Participant ceases to serve as a director for any reason other than death or disability only to the extent that the Option was exercisable at the date he or she ceased to be a director or has become exercisable pursuant to this Section 9(c) within two months after the date he or she ceased to be a director.

(d)Method of Exercise.  A Participant may exercise an Option, in whole or in part, at such time as it is exercisable and prior to its expiration, by giving written notice of exercise to the Secretary of the Company,  in the form attached hereto as Exhibit B, specifying the Option to be exercised and the number of Shares to be purchased, and paying in full the exercise price in cash (including by check) or by surrender of Shares already owned by the Participant (except for Shares acquired from the Company by exercise of an Option or other award less than six months before the date of surrender) having a Fair Market Value at the time of exercise equal to the exercise price, or by a combination of cash and Shares.

10.Adjustment Provisions.

(a)Corporate Transactions and Events.  In the event any recapitalization, reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of Shares or other securities of the Company, share split or reverse split, extraordinary dividend (whether in the form of cash, Shares, or other property), liquidation, dissolution, or other similar corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of each Participant’s rights under the Plan (which would not include a transaction in which public stockholders retain no interest in the surviving company), then an adjustment shall be made, in a manner that is proportionate to the change to the Shares and otherwise equitable, in (i) the number and kind of Shares remaining reserved and available for issuance under Section 3, (ii) the number and kind of Shares under Section 6, (iii) whether Deferred Shares are issued under Section 8, and (iv) the number of Shares to be issued upon settlement of Deferred Shares under Section 8.  The foregoing notwithstanding, no adjustment may be made hereunder except as will be necessary to maintain the proportionate interest of the Participant under the Plan and to preserve, without exceeding, the value of outstanding Deferred Shares.

(b)Insufficient Number of Shares.  If at any date an insufficient number of Shares are available under the Plan for the receipt of Shares or deferral of Deferred Shares at that date, Shares will be distributed proportionately to each eligible director to the extent Shares are then available.

11.Interpretation and Other Rules.  The Board may make such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate.  Without limiting the generality of the foregoing, the Board may (i) interpret the Plan and any agreements under Section 13(a), with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law, provided, that the Board’s interpretation shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations are made exclusively by members of the Board who are individuals who served as Board members before the Change in Control, and (ii) take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof.  In the event of any dispute or disagreement as to the interpretation of the Plan or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Plan, the decision of the Board shall be final and binding upon all persons.  Except as provided in Section 8 with respect to Deferred Shares, Shares are

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not intended to provide for the deferral of compensation subject to Section 409A of the Code and, if any provision of the Plan is subject to more than one interpretation or construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with such grants or payments not being subject to the provisions of Section 409A of the Code.  Deferred Shares are subject to Section 409A of the Code.  

12.Changes to the Plan.  The Board may amend, alter, suspend, discontinue, or terminate the Plan or authority to grant Shares or to permit payment of Deferred Shares under the Plan without the consent of shareholders or Participants, except that any amendment or alteration will be subject to the approval of the Company’s shareholders at or before the next Annual Meeting for which the record date is after the date of such Board action if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system as then in effect, and the Board may otherwise determine to submit other such amendments or alterations to shareholders for approval; provided, however, that, without the consent of an affected Participant, no such action  may materially impair the rights of such Participant with respect to any previous award of Shares or Deferred Shares, provided, further that no such amendment, discontinuance or termination of the Plan shall accelerate the time for payment of any Deferred Shares or other amounts subject to Section 409A of the Code (except to the extent permitted by Section 409A of the Code).  For purposes of this Section 122, a termination of the Plan that involves an accelerated payment of amounts due under the Plan is not considered to materially impair the rights of a Participant.

13.General Provisions.

(a)Agreements.  Deferred Shares and any other right or obligation under the Plan may be evidenced by agreements or other documents executed by the Company and the Participant incorporating the terms and conditions set forth in the Plan, together with such other terms and conditions not inconsistent with the Plan, as the Board may from time to time approve.  Such agreements and documents which pertain to awards that are subject to Section 409A of the Code shall include such additional terms and conditions as may be required to satisfy the requirements thereof.

(b)Compliance with Laws and Obligations.  The Company will not be obligated to issue or deliver Shares in connection with any award of Shares or in settlement of Deferred Shares in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any other federal or state securities law, any requirement under any listing agreement between the Company and any stock exchange or automated quotation system, or any other law, regulation, or contractual obligation of the Company, until the Company is satisfied that such laws, regulations, and other obligations of the Company have been complied with in full.  Certificates representing Shares issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

(c)Compliance.  The obligation of the Company to provide Shares under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Board.  The election and settlement of Deferred Shares shall be administered in conformance with the provisions of Section 409A of the Code.  The Board may make such changes to the Plan as may be necessary or appropriate to comply with the rules and regulations of any government authority or to obtain tax benefits applicable to rights under the Plan.  Notwithstanding any other provision of the Plan, the Company shall not be required to take or permit any action under the Plan or any agreement under Section 133(a) which, in the good-faith determination of the Company, would result in a material risk of a violation by the Company of Section 13(k) of the Exchange Act.

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(d)Limitations on Transferability.  Deferred Shares and rights relating thereto under the Plan will not be transferable by a Participant except by will or the laws of descent and distribution (or to a designated beneficiary in the event of a Participant’s death), and will be exercisable during the lifetime of the Participant only by such Participant or his or her guardian or legal representative.  A Participant may designate a beneficiary by filing with the Company the beneficiary Designation Form attached to the Plan. The Company may rely upon the beneficiary designation last filed in accordance with this Section 13(d).  Deferred Shares and rights relating thereto under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to the claims of creditors of any Participant.

(e)No Fiduciary Relationship.  Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or shall be construed to create a trust of any kind, or a fiduciary relationship between the Company or its subsidiaries, or their officers or the Board, on the one hand, and the Participant, the Company, its subsidiaries or any other person or entity, on the other.

(f)Notices.  All notices under the Plan shall be in writing, and if to the Company, shall be delivered to the Company or mailed to its principal office, addressed to the attention of the Board; and if to the Participant, shall be delivered personally, sent by facsimile transmission or mailed to the Participant at the address appearing in the records of the Company.  Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 13(f).

(g)Unfunded Status of Accounts.  With respect to any Shares or payments not yet made to a Participant in respect of Deferred Shares, nothing contained in the Plan or such Deferred Shares shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash or Shares, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan.

(h)Compliance with Rule 16b-3.  It is the intent of the Company that this Plan complies in all respects with applicable provisions of Rule 16b-3.  Accordingly, if any provision of this Plan or any agreement hereunder does not comply with the requirements of Rule 16b-3 as then applicable to a transaction by a Participant, such provision will be construed or deemed amended to the extent necessary, to conform to the applicable requirements with respect to such Participant.

(i)No Right To Continue as a Director.  Nothing contained in the Plan or any agreement hereunder will confer upon any Participant any right to continue to serve as a director of the Company.

(j)No Shareholder Rights Conferred.  Nothing contained in the Plan or any agreement hereunder will confer upon any Participant (or any person or entity claiming rights by or through a Participant) any rights of a shareholder of the Company unless and until Shares are in fact issued to such Participant (or person).

(k)Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor any submission thereof to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements for directors as it may deem desirable.

(l)Limitation of Liability.  Each member of the Board shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer or other employee of the Company or any subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant, legal counsel, or other professional retained by the Company to assist in the

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administration of the Plan.  No member of the Board, nor any officer or employee of the Company acting on behalf of the Board, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board and any officer or employee of the Company acting on behalf of the Board or members thereof shall, to the extent permitted by, law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.

(m)Captions.  The use of captions in this Plan is for convenience.  The captions are not intended to provide substantive rights.

(n)Governing Law.  The validity, construction, and effect of the Plan and any agreement hereunder will be determined in accordance with the Delaware Limited Liability Company Act and other laws (including those governing contracts) of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

(o)Tax Withholding. Prior to the payment or settlement of any award under the Plan, the Participant must pay, or make arrangements acceptable to the Company for the payment of, any and all federal, state and local tax withholding (including FICA tax) that in the opinion of the Board is required by law. If the Participant does not make such payment or arrangement, in the Board’s discretion, the Participant may forfeit the award.  The Board shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state and local tax withholding (including FICA tax), required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.  The Participant shall remain responsible at all times for paying any tax due with respect to any award under the Plan, and the Company shall not be liable for any interest or penalty that a Participant incurs by failing to make timely payments of tax.

14.Effective Date and Plan Termination.  The Plan will be effective upon the date specified herein upon approval of the Board, subject to its approval by the shareholders of the Company if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system as then in effect.  Unless earlier terminated by action of the Board, the Plan will remain in effect until such time as no Shares remain available for issuance under the Plan and the Company and Participants have no further rights or obligations under the Plan.  The Board may (without the approval or consent of any Participant) elect to settle (and distribute) all Deferred Shares within thirty (30) days prior to, or twelve (12) months following, a “Change In Control” (as defined for purposes of Section 409A of the Code), provided that all substantially similar arrangements that are sponsored by the Company which are deemed to be part of a single plan for purposes of Section 409A of the Code are terminated, and all Deferred Shares are settled within twelve (12) months of the date of termination.  In the event the Plan is terminated, any distribution or settlement of Deferred Shares shall conform to the applicable requirements of Section 409A of the Code so that Participant avoids liability under Section 409A.

As adopted by the Board: November 5, 2020

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EX-10.2

Exhibit 10.2

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed. In addition, portions of the exhibit have been omitted.

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

SOLAR CONSTRUCTION LENDING, LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (as may be amended or restated from time to time, this “Agreement”), executed as of November 7, 2016 (the “Effective Date”), is made by and between the Members identified on Schedule A attached hereto, as well as (i) Fundamental II and Fundamental III (each as defined in Section 2.1), solely for the purposes of Section 1.1 hereof and Article XI hereof and (ii) MEC (as defined in Section 2.1), solely for the purposes of Sections 1.1, 7.1(G)(iv) and 7.6 hereof and Article XI hereof.

ARTICLE I – FORMATION

Section.1.1Formation.

(A)[Affiliates of Fundamental Advisors, LP] and MEC formed a limited liability company under the name Solar Construction Lending, LLC (the “Company”) under the Delaware Limited Liability Company Act, 6 Del. Code §18-101 et seq. (as amended from time to time, the “Act”), by causing the Certificate of Formation attached hereto as Exhibit A (the “Certificate”) to be executed and filed with the Office of the Secretary of State of the State of Delaware on July 8, 2015, and entering into the Limited Liability Company Operating Agreement of Solar Construction Lending, LLC as of July 15, 2015, as amended by that certain First Amendment to Operating Agreement, dated as of October 28, 2015 (the “Original Agreement”).

(B)(i) Pursuant to the Subscription Agreement, dated as of the date hereof (the “Subscription Agreement”), between MEC, RDH and REL, 100% of MEC’s Interests in the Company has been transferred to REL (the “MEC Transfer”) and (ii) (x) the MEC Transfer is deemed to be an approved transfer, having the Required Approval, under the Original Agreement, and is hereby approved and ratified in all respect by each of the Members, and (y) any term of the Original Agreement (or this Agreement) to the contrary notwithstanding (and without limiting the generality of clause (ii)(x)), REL is hereby substituted for MEC as a member of the Company (and as a Member).

(C)(i) Pursuant to the an agreement, dated as of the date hereof (the “Fundamental II Assignment Agreement”), between Fundamental II and Fundamental, 100% of Fundamental II’s Interests in the Company has been transferred to Fundamental (the “Fundamental II Transfer”), (ii) pursuant to an agreement, dated as of the date hereof (the “Fundamental III Assignment Agreement”), between Fundamental III and Fundamental, 100% of Fundamental III’s Interests in the Company has been transferred to Fundamental (the “Fundamental III Transfer”), and (iii) (x) each of the Fundamental II Transfer and the

Fundamental III Transfer is deemed to be an approved transfer, having the Required Approval, under the Original Agreement, and is hereby approved and ratified in all respect by each of the Members, and (y) any term of the Original Agreement (or this Agreement) to the contrary notwithstanding (and without limiting the generality of clause (iii)(x)), Fundamental is hereby substituted (or, to the extent such substitution has already occurred, confirmed to be substituted) for Fundamental II and Fundamental III as a member of the Company (and as a Member).

(D) Upon execution of this Agreement, each Member will hold the Percentage Interest of all Interests in the Company as set forth on Schedule A hereto.

(E)The Members have agreed (i) to amend and restate the Original Agreement as set forth herein, and (ii) that the Agreement of the Company shall be as set forth herein.

(F)The Company’s business shall be conducted under such name until such time as the Members, by Required Approval, shall designate otherwise and file amendments to the Certificate in accordance with applicable law.

(G)This Agreement is subject to, and governed by, the Act and the Certificate. The Members hereby authorize and ratify the execution and filing of the Certificate by Kevin P. Brandon.  In the event of a direct conflict between the provisions of this Agreement and the mandatory provisions of the Act, such provisions of the Act will be controlling.

Section 1.2.Place of Business; Registered Agent.  The principal office and place of business of the Company shall be 3600 O’Donnell Street, Suite 600, Baltimore, Maryland 21224, or at such other place as the Members may from time to time designate.  The registered agent of the Company shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.  The registered agent may be changed from time to time by Required Approval of the Members and by the filing of the prescribed forms with and the payment of any prescribed fees to the appropriate public official(s).

ARTICLE II - INTERPRETATIVE PROVISIONS

Section 2.1.Certain Definitions.  The following terms have the definitions hereinafter indicated whenever used in this Agreement with initial capital letters:

“Act” has the meaning set forth in Section 1.1(A).

“Adjusted Capital Account” means, with respect to a Member, such Member’s Capital Account as of the end of each fiscal year, as the same is specially computed to reflect the adjustments required or permitted to be taken into account in applying Treasury Regulations Section 1.704-1(b)(2)(ii)(d) (including adjustments for partnership minimum gain and partner nonrecourse debt minimum gain) and taking into account any amounts such Member is obligated or deemed obligated to restore pursuant to any provision of this Agreement and the Regulations.

“Adjusted Capital Account Deficit” means, for each Member, the deficit balance, if any, in that Member’s Adjusted Capital Account.

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“Administrative Member” means REL, or any successor Administrative Member appointed by Required Approval.

“Administrative Member Cost Reimbursement Fee” means the monthly fee payable to the Administrative Member by the Company pursuant to Section 7.5 as reimbursement for loan origination and servicing, asset management, management, and other costs incurred by the Administrative Member in performing its Primary Responsibilities pursuant to and in accordance with this Agreement.

“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.  For purposes hereof, “control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly through one or more intermediaries, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, provided that in no event shall (A) (i) HedgeCo, or any Fund or account directly or indirectly managed or advised by HedgeCo, or (ii) any general partner or manager of any Fund or account described in clause (i), be considered to constitute an Affiliate of Fundamental for the purpose of Section 7.3(B) hereof, (B) the Company or any of its subsidiaries be deemed an Affiliate of any other Person (other than the Company and its subsidiaries) by reason of the respective rights and powers of the Members with respect to the Company or (C) any Non-TSSP Managed Entity RDH Affiliate be considered to constitute an Affiliate of REL (so long as RDH controls REL and RDH is controlled by TPG Special Situations Partners, LLC) or RDH (so long as RDH is controlled by TPG Special Situations Partners, LLC) for the purposes of this Agreement.

“Agreement” has the meaning set forth in the preamble hereto.

“Annual Budget” has the meaning Set forth in Section 7.1(F)(i).

“Assignment Agreement” has the meaning set forth in Section 9.2(D).

“Bank Account” has the meaning set forth in Section 8.3.

“Budget Act” has the meaning set forth in Section 8.2(B).

“Business Day” means any day other than a Saturday, Sunday or any day on which commercial banks are authorized or required to be closed in the State of Delaware, the State of New York or the State of Maryland.

“Buy-Sell Closing” has the meaning set forth in Section 9.2(D).

“Capital Contribution” means a contribution to the capital of the Company by a Member pursuant to Section 5.1 and/or Section 5.2(A).

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“Capital Transaction” means the sale, refinancing or other disposition of any Company Asset, including the repayment in whole or in part of principal with respect to any Investment made by the Company, which represents a return of capital invested by the Company.

“Certificate” has the meaning set forth in Section 1.1(A).

“Closing Date” has the meaning set forth in Section 9.2(D).

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any corresponding provisions of succeeding law.

“Company” has the meaning set forth in Section 1.1(A).

“Company Assets” means, at any particular time, any assets or property (tangible or intangible, choate or inchoate, fixed or contingent) then held or owned by the Company or any subsidiary.

“Company Opportunities” has the meaning set forth in Section 7.3(B).

“Competing Investment” shall mean the primary market origination of a construction, late stage development or permanent loan for solar, wind or solar storage battery facilities.

“Default Loans” has the meaning set forth in Section 5.3.

“Effective Date” has the meaning set forth in the preamble hereto.

“Entity” means any Person other than an individual.

“Exclusivity Termination Event” has the meaning set forth in Section 7.3(B).

“Fiscal Year” means the calendar year.

“Formally Presented” has the meaning set forth in Section 7.3(B).

“Fund” means any Entity that is a collective or pooled investment vehicle, including (i) any investment company as defined in section 3(a) of the Investment Company Act of 1940, as amended, or (ii) any Entity that would be an investment company under section 3(a) of that Act but for the exclusion provided from that definition by either section 3(c)(1) or section 3(c)(7) of that Act.

“Fundamental” means [Affiliate of Fundamental Advisors, LP], a Delaware limited liability company, and includes any assignees and/or any successors to any of the Interest held thereby, in each case for so long as such Person is a Member.

“Fundamental II” means [Affiliate of Fundamental Advisors, LP], a Delaware

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limited partnership.

“Fundamental III” means [Affiliate of Fundamental Advisors, LP], a Delaware limited partnership.

“GAAP” means United States generally accepted accounting principles consistently applied.  

“Guaranteed Investment” has the meaning assigned to such term in the SCL Ancillary Agreement as of the Effective Date.

“HedgeCo” means FCO Advisors LP, a Delaware limited partnership, or any of its direct or indirect successors (broadly construing the term “successors”).

“Initial Budget” has the meaning Set forth in Section 7.1(F)(i).

“Initiating Member” has the meaning set forth in Section 9.2(A).

“Initiating Member’s Deposit” has the meaning set forth in Section 9.2(A).

“Interest” means, with respect to an interest of any Member in the Company, the entire ownership interest of such Member in the Company at such time (including, without limitation, such Member’s interest in the capital, profits, losses and distributions of the Company).

“Investment” means (a) a late stage development and/or construction loan for a solar facility and (b) any other investment by the Company (including, without limitation, in another renewable energy asset or facility), including without limitation any equity investment pursuant to the proviso to the definition of “Proscribed Action”, in the case of (a) and (b) that has been approved by Required Approval (including, without limitation and for the avoidance of doubt, any of the foregoing occurring prior to the Effective Date).

“Investment Criteria” means the target parameters for Investments set forth on the attached Exhibit B.

“Investment Period” means the period beginning on the date of the Original Agreement and ending on July 15, 2018.

“Investment Related Actions” has the meaning set forth in Section 7.1(G)(ii).

“IRS” means the Internal Revenue Service, an agency of the United States government, or any successor agency.

“Loan Documents” means the executed definitive documents entered into (for the avoidance of doubt, at any time on or after July 15, 2015) between the Company and a borrower in connection with an Investment.

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“Liquidation Value” has the meaning set forth in Section 9.2(A).

“MEC” means MMA Energy Capital, LLC, a Maryland limited liability company.

“MEC Transfer” has the meaning set forth in Section 1.1(B).

“Member” means each Person listed as a Member on Schedule A hereto, and any Person hereafter admitted as a Substitute Member pursuant to Section 9.5.

“MMA” means MMA Capital Management, LLC, a Delaware limited liability company.

“MMA Outside Obligations” has the meaning set forth in Section 7.1(G)(iv).

“Net Operating Cash Flow” means, for any period, the amount, computed on a cash basis, equal to:

(i)the sum of (A) gross receipts from operations, being all cash receipts of the Company (including but not limited to net interest income, Origination Fees and Other Fees but excluding Capital Contributions, Net Cash Flow from Capital Transactions, and the proceeds of any borrowing), all without double-counting, and (B) any amounts released from Reserves from prior Net Operating Cash Flow;

decreased by

(ii)the sum of (A) all disbursements of the Company for operating expenses, interest and other expenses, including (x) Outgoing Fees and (y) the Administrative Member Cost Reimbursement Fee, but excluding distributions and loan repayments to the Members, repayments of principal on Company borrowings and amounts invested in Investments and (B) any increase in Reserves.

“Net Cash Flow from Capital Transactions” means the net cash proceeds from Capital Transactions (plus any amounts released from Reserves from prior Net Cash Flow from Capital Transactions), less any portion thereof used or held (i) to pay debts and liabilities of the Company, other than any Default Loans, (ii) to make new Investments, or (iii) to establish or increase Reserves.

“Net Income” and “Net Loss” mean, for any fiscal year, the net income or net loss, as applicable, of the Company for federal income tax purposes for such year as determined by the accountants for the Company without regard to any adjustments to basis pursuant to Sections 734 or 743 of the Code, but subject to the following adjustments:

(i)Any income of the Company that is exempt from federal income tax shall be added to such taxable income or loss.

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(ii)Any expenditures of the Company described in Code Section 705(a)(2)(B), or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations §1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income or loss.

(iii)If the fair market value on the date that an asset is contributed to the Company (or if the basis of such asset for book purposes is adjusted under the Treasury Regulations, such adjusted “book” basis) differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, in lieu of the depreciation, amortization and other cost recovery deductions taken into account for computing such taxable income or loss, the amount for depreciation, amortization and other cost recovery deductions shall be equal to an amount which bears the same ratio to such beginning fair market value (or adjusted “book” basis) as the federal income tax deduction for such year or other period bears to such beginning adjusted tax basis.

(iv)If the value at which an asset is carried on the books of the Company differs from its adjusted tax basis and gain or loss is recognized from a disposition of such asset, the gain or loss shall be computed by reference to the asset’s “book” basis rather than its adjusted tax basis.

(v)Any items which are specially allocated under Section 6.3 shall be excluded from the calculations of Net Income and Net Loss.

“Non-Funding Member” has the meaning set forth in Section 5.3.

“Non-Recourse Entities” has the meaning set forth in Section 7.1(G)(v).

“Non-Solicit Trigger Event” means the earliest to occur of (i) the dissolution of the Company pursuant to Section 10.2, (ii) the end of the Investment Period, (iii) the closing of the purchase and sale of an Interest pursuant to Section 9.2, (iv) the occurrence of an Exclusivity Termination Event and (v) the occurrence of a “Non-Solicit Trigger Event” under the SPL Operating Agreement.

“Non-TSSP Managed Entity RDH Affiliate” means any Person other than (i) a TSSP Managed Entity or (ii) MEC, MMA or any of their respective Affiliates.

“Notice” means any writing containing the information required by this Agreement to be communicated to a Person and personally delivered to such Person, sent by a nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, to such Person at such Person’s address or e-mail address listed on Schedule A attached hereto or such other address or e-mail address as such Person may hereafter specify by notice to the other party(ies) hereto given in accordance herewith.  The date of personal delivery, delivery by such overnight courier or of the certification receipt, as the case may be, shall be deemed the date of such Notice; provided, that any written communication containing such information actually received by a Person shall constitute Notice for all purposes of this Agreement.  Electronic transmission promptly confirmed by original communication

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delivered as herein provided shall be an acceptable means of Notice, with the date of receipt of the electronic transmission being deemed the date of Notice.  Any Notice delivered pursuant to Section 7.1(G)(ii), if received (as described in the preceding sentences of this definition, and prior to giving effect to this sentence) on a day that is not a Business Day, or after 5:00 p.m. on a Business Day, shall be deemed to have been received by the recipient for the purposes of Section 7.1(G) only on the next Business Day.

“Origination Fees” mean fees earned and received by the Company for the origination of loans, but excludes any other fees earned and received, including fees associated with due diligence and loan extension.  

“Other Fees” fees earned and received by the Company, which are excluded under the definition of “Origination Fees”.

“Other Member” has the meaning set forth in Section 9.2(A).

“Other Member’s Deposit” has the meaning set forth in Section 9.2(B).

“Outgoing Fees” means fees paid or disbursed by the Company in connection with Investments, including origination fees paid by the Company and other fees associated with due diligence, if any.

“Percentage Interest” means, with respect to a Member, at any particular date, the aggregate Capital Contributions of a Member (and/or its direct or indirect predecessors as such) divided by the aggregate Capital Contributions of all of the Members (and/or their respective direct or indirect predecessors as such), all as determined as at such date.

“Person” means any (i) individual, corporation, company, partnership (including any limited partnership or limited liability partnership), limited liability company, joint venture, association, trust (including a common law trust, business trust, statutory trust or any other form of trust), or other entity or unincorporated organization or (ii) government (including a country, state, county or any other governmental subdivision, agency or instrumentality), in the case of (i) or (ii), whether domestic or foreign.

“Primary Responsibility” means, with respect to the specified activities and/or undertakings, the responsibility and obligation to plan, initiate and implement such activities and undertakings, in all events subject to Section 7.1(D).

“Proscribed Action” means (A) any Investment Related Action (including the execution of any agreement or other instrument or the consummation of any transaction or other arrangement)  that (1) would involve, authorize or result in (i) any new, or any increase of any existing, funding commitment of the Company, (ii) any action (including the execution of any agreement or other instrument or the consummation of any transaction or other arrangement) that purports to impose any obligation on, or otherwise to bind (except to the extent that such action, if taken by the Company, would be binding as against Fundamental, as a member of the Company, solely by reason of it being binding as against the Company), Fundamental in any

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respect, or (iii) the execution of any agreement or other instrument or the consummation of any transaction or other arrangement between the Company, on the one hand, and any REL Related Person, on the other hand (“REL Related Person” being defined to mean (aa) the Administrative Member, MEC or MMA, (bb) any holder (of record or beneficially) of any direct equity interest in the Administrative Member or MEC, or (cc) any Affiliate of any Person specified or described in clause (aa) or (bb)), or (2) would constitute bad faith by the Administrative Member, including engaging in any self-dealing (determined for this purpose, for the avoidance of doubt, assuming that all of the Related Persons were part of the Administrative Member), or (B) for the avoidance of doubt, any of the matters described in clause (iii), (v), (vii) (other than in connection with any Investment Related Decision described in clause (iv) of Section 7.1(G)(i)), (viii), (ix), (x), (xi), (xxii), (xxvi), (xxxii) or (xxxiv) of Section 7.1(D).  The preceding sentence notwithstanding, any action of the Company with respect to any particular Investment, to consent (under the terms of any loan agreement relating to such Investment) to, and/or to subordinate the Company’s rights to payment on, and/or the liens securing the Company’s rights to payment on, such Investment in favor of, any new loan or equity investment to or in the same borrower (or any of its Affiliates) in respect of such Investment, proposed to be made by any REL Related Person, shall not constitute a “Proscribed Action” (including pursuant to clause (A)(2) of this definition) if (A) such new loan or equity investment, as applicable, was first proposed (which proposal may be made using the same process as would be used to propose an Investment Related Action pursuant to Section 7.1(g)(ii) (except that references therein to “three (3)” shall be deemed to be references to “five (5)” for this purpose and it being further understood and agreed that if Fundamental rejects, or is deemed to have rejected, such new loan or equity investment pursuant to such Section 7.1(g)(ii) process, such new loan or equity investment shall not be funded by the Company), unless such new loan or equity investment is for an amount in excess of $10,000,000 (in which case Section 7.4 hereof (including the Investment Approval Process) shall be complied with in relation to such proposal)) to be made by the Company on the same terms and conditions as proposed to be made by such REL Related Person, but Fundamental rejected, or Fundamental alone is deemed to have rejected, the same (it being understood and agreed that no such rejection (or deemed rejection) by Fundamental shall constitute a rejection (or deemed rejection) of an Investment for purposes of (or otherwise taken into account in) determining whether an Exclusivity Termination Event has occurred), and (B) such new loan or equity investment, as applicable, is made within one month of such rejection (or deemed rejection) by Fundamental.

“Purchase Price” has the meaning set forth in Section 9.2(A).

“Redemption Price” has the meaning set forth in Section 9.1(D)

“Regulations” or “Treasury Regulations” means the income tax regulations promulgated under the Code, as such Regulations may be amended from time to time.  All references herein to specific sections of the Regulations shall be deemed to refer also to corresponding provisions of any succeeding regulations.

“Rejected Competing Investment” means any Company Opportunity that (i) is a Competing Investment, (ii) is presented to the Company by REL, (iii) meets the Investment Criteria and (iv) is rejected by Fundamental (or deemed rejected by the Company pursuant to

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Section 7.4(C) under circumstances where such deemed rejection is attributable solely to any act, or failure to timely act, of Fundamental).

“RDH” means Renewable Developer Holdings, LLC, a Delaware limited liability company, and includes any permitted assignees and/or any successors of RDH under the REL Operating Agreement.

“REL” means Renewable Energy Lending, LLC, a Delaware limited liability company, and includes any permitted assignees and/or any successors to any of the Interest held thereby, in each case for such long as such Person is a Member.

“REL Operating Agreement” means that certain operating agreement of REL, dated as of the Effective Date, as it may be subsequently amended, supplemented or otherwise modified from time to time.

“REL Related Person” has the meaning Set forth in in the definition of “Proscribed Action”.

“Required Approval” means the affirmative unanimous written consent of the Members obtained in the manner provided herein.

“Reserves” means any reserves established and maintained from time to time in amounts determined by the Members, in each case pursuant to Required Approval.

“Reviewing Member” has the meaning Set forth in Section 7.1(F)(iii).

“SCL Ancillary Agreement” means that certain SCL Ancillary Agreement dated as of the Effective Date between Fundamental and MMA.

“SCL/REL/SDL/SPL Administrative Member” means the Administrative Member, the “Administrative Member” under the REL Operating Agreement, the “Administrative Member” under the SDL Operating Agreement and/or the “Administrative Member” under the SPL Operating Agreement.

“SCL/SPL Company Opportunity” means (i) a Company Opportunity or (ii) a “Company Opportunity,” as such term is defined in the SPL Operating Agreement.

“SCL/SPL Non-Fundamental Member” means any member at any time under this Agreement other than Fundamental or under the SPL Operating Agreement other than an SPL Fundamental Member.

“SDL” the Entity jointly designated by MEC and Fundamental, in a Notice to REL delivered within 30 days of the Effective Date, to constitute “SDL” for purposes of this Agreement.

“SDL Operating Agreement” means the agreement jointly designated by MEC

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and Fundamental, in a Notice to REL delivered within 30 days of the Effective Date, to constitute the “SDL Operating Agreement” for purposes of this Agreement, as the same may be subsequently amended, supplemented or otherwise modified from time to time.

“SPL” means Solar Permanent Lending, LLC, a Delaware limited liability company.

“SPL Ancillary Agreement” means that certain SPL Ancillary Agreement dated as of the Effective Date between FP Solar Permanent Holdings, LLC and MMA.

“SPL Company Opportunity” means a “Company Opportunity” as defined under the SPL Operating Agreement.

“SPL Fundamental Member” means with respect to the SPL Operating Agreement, “Fundamental”, as such term is defined therein.

“SPL Non-Fundamental Member” means any member at any time under the SPL Operating Agreement other than an SPL Fundamental Member.

“SPL Operating Agreement” means that certain amended and restated operating agreement of SPL, dated as of the Effective Date, as it may be subsequently amended, supplemented or otherwise modified from time to time.

“Subscription Agreement” has the meaning set forth in Section 1.1(B).

“Substitute Member(s)” mean any Person admitted to the Company as a Substitute Member pursuant to Section 9.5.

“Termination Notice” has the meaning set forth in Section 9.2(A).

“Total Purchase Price” has the meaning set forth in Section 9.2(C).

“Transfer” means any direct sale, exchange, transfer, contribution, mortgage, pledge, encumbrance, lien, lease, release or other disposition of a Member’s Interest.

“TSSP Managed Entities” means funds managed by TPG Special Situations

Partners, LLC, excluding (i) TPG Specialty Lending, Inc. and (ii) CLOs managed by TPG Special Situations Partners, LLC.

“Unreturned Capital Contributions” means, with respect to any Member, the aggregate of all Capital Contributions made to the Company by such Member, reduced by all distributions previously made or deemed made to such Member pursuant to Section 6.1(B)(i).

Section 2.2.Rules of Construction. The following rules of construction shall apply to this Agreement:

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(A)References to Articles and Sections are intended to refer to Articles and Sections of this Agreement, and all references to Exhibits and Schedules are intended to refer to Exhibits and Schedules attached to this Agreement, each of which is made a part of this Agreement for all purposes.  The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “including” means “including, without limitation.”  Any date specified for action that is not a Business Day will mean the first Business Day after such date.  Any reference to a Person will be deemed to include such Person’s permitted successors and assigns.  Any reference to any document, agreement, instrument or statute will be deemed to refer to such document, agreement, instrument or statute as amended, modified or supplemented from time to time and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein. Whenever a Person is to determine that something is “satisfactory to,” “acceptable to,” or “to the satisfaction of” such Person, the determination may not be made in bad faith.

(B)All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, the singular shall include the plural, and vice versa, as the context may require.  Words such as “hereto”, “herein” and the like refer to this Agreement as a whole.

(C)As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, will have the respective meanings given to them under GAAP.  To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document will control.  For the avoidance of doubt, this clause (C) shall not apply with respect to any determination of Net Operating Cash Flow or Net Cash Flow from Capital Transactions.

(D)Unless otherwise specified, all references contained herein, in any Exhibit or Schedule referred to herein or in any instrument or document delivered pursuant hereto to dollars or “$” shall mean United States dollars.

(E)Each provision of this Agreement shall be considered severable from the rest, and if any provision of this Agreement or its application to any Person or circumstances shall be held invalid and contrary to any existing or future law or unenforceable to any extent, the remainder of this Agreement and the application of any other provision to any Person or circumstances shall not be affected thereby and shall be interpreted and enforced to the greatest extent permitted by law so as to give effect to the original intent of the parties hereto.

(F)This Agreement has been negotiated by the Members and their counsel and no provision shall be construed for or against a Member on the basis that such Member or its counsel was or was not the drafter thereof.

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ARTICLE III - BUSINESS PURPOSE AND TERM

Section 3.1.Business Purpose.  The purpose of the Company is to make Investments.  In furtherance thereof, the Company may carry on any lawful business, purpose, investment or activity related to the making of Investments and shall have all powers which limited liability companies may have under the Act.

Section 3.2.Term.  The Company shall be deemed to exist as of the date the Certificate was filed, and the duration of the Company shall be perpetual unless and until the Company is dissolved in accordance with the provisions of Section 10.1 of this Agreement.

ARTICLE IV – MEMBERS AND PERCENTAGE INTERESTS

Section 4.1.Members; Percentage Interests.  The name, address and Percentage Interest of each Member are set forth on the attached Schedule A.  To the extent additional or Substituted Members are admitted to the Company or Percentage Interests change, in each case in accordance with the terms of this Agreement, the Members shall amend the attached Schedule A to reflect such change(s).

ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

Section 5.1.Capital Contributions.  Schedule A attached hereto also sets forth the Members’ respective aggregate Capital Contributions to the Company as of the Effective Date (including, in each case, any Capital Contributions previously made by any predecessor to such Member as a member of the Company).

Section 5.2.Additional Capital Contributions.

(A)From time to time, upon determination of either Member (such Member, the “Calling Member”) that capital is required by the Company either to (i) consummate an Investment that has been approved by the Members pursuant to and in accordance with the terms of this Agreement or (ii) fund expenses for the upcoming calendar quarter to the extent such expenses are set forth in the then current Annual Budget, the Calling Member may deliver written notice to the other Member setting forth (x) the aggregate amount of the additional Capital Contribution then required to be made by all of the Members, (y) the individual amount of the additional Capital Contribution then required to be made by each Member and (z) the purpose to which the proceeds of such additional Capital Contributions will be applied (such notice, a “Capital Call Notice”).  Each Member shall make an additional Capital Contribution, in proportion to their then current Percentage Interests (which shall be specified in the applicable Capital Call Notice) no later than seven (7) Business Days after receipt of a proper Capital Call Notice.  Notwithstanding anything to the contrary in this Section 5.2(A), a Capital Call Notice with respect to expenses described in Section 5.2(A)(ii) may not be issued more than once per month.

(B)Except as set forth in Section 5.2(A), no Member shall be required, and no Member shall have any right, to make additional Capital Contributions, except and to the extent

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required by law or as otherwise agreed in writing by Required Approval.

(C)No member shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of the Members.  The return of such Capital Contributions (or any return thereon) shall be made solely from assets of the Company.  No Member shall be required to pay to the Company or any other Member any deficit in such Member’s Capital Account upon dissolution or otherwise.  No Member shall have the right to demand or receive property other than cash for its Interest.

Section 5.3.Default Loans.  In the event that a Member fails or refuses for any reason to make any Capital Contributions required of it pursuant to Section 5.2(A) (a “Non-Funding Member”), another Member or one of its Affiliates may make a loan to the Non-Funding Member by transferring directly to the Company, on behalf of such Non-Funding Member, an amount not to exceed the unpaid portion of such Non-Funding Member’s Capital Contribution, and each such loan (each, a “Default Loan”), shall accrue interest as of the date such Default Loan is made at the annual rate of eighteen percent (18%) compounded quarterly.  Each Default Loan (together with all accrued, unpaid interest thereon) shall be repaid to such Member (or its Affiliate(s), as the case may be) out of any amounts otherwise distributable to the relevant Non-Funding Member pursuant to Article VI below, prior to making any subsequent distributions to such Non-Funding Member pursuant to Article VI.  For purposes of this Agreement, any repayment of all or a portion of any Default Loan pursuant to the immediately preceding sentence shall be deemed to be, and treated as, a distribution to the Non-Funding Member followed by a re-payment by the Non-Funding Member to such other Member or its Affiliate(s).  If, at any time during which a Default Loan remains outstanding, the Company receives from the Non-Funding Member all or any portion of such unpaid Capital Contributions (together with all accrued by unpaid interest on such Default Loan or portion thereof), the Company shall promptly deliver all such amounts to the Member who made such loan (or its Affiliates, as the case may be).

Section 5.4.No Interest, Salary or Drawing.  No Member shall receive any interest, salary or drawing with respect to its Capital Contribution or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member except and to the extent as specifically provided in the Annual Budget.

Section 5.5.No Third Party Beneficiaries.  The provisions of this Agreement are not intended to be for the benefit of any creditor of the Company or other Person (other than a Member in its capacity as a Member or in accordance with Section 7.2) to whom any debts, liabilities or obligations are owed by (or who otherwise has any claim against) the Company or any Member, and no such creditor or other Person shall have or obtain any right under this Agreement against the Company or any Member by reason of any debt, liability or obligation or otherwise.  Without limiting the generality of the foregoing, any obligation of a Member set forth in this Agreement to the Company or to any other Member shall be an obligation only to the Company or such Member, as applicable, and shall not inure to the benefit of any other Person.

Section 5.6.Member Liability.  Except if and to the extent otherwise provided by the Act, no Member shall be liable for the repayment, satisfaction or discharge of any liabilities of

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the Company in excess of the balance of such Member’s Capital Account.  No Member shall be personally liable for the return of any portion of the Capital Contribution(s) (or any profits thereon) of any other Member.

Section 5.7.Capital Accounts.

(A)The Company shall establish and maintain a separate capital account (the “Capital Account”) for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.  The Capital Account of a Member shall consist of its initial Capital Contribution and shall be increased by (i) the amount of any additional Capital Contributions, and (ii) the amount of all Net Income (and any item thereof) allocated to such Member, and decreased by (iii) the amount of all distributions or deemed distributions to such Member, and (iv) the amount of all Net Loss (and any item thereof) allocated to such Member.  The Capital Accounts shall be determined, maintained, and adjusted in accordance with the Code and the Regulations, including the capital account maintenance rules in Regulations § 1.704-(1)(b)(2)(iv).

(B)If any Member shall lend any monies to, or perform any services for, the Company, the amount of any such loan or services shall not increase the Member’s Capital Account or affect in any way his or its share in the profits, losses or distributions of the Company.

(C)Any transferee of an Interest shall succeed to the Capital Account relating to the Interest transferred.

Section 5.8.Return of Capital Account.  Except as otherwise specifically provided in this Agreement, (i) no Member shall have any right to withdraw or reduce its Capital Contributions or Capital Account, or to demand and receive property or any distribution from the Company in return for its Capital Contributions or Capital Account, and (ii) any return of Capital Contributions or Capital Accounts to the Members shall be solely from the Company Assets, and no Member shall be personally liable for any such return.

ARTICLE VI – DISTRIBUTIONS; ALLOCATIONS

Section 6.1.Distributions.

(A)Net Operating Cash Flow shall be distributed on a monthly basis to the Members pro rata in accordance with their respective Percentage Interests, unless the Members, subject to Section 7.1(D) and Section 7.4(D), agree to cause the Company to retain Net Operating Cash Flow to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget.  Monthly distributions of Net Operating Cash Flow with respect to the first two months of each calendar quarter shall made in an amount equal to seventy-five percent (75%) of an internal Administrative Member estimate of such Net Operating Cash Flow.  Monthly distributions with respect to the third month of every calendar quarter shall be in the full amount of Net Operating Cash Flow for the applicable quarter otherwise distributable in accordance with the first sentence of this Section 6.1(A), based on the

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quarterly financial statements for that quarter, less any distributions of Net Operating Cash Flow made with respect to the prior two months of that quarter.  If any Member has made a Default Loan, all payments due under this paragraph (A) to the Non-Funding Member on whose behalf such Default Loan was made shall be paid to the Member which made such Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans made to Non-Funding Members have been paid in full.  

(B)The Members, subject to Section 7.1(D) and Section 7.4(E), agree to cause the Company to retain Net Cash Flow from Capital Transactions to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget unless the Members, subject to Section 7.1(D), determine that such Net Cash Flow from Capital Transactions shall be distributed.  Distributions of Net Cash Flow from Capital Transactions shall be made in the following order of priority:

(i)first, to the Members pro rata in accordance with their respective Unreturned Capital Contributions until such Unreturned Capital Contributions have been reduced to zero; provided, if any Member has made a Default Loan, all payments due under this clause to the Non-Funding Member on whose behalf such Default Loan was made shall be paid to the Member which made such Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans made to Non-Funding Members have been paid in full;

(ii)second, if after making the distributions described in clause (i) any Default Loans remain outstanding, then to the Members pro rata in accordance with their respective Percentage Interests in an amount sufficient to pay the remaining unpaid principal and interest on all Default Loans; provided, that all payments due under this clause (ii) to a Non-Funding Member shall be paid to the Member which made a Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans to Non-Funding Members shall have been paid in full; and

(iii)third, to the Members pro rata in proportion to their respective Percentage Interests at the time of such distribution.

(C)A Non-Funding Member shall not be entitled to vote on any distributions to be made under this Section 6.1.

(D)Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to any Member on account of its Interest in the Company if such distribution would violate the Act or any other applicable law.

Section 6.2.Allocation of Net Income and Net Loss.  

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(A)Except as provided in Section 6.3 or elsewhere in this Agreement, Net Income and Net Loss (and items thereof) for any taxable year or other period of the Company shall be allocated among the Members in proportion to their Percentage Interests.

(B)For federal and state income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Members in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated among the Members pursuant to Section 6.2(A).

Section 6.3.Regulatory Allocations.

(A)Minimum Gain Chargeback.  Notwithstanding any other provision of this Article VI, if there is a net decrease in “partnership minimum gain” (as that term is defined in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d)) for any Fiscal Year, each Member shall, in the manner provided in Treasury Regulation Section 1.704-2(f), be allocated items of Company income and gain for such year (and, if necessary, for subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in such partnership minimum gain, determined in accordance with Treasury Regulation Section 1.704-2(g). This Section 6.3(A) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(B)Member Minimum Gain Chargeback. Notwithstanding any other provision of this Article VI except Section 6.3(A), if during any Fiscal Year there is a net decrease in “partner nonrecourse debt minimum gain” (as that term is defined in Treasury Regulation Sections 1.704-2(i)(2) and (3)), any Member with a share of such partner nonrecourse debt minimum gain (determined in accordance with Treasury Regulation Section 1.704-2(i)(5)) as of the beginning of such Fiscal Year shall be allocated items of Company income and gain for the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to that Member’s share of the net decrease in such partner nonrecourse debt minimum gain (determined in accordance with Treasury Regulation Section 1.704-2(i)(4)). This Section 6.3(B) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(C)Qualified Income Offset.  In the event any Member unexpectedly receives any adjustment, allocation or distribution described in paragraph (4), (5) or (6) of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 6.3(C) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article VI have been tentatively made as if this Section 6.3(C) were not in the Agreement.

(D)Gross Income Allocation.  In the event any Member has a deficit Capital Account balance at the end of any Company Fiscal Year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement and (ii)

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the amount such Member is deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 6. 3(D) shall be made only if and to the extent that such Member would have a deficit Capital Account balance in excess of such sum after all other allocations provided for in this Section 6.3 have been tentatively made as if Section 6.3(C) and this Section 6.3(D) were not in the Agreement.

(E)Nonrecourse Deductions.  Any “nonrecourse deductions” as defined in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c) for any Fiscal Year or other period shall be specially allocated as items of loss in accordance with the Percentage Interests of the Members.  If the Company incurs “nonrecourse deductions” or “partner nonrecourse deductions” or if there is any change in the Company’s “minimum gain,” as those terms are defined in such Regulations, the allocation of Profits, Losses and items thereof to the Members shall be modified as deemed reasonably necessary or advisable by the Members to comply with such Treasury Regulations.

(F)Member Nonrecourse Deductions.  Any “partner nonrecourse deductions” as defined in Treasury Regulation Section 1.704-2(i) for any Fiscal Year or other period shall be specially allocated to the Member who bears the economic risk of loss (within the meaning of Treasury Regulation Section 1.752-2) with respect to the partner nonrecourse debt (as such term is defined in Treasury Regulation Section 1.704-2(b)(4)) to which such partner nonrecourse deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i).

(G)Section 754 Adjustments.  To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining capital accounts, the amount of such adjustment to capital accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

Section 6.4.Tax Withholding.  If the Members determine that the Code or Regulations (or any provision of state, local or foreign tax law) requires the Company to withhold with respect to any Member’s distributive share of income or share of distributions, the Company shall do so.  Such withheld amounts shall be from cash otherwise distributable to such Member, which shall be deemed to have been distributed hereunder to such Member.  The Members shall be authorized to take such other actions as shall be necessary or appropriate for the Members to comply with the Company’s obligations under applicable tax laws.  In the event any such payment made by the Members to the IRS or other taxing authority exceeds the amount of cash otherwise then distributable to such Member, the amount of such payment equal to such excess shall constitute an advance by the Company to such Member for which such Member shall have personal liability, and such Member shall immediately repay such advance to the Company, together with interest thereon from the date when such payment is made to the date of repayment, at a rate of interest equal to the applicable federal rate as published by the IRS at the

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time such excess advance was made.

Section 6.5.  Other Determinations.  All decisions and other matters concerning the computation and allocation of items of income, gain, loss, deduction and credit among the Members, and accounting procedures not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Members by Required Approval.

ARTICLE VII - MANAGEMENT

Section 7.1.Management.

(A)Management.  Subject to the other provisions of this Agreement (including Section 7.1(B) and Section 7.1(D)), the Members shall have exclusive and complete authority and discretion to manage the business, operations and affairs of the Company and to make all decisions regarding the business of the Company.

(B)Administrative Member.  The Members hereby agree that the Administrative Member shall have Primary Responsibility for the day-to-day management and operation of the Company and day-to-day oversight of its Investments.  As such, the Administrative Member shall have the responsibility and authority to carry out and take actions as and to extent the same are expressly set forth in the then current Annual Budget.

(C)Meetings; Consent.  Meetings of the Members and their representatives for matters properly brought before the Members may be called at any time by request of any Member.  Members may participate in any meeting through the use of a conference telephone or similar communications equipment by means of which all individuals participating in the meeting can hear each other and such participation shall constitute presence in person at the meeting.  The Company shall give written notice of the date, time, place and purpose of any meeting to all Members entitled to vote at such meeting at least five (5) days prior to the date fixed for the meeting (or such shorter time period as may be agreed by the Members).  Notice may be waived by any Member in writing or by attendance at the meeting, except when a Member attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not properly called or convened.  Any action required or permitted to be taken at any meeting of Members may be taken by a unanimous written consent without a meeting, without prior notice and without a vote.  The unanimous written consent shall set forth the action so taken and shall be signed by the Members.

(D)Voting.  Except to the extent expressly provided otherwise in Section 7.1(B) and Section 7.1(G), Required Approval shall be required for any and all action taken or proposed to be taken by the Company.  In furtherance of the foregoing, and in all cases subject to Section 7.1(G), without first having obtained Required Approval, no action shall be taken, sum expended or obligation incurred by any Member on behalf of the Company, including without limitation in respect of the following matters:

(i)approving any Investments, whether or not within the Investment

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Criteria;

(ii)modifying the Investment Criteria;

(iii)any (1) merger, consolidation or reorganization of the Company or (2) sale of all or substantially all of the Company Assets;

(iv)filing of any petition in bankruptcy or reorganization or instituting any other type of bankruptcy, reorganization or insolvency proceeding with respect to the Company; consenting to the institution of involuntary bankruptcy, reorganization or insolvency proceedings with respect to the Company; admitting on behalf of the Company of its inability to pay its debts generally as the same become due; and/or making by the Company of a general assignment for the benefit of its creditors;

(v)incurring any indebtedness for borrowed money, making or giving any guarantees and granting of liens on the Company Assets; provided, with Required Approval, the Members may authorize the Administrative Member to incur indebtedness for borrowed money, make or give guarantees or grant liens on the Company Assets up to an agreed upon amount;

(vi)making any sale, exchange, transfer, contribution, mortgage, pledge, encumbrance, lien, lease, release or other disposition of any Company Assets (other than releases pursuant to the Loan Documents with respect to the repayment of particular Investments in the ordinary course of the Company’s business or in respect of any Investment Related Action (other than a Proscribed Action) effectuated in accordance with Section 7.1(G)));

(vii)making any acquisition or lease by the Company of property or assets;

(viii)incurring any expenses by or on behalf of the Company or any subsidiary in excess of the amount therefore expressly set forth in the then current Annual Budget;

(ix)calling for Capital Contributions from the Members or otherwise sending a Capital Call Notice (in either case, other than in accordance with Section 5.2(A));

(x)making distributions to the Members (other than in accordance with Section 6.1); provided, that for the purpose of this subclause (x), Required Approval shall mean the consent of only those Members who are not Non-Funding Members;

(xi)establishing or maintaining Reserves on behalf of the Company or any subsidiary (other than Reserves that are required to be maintained pursuant to the express terms of any agreement that has been approved by Required Approval to which the Company or such subsidiary is a party);

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(xii)[Reserved.];

(xiii)causing the Company to dissolve, wind up or terminate other than as provided in Article X;

(xiv)permitting the Transfer of any Member’s Interest except as permitted by Article IX;

(xv)redeeming all or any portion of the Interest of any Member, except as provided in Article IX;

(xvi)entering into any agreements with Affiliates (including for the avoidance of doubt any Affiliate of any member of REL), except as expressly set forth in the then current Annual Budget;

(xvii)incurring any ERISA or similar obligations;

(xviii)[Reserved.];

(xix)amending this Agreement, the Certificate or any other formation or organizational documents of the Company;

(xx)making an election under Section 754 of the Code or any other material tax election or changing the Company’s accounting methods;

(xxi)changing the Fiscal Year of the Company;

(xxii)causing the Company to commingle the funds of the Company or any subsidiary with the funds of any other Person;

(xxiii)causing any change in the principal nature of the business of the Company;

(xxiv)allowing the admission of a new or Substitute Member to the Company except as permitted by Article IX;

(xxv)altering the tax status of the Company or determining any action of the Company or any subsidiary with respect to any tax controversy;

(xxvi)settling a claim against the Company except as expressly set forth in the then current Annual Budget;

(xxvii)prosecuting, waiving, settling or compromising any claim or cause of action of the Company or any subsidiary against any third party (or parties);

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(xxviii)appointing or removing any officers of the Company;

(xxix)establishing or amending any loans, leases, contracts or other transactions between the Company and any Member, any officer or any Affiliate or employee of such Person (including for the avoidance of doubt any Affiliate of any member of REL), other than any Default Loans to the extent provided in Section 5.3;

(xxx)causing the Company to enter into any contract or other binding agreement of any nature whatsoever (other than in respect of an Investment Related Action), whether oral or written, which is not cancellable without the payment by the Company of any premium or penalty upon thirty (30) days’ or less notice;

(xxxi)engaging in any transactions with Affiliates of any Member (including for the avoidance of doubt any Affiliate of any member of REL), except as otherwise set forth in the then current Annual Budget;

(xxxii)approving or amending the Annual Budget;

(xxxiii)taking or approving any Investment Related Action except as otherwise permitted under Section 7.1(G).;

(xxxiv)distributing any Net Cash Flow from Capital Transactions in accordance with Section 6.1(B), provided, that if the Members cannot agree whether Net Cash Flow From Capital Transactions should be distributed or retained by the Company in order to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget, and such Net Cash Flow from Capital Transactions has been held at the Company for ninety (90) days, such Net Cash Flow from Capital Transactions shall then automatically be distributed to the members in the priority set forth in Section 6.1(B); and

(xxxv)committing or agreeing to undertake or do any of the foregoing.

(E)Bankruptcy of a Member.  The bankruptcy of any Member shall not cause a dissolution of the Company, and the rights of such Member to share in the Net Income or Net Loss of the Company and to receive distributions of Company funds shall, on the happening of such event, devolve on its successors or assigns, subject to the terms and conditions of this Agreement, and the Company shall continue as a limited liability company.  However, in no event shall any such successor or assign become a Substitute Member, except in accordance with Article IX.

(F)Annual Budget.

(i)A budget approved by the Members for the Company for the balance of Fiscal Year 2016 subsequent to the Effective Date and for Fiscal Year 2017 is attached hereto as Exhibit D (collectively, the “Initial Budget”).  The Initial Budget, and any subsequent annual budget or amended annual budget (including of the Initial Budget)

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approved pursuant to this Section 7.1(F) shall be referred to as the “Annual Budget”.  The Annual Budget shall be presented in the form of a budget of MEC with detailed allocations of certain expenses expected to be incurred directly by the Company, SPL, SDL and REL as well as the operating expenses of MEC that are necessary for the Administrative Member to perform its duties under this Agreement, the REL Operating Agreement, the Management Agreement (as defined in the REL Operating Agreement), the SDL Operating Agreement and the SPL Operating Agreement, it being acknowledged and agreed that (i) MEC’s operating expenses will be paid directly by MEC and reimbursed solely through the Administrative Member Cost Reimbursement Fee paid by the Company, REL, SDL and SPL pursuant to the allocation set forth in Section 7.5 hereof, and (ii) the only REL costs, or MEC costs related to REL, that will be reflected in the Annual Budget as payable by the Company, SDL or SPL will be the MEC costs related to REL that will be payable to REL through such Administrative Member Cost Reimbursement Fee.  

(ii)The Administrative Member shall have Primary Responsibility to prepare a proposed annual operating budget for the Company, and any necessary or related materials.  The Administrative Member shall submit such proposed annual operating budget and related materials to the other Members for approval no later than October 1 of each preceding year.

(iii)Fundamental (the “Reviewing Member”) will provide Notice of its acceptance or rejection of any proposed annual operating budget submitted to it no later than thirty (30) Business Days after its receipt of such proposed annual operating budget and related materials.  To the extent the Reviewing Member rejects the proposed annual operating budget, the Reviewing Member will provide the Administrative Member with rationale for its rejection.

(iv)No later than ten (10) Business Days after the disapproval of a proposed annual operating budget by the Reviewing Member, the Administrative Member shall submit a revised operating budget to the Reviewing Member for review.  Any failure on the part of the Reviewing Member to accept or reject the proposed revised budget within five (5) Business Days after receipt thereof shall be and be deemed to constitute a disapproval of the proposed revised annual budget by such Reviewing Member, in which event the previously approved Annual Budget for the prior year shall be utilized (with an inflation factor of 3% per line item).

(v)The Annual Budget shall be subject to amendment by Required Approval in each fiscal quarter to allow the Company to adjust the last-approved Annual Budget to the current set of Investments and Company expenses.  Once approved by Required Approval, such amended Annual Budget shall supersede the prior Annual Budget.  If either the Administrative Member or the Reviewing Member desires a quarterly amendment of the Annual Budget it shall so notify the other in writing.  Upon such notice, the Administrative Member shall have Primary Responsibility for preparing an amended annual operating budget for the Company and any necessary or related materials, and submitting such proposed amended annual operating budget and related

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materials to the Reviewing Member for approval.

(vi)Unless otherwise agreed, the exact form of the Annual Budget shall be that agreed upon by the Members for the Initial Budget for the Company and shall include, without limitation, reasonably detailed and itemized estimates of all projected income and expenses of the Company for the upcoming Fiscal Year.

(G)Special Provision Regarding Investment-Related Actions.

(i)Notwithstanding anything to the contrary contained in Section 7.1(B) or 7.1(D), all decisions in respect of Investment Related Actions shall be subject to the process set forth in clause (ii) of this Section 7.1(G) below, provided that (x) (notwithstanding anything to the contrary contained herein (including in clause (ii) of this Section 7.1(G) below)) no Proscribed Action may be taken, or authorized to be taken, without Required Approval, and (y) nothing in this Section 7.1(G) modifies, or permits any deviation from, Section 7.1(F) or, for the avoidance of doubt, Section 7.4 or the Investment Approval Process.  “Investment Related Actions” means all Company actions specifically related to specific Investments owned by the Company (i.e., Investments that the Company has already made or already is, pursuant to definitive documentation, committed to make), including without limitation, the following actions in respect of such Investments: (i) extension or increases on commitments; (ii) amendments or waivers on payment terms and/or interest and fees; (iii) default waivers; (iv)  any exercise of remedies, including any decision to accelerate, enforce on collateral or enter into a standstill or forbearance agreement with respect to any such Investment; (v) subordination of the obligations of such an Investment; (vi) release of all or substantially all of the collateral securing any such Investment; and (vii) with respect to any particular such Investment, any action specific to such Investment for a workout plan in respect of such Investment, or the underlying borrower thereto, including any amendment to any transaction document for such Investment in connection therewith; (viii) otherwise modifying any such Investment or amending any transaction document for such Investment (including, without limitation, any Loan Documents); and (ix) making any sale, exchange, transfer, contribution, mortgage, pledge, encumbrance, lien, lease, release or other disposition of any such Investment, provided that (x) routine, administrative actions in the ordinary course of the day-to-day oversight of the Investments (for the avoidance of doubt, that are not Proscribed Actions), and (y) immaterial modifications or amendments of Loan Documents permitted thereunder, entered into in the ordinary course and consistent with past practice (prior to the Effective Date), shall be considered to be a permitted activity of the Administrative Member under Section 7.1(B) and the Administrative Member need not comply with Section 7.1(G)(ii) in respect thereof.  

(ii)If the Administrative Member determines that the Company should effectuate an Investment Related Action in respect of any particular Investment owned by the Company, the Administrative Member shall provide written Notice of such proposed Investment Related Action, including reasonable detail of such proposed Investment Related Action and specifically stating that such Notice shall constitute a Notice pursuant to this sentence of this Section 7.1(G)(ii), to Fundamental at least three (3) Business Days prior to such proposed Investment Related Action being effectuated.  During such three (3) Business Day period, the Administrative Member agrees, upon Fundamental’s written request, to consult with

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Fundamental regarding the contemplated Investment Related Action and consider in good faith, any written suggested modifications to such proposed Investment Related Action that are proposed by Fundamental.  Fundamental may, by Notice to the Administrative Member, approve or reject the contemplated Investment Related Action during the above referenced three (3) Business Day period, provided, that, if Fundamental does not provide Notice of approval or rejection by the end of such three (3) Business Day period, Fundamental shall be deemed to have rejected such proposed Investment Related Action for all purposes of this Agreement.  On the first Business Day following the end of such three (3) Business Day period, the Administrative Member shall determine, in its sole discretion, and whether or not it has received any Notice of approval or rejection from Fundamental, whether to effectuate such proposed Investment Related Action, with or without incorporating any modifications thereto (including any modifications suggested in writing by Fundamental during the preceding three (3) Business Day period). The Administrative Member shall have the authority to take, in its sole discretion but subject to its express obligations under this Agreement, without the obligation to engage in the process set forth in this Section 7.1(G)(ii) above, any Investment Related Action, other than a Proscribed Action, in respect of any Guaranteed Investment, provided that (i) nothing in this sentence limits or qualifies Section 7.1(G)(iii) hereof, and (ii) without limitation of clause (i), the Administrative Member forthwith shall notify Fundamental of each Investment Related Action that is effectuated pursuant to this sentence.

(iii)Notwithstanding the authority of the Administrative Member to proceed with any Investment Related Action upon compliance with Section 7.1(G)(ii), the Administrative Member shall (in addition to the specific consultation with Fundamental required under Section 7.1(G)(ii)) in the ordinary course (before and after the delivery of any notice pursuant to Section 7.1(G)(ii) or the taking of any particular Investment Related Action) keep Fundamental reasonably apprised of  (including discussing with Fundamental, and responding in a reasonably timely manner to inquiries of Fundamental regarding) the status of, and of material developments concerning, all Investments owned by the Company, including material Investment Related Actions (and of material extensions of due dates not constituting Investment Related Actions), provided that no failure of the Administrative Member to comply with this Section 7.1(G)(iii) shall limit the authority of the Administrative Member to proceed with any Investment Related Action upon compliance with Section 7.1(G)(ii).  The Administrative Member need not separately comply with Section 7.1(G)(ii) hereof in respect of any specific Company action that Fundamental approves in a writing making specific reference to this Section 7.1(G)(iii) (so long as such Company action is taken within the time frame contemplated by the Members at the time such Fundamental approval is given).

(iv)For the avoidance of doubt, each of the Members and MEC agree that none of the terms of the SCL Ancillary Agreement or the SPL Ancillary Agreement or any obligation that MMA or any of its Affiliates may have to Fundamental under any other separate arrangement or agreement in respect of any Investment Related Actions (an “MMA Outside Obligations”) shall have any impact whatsoever on the Company, this Agreement or any of the Members’ rights and obligations under this Agreement, and neither Fundamental nor MEC shall have any recourse against the Company, REL, RDH or any of RDH’s respective parent or subsidiary companies, partners and other Affiliates (but excluding in any event MMA and MMA’s Affiliates) or any of their respective members, partners, officers, directors, employees and agents (but excluding in

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any event MMA and MMA’s Affiliates) (collectively, “Non-Recourse Entities”) or any of their respective assets with respect to any such MMA Outside Obligations, and Fundamental and MEC each explicitly hereby waive any such recourse against any Non-Recourse Entities or any of their assets.

Section 7.2.Limitation of Liability, Indemnification and Exculpation.

(A)Indemnification of the Members.  The Company shall indemnify and hold harmless the Members, their Affiliates and their respective members, partners, officers, directors, employees and agents (each, an “Indemnified Party”) from and against any claim, loss, expense, damage or injury suffered or sustained by an Indemnified Party, by reason of any acts, omissions or alleged acts or omissions arising out of such Indemnified Party’s activities on behalf of the Company or in furtherance of the interests of the Company, including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim, except that the Company shall not be responsible under this Section 7.2(A) to an Indemnified Party for any claim, loss, expense, damage or injury to the extent resulting from such Indemnified Party’s fraud, gross negligence, willful misconduct, bad faith or material breach of this Agreement (including the taking of any Proscribed Action without Required Approval).  Notwithstanding the foregoing or any other provisions of this Agreement, satisfaction of any obligation with respect to the indemnification or holding harmless of any Person shall be from and limited to the Company Assets, and no Member shall be required to advance or contribute funds to the Company for such purpose.  

(B)Expenses.  Expenses (including attorneys’ fees) incurred by an Indemnified Party in a civil or criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding, as incurred; provided, that if an Indemnified Party is advanced such expenses and it is later determined that such Indemnified Party was not entitled to indemnification with respect to such action, suit or proceeding, then such Indemnified Party shall reimburse the Company for such advances; and provided, further, such expenses shall be advanced by the Company only upon the execution and delivery by the Indemnified Party of a recourse promissory note, in a principal amount equal to the amount of the requested advance, to the Company, having a payment date of ten (10) Business Days following the final disposition of the action, suit or proceeding with respect to which such advance is being requested in order to secure the return following final disposition of the action, suit or proceeding with respect to which such advance is being requested, of any amount which represents an advance of expenses for which the Indemnified Party is not entitled to indemnification under this Section 7.2.  No expenses shall be advanced to any Indemnified Party pursuant to this Section 7.2 (or for the avoidance of doubt Section 7.1) in connection with any claim, action, suit or proceeding against such Indemnified Party by a Member (either on its own behalf or derivatively on behalf of the Company).

(C)Not Exclusive.  The indemnification and advancement of expenses provided by this Section 7.2 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of Members or otherwise, both as to action in such Person’s official capacity

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and as to action in another capacity while holding such office, and shall continue as to a Person who has ceased to be a Member, officer, employee or agent and shall inure to the benefit of the successors, assigns, heirs, executors and administrators of such a Person.

(D)Insurance.  The Company may purchase and maintain insurance on its own behalf, or on behalf of any Person with respect to the liabilities of the types described in this Section 7.2.  The Company may purchase such insurance regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Section 7.2.

(E)Exculpation.  No Member or any of its Affiliates or any of their respective members, partners, officers, directors, agents or employees shall be liable, responsible or accountable in damages or otherwise to the Company or any other Member for any act or failure to act on behalf of the Company except to the extent that such damages or loss resulted from such Person’s fraud, gross negligence, willful misconduct, bad faith or material breach of this Agreement (including the taking of any Proscribed Action without Required Approval).  Without limiting the generality of the foregoing, each such Member shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and upon information, opinions, reports or statements presented to such Member by any other Person as to matters such Member reasonably believes are within such other Person’s professional or expert competence and that has been selected with reasonable care by or on behalf of the Company.

(F)Guarantees.  No Member shall be required or permitted to guarantee or indemnify any third party in connection with the business of the Company, except by Required Approval.  Any amounts advanced by a Member pursuant to such guaranty or indemnity shall be deemed a loan to the Company by a Member for all purposes of this Agreement.  To the extent that Sections 7.2(A) and (B) apply to any payments, or expenses incurred, by the Members under this Section7.2(F), the Members shall also be entitled to indemnification and expense reimbursement from the Company as provided therein.  For purposes of applying this Section7.2(F), guarantees and indemnities given by an Affiliate of a Member shall be treated as given by that Member.

Section 7.3.Investment Exclusivity; Other Activities.

(A)Except as provided in Section 7.3(B), any Member or its Affiliates may engage in, or possess an interest in, other business ventures of every nature and description, independently or with others, whether or not such other business ventures shall be in competition with any activities of the Company, and neither the Company nor the other Members shall have any right by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom, and such activities shall not be construed as a breach of any duty of loyalty or other fiduciary duty to the Members or the Company.

(B)Until the occurrence of a Non-Solicit Trigger Event, Fundamental shall, and shall cause its Affiliates to, present all investment opportunities in North America to provide late stage renewable energy development and/or renewable energy construction loans (such opportunities, “Company Opportunities”) which are also Competing Investments for

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consideration by the Company exclusively, and REL shall present all Company Opportunities (regardless of whether they are also Competing Investments) for consideration by the Company exclusively (and shall do so promptly following such Company Opportunity becoming approved by the members of REL, provided that REL further covenants to procure that if any Company Opportunity is not so approved by the members of REL, it shall not, until the occurrence of a Non-Solicit Trigger Event, be pursued outside of the Company by REL, any member of REL or any of their respective Affiliates (except that any such Company Opportunity that is a development loan may be pursued by SDL)); provided, however, that (i) each Member that is not a Non-Funding Member shall have the option but not the obligation to bring to the Company any Company Opportunities (regardless of whether they are Competing Investments) while there is any unpaid principal or accrued interest owing to such Member on a Default Loan, and (ii) if any one or more SCL/SPL Non-Fundamental Member(s) has (after the Effective Date) Formally Presented to the Company (under this Agreement) or SPL (under the SPL Operating Agreement) for consideration three (3) SCL/SPL Company Opportunities that (x) met the Investment Criteria or the Investment Criteria under the SPL Operating Agreement, as applicable, (y) did not involve a proposed loan to, or an equity investment in, an Entity that was an Affiliate of REL or of any member of REL and (z) subsequently are rejected (or deemed rejected) by Fundamental pursuant to Section 7.4(C) hereof, and/or by “Fundamental” (as such term is defined in the SPL Operating Agreement) pursuant to Section 7.4(C) of the SPL Operating Agreement (an “Exclusivity Termination Event”), then a Non-Solicit Trigger Event shall be deemed to have occurred and, thereafter, each Member shall have the option but not the obligation to bring further Company Opportunities to the Company during the remainder of the Investment Period.  A Company Opportunity shall be deemed to have been “Formally Presented” to the Company by any SCL/SPL Non-Fundamental Member if (and only if) it is included in a Notice from such Member to each of the other Members, and (aa) such Notice (I) expressly states that such Member intends for such Company Opportunity presentation to thereby have been “Formally Presented” to the Company and (II) includes a further written statement of (and executed by) such Member that it irrevocably gives its approval for the Company to proceed with such Company Opportunity (for the purpose of determining whether such Company Opportunity has received Required Approval), and (bb) the level of detail and completeness of the description of such Company Opportunity included in such Notice is, in all material respects, consistent with past practice of the Company.  An SPL Company Opportunity shall be deemed to have been “Formally Presented” to SPL by a particular member of SPL as (and only as) specified in Section 7.3(B) of the SPL Operating Agreement.

(C)Each Member will have the option, but not the obligation, to bring to the Company other renewable energy investment opportunities.  If investment opportunities are not required to be presented to the Company for investment pursuant to Sections 7.3(B) or are rejected pursuant to Section 7.4(C), the presenting Member (unless such Member failed to provide any approval of such Member required for the Company to undertake such investment opportunity) may choose to invest directly in such investment outside of the Company.  

(D)No Member shall receive compensation for services rendered on behalf of the Company or otherwise in its capacity as a Member.  Nothing in the preceding sentence shall limit the monthly distribution from the Company to the Administrative Member of the Administrative Member Cost Reimbursement Fee. Except as otherwise provided in this

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Agreement, all actions of the Members shall be subject to Section 7.1(D) and all expenditures of Company funds shall be subject to the Annual Budget and Section 8.3.

(E)Notwithstanding the definition of “Affiliate” hereunder, Fundamental shall not cause, direct or in any manner facilitate (including providing information obtained by Fundamental as a Member of the Company) HedgeCo to take, or in taking, any action which would be prohibited by Fundamental or any of its Affiliates under Section 7.3(B).

Section 7.4Investments.

(A)In addition to those functions set forth in Section 7.1(B), the Administrative Member will have Primary Responsibility for originating and underwriting proposed investments subject to the Investment Criteria, and will also prepare the underwriting for purposes of investments originated by Fundamental.  

(B)No less than once every two (2) weeks during the Investment Period, the designated representatives of each Member (which each Member shall designate from time to time by notice to the other Member) shall have a call for the purposes of discussing potential investment opportunities, including presenting investment opportunities in accordance with Section 7.3(B), and for any other purposes as determined by the Members.  Notwithstanding the foregoing, at any time and from time to time, any Member may request a call with the other Member to discuss any matters related to the business of the Company.  Nothing herein shall be construed as preventing a Member from consulting such internal committees of the Member and its Affiliates as such Member deems necessary.

(C)All investments which are presented to the Company in accordance with Section 7.3 shall be approved or rejected in accordance with the investment approval process outlined on Exhibit C attached hereto (the “Investment Approval Process”).  Upon completion of all required due diligence (as described in the Investment Approval Process) and upon the Members voting to approve an investment opportunity by Required Approval, Capital Contributions may be called to fund such approved Investment in accordance with Section 5.2(A).  If a proposed investment opportunity fails to receive Required Approval, such investment opportunity shall be deemed rejected.  If any investment opportunity is rejected, the Member which presented such investment opportunity may (unless such Member failed to provide any approval of such Member required for the Company to undertake such investment opportunity) choose to invest in such investment outside of the Company, during the six-month period thereafter on the same terms and conditions as were presented to the Company.  The Members may agree by Required Approval to fund an approved Investment other than through the Company, and each such Investment shall be considered on an individual basis after presentation to the Company.    

(D)Decisions required under this Section 7.4 shall be presented to and decided by the Members.

(E)Notwithstanding anything to the contrary in this Agreement, no new Investments may be made by the Company (i) at any time after the expiration of the Investment

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Period and/or (ii) that have a maturity date that occurs on or after September 1, 2019.

Section 7.5Administrative Member Cost Reimbursement Fee.  The Company shall pay the Administrative Member the Administrative Member Cost Reimbursement Fee for each calendar month promptly after the end of each such month.  The Administrative Member Cost Reimbursement Fee billed by the Administrative Member and paid by the Company pursuant to this Section 7.5 shall be equal to the product of the Applicable Portion (as defined below) times the SCL/REL/SDL/SPL Administrative Member’s actual costs (including but not limited to attributable salary and benefits of employees of the SCL/REL/SDL/SPL Administrative Member but in any event excluding any amount payable by MEC pursuant to Section 7.6), incurred on an arms-length basis (such costs, “Actual MEC Admin Costs”), for each applicable month in performing its Primary Responsibilities pursuant to and in accordance with this Agreement, the REL Operating Agreement (with respect to, and only with respect to, Rejected Competing Investments (from and after, and only from and after, the relevant Investment becoming a Rejected Competing Investment), and then only to the extent any Actual MEC Admin Costs with respect to such Rejected Competing Investments, and the Commitment Amount and UPB for the Rejected Competing Investments taken up by REL, are documented to the reasonable satisfaction of Fundamental), the SPL Operating Agreement and the SDL Operating Agreement; provided, however, that (a) in no event shall the Administrative Member Cost Reimbursement Fee for any Fiscal Year exceed the maximum Administrative Member Cost Reimbursement Fee set forth in the Annual Budget for such period, and (b) neither the Company nor Fundamental shall have or be deemed to have any obligations to pay any salary or benefits directly to the employees of the SCL/REL/SDL/SPL Administrative Member and neither the Company nor Fundamental shall have or be deemed to have an employee/employer relationship with any such employee of the SCL/REL/SDL/SPL Administrative Member.  For the first two months of each calendar quarter, the Company shall pay Administrative Member Cost Reimbursement Fee based upon internal Administrative Member estimates.  For the third month of each calendar quarter, the Company shall pay Administrative Member Cost Reimbursement Fee for the entire calendar quarter then ended based on the quarterly financial statements for that quarter, less any Administrative Member Cost Reimbursement Fee previously paid for the prior two months of that quarter.  Upon preparation of quarterly financial statements, if the Company has paid for the first two calendar months of a calendar quarter to the Administrative Member an amount of Administrative Member Cost Reimbursement Fee in excess of the amount that should have been paid for such quarter based upon the quarterly financial statements for such quarter, the Administrative Member shall promptly repay to the Company the amount of any such overage.  The Administrative Member Cost Reimbursement Fee is not intended to include or cover any expenses directly incurred by the Company, which shall be paid directly by the Company.  For purposes hereof, “Applicable Portion” shall mean that percentage which results from the following calculation:  

80%	x	Commitment Amount of Investments originated in the Company during the Calculation Period	+	20%	x	UPB of Investments held in the Company at the end of the applicable month
		aggregate Commitment Amount of Investments				aggregate UPB of Investments held in the

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originated in the Company, SPL, SDL and REL during the Calculation Period Company, SPL, SDL and REL at the end of the applicable month

Where

“Calculation Period” means the three-month period ending on the last day of the applicable month.

“Commitment Amount” means the maximum committed principal balance.

“Investment” (i) has the meaning set forth herein (in relation to the Company), in the SDL Operating Agreement (in relation to SDL), or in the SPL Operating Agreement (in relation to SPL) and (ii) in relation to REL means any Rejected Competing Investment taken up by REL.

“UPB” means unpaid principal balance.

Section 7.6Allocation of Costs Associated with Deutsche Bank.  If a debt facility provided to the Company by Deutsche Bank does not close on or before December 31, 2016, MEC shall bear seventy-five percent (75%), and Fundamental will bear twenty-five percent (25%), of all Deutsche Bank’s third party costs otherwise due and payable by the Company with respect thereto (in each case without right of reimbursement from the Company (including without limitation, in the case of MEC, through Section 7.5)), and to the extent that, notwithstanding the foregoing, the Company shall pay any such costs (that MEC and Fundamental were so required to bear) in the first instance, MEC and Fundamental promptly shall reimburse the Company for their respective shares thereof as provided above in this sentence.  Without limitation, to the extent that any amount is payable by Fundamental pursuant to this Section 7.6 but has not been paid, the Company shall have the right to, and shall, credit such amount against any amount(s) thereafter otherwise to be distributed to Fundamental, respectively, hereunder.  

ARTICLE VIII - ACCOUNTING AND REPORTS; BANK ACCOUNTS

Section 8.1.Books and Records. The Administrative Member shall maintain at the principal place of business of the Company set forth in Section 1.2 full and accurate books of the Company showing all receipts and expenditures, assets and liabilities, profits and losses, names and current addresses of Members, and all other records necessary for recording the Company’s business and affairs.  All Members and their duly authorized representatives shall have the right to inspect and copy any or all of the Company’s books and records, including books and records necessary to enable a Member to defend any tax audit or related proceeding.

Section 8.2.Books, Records and Tax Matters.

(A)The books and records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with GAAP.  The

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Administrative Member shall prepare quarterly and annual financial statements of the Company and shall distribute them to the Members promptly after completion.  Specifically, the Administrative Member shall prepare the following statements and reports and deliver them to each Member:

(i)quarterly financial statements, no later than the 30^th day of the month following the end of each calendar quarter, to include the following:

(a)current Company balance sheet;

(b)current Company income statement;

(c)current period Net Operating Cash Flow distribution calculation;

(d)current period Administrative Member Cost Reimbursement Fee allocation calculation;

(e)current period variance report setting forth any differences between current Annual Budget and actual expenses; and

(f)schedule of all Investments held by the Company.

(ii)upon request of any Member the following:

(a)trial balance of general ledger accounts;

(b)general ledger, reflecting all transactions and Investments, liabilities, Members’ Capital Accounts, gross revenue and expenses;

(c)reconciliation of all bank transactions;

(d)aged accounts receivable report with respect to all Investments;

(e)no later than the 90^th day following the end of any particular Fiscal Year, a report of aged receivables for the preceding twelve (12) month period and unaudited financial statements; and

(f)such other reports and information as reasonably requested by any Member from time to time;

(iii)on an annual basis, no later than the 60^th day following the end of each Fiscal Year, (x) annual financial statements for the Company and its Subsidiaries for such Fiscal Year, prepared in accordance with generally accepted accounting principles consistently applied, which shall be audited by the Company’s independent accountants (whom the Company shall retain), and (ii) Form K-1s and related tax disclosures

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(including each Member’s  share of any “unrelated business taxable income” (“UBTI”) generated by the Company); provided, if adjustments are identified during the preparation of the annual audited financial statements which would impact amounts or disclosures provided on Forms K-1 and related tax disclosures delivered pursuant to this Section, the Company shall promptly notify Members and provide revised Forms K-1 and related tax disclosures no later than the 90^th day following the end of each Fiscal Year; and

(iv)estimated current taxable income, deduction, gain, loss or credit within 30 days following the end of March 31 and September 30 of each Fiscal Year.

(B)The Administrative Member shall be the Tax Matters Member (“TMM”) and shall prepare, or cause to be prepared, all tax returns required of the Company at the Company’s expense.  The TMM shall promptly take such actions as may be necessary to cause each Member to become a “notice Member” within the meaning of Section 6231(a)(8) of the Code.  The TMM shall furnish promptly to the Members a copy of all notices or other written communications received by the TMM from the IRS relating to the Company (except such notices or communications as are sent directly to the Members by the IRS).  The TMM shall keep the Members informed of all matters which may come to its attention in its capacity as TMM by giving the Members Notice thereof within fifteen (15) days after the TMM becomes informed of any such matter or within such shorter period as may be required by the appropriate statutory or regulatory provisions.  The TMM shall give the other Members prompt Notice upon receipt of advice that the IRS or any other taxing authority intends to examine any Company tax return or the books and records of the Company.  The TMM shall provide the Members with a reasonable opportunity to consult with the TMM regarding the course and conduct of all material matters that are the subject of or relating to or potentially resulting in an adjustment of Company items and the TMM shall obtain the Members’ written consent prior to providing correspondence or other information to the IRS or any taxing authority.

The TMM shall be the “partnership representative” under Section 6223 of the Code as in effect pursuant to the Bipartisan Budget Act of 2015, P.L. 114-74 (the “Budget Act”), and the TMM shall take any and all action required under the Code or Treasury Regulations, as in effect from time to time, to designate itself as the “partnership representative.” No election shall be made to apply the provisions of the Budget Act to any taxable year of the Company beginning prior to January 1, 2018 without Required Approval.  As provided in Section 7.1(D)(xxv), actions taken by the TMM on behalf of the Company, including without limitation (i) any election pursuant to Section 6221(b) of the Code (as modified by the Budget Act) that the provisions of Subchapter C of Chapter 63 of the Code (as modified by the Budget Act) not apply to the Company, or (ii) any election to use the alternative procedure to payment of imputed underpayment described in Section 6226 of the Code (as modified by the Budget Act), shall be subject to Required Approval.  The TMM, as partnership representative, shall succeed to all of the duties and obligations of the TMM with respect to notices to partners that existed prior to the effective date of the Budget Act, subject to any limitations contained herein, and shall have all of the powers and responsibilities of the TMM as otherwise set forth in this Agreement to the extent permitted under the Code (as modified by the Budget Act) and applicable Regulations promulgated thereunder, subject to the immediately preceding sentence and Section 7.1(D).

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If any imputed underpayment (including associated interest, penalties, or additions to tax) is required to be paid by the Company pursuant to Section 6225 of the Code (as modified by the Budget Act) with respect to income, losses, deductions or credits allocable to a Member or former Member, such Member or former Member (and, in the case of a former Member, its transferee) shall promptly reimburse the Company therefor. Any amount due from a Member or a former Member to the Company pursuant to the preceding sentence shall bear interest at the “prime rate” (as specified in The Wall Street Journal, from time to time) plus 3% from the time of payment by the Company of the tax or imputed underpayment to the time of payment by the Member or former Member, and the Company may offset such amounts against distributions or other amounts due from the Company to such Member. The obligations of a Member pursuant to this Section 8.2(B) shall continue even if such Member ceases to be a Member.

(C)If the Company incurs any costs related to any tax audit, declaration of any tax deficiency or any administrative proceeding or litigation involving any Company tax matter, the Company shall use all available Net Operating Cash Flow for such purpose, but no Member shall be required to advance or contribute funds to the Company for such purpose.

Section 8.3.Bank Accounts.  The Members shall deposit or cause the Company to deposit all cash balances derived from the business of the Company into one or more bank accounts established in the name of the Company (each a “Bank Account”).  In no event shall any Bank Account be co-mingled with any accounts of any Member, Affiliate of a Member or other Person.  Each Bank Account shall be in such depository institution under such arrangements as the Members may reasonably determine by Required Approval.  Any investment of funds shall be made in the name of the Company.  Through the use of signature cards, authorized representatives of the Members and the Company shall have access to all Bank Accounts and the contents thereof for Company purposes as allowed by this Agreement.  All payments or withdrawals of funds of amounts less than $10,000 from Company accounts may be made by any authorized person of the Administrative Member without the necessity of joinder by the other Member.  Notwithstanding anything in this Agreement to the contrary, no payments from a Bank Account may be made to, and no withdrawals from a Bank Account made by, any Member or its Affiliate or employee of such Member unless specifically provided for in this Agreement or the Annual Budget.  

Section 8.4.Opt-in to UCC Article 8.  All Interests in the Company will be securities governed by Article 8 of the Uniform Commercial Code as in effect from time to time in the State of New York and any other applicable jurisdiction.  Such Interests are not evidenced by certificates, and will remain not evidenced by certificates.  The Company is not authorized to issue certificated interests.  The Company will keep a register of the Interests of the Members, in which it will record all transfers of such Interests.

ARTICLE IX - TRANSFERS OF INTERESTS

Section 9.1.Restrictions on Transfers.  No Member may Transfer all or any part of its Interest to any Person other than to an Affiliate of such Member, provided, that, in the case of any Transfer of all or any part of a Member’s Interest to an Affiliate of such transferring Member, if, following such Transfer, at any time such Affiliate transferee ceases to remain an

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Affiliate of the transferring Member, then at such time, the Interest held by such Affiliate transferee shall automatically revert to and transfer back to the transferring Member.

Section 9.2.Buy-Sell.

(A)At any time upon the occurrence and continuation of any dispute among the Members arising out of or relating to a matter described in Section 7.1(D)(iii), Section 7.1(D)(iv), Section 7.1(D)(viii), Section 7.1(D)(xiii), Section 7.1(D)(xiv), Section 7.1(D)(xv), Section 7.1(D)(xxiii), Section 7.1(D)(xxiv) and/or Section 7.1(D)(xxv) (and, for the voidance of doubt, expressly excluding any decision related to the making of a specific Investment), either REL or Fundamental may give Notice to the other that a deadlock exists.  The Members shall meet as soon as practicable to resolve such deadlock.  If the Members are unable to resolve the deadlock at a meeting, or no meeting occurs within thirty (30) days of the date of the deadlock Notice, either Member (the “Initiating Member”) may within thirty (30) days of the meeting, or if no meeting occurs, within sixty (60) days after the deadlock Notice, give to the other such Member (the “Other Member”) an irrevocable written notice (the “Termination Notice”) setting forth the Initiating Member’s proposed liquidation value of the Company (the “Liquidation Value”) and an offer to either (x) sell the Initiating Member’s Interest to the Other Member at a price equal to the Liquidation Value multiplied by the Initiating Member’s Percentage Interest, or (y) purchase the Interest of the Other Member at a price equal to the Liquidation Value multiplied by the Other Member’s Percentage Interest (in each case, the “Purchase Price”).  Such Termination Notice shall be accompanied by an earnest money deposit in an amount equal to 1% of the Purchase Price (said amount being hereinafter called the “Initiating Member’s Deposit”).

(B)The Other Member shall, on or before the date that is thirty (30) days after the date of receipt of the Termination Notice, either accept the offer to sell the Other Member’s Interest to the Initiating Member, or accept the offer of the Initiating Member to sell the Initiating Member’s Interest to the Other Member.  If the Other Member elects to accept the Initiating Member’s offer to sell the Initiating Member’s Interest to the Other Member, its notice of such election shall be accompanied by (i) the return of the Initiating Member’s Deposit and (ii) its own earnest money deposit in an amount equal to 1% of the Purchase Price (said amount, together with any interest earned thereon, being hereinafter called the “Other Member’s Deposit”).   If the Other Member fails to respond to the Termination Notice within such thirty (30) day period, the failure to respond shall be deemed the Other Member’s election to accept the offer of the Initiating Member to purchase the Interest of the Other Member in accordance with the Termination Notice.

(C)The base consideration (as adjusted pursuant to this Section 9.2(C)) for the selling Member’s Interest being acquired from the purchasing Member will be a total amount equal to:

(i)the Purchase Price; minus

(ii)the Initiating Member’s Deposit or the Other Member’s Deposit, as the case may be.

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The amount determined in the preceding sentence shall be adjusted based upon a proration of any accrued income or expense and any distributions under Section 9.2(G), all without double counting (the “Total Purchase Price”).

(D)The closing of the purchase and sale of a Member’s Interest pursuant to this Section 9.2 (the “Buy-Sell Closing”) shall occur on the date which is not later than sixty (60) days after the Other Member’s election or deemed election pursuant to Section 9.2(B), or at such other time as may be otherwise agreed to in writing by the Other Member and the Initiating Member (such date, the “Closing Date”), provided that (except as may be otherwise agreed by the Other Member and the Initiating Member) the Buy-Sell Closing shall occur at the same time as the “Buy-Sell Closing” under SPL Operating Agreement, and provided, further, that the required time for closing hereunder shall be subject to extension for any applicable governmental approvals or waiting periods (e.g., HSR Act filings).  The Buy-Sell Closing shall occur at the office of the Company’s counsel, unless otherwise agreed by the Members.  In connection with the Buy-Sell Closing, each of the purchasing Member and the selling Member shall execute an instrument of assignment of Interests (the “Assignment Agreement”), which shall (i) transfer and assign the entirety of the selling Member’s Interest to the purchasing Member, free and clear of all liens and encumbrances thereon, with the intent that the purchasing Member succeed to all of selling Member’s rights, titles and interests in the Company on and as of the Closing Date; (ii) contain (1) the resignation of the selling Member as a Member in the Company, (2) a full release of the Company and all of its Members by the selling Member of any and all claims, known and unknown, that the selling Member has or may have against the Company and its Members with respect to the Interest then being sold, other than rights to indemnification and claims arising as part of the Buy-Sell Closing, and (3) a full release of the selling Member by the Company and its Members of any and all claims, known and unknown, that the Company and/or any Member has or may have against the selling Member with respect to the Interest then being sold, other than rights to indemnification and claims arising as part of the Buy-Sell Closing; and (iii) include representations and warranties by the selling Member that (1) the selling Member is the sole legal and equitable owner of the entirety of the Interest then being sold, (2) except for the purchasing Member, the selling Member is not aware of any Person which has any right, title or interest in or to any of the Interest then being sold, (3) there are no liens, encumbrances or other restrictions on the transfer of, or potential claims to or against, the Interest then being sold except as set forth in this Agreement, and (4) the selling Member has the full legal power, authority and right to execute and deliver, and to cause the selling Member to perform its legal obligations under, the Assignment Agreement, and the selling Member’s performance thereunder and the transactions contemplated thereby have been duly authorized by all requisite action on the part of the selling Member and its Affiliates.

(E)On the Closing Date, (i) each of the purchasing Member and the selling Member shall deliver to the other Member an executed counterpart of the Assignment Agreement and (ii) the purchasing Member shall deliver to the selling Member the Total Purchase Price by wire transfer of immediately available funds to an account which is designated by the selling Member.  Closing costs and all other charges involved in the Buy-Sell Closing (except for attorneys’ fees (each party paying their own)) shall be prorated between the Members pro rata in accordance with the Percentage Interests of the Members.  Stamp, recording, transfer

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or similar taxes and title insurance costs arising in connection with the sale of the Interest, if any, shall be paid fifty percent (50%) by the selling Member and fifty percent (50%) by the purchasing Member.  The purchasing Member shall pay all applicable loan assumption fees.  The Members will share equally in any applicable lender review fees and lender legal costs related to the sale of a Member’s Interest pursuant to this Section 9.2.

(F)Each Member hereby irrevocably constitutes and appoints the other Member as such Member’s true and lawful attorney-in-fact, with full power of substitution, in its name, place and stead, to make, execute, sign, acknowledge, verify, deliver, record and file, on its behalf, any instruments, documents or certificates, including without limitation, the Assignment Agreement, necessary to effectuate the purchase and sale of such Member’s Interest pursuant to this Section 9.2.  Each Member is fully aware that the other Member will rely on the effectiveness of this special power-of-attorney (the “Power-of-Attorney”) to effectuate the Buy-Sell Closing in the event of the non-performance of either Member.  This Power-of-Attorney is a special power-of-attorney and is coupled with an interest.

(G)The Members (including the selling Member) shall be entitled to any distributions of Net Operating Cash Flow and Net Cash Flow from Capital Transactions from the Company in accordance with Section 6.1 following the giving of the Termination Notice pursuant to Section 9.2 and until the Buy-Sell Closing.  The purchasing Member shall receive all distributions of Net Operating Cash Flow and Net Cash Flow from Capital Transactions attributable to the Interest which it purchased after the Closing Date.

(H)Notwithstanding anything to the contrary set forth herein, (i) (x) if the SPL Fundamental Member or the SPL Non-Fundamental Member delivers a “Termination Notice” in accordance with Section 9.2(A) of the SPL Operating Agreement, then Fundamental or REL, respectively, may, and shall, deliver a Termination Notice under Section 9.2(A) hereof at the same time (accompanied by the Initiating Member’s Deposit required hereunder), and (y) neither Fundamental nor REL may deliver a Termination Notice under Section 9.2(A) hereof unless, contemporaneously therewith, the SPL Fundamental Member or the SPL Non-Fundamental Member, respectively, delivers a “Termination Notice” under Section 9.2(A) of the SPL Operating Agreement (accompanied by the “Initiating Member’s Deposit” required thereunder), and (ii) neither Fundamental nor REL may make any election as the Other Member pursuant to the first sentence of Section 9.2(B) hereof unless (x) contemporaneously with the making of such election, the SPL Fundamental Member or the SPL Non-Fundamental Member, respectively, makes the same corresponding election (i.e., to either buy or sell) as the “Other Member” under the first sentence of Section 9.2(B) of the SPL Operating Agreement and (y) if such election hereunder is to accept the offer of the Initiating Member to sell the Initiating Member’s Interest to the Other Member, both the Other Member hereunder and the “Other Member” under the SPL Operating Agreement contemporaneously comply with the requirements of the second sentence of Section 9.2(B) hereof and of Section 9.2(B) of the SPL Operating Agreement.

Section 9.3.Further Restrictions on Transfer.  In addition to the other requirements of this Article IX, no Transfer may be made by a Member (i) to the extent such transfer would violate applicable securities laws, or cause the Company to lose its status as a partnership for federal income tax purposes or cause a termination of the Company for federal income tax

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purposes and/or (ii) if such Transfer would subject the Company to the registration requirements of the U.S. Investment Company Act of 1940, as amended or otherwise have a material adverse effect on the Company as a result of regulatory restrictions imposed by any governmental authority.

Section 9.4.Effect of Transfer.

(A)Unless otherwise agreed, any permitted Transfer of all or any portion of a Member’s Interest in the Company will take effect on the first (1^st) day of the month after all of the conditions of this Article IX have been satisfied.  Any transferee of an Interest in the Company shall take subject to the restrictions on Transfer imposed by this Agreement.

(B)No involuntary Transfer and no Transfer in violation of this Agreement shall be recognized by the Company, unless otherwise required by applicable law, and then only to the minimum extent required by applicable law.  Without limiting the generality of the foregoing, the transferee of such a Transfer shall have no right to participate in the management of the business and affairs of the Company or to become a Member.

Section 9.5.Additional or Substitute Members.  A transferee shall have the right to become an additional or Substitute Member only if (i) the requirements of this Article IX are met, including Required Approval (other than with respect to transfers to Affiliates of such transferring Member), (ii) such Person executes an instrument of transfer satisfactory to the Members accepting and adopting the terms and provisions of this Agreement, and (iii) such Person pays any reasonable expenses incurred by the Company in connection with such Person’s admission as a Member.

Section 9.6.Representations of Members.  Each Member (including each additional or Substitute Member in connection with its admission as a Member) severally represents and warrants to the Company and other Member(s), as to itself, as of the date hereof (or the date of its admission) as follows:

(A)Such Member is acquiring its Interest for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and, except as contemplated by this Agreement such Member has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

(B)Such Member has made its own independent decisions to enter into this Agreement and the transaction contemplated herein and as to whether the transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary.

(C)Such Member is not relying on any communication (written or oral) of the other Member as investment advice or as a recommendation to enter into this Agreement, it being understood that information and explanations related to the terms and conditions of this Agreement will not be considered investment advice or a recommendation to enter into this

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Agreement.  No communication (written or oral) received from the other Member will be deemed to be an assurance or guarantee as to the expected results of this Agreement.

(D)Such Member is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of entering into this Agreement, and it is capable of assuming, and assumes, such risks.

(E)Such Member has conducted its own inquiry concerning the Company, its business and its personnel as such Member has deemed appropriate, and the Company has made available to such Member any and all written information which it has requested and has answered to such Member’s satisfaction all inquiries made by such Member.

(F)Such Member has such knowledge and experience in financial and business matters so as to enable it to utilize the information made available to it in order to evaluate the merits and risks of an investment in the Company and to make an informed investment decision with respect thereto.

(G)Such Member can afford a complete loss of its investment in the Interest and can afford to hold the investment in such Interest for an indefinite period of time, and the Member’s investment in the Interest is consistent with the investment purposes and objectives and cash flow requirements of the Member and will not adversely affect the Member’s overall need for diversification and liquidity.

(H)Such Member meets all suitability standards imposed on it by applicable law and is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.

(I)This Agreement has been negotiated as an arms-length between the Members, and no agency relationship exists between or among such parties.

Section 9.7.  Non-Solicitation.  Each Member shall not solicit, for Competing Investments, developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company, for a period of:  (A) one (1) year from the Non-Solicit Trigger Event for developer clients or prospective developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company, or SPL, in each case, within the one (1) year period prior to the Non-Solicit Trigger Event; or (B) six (6) months from the Non-Solicit Trigger Event for all other developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company.  Each Member shall not solicit (other than by means of employment advertisements to the general public) employees of the other for a period of two years subsequent to the later of (A) the dissolution of the Company and complete liquidation of Company Assets pursuant to Section 10.2 or (B) the closing of the purchase and sale of an Interest pursuant to Section 9.2.

ARTICLE X - DISSOLUTION AND LIQUIDATION

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Section 10.1.Term and Dissolution.

(A)The Company shall be dissolved, wound up and terminated as provided herein upon the first to occur of the following:

(i)An election to dissolve the Company is made in writing by Required Approval; or

(ii)Notice to dissolve the Company is given by either Member to the other at any time following the date that is 18 months after the end of the Investment Period;

provided, that any dissolution described in Section 10.1(A)(ii) shall be effective ninety (90) days following the delivery of the Notice described therein.  Except as expressly provided herein or as otherwise required by applicable Delaware law, the Members shall have no power to dissolve the Company.

(B)In the event of the dissolution of the Company for any reason, the Members or a liquidating agent appointed jointly by the Members (the Members, in such capacity, or such jointly appointed liquidating agent, as the case may be, the “Liquidator”) shall commence to wind up the affairs of the Company and to liquidate the Company Assets (it being understood and agreed that during such liquidation process, the relative managements rights and obligations of the Members as set forth in Section 7.1 hereof shall continue to apply); provided, however, that, subject to Administrative Member’s continuing authority to take Investment Related Actions permitted under (and subject to all of the terms and conditions of) Section 7.1(G), the liquidation shall be deferred until the maturity of all of the Investments, except (i) to the extent provided by the Act; or (ii) to the extent Fundamental requests that an Investment be liquidated,  the Administrative Member, may, in its sole discretion, liquidate such Investment on behalf of the Company.  Notwithstanding anything in this Section 10.1(B) to the contrary and for the avoidance of doubt, the Members shall continue to share all income, losses and distributions during the period of dissolution and liquidation in accordance with Article VI.

(C)The Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any Company Assets.

Section 10.2.Liquidation of Company Assets.

(A)Once the dissolution process commences, (i) the Company will continue to close and fund Investments for which the Company issued a binding, written commitment on or before the date of the election to dissolve pursuant to Section 10.1(A)(i) or the date of the notice to dissolve is given pursuant to Section 10.1(A)(ii), as the case may be, (ii) the Company will not commit to any new Investments, (iii) the Company will continue to operate until its last Investment is redeemed or sold, and (iv) the exclusivity provisions of Section 7.3 requiring each Member to bring all investment opportunities to the Company will terminate.

40

(B)The Liquidator shall, subject to Section 10.1(B), as soon as practicable following the event giving rise to the dissolution, winding up and termination of the Company, wind up with the affairs of the Company and sell and/or distribute the Company Assets.  The Company Assets shall be applied in the following order of priority:

(i)first, to pay the costs and expenses of the winding up, liquidation and termination of the Company;

(ii)second, to creditors of the Company, in the order of priority provided by law, including fees and reimbursements payable to the Members or their Affiliates, but not including those liabilities (other than liabilities to the Members for any expenses of the Company paid by the Members or their Affiliates, to the extent the Members are entitled to reimbursement hereunder) to the Members in their capacity as Members;

(iii)third, to establish reserves reasonably adequate to meet any and all contingent or unforeseen liabilities or obligations of the Company; provided, that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided;

(iv)fourth, to the Members for the principal and accrued but unpaid interest outstanding on any cash loans (other than Default Loans), if any, made by them to the Company; and

(v)fifth, the remainder to the Members in accordance with Section 6.1(B).

If assets are to be distributed in kind, the Members’ Capital Accounts shall be appropriately adjusted, in accordance with Section 5.6, before any such distribution to reflect any Net Income or Net Loss that would have been allocated if the property distributed in kind had been sold for its fair market value (net of liabilities) by the Company prior to dissolution.

(C)Notwithstanding anything else in this Agreement to the contrary, upon liquidation of a Member’s Interest in the Company (whether or not in connection with a liquidation of the Company), no Member shall have an obligation to contribute additional capital to the Company in order to restore a deficit balance in his Capital Account at any time, and such deficit shall not be considered as owed to the Company or any other Person for any purpose whatsoever.

(D)Within a reasonable time following the completion of the Company’s Asset, the Administrative Member shall cause to be prepared, and shall furnish to each Member, a statement setting forth the assets and liabilities of the Company as of the date of complete liquidation and each Member’s portion of distributions pursuant to Section 10.2(B).

(E)Each Member shall look solely to the Company’s assets for all

41

distributions with respect to the Company and such Member’s Capital Contributions (including return thereof), and such Member’s share of profits or losses thereon, and shall have no recourse therefor (upon dissolution or otherwise) against the Members or any other Member.  No Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company.

(F)The Company shall terminate when all property owned by the Company shall have been dissolved of and the assets shall have been distributed as provided in Section 10.2(B).  Upon such termination, the Members shall cease to be Members of the Company and the Members shall then cause to be executed and filed a Certificate of Cancellation of the Company.

ARTICLE XI - MISCELLANEOUS PROVISIONS

Section 11.1.Title to Property.  All property owned by the Company, whether real or personal, tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually, shall have any ownership of such property.

Section 11.2.Applicable Law.  This Agreement, and the application or interpretation thereof, shall be governed exclusively by its terms and by the laws of the State of Delaware applied without regard to principles of conflicts of law.

Section 11.3.Binding Agreement.  This Agreement shall be binding upon the parties hereto, and their respective permitted successors and assigns.

Section 11.4.Waiver of Partition.  Each of the parties hereto irrevocably waives during the term of the Company any right that it may have to maintain any action for partition with respect to any property of the Company.

Section 11.5.Counterparts and Effectiveness.  This Agreement may be executed in several counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the original or the same counterpart.  Any such counterpart shall be admissible into evidence as an original hereof against the Person who executed it.  The execution and delivery of this Agreement by electronic means (including facsimile and electronic mail) shall be sufficient for all purposes and shall be binding upon any Person who so executes.

Section 11.6.Publicity.  Without the approval of all other Members, no Member shall, at any time during the term of the Company and thereafter, whether or not at the time a Member of the Company, (A) issue any press release or advertisement or take any similar action concerning the Company’s business or affairs which refers to the other Members, (B) publicize detailed financial information concerning the Company which refers to the other Members, or (C) disclose the Company’s affairs or the terms and provisions of this Agreement or any other agreement to which the Company or an Affiliate is a party.  Notwithstanding the foregoing, the Members may each disclose such information (1) to their respective Affiliates, and to the respective employees, advisors, agents and consultants of the Members and their respective

42

Affiliates, (2) to actual or prospective lenders to, or actual or prospective investors in, a Member or any Affiliate of a Member, (3) to actual or prospective purchasers (direct or indirect) of such Member’s Interest, and (4) as may be required by law (including regulatory compliance) or to enforce their rights hereunder, provided, that in each case described in clauses (1), (2) and (3), such Persons have agreed to abide by the terms of this Section 11.6 or have otherwise entered into a contract with restrictions on disclosure substantially the same (and not less than one year in duration) as the terms of this Section 11.6 (or in the case of advisors, agents and consultants, are otherwise bound by professional or legal obligations of confidentiality).  Notwithstanding anything to the contrary, the Members may disclose the tax treatment and tax structure of the transaction unless required to be kept confidential to the extent necessary to comply with any applicable securities laws.  The preceding sentence is intended to cause the transaction not to be treated as having been offered under conditions of confidentiality for purposes of Treasury Regulation Sections 1.6011-4(b)(3) and 301.6111-2(a)(2)(ii) (or any successor provision) of the Regulations and shall be construed in a manner consistent with such purpose.  Further notwithstanding the foregoing, a Member who issues any press release or advertisement or takes any similar action concerning the Company shall refer to the other Members in such release if so requested by said other Members.

Section 11.7.Entire Agreement.  This Agreement (and all Schedules and Exhibits hereto) contains the entire understanding among the parties hereto and supersedes all prior written or oral agreements among them respecting the within subject matter, unless otherwise provided herein.  There are no representations, agreements, arrangements or understandings, oral or written, among the Members hereto relating to the subject matter of this Agreement which are not fully expressed herein and in said Exhibits.

[signatures appear on following page]

43

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.

[[
[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its Managing Member
	By:	[Affiliate of Fundamental Advisors, LP], its Managing Member
	By:	/s/Laurence Gottlieb
		Name:	Laurence Gottlieb
		Title:	Managing Member
RENEWABLE ENERGY LENDING, LLC
By:	Renewable Developer Holdings, LLC
	By:	/s/Joshua Peck
		Name:	Joshua Peck
		Title:	Vice President

Solely for purposes of Section 1.1 hereof and Article XI hereof:

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Chief Executive Officer
[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence L. Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Chief Executive Officer

A-1

Solely for purposes of Sections 1.1, 7.1(G)(iv) and 7.6 hereof and Article XI hereof:

MMA ENERGY CAPITAL, LLC
By:	/s/Gary A. Mentesana
	Name:	Gary A. Mentesana
	Title:	Executive Vice President

A-2

EX-10.3

‌Exhibit 10.3

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed.

SOLAR CONSTRUCTION LENDING, LLC

First AMENDMENT to
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

This FIRST AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Amendment”) of Solar Construction Lending, LLC, a Delaware limited liability company (the “Company”), is made and entered into as of January 8, 2018, by and among Renewable Energy Lending, LLC, a Delaware limited liability company, and [Affiliate of Fundamental Advisors, LP], a Delaware limited Liability company;

Whereas, the Members are party to that certain Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of November 7, 2016 (as heretofore amended, supplemented or otherwise modified, the “Existing Operating Agreement”);

Whereas, the Members desire to amend the Existing Operating Agreement to reflect certain matters with respect Hunt Investment Management, LLC, a Delaware limited liability company (“Hunt”), becoming the Manager of the Administrative Member of the Company;

Whereas, Section 7.1(D)(xix) of the Existing Operating Agreement permits amendment only with the affirmative written consent of the Members; and

Whereas, capitalized terms used in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Existing Operating Agreement.

Now, Therefore, in consideration of the mutual agreements, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Amendments to Existing Operating Agreement.  

(a)Section 2.1 of the Existing Operating Agreement is hereby amended to add (in the appropriate place alphabetically) the following defined term thereto (reading in its entirety as follows):

“Hunt” means Hunt Investment Management, LLC, a Delaware limited liability company.

(b)The last sentence of Section 7.1(F)(i) of the Existing Operating Agreement is hereby amended to read in its entirety as follows:

“The Annual Budget shall be presented in the form of a budget of Hunt regarding the Company, SPL, SDL and REL with detailed allocations of

certain expenses expected to be incurred directly by the Company, SPL, SDL and REL as well as the operating expenses of Hunt that are necessary for the Administrative Member to perform its duties under this Agreement, the REL Operating  Agreement, the Management Agreement (as defined in the REL Operating Agreement), the SDL Operating Agreement and the SPL Operating Agreement, it being acknowledged and agreed that (i) Hunt's operating expenses will be paid directly by Hunt and reimbursed (for the avoidance of doubt, to the extent in respect of SDL, SCL or SPL) solely through the Administrative Member Cost Reimbursement Fee paid by the Company, REL, SDL and SPL pursuant to the allocation set forth in Section 7.5 hereof, and (ii) the only REL costs, or Hunt costs related to REL, that will be reflected in the Annual Budget as payable by the Company, SDL or SPL will be the Hunt costs related to REL that will be payable to REL through such Administrative Member Cost Reimbursement Fee.”

(c)A new final sentence of Section 7.5 is hereby added as follows:  “If at any time Hunt is removed as the “Administrative Member” under the SDL Operating Agreement by “Fundamental” (as defined in the SDL Operating Agreement), or is removed as such “Administrative Member” pursuant to the last sentence of Section 7.1(E) of the SDL Operating Agreement, then, with effect from and after such removal, the Administrative Member Cost Reimbursement Fee shall be calculated as above in this Section 7.5 disregarding SDL and the SDL Operating Agreement in all respects (including without limitation disregarding any costs related to SDL and any Investments originated by, or held in, SDL), and (without limiting the generality of the foregoing) the term “SCL/REL/SDL/SPL Administrative Member” shall be applied excluding the “Administrative Member” under the SDL Operating Agreement.

2.Miscellaneous.

(a)Except as specifically modified or supplemented herein, the Existing Operating Agreement shall remain in full force and effect.  If any conflict exists between the provisions in this Amendment and the Existing Operating Agreement, this Amendment shall control.  The Existing Operating Agreement, as amended and supplemented by this Amendment, constitutes the entire agreement of the parties hereto with respect to the subject matter of this Amendment, and contains all of the covenants and agreements of the parties hereto with respect thereto.  This Amendment may not be altered, changed or amended except by an instrument in writing signed by all parties hereto.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  All section headings of this Amendment are inserted solely as a matter of convenience and for reference, and are not a substantive part of this Amendment.  The recitals hereto are hereby incorporated by reference into and form an integral part of this Amendment.

(b)This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

2

(c)This Amendment may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(d)By their execution of this Amendment, the undersigned Members and the Administrative Member hereby confirm that they are duly authorized to execute this Amendment and any necessary requisite approval has been obtained with respect to this Amendment and all matters set forth herein.

3.Effectiveness.

This Amendment shall be effective upon (but only upon) the occurrence, prior to or on (but not after) January 31, 2018, of (i) the “Specified Sections Effective Date” under and accordance with that certain First Amendment to Limited Liability Company Operating Agreement of Solar Development Lending, LLC and (ii) the “Consent Effective Date” under and in accordance with that certain Consent to Assignment of Renewable Energy Lending, LLC Management Agreement, by and between REL and MEC, and acknowledged for limited purposes by RDH, each being executed contemporaneously herewith.

[Signatures on the Following Page]

3

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its managing member
	By:	[Affiliate of Fundamental Advisors, LP], its general member
	By:	/s/Laurence Gottlieb
		Name:	Laurence Gottlieb
		Title:	Managing Member
RENEWABLE ENERGY LENDING, LLC
By:	Renewable Developer Holdings, LLC
Its:	Member
	By:	/s/Joshua Peck
		Name:	Joshua Peck
		Title:	Vice President

[Signature Page to First Amendment to SCL Limited Liability Company Operating Agreement]

EX-10.4

‌Exhibit 10.4

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed.

SOLAR CONSTRUCTION LENDING, LLC

second AMENDMENT to
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

This SECOND AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Amendment”) of Solar Construction Lending, LLC, a Delaware limited liability company (the “Company”), is made and entered into as of July 13, 2018, by and between Renewable Energy Lending, LLC, a Delaware limited liability company, and [Affiliate of Fundamental Advisors, LP], LLC, a Delaware limited liability company;

Whereas, the Members are party to that certain Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of November 7, 2016 (as heretofore amended, supplemented or otherwise modified to the date hereof, the “Existing Operating Agreement”);

Whereas, the Investment Period of the Company would end on July 15, 2018 in accordance with the terms of the Existing Operating Agreement;

Whereas, the Members desire to extend the Investment Period of the Company through July 15, 2023;

Whereas, Section 7.1(D)(xix) of the Existing Operating Agreement permits amendment only with the affirmative written consent of the Members; and

Whereas, capitalized terms used in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Existing Operating Agreement.

Now, Therefore, in consideration of the mutual agreements, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Amendments to Existing Operating Agreement.

(a)The definition of “Investment Period” in Section 2.1 of the Existing Operating Agreement is hereby amended by deleting the date “July 15, 2018” and replacing it with the date “July 15, 2023”.

(b)Section 7.4(E)(ii) of the Existing Operating Agreement is hereby amended by deleting the date “September 1, 2019” and replacing it with the date “September 1, 2024”.

(c)Exhibit B to the Existing Operating Agreement is hereby amended by deleting each reference to the date “September 1, 2019” and replacing it with the date “September 1, 2024”.

(d)Notwithstanding anything to the contrary contained in the Existing Operating Agreement, prior to July 15, 2023, the Administrative Member shall have no right to take any Investment Related Action, and shall not take any Investment Related Action, without having obtained Required Approval.

2.Miscellaneous.

(a)Except as specifically modified or supplemented herein, the Existing Operating Agreement shall remain in full force and effect.  If any conflict exists between the provisions in this Amendment and the Existing Operating Agreement, this Amendment shall control.  The Existing Operating Agreement, as amended and supplemented by this Amendment, constitutes the entire agreement of the parties hereto with respect to the subject matter of the Existing Operating Agreement and this Amendment, and contains all of the covenants and agreements of the parties with respect thereto.  This Amendment may not be altered, changed or amended except by an instrument in writing signed by all parties hereto.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  All section headings of this Amendment are inserted solely as a matter of convenience and for reference, and are not a substantive part of this Amendment.  The recitals hereto are hereby incorporated by reference into and form an integral part of this Amendment.

(b)This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

(c)This Amendment may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(d)By their execution of this Amendment, the undersigned Members and the Administrative Member hereby confirm that they are duly authorized to execute this Amendment and any necessary requisite approval has been obtained with respect to this Amendment and all matters set forth herein.

[Signatures on the Following Page]

2

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its managing member
	By:	[Affiliate of Fundamental Advisors, LP], its managing member
	By:	/s/Laurence Gottlieb
		Name:	Laurence Gottlieb
		Title:	Managing Member
RENEWABLE ENERGY LENDING, LLC
By:	Hunt Investment Management, LLC, its administrative member
	By:	/s/Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Executive Vice President

[Signature Page to Second Amendment to SCL Limited Liability Company Operating Agreement]

EX-10.5

Exhibit 10.5

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed. In addition, portions of the exhibit have been omitted.

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

SOLAR DEVELOPMENT LENDING, LLC

THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (as may be amended or restated from time to time, this “Agreement”), executed as of November 21, 2016 (the “Effective Date”), is made by and between the Members identified on Schedule A attached hereto.

ARTICLE I – FORMATION

Section 1.1Formation.

(A)The Members, desiring to form a Delaware limited liability company under the Delaware Limited Liability Company Act, 6 Del. Code §18-101 et seq. (as amended from time to time, the “Act”), have entered into this Agreement.  The Members have caused the formation of a limited liability company under the name Solar Development Lending, LLC (the “Company”) by causing a Certificate of Formation in the form attached hereto as Exhibit A (the “Certificate”) to be executed and filed with the Office of the Secretary of State of the State of Delaware.  The Company’s business shall be conducted under such name until such time as the Members, by Required Approval, shall designate otherwise and file amendments to the Certificate in accordance with applicable law.

(B)This Agreement is subject to, and governed by, the Act and the Certificate.  The Members hereby authorize and ratify the execution and filing of the Certificate by Donald P. Zeithaml, Jr.  In the event of a direct conflict between the provisions of this Agreement and the mandatory provisions of the Act, such provisions of the Act will be controlling.

Section 1.2.Place of Business; Registered Agent.  The principal office and place of business of the Company shall be 3600 O’Donnell Street, Suite 600, Baltimore, Maryland 21224, or at such other place as the Members may from time to time designate.  The registered agent of the Company shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.  The registered agent may be changed from time to time by Required Approval of the Members and by the filing of the prescribed forms with and the payment of any prescribed fees to the appropriate public official(s).

ARTICLE II - INTERPRETATIVE PROVISIONS

Section 2.1.Certain Definitions.  The following terms have the definitions hereinafter indicated whenever used in this Agreement with initial capital letters:

“Act” has the meaning set forth in Section 1.1(A).

[Signature Page to SDL LLC Agreement]

“Adjusted Capital Account” means, with respect to a Member, such Member’s Capital Account as of the end of each fiscal year, as the same is specially computed to reflect the adjustments required or permitted to be taken into account in applying Treasury Regulations Section 1.704-1(b)(2)(ii)(d) (including adjustments for partnership minimum gain and partner nonrecourse debt minimum gain) and taking into account any amounts such Member is obligated or deemed obligated to restore pursuant to any provision of this Agreement and the Regulations.

“Adjusted Capital Account Deficit” means, for each Member, the deficit balance, if any, in that Member’s Adjusted Capital Account.

“Administrative Member” means MEC, or any successor Administrative Member appointed by Required Approval.

“Administrative Member Cost Reimbursement Fee” means the monthly fee payable to the Administrative Member by the Company pursuant to Section 7.5 as reimbursement for loan origination and servicing, asset management, management, and other costs incurred by the Administrative Member in performing its Primary Responsibilities pursuant to and in accordance with this Agreement.

“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified Person.  For purposes hereof, “control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly through one or more intermediaries, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, provided that in no event shall (A) (i) HedgeCo, or any Fund or account directly or indirectly managed or advised by HedgeCo, or (ii) any general partner or manager of any Fund or account described in clause (i), be considered to constitute an Affiliate of Fundamental for the purpose of Section 7.3(B) hereof, or (B) the Company or any of its subsidiaries be deemed an Affiliate of any other Person (other than the Company and its subsidiaries) by reason of the respective rights and powers of the Members with respect to the Company.

“Agreement” has the meaning set forth in the preamble hereto.

“Annual Budget” has the meaning Set forth in Section 7.1(F)(i).

“Assignment Agreement” has the meaning set forth in Section 9.2(D).

“Bank Account” has the meaning set forth in Section 8.3.

“Budget Act” has the meaning set forth in Section 8.2(B).

“Business Day” means any day other than a Saturday, Sunday or any day on which commercial banks are authorized or required to be closed in the State of Delaware, the State of New York or the State of Maryland.

2

“Buy-Sell Closing” has the meaning set forth in Section 9.2(D).

“Capital Contribution” means a contribution to the capital of the Company by a Member pursuant to Section 5.1 and/or Section 5.2(A).

“Capital Transaction” means the sale, refinancing or other disposition of any Company Asset, including the repayment in whole or in part of principal with respect to any Investment made by the Company, which represents a return of capital invested by the Company.

“Certificate” has the meaning set forth in Section 1.1(A).

“Closing Date” has the meaning set forth in Section 9.2(D).

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any corresponding provisions of succeeding law.

“Company” has the meaning set forth in Section 1.1(A).

“Company Assets” means, at any particular time, any assets or property (tangible or intangible, choate or inchoate, fixed or contingent) then held or owned by the Company or any subsidiary.

“Company Opportunities” has the meaning set forth in Section 7.3(B).

“Competing Investment” shall mean the primary market origination of a construction, late stage development or permanent loan for solar, wind or solar storage battery facilities.

“Default Loans” has the meaning set forth in Section 5.3.

“Effective Date” has the meaning set forth in the preamble hereto.

“Entity” means any Person other than an individual.

“Exclusivity Termination Event” has the meaning set forth in Section 7.3(B).

“Fiscal Year” means the calendar year.

“Fund” means any Entity that is a collective or pooled investment vehicle, including (i) any investment company as defined in section 3(a) of the Investment Company Act of 1940, as amended, or (ii) any Entity that would be an investment company under section 3(a) of that Act but for the exclusion provided from that definition by either section 3(c)(1) or section 3(c)(7) of that Act.

“Fundamental” means Fundamental II and Fundamental III], collectively.

3

“Fundamental II” means [Affiliate of Fundamental Advisors, LP], a Delaware limited partnership, and includes any permitted assignees and/or any successors to any of the Interest held thereby, in each case for such long as such Person is a Member.

“Fundamental III” means [Affiliate of Fundamental Advisors, LP], a Delaware limited partnership, and includes any permitted assignees and/or any successors to any of the Interest held thereby, in each case for such long as such Person is a Member.

“GAAP” means United States generally accepted accounting principles consistently applied.  

“HedgeCo” means FCO Advisors LP, a Delaware limited partnership, or any of its direct or indirect successors (broadly construing the term “successors”).  

“Initial Budget” has the meaning Set forth in Section 7.1(F)(i).

“Initiating Member” has the meaning set forth in Section 9.2(A).

“Initiating Member’s Deposit” has the meaning set forth in Section 9.2(A).

“Interest” means, with respect to an interest of any Member in the Company, the entire ownership interest of such Member in the Company at such time (including, without limitation, such Member’s interest in the capital, profits, losses and distributions of the Company).

“Investment” means (a) a late stage development loan for a solar facility and (b) any other investment by the Company (including, without limitation, in another renewable energy asset or facility) that has been approved by Required Approval.

“Investment Criteria” means the target parameters for Investments set forth on the attached Exhibit B.

“Investment Period” means the period beginning on the Effective Date and ending on July 15, 2018.

“IRS” means the Internal Revenue Service, an agency of the United States government, or any successor agency.

“Loan Documents” means the executed definitive documents entered into between the Company and a borrower in connection with an Investment.

“Liquidation Value” has the meaning set forth in Section 9.2(A).

“MEC” means MMA Energy Capital, LLC, a Maryland limited liability company, and includes any permitted assignees and/or any successors to any of the Interest held thereby, in each case for such long as such Person is a Member.

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“Member” means each Person listed as a Member on Schedule A hereto, and any Person hereafter admitted as a Substitute Member pursuant to Section 9.5.

“Net Operating Cash Flow” means, for any period, the amount, computed on a cash basis, equal to:

(i)the sum of (A) gross receipts from operations, being all cash receipts of the Company (including but not limited to net interest income, Origination Fees and Other Fees but excluding Capital Contributions, Net Cash Flow from Capital Transactions, and the proceeds of any borrowing), all without double-counting, and (B) any amounts released from Reserves from prior Net Operating Cash Flow;

decreased by

(ii)the sum of (A) all disbursements of the Company for operating expenses, interest and other expenses, including (x) Outgoing Fees and (y) the Administrative Member Cost Reimbursement Fee, but excluding distributions and loan repayments to the Members, repayments of principal on Company borrowings and amounts invested in Investments and (B) any increase in Reserves.

“Net Cash Flow from Capital Transactions” means the net cash proceeds from Capital Transactions (plus any amounts released from Reserves from prior Net Cash Flow from Capital Transactions), less any portion thereof used or held (i) to pay debts and liabilities of the Company, other than any Default Loans, (ii) to make new Investments, or (iii) to establish or increase Reserves.

“Net Income” and “Net Loss” mean, for any fiscal year, the net income or net loss, as applicable, of the Company for federal income tax purposes for such year as determined by the accountants for the Company without regard to any adjustments to basis pursuant to Sections 734 or 743 of the Code, but subject to the following adjustments:

(i)Any income of the Company that is exempt from federal income tax shall be added to such taxable income or loss.

(ii)Any expenditures of the Company described in Code Section 705(a)(2)(B), or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations §1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income or loss.

(iii)If the fair market value on the date that an asset is contributed to the Company (or if the basis of such asset for book purposes is adjusted under the Treasury Regulations, such adjusted “book” basis) differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, in lieu of the depreciation, amortization and other cost recovery deductions taken into account for computing such taxable income or loss, the amount for depreciation, amortization and other cost recovery deductions shall be equal to an amount which bears the same ratio to such beginning fair market value (or adjusted “book” basis) as the federal income tax deduction for such year

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or other period bears to such beginning adjusted tax basis.

(iv)If the value at which an asset is carried on the books of the Company differs from its adjusted tax basis and gain or loss is recognized from a disposition of such asset, the gain or loss shall be computed by reference to the asset’s “book” basis rather than its adjusted tax basis.

(v)Any items which are specially allocated under Section 6.3 shall be excluded from the calculations of Net Income and Net Loss.

“Non-Funding Member” has the meaning set forth in Section 5.3.

“Non-Solicit Trigger Event” means the earliest to occur of (i) the dissolution of the Company pursuant to Section 10.1, (ii) the end of the Investment Period, (iii) the closing of the purchase and sale of an Interest pursuant to Section 9.2, (iv) the occurrence of an Exclusivity Termination Event and (v) an SCL/SPL Non-Solicit Trigger Event.

“Notice” means any writing containing the information required by this Agreement to be communicated to a Person and personally delivered to such Person, sent by a nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, to such Person at such Person’s address or e-mail address listed on Schedule A attached hereto or such other address or e-mail address as such Person may hereafter specify by notice to the other party(ies) hereto given in accordance herewith.  The date of personal delivery, delivery by such overnight courier or of the certification receipt, as the case may be, shall be deemed the date of such Notice; provided, that any written communication containing such information actually received by a Person shall constitute Notice for all purposes of this Agreement.  Electronic transmission promptly confirmed by original communication delivered as herein provided shall be an acceptable means of Notice, with the date of receipt of the electronic transmission being deemed the date of Notice.  

“Origination Fees” mean fees earned and received by the Company for the origination of loans, but excludes any other fees earned and received, including fees associated with due diligence and loan extension.  

“Other Fees” fees earned and received by the Company, which are excluded under the definition of “Origination Fees”.

“Other Member” has the meaning set forth in Section 9.2(A).

“Other Member’s Deposit” has the meaning set forth in Section 9.2(B).

“Outgoing Fees” means fees paid or disbursed by the Company in connection with Investments, including origination fees paid by the Company and other fees associated with due diligence, if any.

“Percentage Interest” means, with respect to a Member, at any particular date, the

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aggregate Capital Contributions of a Member (and/or its direct or indirect predecessors as such) divided by the aggregate Capital Contributions of all of the Members (and/or their respective direct or indirect predecessors as such), all as determined as at such date.

“Person” means any (i) individual, corporation, company, partnership (including any limited partnership or limited liability partnership), limited liability company, joint venture, association, trust (including a common law trust, business trust, statutory trust or any other form of trust), or other entity or unincorporated organization or (ii) government (including a country, state, county or any other governmental subdivision, agency or instrumentality), in the case of (i) or (ii), whether domestic or foreign.

“Primary Responsibility” means, with respect to the specified activities and/or undertakings, the responsibility and obligation to plan, initiate and implement such activities and undertakings, in all events subject to Section 7.1(D).

“Purchase Price” has the meaning set forth in Section 9.2(A).

“Regulations” or “Treasury Regulations” means the income tax regulations promulgated under the Code, as such Regulations may be amended from time to time.  All references herein to specific sections of the Regulations shall be deemed to refer also to corresponding provisions of any succeeding regulations.

“Rejected Competing Investment” means any “Rejected Competing Investment” as defined in the SPL Operating Agreement or any “Rejected Competing Investment” as defined in the SCL Operating Agreement”.

“REL” means Renewable Energy Lending LLC, a Delaware limited liability company, and includes any permitted assignees and/or any successors to any of the limited liability company interest held thereby in accordance with the SCL Operating Agreement and the SPL Operating Agreement, in each case for such long as such Person is a member of SCL and SPL.

“REL Operating Agreement” means that certain operating agreement of REL, dated as of November 7, 2016, as it may be subsequently amended, supplemented or otherwise modified from time to time.

“Required Approval” means the affirmative unanimous written consent of the Members obtained in the manner provided herein.

“Reserves” means any reserves established and maintained from time to time in amounts determined by the Members, in each case pursuant to Required Approval.

“Reviewing Member” has the meaning Set forth in Section 7.1(F)(iii).

“SCL” means Solar Construction Lending, LLC, a Delaware limited liability company.

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“SCL Operating Agreement” means that certain operating agreement of SCL, dated as of November 7, 2016, as it may be subsequently amended, supplemented or otherwise modified from time to time (prior to any Transfer pursuant to Section 9.2 thereof).

“SCL/SPL Fundamental Member” means (i) with respect to the SCL Operating Agreement, “Fundamental”, as such term is defined therein, and (ii) with respect to the SPL Operating Agreement, “Fundamental”, as such term is defined therein.

“SCL/SPL Non-Fundamental Member” means any member at any time under the SCL Operating Agreement or the SPL Operating Agreement other than any SCL/SPL Fundamental Member.

“SCL/SPL Non-Solicit Trigger Event” means the occurrence of a “Non-Solicit Trigger Event” under the SCL Operating Agreement or the SPL Operating Agreement

“SCL/REL/SDL/SPL Administrative Member” means the Administrative Member, the “Administrative Member” under the REL Operating Agreement, the “Administrative Member” under the SCL Operating Agreement and/or the “Administrative Member” under the SPL Operating Agreement.

“SPL” means Solar Permanent Lending, LLC, a Delaware limited liability company.

“SPL Operating Agreement” means that certain amended and restated operating agreement of SPL, dated as of November 7, 2016, as it may be subsequently amended, supplemented or otherwise modified from time to time (prior to any Transfer pursuant to Section 9.2 thereof).

“Substitute Member(s)” mean any Person admitted to the Company as a Substitute Member pursuant to Section 9.5.

“Termination Notice” has the meaning set forth in Section 9.2(A).

“Total Purchase Price” has the meaning set forth in Section 9.2(C).

“Transfer” means any direct sale, exchange, transfer, contribution, mortgage, pledge, encumbrance, lien, lease, release or other disposition of a Member’s Interest.

“Unreturned Capital Contributions” means, with respect to any Member, the aggregate of all Capital Contributions made to the Company by such Member, reduced by all distributions previously made or deemed made to such Member pursuant to Section 6.1(B)(i).

Section 2.2.Rules of Construction. The following rules of construction shall apply to this Agreement:

(A)References to Articles and Sections are intended to refer to Articles and

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Sections of this Agreement, and all references to Exhibits and Schedules are intended to refer to Exhibits and Schedules attached to this Agreement, each of which is made a part of this Agreement for all purposes.  The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “including” means “including, without limitation.”  Any date specified for action that is not a Business Day will mean the first Business Day after such date.  Any reference to a Person will be deemed to include such Person’s permitted successors and assigns.  Any reference to any document, agreement, instrument or statute will be deemed to refer to such document, agreement, instrument or statute as amended, modified or supplemented from time to time and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein. Whenever a Person is to determine that something is “satisfactory to,” “acceptable to,” or “to the satisfaction of” such Person, the determination may not be made in bad faith.

(B)All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, the singular shall include the plural, and vice versa, as the context may require.  Words such as “hereto”, “herein” and the like refer to this Agreement as a whole.

(C)As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, will have the respective meanings given to them under GAAP.  To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document will control.  For the avoidance of doubt, this clause (C) shall not apply with respect to any determination of Net Operating Cash Flow or Net Cash Flow from Capital Transactions.

(D)Unless otherwise specified, all references contained herein, in any Exhibit or Schedule referred to herein or in any instrument or document delivered pursuant hereto to dollars or “$” shall mean United States dollars.

(E)Each provision of this Agreement shall be considered severable from the rest, and if any provision of this Agreement or its application to any Person or circumstances shall be held invalid and contrary to any existing or future law or unenforceable to any extent, the remainder of this Agreement and the application of any other provision to any Person or circumstances shall not be affected thereby and shall be interpreted and enforced to the greatest extent permitted by law so as to give effect to the original intent of the parties hereto.

(F)This Agreement has been negotiated by the Members and their counsel and no provision shall be construed for or against a Member on the basis that such Member or its counsel was or was not the drafter thereof.

ARTICLE III - BUSINESS PURPOSE AND TERM

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Section 3.1.Business Purpose.  The purpose of the Company is to make Investments.  In furtherance thereof, the Company may carry on any lawful business, purpose, investment or activity related to the making of Investments and shall have all powers which limited liability companies may have under the Act.

Section 3.2.Term.  The Company shall be deemed to exist as of the date the Certificate was filed, and the duration of the Company shall be perpetual unless and until the Company is dissolved in accordance with the provisions of Section 10.1 of this Agreement.

ARTICLE IV – MEMBERS AND PERCENTAGE INTERESTS

Section 4.1.Members; Percentage Interests.  The name, address and Percentage Interest of each Member are set forth on the attached Schedule A.  To the extent additional or Substituted Members are admitted to the Company or Percentage Interests change, in each case in accordance with the terms of this Agreement, the Members shall amend the attached Schedule A to reflect such change(s).

ARTICLE V - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

Section 5.1.Capital Contributions.  [Reserved.]

Section 5.2.Additional Capital Contributions.

(A)From time to time, upon determination of either Member (such Member, the “Calling Member”) that capital is required by the Company either to (i) consummate an Investment that has been approved by the Members pursuant to and in accordance with the terms of this Agreement or (ii) fund expenses for the upcoming calendar quarter to the extent such expenses are set forth in the then current Annual Budget, the Calling Member may deliver written notice to the other Member setting forth (x) the aggregate amount of the additional Capital Contribution then required to be made by all of the Members, (y) the individual amount of the additional Capital Contribution then required to be made by each Member and (z) the purpose to which the proceeds of such additional Capital Contributions will be applied (such notice, a “Capital Call Notice”).  Each Member shall make an additional Capital Contribution, in proportion to their then current Percentage Interests (which shall be specified in the applicable Capital Call Notice) no later than seven (7) Business Days after receipt of a proper Capital Call Notice.  Notwithstanding anything to the contrary in this Section 5.2(A), a Capital Call Notice with respect to expenses described in Section 5.2(A)(ii) may not be issued more than once per month.

(B)Except as set forth in Section 5.2(A), no Member shall be required, and no Member shall have any right, to make additional Capital Contributions, except and to the extent required by law or as otherwise agreed in writing by Required Approval.

(C)No member shall be personally liable for the return of any portion of the Capital Contributions (or any return thereon) of the Members.  The return of such Capital Contributions (or any return thereon) shall be made solely from assets of the Company.  No

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Member shall be required to pay to the Company or any other Member any deficit in such Member’s Capital Account upon dissolution or otherwise.  No Member shall have the right to demand or receive property other than cash for its Interest.

Section 5.3.Default Loans.  In the event that a Member fails or refuses for any reason to make any Capital Contributions required of it pursuant to Section 5.2(A) (a “Non-Funding Member”), another Member or one of its Affiliates may make a loan to the Non-Funding Member by transferring directly to the Company, on behalf of such Non-Funding Member, an amount not to exceed the unpaid portion of such Non-Funding Member’s Capital Contribution, and each such loan (each, a “Default Loan”), shall accrue interest as of the date such Default Loan is made at the annual rate of eighteen percent (18%) compounded quarterly.  Each Default Loan (together with all accrued, unpaid interest thereon) shall be repaid to such Member (or its Affiliate(s), as the case may be) out of any amounts otherwise distributable to the relevant Non-Funding Member pursuant to Article VI below, prior to making any subsequent distributions to such Non-Funding Member pursuant to Article VI.  For purposes of this Agreement, any repayment of all or a portion of any Default Loan pursuant to the immediately preceding sentence shall be deemed to be, and treated as, a distribution to the Non-Funding Member followed by a re-payment by the Non-Funding Member to such other Member or its Affiliate(s).  If, at any time during which a Default Loan remains outstanding, the Company receives from the Non-Funding Member all or any portion of such unpaid Capital Contributions (together with all accrued by unpaid interest on such Default Loan or portion thereof), the Company shall promptly deliver all such amounts to the Member who made such loan (or its Affiliates, as the case may be).

Section 5.4.No Interest, Salary or Drawing.  No Member shall receive any interest, salary or drawing with respect to its Capital Contribution or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member except and to the extent as specifically provided in the Annual Budget.

Section 5.5.No Third Party Beneficiaries.  The provisions of this Agreement are not intended to be for the benefit of any creditor of the Company or other Person (other than a Member in its capacity as a Member or in accordance with Section 7.2) to whom any debts, liabilities or obligations are owed by (or who otherwise has any claim against) the Company or any Member, and no such creditor or other Person shall have or obtain any right under this Agreement against the Company or any Member by reason of any debt, liability or obligation or otherwise.  Without limiting the generality of the foregoing, any obligation of a Member set forth in this Agreement to the Company or to any other Member shall be an obligation only to the Company or such Member, as applicable, and shall not inure to the benefit of any other Person.

Section 5.6.Member Liability.  Except if and to the extent otherwise provided by the Act, no Member shall be liable for the repayment, satisfaction or discharge of any liabilities of the Company in excess of the balance of such Member’s Capital Account.  No Member shall be personally liable for the return of any portion of the Capital Contribution(s) (or any profits thereon) of any other Member.

Section 5.7.Capital Accounts.

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(A)The Company shall establish and maintain a separate capital account (the “Capital Account”) for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.  The Capital Account of a Member shall consist of its initial Capital Contribution and shall be increased by (i) the amount of any additional Capital Contributions, and (ii) the amount of all Net Income (and any item thereof) allocated to such Member, and decreased by (iii) the amount of all distributions or deemed distributions to such Member, and (iv) the amount of all Net Loss (and any item thereof) allocated to such Member.  The Capital Accounts shall be determined, maintained, and adjusted in accordance with the Code and the Regulations, including the capital account maintenance rules in Regulations § 1.704-(1)(b)(2)(iv).

(B)If any Member shall lend any monies to, or perform any services for, the Company, the amount of any such loan or services shall not increase the Member’s Capital Account or affect in any way his or its share in the profits, losses or distributions of the Company.

(C)Any transferee of an Interest shall succeed to the Capital Account relating to the Interest transferred.

Section 5.8.Return of Capital Account.  Except as otherwise specifically provided in this Agreement, (i) no Member shall have any right to withdraw or reduce its Capital Contributions or Capital Account, or to demand and receive property or any distribution from the Company in return for its Capital Contributions or Capital Account, and (ii) any return of Capital Contributions or Capital Accounts to the Members shall be solely from the Company Assets, and no Member shall be personally liable for any such return.

ARTICLE VI – DISTRIBUTIONS; ALLOCATIONS

Section 6.1.Distributions.

(A)Net Operating Cash Flow shall be distributed on a monthly basis to the Members pro rata in accordance with their respective Percentage Interests, unless the Members, subject to Section 7.1(D) and Section 7.4(E), agree to cause the Company to retain Net Operating Cash Flow to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget.  Monthly distributions of Net Operating Cash Flow with respect to the first two months of each calendar quarter shall made in an amount equal to seventy-five percent (75%) of an internal Administrative Member estimate of such Net Operating Cash Flow.  Monthly distributions with respect to the third month of every calendar quarter shall be in the full amount of Net Operating Cash Flow for the applicable quarter otherwise distributable in accordance with the first sentence of this Section 6.1(A), based on the quarterly financial statements for that quarter, less any distributions of Net Operating Cash Flow made with respect to the prior two months of that quarter.  If any Member has made a Default Loan, all payments due under this paragraph (A) to the Non-Funding Member on whose behalf such Default Loan was made shall be paid to the Member which made such Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans made to Non-Funding Members have been paid in full.  

(B)The Members, subject to Section 7.1(D) and Section 7.4(E), agree to cause

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the Company to retain Net Cash Flow from Capital Transactions to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget unless the Members, subject to Section 7.1(D), determine that such Net Cash Flow from Capital Transactions shall be distributed.  Distributions of Net Cash Flow from Capital Transactions shall be made in the following order of priority:

(i)first, to the Members pro rata in accordance with their respective Unreturned Capital Contributions until such Unreturned Capital Contributions have been reduced to zero; provided, if any Member has made a Default Loan, all payments due under this clause to the Non-Funding Member on whose behalf such Default Loan was made shall be paid to the Member which made such Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans made to Non-Funding Members have been paid in full;

(ii)second, if after making the distributions described in clause (i) any Default Loans remain outstanding, then to the Members pro rata in accordance with their respective Percentage Interests in an amount sufficient to pay the remaining unpaid principal and interest on all Default Loans; provided, that all payments due under this clause (ii) to a Non-Funding Member shall be paid to the Member which made a Default Loan to the Non-Funding Member (applied first to reduce accrued but unpaid interest and then to reduce principal) until the principal and interest on all Default Loans to Non-Funding Members shall have been paid in full; and

(iii)third, to the Members pro rata in proportion to their respective Percentage Interests at the time of such distribution.

(C)A Non-Funding Member shall not be entitled to vote on any distributions to be made under this Section 6.1.

(D)Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to any Member on account of its Interest in the Company if such distribution would violate the Act or any other applicable law.

Section 6.2.Allocation of Net Income and Net Loss.  

(A)Except as provided in Section 6.3 or elsewhere in this Agreement, Net Income and Net Loss (and items thereof) for any taxable year or other period of the Company shall be allocated among the Members in proportion to their Percentage Interests.

(B)For federal and state income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Members in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated among the Members pursuant to Section 6.2(A).

Section 6.3.Regulatory Allocations.

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(A)Minimum Gain Chargeback.  Notwithstanding any other provision of this Article VI, if there is a net decrease in “partnership minimum gain” (as that term is defined in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d)) for any Fiscal Year, each Member shall, in the manner provided in Treasury Regulation Section 1.704-2(f), be allocated items of Company income and gain for such year (and, if necessary, for subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in such partnership minimum gain, determined in accordance with Treasury Regulation Section 1.704-2(g). This Section 6.3(A) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(B)Member Minimum Gain Chargeback. Notwithstanding any other provision of this Article VI except Section 6.3(A), if during any Fiscal Year there is a net decrease in “partner nonrecourse debt minimum gain” (as that term is defined in Treasury Regulation Sections 1.704-2(i)(2) and (3)), any Member with a share of such partner nonrecourse debt minimum gain (determined in accordance with Treasury Regulation Section 1.704-2(i)(5)) as of the beginning of such Fiscal Year shall be allocated items of Company income and gain for the Fiscal Year (and, if necessary, for succeeding Fiscal Years) equal to that Member’s share of the net decrease in such partner nonrecourse debt minimum gain (determined in accordance with Treasury Regulation Section 1.704-2(i)(4)). This Section 6.3(B) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(C)Qualified Income Offset.  In the event any Member unexpectedly receives any adjustment, allocation or distribution described in paragraph (4), (5) or (6) of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 6.3(C) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article VI have been tentatively made as if this Section 6.3(C) were not in the Agreement.

(D)Gross Income Allocation.  In the event any Member has a deficit Capital Account balance at the end of any Company Fiscal Year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement and (ii) the amount such Member is deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 6. 3(D) shall be made only if and to the extent that such Member would have a deficit Capital Account balance in excess of such sum after all other allocations provided for in this Section 6.3 have been tentatively made as if Section 6.3(C) and this Section 6.3(D) were not in the Agreement.

(E)Nonrecourse Deductions.  Any “nonrecourse deductions” as defined in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c) for any Fiscal Year or other period

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shall be specially allocated as items of loss in accordance with the Percentage Interests of the Members.  If the Company incurs “nonrecourse deductions” or “partner nonrecourse deductions” or if there is any change in the Company’s “minimum gain,” as those terms are defined in such Regulations, the allocation of Profits, Losses and items thereof to the Members shall be modified as deemed reasonably necessary or advisable by the Members to comply with such Treasury Regulations.

(F)Member Nonrecourse Deductions.  Any “partner nonrecourse deductions” as defined in Treasury Regulation Section 1.704-2(i) for any Fiscal Year or other period shall be specially allocated to the Member who bears the economic risk of loss (within the meaning of Treasury Regulation Section 1.752-2) with respect to the partner nonrecourse debt (as such term is defined in Treasury Regulation Section 1.704-2(b)(4)) to which such partner nonrecourse deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i).

(G)Section 754 Adjustments.  To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining capital accounts, the amount of such adjustment to capital accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

Section 6.4.Tax Withholding.  If the Members determine that the Code or Regulations (or any provision of state, local or foreign tax law) requires the Company to withhold with respect to any Member’s distributive share of income or share of distributions, the Company shall do so.  Such withheld amounts shall be from cash otherwise distributable to such Member, which shall be deemed to have been distributed hereunder to such Member.  The Members shall be authorized to take such other actions as shall be necessary or appropriate for the Members to comply with the Company’s obligations under applicable tax laws.  In the event any such payment made by the Members to the IRS or other taxing authority exceeds the amount of cash otherwise then distributable to such Member, the amount of such payment equal to such excess shall constitute an advance by the Company to such Member for which such Member shall have personal liability, and such Member shall immediately repay such advance to the Company, together with interest thereon from the date when such payment is made to the date of repayment, at a rate of interest equal to the applicable federal rate as published by the IRS at the time such excess advance was made.

Section 6.5.  Other Determinations.  All decisions and other matters concerning the computation and allocation of items of income, gain, loss, deduction and credit among the Members, and accounting procedures not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Members by Required Approval.

ARTICLE VII - MANAGEMENT

Section 7.1.Management.

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(A)Management.  Subject to the other provisions of this Agreement (including Section 7.1(B) and Section 7.1(D)), the Members shall have exclusive and complete authority and discretion to manage the business, operations and affairs of the Company and to make all decisions regarding the business of the Company.

(B)Administrative Member.  The Members hereby agree that the Administrative Member shall have Primary Responsibility for the day-to-day management and operation of the Company and day-to-day oversight of its Investments.  As such, the Administrative Member shall have the responsibility and authority to carry out and take actions as and to extent the same are expressly set forth in the then current Annual Budget.

(C)Meetings; Consent.  Meetings of the Members and their representatives for matters properly brought before the Members may be called at any time by request of any Member.  Members may participate in any meeting through the use of a conference telephone or similar communications equipment by means of which all individuals participating in the meeting can hear each other and such participation shall constitute presence in person at the meeting.  The Company shall give written notice of the date, time, place and purpose of any meeting to all Members entitled to vote at such meeting at least five (5) days prior to the date fixed for the meeting (or such shorter time period as may be agreed by the Members).  Notice may be waived by any Member in writing or by attendance at the meeting, except when a Member attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not properly called or convened.  Any action required or permitted to be taken at any meeting of Members may be taken by a unanimous written consent without a meeting, without prior notice and without a vote.  The unanimous written consent shall set forth the action so taken and shall be signed by the Members.

(D)Voting.  Except to the extent expressly provided otherwise in Section 7.1(B), Required Approval shall be required for any and all action taken or proposed to be taken by the Company.  In furtherance of the foregoing, without first having obtained Required Approval, no action shall be taken, sum expended or obligation incurred by any Member on behalf of the Company, including without limitation in respect of the following matters:

(i)approving any Investments, whether or not within the Investment Criteria, or modifying any existing Investments, provided that immaterial modifications or amendments of Loan Documents permitted thereunder, entered into in good faith and in the ordinary course and consistent with past practice (prior to the Effective Date (as defined in the SCL Operating Agreement)) of MEC, as the “Administrative Member” under the “Original Agreement” (as defined in the SCL Operating Agreement), in relation to Investments (as defined in the SCL Operating Agreement), shall be considered to be a permitted activity of the Administrative Member under Section 7.1(B) and shall not require Required Approval;

(ii)modifying the Investment Criteria by which the Administrative Manager determines which new Investments to present to the Members pursuant to Section 7.3(B);

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(iii)any (1) merger, consolidation or reorganization of the Company or (2) sale of all or substantially all of the Company Assets;

(iv)filing of any petition in bankruptcy or reorganization or instituting any other type of bankruptcy, reorganization or insolvency proceeding with respect to the Company; consenting to the institution of involuntary bankruptcy, reorganization or insolvency proceedings with respect to the Company; admitting on behalf of the Company of its inability to pay its debts generally as the same become due; and/or making by the Company of a general assignment for the benefit of its creditors;

(v)incurring any indebtedness for borrowed money, making or giving any guarantees and granting of liens on the Company Assets; provided, with Required Approval, the Members may authorize the Administrative Member to incur indebtedness for borrowed money, make or give guarantees or grant liens on the Company Assets up to an agreed upon amount;

(vi)making any sale, exchange, transfer, contribution, mortgage, pledge, encumbrance, lien, lease, release or other disposition of any Company Assets (other than releases pursuant to the Loan Documents with respect to the repayment of particular Investments in the ordinary course of the Company’s business);

(vii)making any acquisition or lease by the Company of property or assets;

(viii)incurring any expenses by or on behalf of the Company or any subsidiary in excess of the amount therefore expressly set forth in the then current Annual Budget;

(ix)calling for Capital Contributions from the Members or otherwise sending a Capital Call Notice (in either case, other than in accordance with Section 5.2(A));

(x)making distributions to the Members (other than in accordance with Section 6.1); provided, that for the purpose of this subclause (x), Required Approval shall mean the consent of only those Members who are not Non-Funding Members;

(xi)establishing or maintaining Reserves on behalf of the Company or any subsidiary (other than Reserves that are required to be maintained pursuant to the express terms of any agreement that has been approved by Required Approval to which the Company or such subsidiary is a party);

(xii)approving and/or implementing a workout plan for or in respect of any Investment or the underlying borrower thereto, including any amendment to transaction documents or other documents related to Investments in connection therewith;

(xiii)causing the Company to dissolve, wind up or terminate other than

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as provided in Article X;

(xiv)permitting the Transfer of any Member’s Interest except as permitted by Article IX;

(xv)redeeming all or any portion of the Interest of any Member;

(xvi)entering into any agreements with Affiliates except as expressly set forth in the then current Annual Budget;

(xvii)incurring any ERISA or similar obligations;

(xviii)amending any transaction documents or other documents related to Investments (including, without limitation, any Loan Documents);

(xix)amending this Agreement, the Certificate or any other formation or organizational documents of the Company;

(xx)making an election under Section 754 of the Code or any other material tax election or changing the Company’s accounting methods;

(xxi)changing the Fiscal Year of the Company;

(xxii)causing the Company to commingle the funds of the Company or any subsidiary with the funds of any other Person;

(xxiii)causing any change in the principal nature of the business of the Company;

(xxiv)allowing the admission of a new or Substitute Member to the Company except as permitted by Article IX;

(xxv)altering the tax status of the Company or determining any action of the Company or any subsidiary with respect to any tax controversy;

(xxvi)settling a claim against the Company except as expressly set forth in the then current Annual Budget;

(xxvii)prosecuting, waiving, settling or compromising any claim or cause of action of the Company or any subsidiary against any third party (or parties);

(xxviii)appointing or removing any officers of the Company;

(xxix)establishing or amending any loans, leases, contracts or other transactions between the Company and any Member, officer or any Affiliate or employee of such Person (other than any Default Loans to the extent provided in Section 5.3);

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(xxx)causing the Company to enter into any contract or other binding agreement of any nature whatsoever, whether oral or written, which is not cancellable without the payment by the Company of any premium or penalty upon thirty (30) days’ or less notice;

(xxxi)engaging in any transactions with Affiliates of any Member, except as otherwise set forth in the then current Annual Budget;

(xxxii)approving or amending the Annual Budget;

(xxxiii)[Intentionally Omitted];

(xxxiv)distributing any Net Cash Flow from Capital Transactions in accordance with Section 6.1(B), provided, that if the Members cannot agree whether Net Cash Flow From Capital Transactions should be distributed or retained by the Company in order to fund approved Investments or to pay approved Company expenses in accordance with the Annual Budget, and such Net Cash Flow from Capital Transactions has been held at the Company for ninety (90) days, such Net Cash Flow from Capital Transactions shall then automatically be distributed to the members in the priority set forth in Section 6.1(B); and

(xxxv)committing or agreeing to undertake or do any of the foregoing.

(E)Bankruptcy of a Member.  The bankruptcy of any Member shall not cause a dissolution of the Company, and the rights of such Member to share in the Net Income or Net Loss of the Company and to receive distributions of Company funds shall, on the happening of such event, devolve on its successors or assigns, subject to the terms and conditions of this Agreement, and the Company shall continue as a limited liability company.  However, in no event shall any such successor or assign become a Substitute Member, except in accordance with Article IX.

(F)Annual Budget.

(i)A budget approved by the Members for the Company for the balance of Fiscal Year 2016 subsequent to the Effective Date and for Fiscal Year 2017 is attached hereto as Exhibit C (collectively, the “Initial Budget”).  The Initial Budget, and any subsequent annual budget or amended annual budget (including of the Initial Budget) approved pursuant to this Section 7.1(F) shall be referred to as the “Annual Budget”.  The Annual Budget shall be presented in the form of a budget of MEC with detailed allocations of certain expenses expected to be incurred directly by the Company, SPL, SDL and REL as well as the operating expenses of MEC that are necessary for the Administrative Member to perform its duties under this Agreement, the REL Operating Agreement, the Management Agreement (as defined in the REL Operating Agreement), the SDL Operating Agreement and the SPL Operating Agreement, it being acknowledged and agreed that (i) MEC’s operating expenses will be paid directly by MEC and reimbursed solely through

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the Administrative Member Cost Reimbursement Fee paid by the Company, REL, SDL and SPL pursuant to the allocation set forth in Section 7.5 hereof, and (ii) the only REL costs, or MEC costs related to REL, that will be reflected in the Annual Budget as payable by the Company, SCL or SPL will be the MEC costs related to REL that will be payable to REL through such Administrative Member Cost Reimbursement Fee.  

(ii)The Administrative Member shall have Primary Responsibility to prepare a proposed annual operating budget for the Company, and any necessary or related materials.  The Administrative Member shall submit such proposed annual operating budget and related materials to the other Members for approval no later than October 1 of each preceding year.

(iii)Fundamental (the “Reviewing Member”) will provide Notice of its acceptance or rejection of any proposed annual operating budget submitted to it no later than thirty (30) Business Days after its receipt of such proposed annual operating budget and related materials.  To the extent the Reviewing Member rejects the proposed annual operating budget, the Reviewing Member will provide the Administrative Member with rationale for its rejection.

(iv)No later than ten (10) Business Days after the disapproval of a proposed annual operating budget by the Reviewing Member, the Administrative Member shall submit a revised operating budget to the Reviewing Member for review.  Any failure on the part of the Reviewing Member to accept or reject the proposed revised budget within five (5) Business Days after receipt thereof shall be and be deemed to constitute a disapproval of the proposed revised annual budget by such Reviewing Member, in which event the previously approved Annual Budget for the prior year shall be utilized (with an inflation factor of 3% per line item).

(v)The Annual Budget shall be subject to amendment by Required Approval in each fiscal quarter to allow the Company to adjust the last-approved Annual Budget to the current set of Investments and Company expenses.  Once approved by Required Approval, such amended Annual Budget shall supersede the prior Annual Budget.  If either the Administrative Member or the Reviewing Member desires a quarterly amendment of the Annual Budget it shall so notify the other in writing.  Upon such notice, the Administrative Member shall have Primary Responsibility for preparing an amended annual operating budget for the Company and any necessary or related materials, and submitting such proposed amended annual operating budget and related materials to the Reviewing Member for approval.

(vi)Unless otherwise agreed, the exact form of the Annual Budget shall be that agreed upon by the Members for the Initial Budget for the Company and shall include, without limitation, reasonably detailed and itemized estimates of all projected income and expenses of the Company for the upcoming Fiscal Year.

Section 7.2.Limitation of Liability, Indemnification and Exculpation.

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(A)Indemnification of the Members.  The Company shall indemnify and hold harmless the Members, their Affiliates and their respective members, partners, officers, directors, employees and agents (each, an “Indemnified Party”) from and against any claim, loss, expense, damage or injury suffered or sustained by an Indemnified Party, by reason of any acts, omissions or alleged acts or omissions arising out of such Indemnified Party’s activities on behalf of the Company or in furtherance of the interests of the Company, including but not limited to any judgment, award, settlement, reasonable attorneys’ fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim, except that the Company shall not be responsible under this Section 7.2(A) to an Indemnified Party for any claim, loss, expense, damage or injury to the extent resulting from such Indemnified Party’s fraud, gross negligence, willful misconduct, bad faith or material breach of this Agreement.  Notwithstanding the foregoing or any other provisions of this Agreement, satisfaction of any obligation with respect to the indemnification or holding harmless of any Person shall be from and limited to the Company Assets, and no Member shall be required to advance or contribute funds to the Company for such purpose.  

(B)Expenses.  Expenses (including attorneys’ fees) incurred by an Indemnified Party in a civil or criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding, as incurred; provided, that if an Indemnified Party is advanced such expenses and it is later determined that such Indemnified Party was not entitled to indemnification with respect to such action, suit or proceeding, then such Indemnified Party shall reimburse the Company for such advances; and provided, further, such expenses shall be advanced by the Company only upon the execution and delivery by the Indemnified Party of a recourse promissory note, in a principal amount equal to the amount of the requested advance, to the Company, having a payment date of ten (10) Business Days following the final disposition of the action, suit or proceeding with respect to which such advance is being requested in order to secure the return following final disposition of the action, suit or proceeding with respect to which such advance is being requested, of any amount which represents an advance of expenses for which the Indemnified Party is not entitled to indemnification under this Section 7.2.  No expenses shall be advanced to any Indemnified Party pursuant to this Section 7.2 (or for the avoidance of doubt Section 7.1) in connection with any claim, action, suit or proceeding against such Indemnified Party by a Member (either on its own behalf or derivatively on behalf of the Company).

(C)Not Exclusive.  The indemnification and advancement of expenses provided by this Section 7.2 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of Members or otherwise, both as to action in such Person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a Person who has ceased to be a Member, officer, employee or agent and shall inure to the benefit of the successors, assigns, heirs, executors and administrators of such a Person.

(D)Insurance.  The Company may purchase and maintain insurance on its own behalf, or on behalf of any Person with respect to the liabilities of the types described in this Section 7.2.  The Company may purchase such insurance regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this

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Section 7.2.

(E)Exculpation.  No Member or any of its Affiliates or any of their respective members, partners, officers, directors, agents or employees shall be liable, responsible or accountable in damages or otherwise to the Company or any other Member for any act or failure to act on behalf of the Company except to the extent that such damages or loss resulted from such Person’s fraud, gross negligence, willful misconduct, bad faith or material breach of this Agreement.  Without limiting the generality of the foregoing, each such Member shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and upon information, opinions, reports or statements presented to such Member by any other Person as to matters such Member reasonably believes are within such other Person’s professional or expert competence and that has been selected with reasonable care by or on behalf of the Company.

(F)Guarantees.  No Member shall be required or permitted to guarantee or indemnify any third party in connection with the business of the Company, except by Required Approval.  Any amounts advanced by a Member pursuant to such guaranty or indemnity shall be deemed a loan to the Company by a Member for all purposes of this Agreement.  To the extent that Sections 7.2(A) and (B) apply to any payments, or expenses incurred, by the Members under this Section7.2(F), the Members shall also be entitled to indemnification and expense reimbursement from the Company as provided therein.  For purposes of applying this Section7.2(F), guarantees and indemnities given by an Affiliate of a Member shall be treated as given by that Member.

Section 7.3.Investment Exclusivity; Other Activities.

(A)Except as provided in Section 7.3(B), any Member or its Affiliates may engage in, or possess an interest in, other business ventures of every nature and description, independently or with others, whether or not such other business ventures shall be in competition with any activities of the Company, and neither the Company nor the other Members shall have any right by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom, and such activities shall not be construed as a breach of any duty of loyalty or other fiduciary duty to the Members or the Company.

(B)Until the occurrence of a Non-Solicit Trigger Event, Fundamental shall, and shall cause its Affiliates to, present all investment opportunities in North America to provide late stage renewable energy development loans (such opportunities, “Company Opportunities”) which are also Competing Investments for consideration exclusively first by SCL and then by the Company, and MEC shall, and shall cause its Affiliates to, present all Company Opportunities (regardless of whether they are also Competing Investments) for consideration exclusively first by SCL and then by the Company; provided, however, that (i) each Member that is not a Non-Funding Member shall have the option but not the obligation to bring to the Company any Company Opportunities (regardless of whether they are Competing Investments) while there is any unpaid principal or accrued interest owing to such Member on a Default Loan, and (ii) if MEC has Formally Presented to the Company under this Agreement for consideration three Company Opportunities that (x) were not presented to (and were not required to have been presented to) SCL

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and (y) met the Investment Criteria and subsequently are rejected (or deemed rejected) by Fundamental under Section 7.4(C) hereof (an “Exclusivity Termination Event”), then a Non-Solicit Trigger Event shall be deemed to have occurred and, thereafter, each Member shall have the option but not the obligation to bring further Company Opportunities to the Company during the remainder of the Investment Period.  A Company Opportunity shall be deemed to have been “Formally Presented” to the Company by MEC if (and only if) it is included in a Notice from MEC to Fundamental, and (aa) such Notice (I) expressly states that MEC intends for such Company Opportunity presentation to thereby have been “Formally Presented” to the Company and (II) includes a further written statement of (and executed by) MEC that it irrevocably gives its approval for the Company to proceed with such Company Opportunity (for the purpose of determining whether such Company Opportunity has received Required Approval), and (bb) the level of detail and completeness of the description of such Company Opportunity included in such Notice is, in all material respects, consistent with past practice of SCL (in relation to “Company Opportunities” (as defined in the SCL Operating Agreement)) prior to the “Effective Date” (as defined in the SCL Operating Agreement).

(C)Each Member will have the option, but not the obligation, to bring to the Company other renewable energy investment opportunities.  If investment opportunities are not required to be presented to the Company for investment pursuant to Sections 7.3(B) or are rejected pursuant to Section 7.4(C), the presenting Member (unless such Member failed to provide any approval of such Member required for the Company to undertake such investment opportunity) may choose to invest directly in such investment outside of the Company.  

(D)No Member shall receive compensation for services rendered on behalf of the Company or otherwise in its capacity as a Member.  Nothing in the preceding sentence shall limit the monthly distribution from the Company to the Administrative Member of the Administrative Member Cost Reimbursement Fee. Except as otherwise provided in this Agreement, all actions of the Members shall be subject to Section 7.1(D) and all expenditures of Company funds shall be subject to the Annual Budget and Section 8.3.

(E)Notwithstanding the definition of “Affiliate” hereunder, Fundamental shall not cause, direct or in any manner facilitate (including providing information obtained by Fundamental as a Member of the Company) HedgeCo to take, or in taking, any action which would be prohibited by Fundamental or any of its Affiliates under Section 7.3(B).

Section 7.4Investments.

(A)In addition to those functions set forth in Section 7.1(B), the Administrative Member will have Primary Responsibility for originating and underwriting proposed investments subject to the Investment Criteria and will also prepare the underwriting for purposes of investments originated by Fundamental.  

(B)No less than once every two (2) weeks during the Investment Period, the designated representatives of each Member (which each Member shall designate from time to time by notice to the other Member) shall have a call for the purposes of discussing potential investment opportunities, including presenting investment opportunities in accordance with Section 7.3(B),

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and for any other purposes as determined by the Members.  Notwithstanding the foregoing, at any time and from time to time, any Member may request a call with the other Member to discuss any matters related to the business of the Company.  Nothing herein shall be construed as preventing a Member from consulting such internal committees of the Member and its Affiliates as such Member deems necessary.

(C)All investments which are presented to the Company in accordance with Section 7.3 shall be approved or rejected in accordance with the investment approval process outlined on Exhibit D attached hereto (the “Investment Approval Process”).  Upon completion of all required due diligence (as described in the Investment Approval Process) and upon the Members voting to approve an investment opportunity by Required Approval, Capital Contributions may be called to fund such approved Investment in accordance with Section 5.2(A).  If a proposed investment opportunity fails to receive Required Approval, such investment opportunity shall be deemed rejected.  If any investment opportunity is rejected, the Member which presented such investment opportunity may (unless such Member failed to provide any approval of such Member required for the Company to undertake such investment opportunity) choose to invest in such investment outside of the Company, during the six-month period thereafter on the same terms and conditions as were presented to the Company.  The Members may agree by Required Approval to fund an approved Investment other than through the Company, and each such Investment shall be considered on an individual basis after presentation to the Company.  

(D)Decisions required under this Section 7.4 shall be presented to and decided by the Members.

(E)Notwithstanding anything to the contrary in this Agreement, no new Investments may be made by the Company (i) at any time after the expiration of the Investment Period and/or (ii) that have a maturity date that occurs on or after September 1, 2019.

Section 7.5Administrative Member Cost Reimbursement Fee.  The Company shall pay the Administrative Member the Administrative Member Cost Reimbursement Fee for each calendar month promptly after the end of each such month.  The Administrative Member Cost Reimbursement Fee billed by the Administrative Member and paid by the Company pursuant to this Section 7.5 shall be equal to the product of the Applicable Portion (as defined below) times the SCL/REL/SDL/SPL Administrative Member’s actual costs (including but not limited to attributable salary and benefits of employees of the SCL/REL/SDL/SPL Administrative Member but in any event excluding any amount payable by MEC pursuant to Section 7.6 of the SCL Operating Agreement), incurred on an arms-length basis (such costs, “Actual MEC Admin Costs”), for each applicable month in performing its Primary Responsibilities pursuant to and in accordance with this Agreement, the REL Operating Agreement (with respect to, and only with respect to, Rejected Competing Investments (from and after, and only from and after, the relevant Investment becoming a Rejected Competing Investment), and then only to the extent any Actual MEC Admin Costs with respect to such Rejected Competing Investments, and the Commitment Amount and UPB for the Rejected Competing Investments taken up by REL, are documented to the reasonable satisfaction of Fundamental), the SCL Operating Agreement and the SPL Operating Agreement; provided, however, that (a) in no event shall the Administrative Member Cost Reimbursement Fee for any Fiscal Year exceed the maximum Administrative Member Cost

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Reimbursement Fee set forth in the Annual Budget for such period and (b) neither the Company nor Fundamental shall have or be deemed to have any obligations to pay any salary or benefits directly to the employees of the SCL/REL/SDL/SPL Administrative Member and neither the Company nor Fundamental shall have or be deemed to have an employee/employer relationship with any such employee of the SCL/REL/SDL/SPL Administrative Member.  For the first two months of each calendar quarter, the Company shall pay Administrative Member Cost Reimbursement Fee based upon internal Administrative Member estimates.  For the third month of each calendar quarter, the Company shall pay Administrative Member Cost Reimbursement Fee for the entire calendar quarter then ended based on the quarterly financial statements for that quarter, less any Administrative Member Cost Reimbursement Fee previously paid for the prior two months of that quarter.  Upon preparation of quarterly financial statements, if the Company has paid for the first two calendar months of a calendar quarter to the Administrative Member an amount of Administrative Member Cost Reimbursement Fee in excess of the amount that should have been paid for such quarter based upon the quarterly financial statements for such quarter, the Administrative Member shall promptly repay to the Company the amount of any such overage.  The Administrative Member Cost Reimbursement Fee is not intended to include or cover any expenses directly incurred by the Company, which shall be paid directly by the Company.  For purposes hereof, “Applicable Portion” shall mean that percentage which results from the following calculation:  

80%	x	Commitment Amount of Investments originated in the Company during the Calculation Period	+	20%	x	UPB of Investments held in the Company at the end of the applicable month
		aggregate Commitment Amount of Investments originated in the Company, SCL, SPL and REL during the Calculation Period				aggregate UPB of Investments held in the Company, SCL, SPL and REL at the end of the applicable month

Where

“Calculation Period” means the three-month period ending on the last day of the applicable month.

“Commitment Amount” means the maximum committed principal balance.

“Investment” (i) has the meaning set forth herein (in relation to the Company), in the SCL Operating Agreement (in relation to SCL), or in the SPL Operating Agreement (in relation to SPL) and (ii) in relation to REL means any Rejected Competing Investment taken up by REL.

“UPB” means unpaid principal balance.

ARTICLE VIII - ACCOUNTING AND REPORTS; BANK ACCOUNTS

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Section 8.1.Books and Records. The Administrative Member shall maintain at the principal place of business of the Company set forth in Section 1.2 full and accurate books of the Company showing all receipts and expenditures, assets and liabilities, profits and losses, names and current addresses of Members, and all other records necessary for recording the Company’s business and affairs.  All Members and their duly authorized representatives shall have the right to inspect and copy any or all of the Company’s books and records, including books and records necessary to enable a Member to defend any tax audit or related proceeding.

Section 8.2.Books, Records and Tax Matters.

(A)The books and records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with GAAP.  The Administrative Member shall prepare quarterly and annual financial statements of the Company and shall distribute them to the Members promptly after completion.  Specifically, the Administrative Member shall prepare the following statements and reports and deliver them to each Member:

(i)quarterly financial statements, no later than the 30^th day of the month following the end of each calendar quarter, to include the following:

(a)current Company balance sheet;

(b)current Company income statement;

(c)current period Net Operating Cash Flow distribution calculation;

(d)current period Administrative Member Cost Reimbursement Fee allocation calculation;

(e)current period variance report setting forth any differences between current Annual Budget and actual expenses; and

(f)schedule of all Investments held by the Company.

(ii)upon request of any Member the following:

(a)trial balance of general ledger accounts;

(b)general ledger, reflecting all transactions and Investments, liabilities, Members’ Capital Accounts, gross revenue and expenses;

(c)reconciliation of all bank transactions;

(d)aged accounts receivable report with respect to all Investments;

(e)no later than the 90^th day following the end of any particular

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Fiscal Year, a report of aged receivables for the preceding twelve (12) month period and unaudited financial statements; and

(f)such other reports and information as reasonably requested by any Member from time to time;

(iii)on an annual basis, no later than the 60^th day following the end of each Fiscal Year, (x) annual financial statements for the Company and its Subsidiaries for such Fiscal Year, prepared in accordance with generally accepted accounting principles consistently applied, which shall be audited by the Company’s independent accountants (whom the Company shall retain), and (ii) Form K-1s and related tax disclosures (including each Member’s  share of any “unrelated business taxable income” (“UBTI”) generated by the Company); provided, if adjustments are identified during the preparation of the annual audited financial statements which would impact amounts or disclosures provided on Forms K-1 and related tax disclosures delivered pursuant to this Section, the Company shall promptly notify Members and provide revised Forms K-1 and related tax disclosures no later than the 90^th day following the end of each Fiscal Year; and

(iv)estimated current taxable income, deduction, gain, loss or credit within 30 days following the end of March 31 and September 30 of each Fiscal Year.

(B)The Administrative Member shall be the Tax Matters Member (“TMM”) and shall prepare, or cause to be prepared, all tax returns required of the Company at the Company’s expense.  The TMM shall promptly take such actions as may be necessary to cause each Member to become a “notice Member” within the meaning of Section 6231(a)(8) of the Code.  The TMM shall furnish promptly to the Members a copy of all notices or other written communications received by the TMM from the IRS relating to the Company (except such notices or communications as are sent directly to the Members by the IRS).  The TMM shall keep the Members informed of all matters which may come to its attention in its capacity as TMM by giving the Members Notice thereof within fifteen (15) days after the TMM becomes informed of any such matter or within such shorter period as may be required by the appropriate statutory or regulatory provisions.  The TMM shall give the other Members prompt Notice upon receipt of advice that the IRS or any other taxing authority intends to examine any Company tax return or the books and records of the Company.  The TMM shall provide the Members with a reasonable opportunity to consult with the TMM regarding the course and conduct of all material matters that are the subject of or relating to or potentially resulting in an adjustment of Company items and the TMM shall obtain the Members’ written consent prior to providing correspondence or other information to the IRS or any taxing authority.

The TMM shall be the “partnership representative” under Section 6223 of the Code as in effect pursuant to the Bipartisan Budget Act of 2015, P.L. 114-74 (the “Budget Act”), and the TMM shall take any and all action required under the Code or Treasury Regulations, as in effect from time to time, to designate itself as the “partnership representative.” No election shall be made to apply the provisions of the Budget Act to any taxable year of the Company beginning prior to January 1, 2018 without Required Approval.  As provided in Section 7.1(D)(xxv), actions taken by the TMM on behalf of the Company, including without limitation (i) any election pursuant

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to Section 6221(b) of the Code (as modified by the Budget Act) that the provisions of Subchapter C of Chapter 63 of the Code (as modified by the Budget Act) not apply to the Company, or (ii) any election to use the alternative procedure to payment of imputed underpayment described in Section 6226 of the Code (as modified by the Budget Act), shall be subject to Required Approval.  The TMM, as partnership representative, shall succeed to all of the duties and obligations of the TMM with respect to notices to partners that existed prior to the effective date of the Budget Act, subject to any limitations contained herein, and shall have all of the powers and responsibilities of the TMM as otherwise set forth in this Agreement to the extent permitted under the Code (as modified by the Budget Act) and applicable Regulations promulgated thereunder, subject to the immediately preceding sentence and Section 7.1(D).

If any imputed underpayment (including associated interest, penalties, or additions to tax) is required to be paid by the Company pursuant to Section 6225 of the Code (as modified by the Budget Act) with respect to income, losses, deductions or credits allocable to a Member or former Member, such Member or former Member (and, in the case of a former Member, its transferee) shall promptly reimburse the Company therefor. Any amount due from a Member or a former Member to the Company pursuant to the preceding sentence shall bear interest at the “prime rate” (as specified in The Wall Street Journal, from time to time) plus 3% from the time of payment by the Company of the tax or imputed underpayment to the time of payment by the Member or former Member, and the Company may offset such amounts against distributions or other amounts due from the Company to such Member. The obligations of a Member pursuant to this Section 8.2(B) shall continue even if such Member ceases to be a Member.

(C)If the Company incurs any costs related to any tax audit, declaration of any tax deficiency or any administrative proceeding or litigation involving any Company tax matter, the Company shall use all available Net Operating Cash Flow for such purpose, but no Member shall be required to advance or contribute funds to the Company for such purpose.

Section 8.3.Bank Accounts.  The Members shall deposit or cause the Company to deposit all cash balances derived from the business of the Company into one or more bank accounts established in the name of the Company (each a “Bank Account”).  In no event shall any Bank Account be co-mingled with any accounts of any Member, Affiliate of a Member or other Person.  Each Bank Account shall be in such depository institution under such arrangements as the Members may reasonably determine by Required Approval.  Any investment of funds shall be made in the name of the Company.  Through the use of signature cards, authorized representatives of the Members and the Company shall have access to all Bank Accounts and the contents thereof for Company purposes as allowed by this Agreement.  All payments or withdrawals of funds of amounts less than $10,000 from Company accounts may be made by any authorized person of the Administrative Member without the necessity of joinder by the other Member.  Notwithstanding anything in this Agreement to the contrary, no payments from a Bank Account may be made to, and no withdrawals from a Bank Account made by, any Member or its Affiliate or employee of such Member unless specifically provided for in this Agreement or the Annual Budget.  

ARTICLE IX - TRANSFERS OF INTERESTS

Section 9.1.Restrictions on Transfers.  No Member may Transfer all or any part of its Interest to any Person other than to an Affiliate of such Member, provided, that, in the case of any

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Transfer of all or any part of a Member’s Interest to an Affiliate of such transferring Member, if, following such Transfer, at any time such Affiliate transferee ceases to remain an Affiliate of the transferring Member, then at such time, the Interest held by such Affiliate transferee shall automatically revert to and transfer back to the transferring Member.

Section 9.2.Buy-Sell.

(A)At any time upon the occurrence and continuation of any dispute among the Members arising out of or relating to a matter described in Section 7.1(D)(iii), Section 7.1(D)(iv), Section 7.1(D)(viii), Section 7.1(D)(xiii), Section 7.1(D)(xiv), Section 7.1(D)(xv), Section 7.1(D)(xxiii), Section 7.1(D)(xxiv) and/or Section 7.1(D)(xxv) (and, for the voidance of doubt, expressly excluding any decision related to the making of a specific Investment), either MEC or Fundamental may give Notice to the other that a deadlock exists.  The Members shall meet as soon as practicable to resolve such deadlock.  If the Members are unable to resolve the deadlock at a meeting, or no meeting occurs within thirty (30) days of the date of the deadlock Notice, either Member (the “Initiating Member”) may within thirty (30) days of the meeting, or if no meeting occurs, within sixty (60) days after the deadlock Notice, give to the other such Member (the “Other Member”) an irrevocable written notice (the “Termination Notice”) setting forth the Initiating Member’s proposed liquidation value of the Company (the “Liquidation Value”) and an offer to either (x) sell the Initiating Member’s Interest to the Other Member at a price equal to the Liquidation Value multiplied by the Initiating Member’s Percentage Interest, or (y) purchase the Interest of the Other Member at a price equal to the Liquidation Value multiplied by the Other Member’s Percentage Interest (in each case, the “Purchase Price”).  Such Termination Notice shall be accompanied by an earnest money deposit in an amount equal to 1% of the Purchase Price (said amount being hereinafter called the “Initiating Member’s Deposit”).

(B)The Other Member shall, on or before the date that is thirty (30) days after the date of receipt of the Termination Notice, either accept the offer to sell the Other Member’s Interest to the Initiating Member, or accept the offer of the Initiating Member to sell the Initiating Member’s Interest to the Other Member.  If the Other Member elects to accept the Initiating Member’s offer to sell the Initiating Member’s Interest to the Other Member, its notice of such election shall be accompanied by (i) the return of the Initiating Member’s Deposit and (ii) its own earnest money deposit in an amount equal to 1% of the Purchase Price (said amount, together with any interest earned thereon, being hereinafter called the “Other Member’s Deposit”).   If the Other Member fails to respond to the Termination Notice within such thirty (30) day period, the failure to respond shall be deemed the Other Member’s election to accept the offer of the Initiating Member to purchase the Interest of the Other Member in accordance with the Termination Notice.

(C)The base consideration (as adjusted pursuant to this Section 9.2(C)) for the selling Member’s Interest being acquired from the purchasing Member will be a total amount equal to:

(i)the Purchase Price; minus

(ii)the Initiating Member’s Deposit or the Other Member’s Deposit, as the case may be.

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The amount determined in the preceding sentence shall be adjusted based upon a proration of any accrued income or expense and any distributions under Section 9.2(G), all without double counting (the “Total Purchase Price”).

(D)The closing of the purchase and sale of a Member’s Interest pursuant to this Section 9.2 (the “Buy-Sell Closing”) shall occur on the date which is not later than sixty (60) days after the Other Member’s election or deemed election pursuant to Section 9.2(B), or at such other time as may be otherwise agreed to in writing by the Other Member and the Initiating Member (such date, the “Closing Date”), provided that the required time for closing hereunder shall be subject to extension for any applicable governmental approvals or waiting periods (e.g., HSR Act filings).  The Buy-Sell Closing shall occur at the office of the Company’s counsel, unless otherwise agreed by the Members.  In connection with the Buy-Sell Closing, each of the purchasing Member and the selling Member shall execute an instrument of assignment of Interests (the “Assignment Agreement”), which shall (i) transfer and assign the entirety of the selling Member’s Interest to the purchasing Member, free and clear of all liens and encumbrances thereon, with the intent that the purchasing Member succeed to all of selling Member’s rights, titles and interests in the Company on and as of the Closing Date; (ii) contain (1) the resignation of the selling Member as a Member in the Company, (2) a full release of the Company and all of its Members by the selling Member of any and all claims, known and unknown, that the selling Member has or may have against the Company and its Members with respect to the Interest then being sold, other than rights to indemnification and claims arising as part of the Buy-Sell Closing, and (3) a full release of the selling Member by the Company and its Members of any and all claims, known and unknown, that the Company and/or any Member has or may have against the selling Member with respect to the Interest then being sold, other than rights to indemnification and claims arising as part of the Buy-Sell Closing; and (iii) include representations and warranties by the selling Member that (1) the selling Member is the sole legal and equitable owner of the entirety of the Interest then being sold, (2) except for the purchasing Member, the selling Member is not aware of any Person which has any right, title or interest in or to any of the Interest then being sold, (3) there are no liens, encumbrances or other restrictions on the transfer of, or potential claims to or against, the Interest then being sold except as set forth in this Agreement, and (4) the selling Member has the full legal power, authority and right to execute and deliver, and to cause the selling Member to perform its legal obligations under, the Assignment Agreement, and the selling Member’s performance thereunder and the transactions contemplated thereby have been duly authorized by all requisite action on the part of the selling Member and its Affiliates.

(E)On the Closing Date, (i) each of the purchasing Member and the selling Member shall deliver to the other Member an executed counterpart of the Assignment Agreement and (ii) the purchasing Member shall deliver to the selling Member the Total Purchase Price by wire transfer of immediately available funds to an account which is designated by the selling Member.  Closing costs and all other charges involved in the Buy-Sell Closing (except for attorneys’ fees (each party paying their own)) shall be prorated between the Members pro rata in accordance with the Percentage Interests of the Members.  Stamp, recording, transfer or similar taxes and title insurance costs arising in connection with the sale of the Interest, if any, shall be paid fifty percent (50%) by the selling Member and fifty percent (50%) by the purchasing Member.  The purchasing Member shall pay all applicable loan assumption fees.  The Members will share

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equally in any applicable lender review fees and lender legal costs related to the sale of a Member’s Interest pursuant to this Section 9.2.

(F)Each Member hereby irrevocably constitutes and appoints the other Member as such Member’s true and lawful attorney-in-fact, with full power of substitution, in its name, place and stead, to make, execute, sign, acknowledge, verify, deliver, record and file, on its behalf, any instruments, documents or certificates, including without limitation, the Assignment Agreement, necessary to effectuate the purchase and sale of such Member’s Interest pursuant to this Section 9.2.  Each Member is fully aware that the other Member will rely on the effectiveness of this special power-of-attorney (the “Power-of-Attorney”) to effectuate the Buy-Sell Closing in the event of the non-performance of either Member.  This Power-of-Attorney is a special power-of-attorney and is coupled with an interest.

(G)The Members (including the selling Member) shall be entitled to any distributions of Net Operating Cash Flow and Net Cash Flow from Capital Transactions from the Company in accordance with Section 6.1 following the giving of the Termination Notice pursuant to Section 9.2 and until the Buy-Sell Closing.  The purchasing Member shall receive all distributions of Net Operating Cash Flow and Net Cash Flow from Capital Transactions attributable to the Interest which it purchased after the Closing Date.

(H)Notwithstanding anything to the contrary set forth herein, if the SCL/SPL Fundamental Member or the SCL/SPL Non-Fundamental Member delivers a “Termination Notice” in accordance with Section 9.2(A) of the SCL Operating Agreement or in accordance with Section 9.2(A) of the SPL Operating Agreement, then Fundamental or MEC, respectively, may, and shall, deliver a Termination Notice under Section 9.2(A) hereof at the same time (accompanied by the Initiating Member’s Deposit required hereunder).

Section 9.3.Further Restrictions on Transfer.  In addition to the other requirements of this Article IX, no Transfer may be made by a Member (i) to the extent such transfer would violate applicable securities laws, or cause the Company to lose its status as a partnership for federal income tax purposes or cause a termination of the Company for federal income tax purposes and/or (ii) if such Transfer would subject the Company to the registration requirements of the U.S. Investment Company Act of 1940, as amended or otherwise have a material adverse effect on the Company as a result of regulatory restrictions imposed by any governmental authority.

Section 9.4.Effect of Transfer.

(A)Unless otherwise agreed, any permitted Transfer of all or any portion of a Member’s Interest in the Company will take effect on the first (1^st) day of the month after all of the conditions of this Article IX have been satisfied.  Any transferee of an Interest in the Company shall take subject to the restrictions on Transfer imposed by this Agreement.

(B)No involuntary Transfer and no Transfer in violation of this Agreement shall be recognized by the Company, unless otherwise required by applicable law, and then only to the minimum extent required by applicable law.  Without limiting the generality of the

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foregoing, the transferee of such a Transfer shall have no right to participate in the management of the business and affairs of the Company or to become a Member.

Section 9.5.Additional or Substitute Members.  A transferee shall have the right to become an additional or Substitute Member only if (i) the requirements of this Article IX are met, including Required Approval (other than with respect to transfers to Affiliates of such transferring Member), (ii) such Person executes an instrument of transfer satisfactory to the Members accepting and adopting the terms and provisions of this Agreement, and (iii) such Person pays any reasonable expenses incurred by the Company in connection with such Person’s admission as a Member.

Section 9.6.Representations of Members.  Each Member (including each additional or Substitute Member in connection with its admission as a Member) severally represents and warrants to the Company and other Member(s), as to itself, as of the date hereof (or the date of its admission) as follows:

(A)Such Member is acquiring its Interest for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and, except as contemplated by this Agreement such Member has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

(B)Such Member has made its own independent decisions to enter into this Agreement and the transaction contemplated herein and as to whether the transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary.

(C)Such Member is not relying on any communication (written or oral) of the other Member as investment advice or as a recommendation to enter into this Agreement, it being understood that information and explanations related to the terms and conditions of this Agreement will not be considered investment advice or a recommendation to enter into this Agreement.  No communication (written or oral) received from the other Member will be deemed to be an assurance or guarantee as to the expected results of this Agreement.

(D)Such Member is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of entering into this Agreement, and it is capable of assuming, and assumes, such risks.

(E)Such Member has conducted its own inquiry concerning the Company, its business and its personnel as such Member has deemed appropriate, and the Company has made available to such Member any and all written information which it has requested and has answered to such Member’s satisfaction all inquiries made by such Member.

(F)Such Member has such knowledge and experience in financial and business matters so as to enable it to utilize the information made available to it in order to evaluate the merits and risks of an investment in the Company and to make an informed investment decision

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with respect thereto.

(G)Such Member can afford a complete loss of its investment in the Interest and can afford to hold the investment in such Interest for an indefinite period of time, and the Member’s investment in the Interest is consistent with the investment purposes and objectives and cash flow requirements of the Member and will not adversely affect the Member’s overall need for diversification and liquidity.

(H)Such Member meets all suitability standards imposed on it by applicable law and is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.

(I)This Agreement has been negotiated as an arms-length between the Members, and no agency relationship exists between or among such parties.

Section 9.7.  Non-Solicitation.  Each Member shall not solicit, for Competing Investments, developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company, for a period of:  (A) one (1) year from the SCL/SPL Non-Solicit Trigger Event for developer clients or prospective developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company, in each case, within the one (1) year period prior to the SCL/SPL Non-Solicit Trigger Event; or (B) six (6) months from the SCL/SPL Non-Solicit Trigger Event for all other developer clients sourced by the other Member or Members who closed a loan or executed a term sheet with the Company.  Each Member shall not solicit (other than by means of employment advertisements to the general public) employees of the other for a period of two years subsequent to the later of (A) the dissolution of the Company and complete liquidation of Company Assets pursuant to Section 10.2 or (B) the closing of the purchase and sale of an Interest pursuant to Section 9.2.

ARTICLE X - DISSOLUTION AND LIQUIDATION

Section 10.1.Term and Dissolution.

(A)The Company shall be dissolved, wound up and terminated as provided herein upon the first to occur of the following:

(i)An election to dissolve the Company is made in writing by Required Approval; or

(ii)Notice to dissolve the Company is given by either Member to the other at any time following the date that is 18 months after the end of the Investment Period;

provided, that any dissolution described in Section 10.1(A)(ii) shall be effective ninety (90) days following the delivery of the Notice described therein.  Except as expressly provided herein or as otherwise required by applicable Delaware law, the Members shall have no power to dissolve the Company.

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(B)In the event of the dissolution of the Company for any reason, the Members or a liquidating agent appointed jointly by the Members (the Members, in such capacity, or such jointly appointed liquidating agent, as the case may be, the “Liquidator”) shall commence to wind up the affairs of the Company and to liquidate the Company Assets (it being understood and agreed that during such liquidation process, the relative managements rights and obligations of the Members as set forth in Section 7.1 hereof shall continue to apply); provided, however, that the liquidation shall be deferred until the maturity of all of the Investments, except to the extent (i) provided by the Act or (ii) the Members determine otherwise by Required Approval.  Notwithstanding anything in this Section 10.1(B) to the contrary and for the avoidance of doubt, the Members shall continue to share all income, losses and distributions during the period of dissolution and liquidation in accordance with Article VI.

(C)The Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any Company Assets.

Section 10.2.Liquidation of Company Assets.

(A)Once the dissolution process commences, (i) the Company will continue to close and fund Investments for which the Company issued a binding, written commitment on or before the date of the election to dissolve pursuant to Section 10.1(A)(i) or the date of the notice to dissolve is given pursuant to Section 10.1(A)(ii), as the case may be, (ii) the Company will not commit to any new Investments, (iii) the Company will continue to operate until its last Investment is redeemed or sold, and (iv) the exclusivity provisions of Section 7.3 requiring each Member to bring all investment opportunities to the Company will terminate.

(B)The Liquidator shall, subject to Section 10.1(B). as soon as practicable following the event giving rise to the dissolution, winding up and termination of the Company, wind up with the affairs of the Company and sell and/or distribute the Company Assets.  The Company Assets shall be applied in the following order of priority:

(i)first, to pay the costs and expenses of the winding up, liquidation and termination of the Company;

(ii)second, to creditors of the Company, in the order of priority provided by law, including fees and reimbursements payable to the Members or their Affiliates, but not including those liabilities (other than liabilities to the Members for any expenses of the Company paid by the Members or their Affiliates, to the extent the Members are entitled to reimbursement hereunder) to the Members in their capacity as Members;

(iii)third, to establish reserves reasonably adequate to meet any and all contingent or unforeseen liabilities or obligations of the Company; provided, that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided;

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(iv)fourth, to the Members for the principal and accrued but unpaid interest outstanding on any cash loans (other than Default Loans), if any, made by them to the Company; and

(v)fifth, the remainder to the Members in accordance with Section 6.1(B).

If assets are to be distributed in kind, the Members’ Capital Accounts shall be appropriately adjusted, in accordance with Section 5.6, before any such distribution to reflect any Net Income or Net Loss that would have been allocated if the property distributed in kind had been sold for its fair market value (net of liabilities) by the Company prior to dissolution.

(C)Notwithstanding anything else in this Agreement to the contrary, upon liquidation of a Member’s Interest in the Company (whether or not in connection with a liquidation of the Company), no Member shall have an obligation to contribute additional capital to the Company in order to restore a deficit balance in his Capital Account at any time, and such deficit shall not be considered as owed to the Company or any other Person for any purpose whatsoever.

(D)Within a reasonable time following the completion of the Company’s Asset, the Administrative Member shall cause to be prepared, and shall furnish to each Member, a statement setting forth the assets and liabilities of the Company as of the date of complete liquidation and each Member’s portion of distributions pursuant to Section 10.2(B).

(E)Each Member shall look solely to the Company’s assets for all distributions with respect to the Company and such Member’s Capital Contributions (including return thereof), and such Member’s share of profits or losses thereon, and shall have no recourse therefor (upon dissolution or otherwise) against the Members or any other Member.  No Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company.

(F)The Company shall terminate when all property owned by the Company shall have been dissolved of and the assets shall have been distributed as provided in Section 10.2(B).  Upon such termination, the Members shall cease to be Members of the Company and the Members shall then cause to be executed and filed a Certificate of Cancellation of the Company.

ARTICLE XI - MISCELLANEOUS PROVISIONS

Section 11.1.Title to Property.  All property owned by the Company, whether real or personal, tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually, shall have any ownership of such property.

Section 11.2.Applicable Law.  This Agreement, and the application or interpretation thereof, shall be governed exclusively by its terms and by the laws of the State of Delaware applied without regard to principles of conflicts of law.

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Section 11.3.Binding Agreement.  This Agreement shall be binding upon the parties hereto, and their respective permitted successors and assigns.

Section 11.4.Waiver of Partition.  Each of the parties hereto irrevocably waives during the term of the Company any right that it may have to maintain any action for partition with respect to any property of the Company.

Section 11.5.Counterparts and Effectiveness.  This Agreement may be executed in several counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the original or the same counterpart.  Any such counterpart shall be admissible into evidence as an original hereof against the Person who executed it.  The execution and delivery of this Agreement by electronic means (including facsimile and electronic mail) shall be sufficient for all purposes and shall be binding upon any Person who so executes.

Section 11.6.Publicity.  Without the approval of all other Members, no Member shall, at any time during the term of the Company and thereafter, whether or not at the time a Member of the Company, (A) issue any press release or advertisement or take any similar action concerning the Company’s business or affairs which refers to the other Members, (B) publicize detailed financial information concerning the Company which refers to the other Members, or (C) disclose the Company’s affairs or the terms and provisions of this Agreement or any other agreement to which the Company or an Affiliate is a party.  Notwithstanding the foregoing, the Members may each disclose such information (1) to their respective Affiliates, and to the respective employees, advisors, agents and consultants of the Members and their respective Affiliates, (2) to actual or prospective lenders to, or actual or prospective investors in, a Member or any Affiliate of a Member, (3) to actual or prospective purchasers (direct or indirect) of such Member’s Interest, and (4) as may be required by law (including regulatory compliance) or to enforce their rights hereunder, provided, that in each case described in clauses (1), (2) and (3), such Persons have agreed to abide by the terms of this Section 11.6 or have otherwise entered into a contract with restrictions on disclosure substantially the same (and not less than one year in duration) as the terms of this Section 11.6 (or in the case of advisors, agents and consultants, are otherwise bound by professional or legal obligations of confidentiality).  Notwithstanding anything to the contrary, the Members may disclose the tax treatment and tax structure of the transaction unless required to be kept confidential to the extent necessary to comply with any applicable securities laws.  The preceding sentence is intended to cause the transaction not to be treated as having been offered under conditions of confidentiality for purposes of Treasury Regulation Sections 1.6011-4(b)(3) and 301.6111-2(a)(2)(ii) (or any successor provision) of the Regulations and shall be construed in a manner consistent with such purpose.  Further notwithstanding the foregoing, a Member who issues any press release or advertisement or takes any similar action concerning the Company shall refer to the other Members in such release if so requested by said other Members.

Section 11.7.Entire Agreement.  This Agreement (and all Schedules and Exhibits hereto) contains the entire understanding among the parties hereto and supersedes all prior written or oral agreements among them respecting the within subject matter, unless otherwise provided herein.  There are no representations, agreements, arrangements or understandings, oral or written, among the Members hereto relating to the subject matter of this Agreement which are not fully

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expressed herein and in said Exhibits.  For the avoidance of doubt, this Agreement constitutes the “SDL Operating Agreement”, and the execution and delivery hereof constitutes the “consummation of SDL”,  within the meaning of, and for all purposes of, Section 9(m) of the SCL Ancillary Agreement (as such term is defined in the SCL Operating Agreement).

[signatures appear on following page]

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IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.

[FUNDAMENTAL II]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Authorized Signatory
[FUNDAMENTAL III]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence L. Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Authorized Signatory
MMA ENERGY CAPITAL, LLC
By:	/s/ Gary A. Mentesana
	Name:	Gary A. Mentesana
	Title:	Executive Vice President

[Signature Page to SDL LLC Agreement]

EX-10.6

‌Exhibit 10.6

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed. In addition, portions of the exhibit have been omitted.

SOLAR DEVELOPMENT LENDING, LLC

First AMENDMENT to
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

This FIRST AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Agreement”) of Solar Development Lending, LLC, a Delaware limited liability company (the “Company”), is made and entered into as of January 8, 2018, by and among (i) MMA Energy Capital, LLC, a Maryland limited liability company (“MEC”), (ii) Hunt Investment Management, LLC, a Delaware limited liability company (“Hunt”), (iii) [Affiliate of Fundamental Advisors, LP], a Delaware limited liability company (“Fundamental Intermediate”), and (iv) solely for the purpose of Section 3 hereof, [Affiliates of Fundamental Advisors, LP].

Whereas, the Members are party to that certain Operating Agreement of the Company, dated as of November 21, 2016 (as heretofore amended, supplemented or otherwise modified (including without limitation pursuant to that certain Agreement Regarding CCR Sunshare and Novel MN Investments dated as of September 21, 2017 (the “CCR Sunshare/Novel MN Letter Agreement”) and all of the Prior Letter Agreements (as defined in the CCR Sunshare/Novel MN Letter Agreement)), the “Existing Operating Agreement”), under which the Administrative Member is a Member of the Company;

Whereas, to accommodate MEC, the Members desire to amend the Existing Operating Agreement to reflect certain matters with respect to the creation, appointment, rights and duties of an “Administrative Member” of the Company separate and distinct from either Member and which does not make and is not required to make capital contributions to the Company and does not acquire a limited liability company interest in the Company;

Whereas, to accommodate MEC, the Members desire to appoint Hunt as Administrative Member of the Company;

Whereas, Section 7.1(D)(xix) of the Existing Operating Agreement permits amendment only with the affirmative written consent of the Members; and

Whereas, capitalized terms used in this Agreement and not otherwise defined shall have the meanings ascribed to such terms in the Existing Operating Agreement.

Now, Therefore, in consideration of the mutual agreements, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Amendments to Existing Operating Agreement.  Notwithstanding anything to the contrary contained in the Existing Operating Agreement, the Members hereby consent to and approve (i) the Administrative Member being a Person separate and distinct from either Member, having the rights and duties set forth below and in the Existing Operating

Agreement, and (ii) the substitution of Hunt for MEC as the Administrative Member.  Notwithstanding anything to the contrary contained in the Existing Operating Agreement:

(a)except as otherwise specified in Sections 1(c) and 1(e) of this Agreement, each reference to “Administrative Member” in the Existing Operating Agreement shall refer to the Administrative Member having the rights and obligations set forth herein and/or in the Existing Operating Agreement for the Administrative Member but not the rights or obligations of a “Member” (and references in the Existing Operating Agreement to the “Administrative Member” shall refer only to the Administrative Member and not to any Member), and each reference to “Member” in the Existing Operating Agreement shall refer to a Member having the rights and obligations set forth herein and in the Existing Operating Agreement for a Member but not the rights or obligations of the Administrative Member (and references in the Existing Operating Agreement to “Member” or “Members” shall refer only to a Member or the Members (as the case may be) and not to the Administrative Member);  

(b)for the avoidance of doubt, the Members acknowledge and agree that the Administrative Member shall constitute a member of the Company (but not (except as otherwise specified in Sections 1(c) and 1(e) of this Agreement) a “Member”), but shall not have a Capital Account, shall have no Interest, shall have no obligation to fund Capital Contributions under Article V of the Existing Operating Agreement and shall have no right to and shall receive no distributions under Article VI and/or Article X of the Existing Operating Agreement;

(c)the Administrative Member shall be an Indemnified Party for purposes of Section 7.2 of the Existing Operating Agreement and shall be considered a “Member” for purposes of (i) the definition of the term “Transfer”, (ii) Sections 2.2(F), 5.2(B) (excluding any requirement to make Capital Contributions, even if by Required Approval), 5.2(C), 5.5, 5.6, 7.1(D)(xxix), 7.1(D)(xxxi), 7.2(B), 7.2(E), 7.2(F), 7.3(D), 7.4(B), 8.3, 9.7, 10.2(B)(ii) and 10.2(F), and Article XI, of, and paragraphs 2 and 4 of Exhibit C to, the Existing Operating Agreement, and (iii) Section 7.3(A) of the Existing Agreement (but subject in any event to Section 1(d) of this Agreement), clause (i) of the proviso to the first sentence of Section 7.3(B) of the Existing Operating Agreement (but only if Fundamental is the Non-Funding Member), clause (ii) of the proviso to the first sentence of Section 7.3(B) of the Existing Operating Agreement (and “MEC” shall mean MEC and/or the Administrative Member both in said clause (ii) and in the last sentence of said Section 7.3(B) (except in the case of the reference to “MEC” in clause (II) of said last sentence)), and Section 7.3(C) of the Existing Agreement (subject in any event to Section 1(d) of this Agreement, and provided that the second sentence of said Section 7(C) shall apply to Hunt as the Administrative Member only as if said second sentence read as follows:  “If investment opportunities are not required to be presented to the Company pursuant to Section 7.3(B), and/or Section 1(d) of that certain First Amendment to Limited Liability Company Operating Agreement (of the Company), or are rejected pursuant to Section 7.4(C), the presenting Member (unless such Member (or if such Member is the Administrative Member, MEC) failed to provide any approval of such Member (or if such Member is the Administrative Member, of MEC) required for the Company to undertake such investment opportunity) may choose to invest directly in such investment outside of the Company.”), provided, for the avoidance of doubt, that the term “Required Approval” in any event (including without limitation in the context of any references thereto in the provisions of the Existing Operating Agreement specified in clause (ii) or (iii) above) shall mean the

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affirmative written consent of the Members (i.e., excluding the Administrative Member) obtained in the manner provided in the Existing Operating Agreement;

(d) Section 7.3 of the Existing Operating Agreement is hereby amended to add a new subsection (F) thereto, reading in its entirety as follows:

“(F)Hunt hereby covenants to Fundamental that unless and until the occurrence of a Non-Solicit Trigger Event, Hunt shall, and shall cause its Affiliates to, present all Company Opportunities (regardless of whether they are also Competing Investments) for consideration exclusively first by SCL and then by the Company; provided however, that (x), subject to clause (y), neither Amber Infrastructure Group Holdings Limited, a private limited company registered in England and Wales and each of its controlled Affiliates other than Hunt and its controlled Affiliates (each individually, an “AI Person”) nor Hunt Financial Securities, LLC, a Delaware limited liability company, individually and not including any of its subsidiaries or Affiliates (“HFS”), shall be considered to constitute an Affiliate of MEC or Hunt for purposes of this Section 7.3(F), and (y) each of Hunt and MEC covenants that it shall not, and shall cause its Affiliates (excluding any AI Person and HFS) not to, (A) cause, direct or in any manner facilitate or otherwise assist any AI Person or HFS to pursue (or in pursuing) any Company Opportunity, or (B) without limiting the generality of clause (A), provide to any AI Person or HFS, or cause, direct or in any manner facilitate the provision to any AI Person or HFS, of any information relating to any Company Opportunity”;

(e)Section 9.1 of the Existing Operating Agreement is hereby amended to add the following sentence at the end thereof:  

“Notwithstanding anything to the contrary in the preceding sentence, the Administrative Member may not, and shall not, Transfer all or any part of its rights, powers, obligations or duties under this Agreement (even to an Affiliate) without Required Approval (and, without limitation of the foregoing, Section 9.3 hereof shall apply to the Administrative Member (as if it were a Member)).”;

(f)  the definition of the term “Administrative Member” in Section 2.1 of the Existing Operating Agreement is hereby amended to read in its entirety as follows:

“‘Administrative Member’ means Hunt or any successor or replacement Administrative Member appointed (i) at any time, by Required Approval, or (ii) at any time when a Change/Absence of Specified Control exists, by Fundamental (provided that during any period when Fundamental, or an Affiliate of Fundamental, is, pursuant to the exercise by Fundamental of its rights under this clause (ii), the Administrative Member, MEC, rather than Fundamental, shall constitute the “Reviewing Member” for purposes hereof).”;

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(g)Section 2.1 of the Existing Operating Agreement is hereby amended to add (in the appropriate place alphabetically) the following defined terms thereto (reading in their entirety as follows):

“Change/Absence of Specified Control” means:

(i)Hunt and/or its Affiliates at any time after March 12, 2018 failing or ceasing to collectively own, beneficially and of record, at least 75,000 Common Shares (such figure and reference to Common Shares to be appropriately adjusted in the event of any stock dividend, stock split, reclassification, recapitalization or other similar transaction with respect to the Common Shares (or substitute therefor or addition thereto pursuant to this parenthetical clause)) of MMA Capital Management, LLC, a Delaware limited liability company; or

(ii)(x) any of the individuals constituting the Key Asset Managers at any time failing or ceasing to be actively and meaningfully involved (directly or indirectly) on a day-to-day basis in the decision-making regarding (A) the conduct of the business and affairs of the Company or (B) without limiting the generality of (A), the investment underwriting, and other, activities specified in Section 7.4(A) hereof, or (y) the individuals constituting the Key Asset Managers failing to have the collective power, directly or indirectly, to manage and control, all ordinary course decision-making of the Administrative Member regarding, (A) the conduct of the business and affairs of the Company and (B) without limiting the generality of clause (A), the investment underwriting, and other, activities specified in Section 7.4(A) hereof.

“Hunt” means Hunt Investment Management, LLC, a Delaware limited liability company.

“Key Asset Managers” means Bob Hopper, Gary Mentesana and Megan Targarona Sophocles, as such group of individuals may be modified from time to time pursuant to a written request for such modification submitted by the Administrative Member and consented to in writing by Fundamental (such consent not to be unreasonably withheld).

(h)the phrase (in the second sentence of Section 7.1(D) of the Existing Operating Agreement) “by any Member” is hereby amended to read “by any Member, or the Administrative Member,”;

(i)Section 7.1(E) of the Existing Operating Agreement is hereby amended to add the following sentence at the end thereof:

“Further, for the avoidance of doubt, (i) the Person then serving as the Administrative Member automatically shall cease to constitute the Administrative Member (and automatically shall cease to be a member of

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the Company) upon the happening of any of the events specified in section 18-304 of the Act (as in effect on the date hereof), but no such event shall cause the dissolution of the Company, (ii) (x) the Person then serving as the Administrative Member automatically shall cease to constitute the Administrative Member (and automatically shall cease to be a member of the Company) upon the consummation of any Buy-Sell Closing, and (y) MEC shall procure that, in connection with the consummation of any Buy-Sell Closing, the Administrative Member (unless such Administrative Member was appointed solely by Fundamental) executes and delivers to Fundamental, at such Buy-Sell Closing, the same release (in favor of Fundamental and/or the Company) that MEC is required to execute and deliver, and (iii) the Administrative Member shall have no power or authority to dissolve the Company (or to seek the dissolution of the Company).”;

(j)the last sentence of Section 7.1(F)(i) of the Existing Operating Agreement is hereby amended to read in its entirety as follows:

“The Annual Budget shall be presented in the form of a budget of Hunt regarding the Company, SPL, SCL and REL with detailed allocations of certain expenses expected to be incurred directly by the Company, SPL, SCL and REL as well as the operating expenses of Hunt that are necessary for the Administrative Member to perform its duties under this Agreement, the REL Operating Agreement, the Management Agreement (as defined in the REL Operating Agreement), the SCL Operating Agreement and the SPL Operating Agreement, it being acknowledged and agreed that (i) Hunt's operating expenses will be paid directly by Hunt and reimbursed (for the avoidance of doubt, to the extent in respect of SDL, SCL or SPL) solely through the Administrative Member Cost Reimbursement Fee paid by the Company, REL, SCL and SPL pursuant to the allocation set forth in Section 7.5 hereof, and (ii) the only REL costs, or Hunt costs related to REL, that will be reflected in the Annual Budget as payable by the Company, SCL or SPL will be the Hunt costs related to REL that will be payable to REL through such Administrative Member Cost Reimbursement Fee, provided that none of this sentence will apply during any period when the Administrative Member is a Person appointed solely by Fundamental.”;

(k)The reference, in Section 7.1(F)(i) of the Existing Operating Agreement, to “Exhibit C” is hereby amended to refer instead to “Exhibit D”, and the reference, in Section 7.4(C) of the Existing Operating Agreement, to “Exhibit D” is hereby amended to refer instead to “Exhibit C”;

(l)A new final sentence of Section 7.5 is hereby added to the Existing Operating Agreement as follows:  “If at any time Hunt is removed as the Administrative Member hereunder by Fundamental (or pursuant to the last sentence of Section 7.1(E)), then, with effect from and after such removal, the Administrative

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Member Cost Reimbursement Fee shall be calculated as above in this Section 7.5 on a stand-alone basis for the Administrative Member of the Company only (including without limitation that (aa) the “Applicable Portion” thereafter shall be deemed to be 100%, (bb) all references in this Section 7.5 to the “SEC/REL/SDL/SPL Administrative Member” shall instead be deemed to refer solely to the “Administrative Member”, and (cc) all references in this Section 7.5 to the REL Operating Agreement, the SCL Operating Agreement and/or the SPL Operating Agreement shall be disregarded).”;  

(m)A new Section 8.4 is hereby added to the Existing Operating Agreement, reading in its entirety as follows:

“8.4.  Change/Absence of Specified Control Information.  Promptly upon request of Fundamental from time to time, MEC shall (i) certify in writing to Fundamental as to whether a Change/Absence of Specified Control has occurred or otherwise exists, and (ii) without limitation of clause (i), provide Fundamental specific information requested by Fundamental relevant to determining whether a Change/Absence of Specified Control has occurred or otherwise exists.”; and

(n)Section 9.2(A) of the Existing Operating Agreement is hereby amended by adding a new second sentence thereto reading in its entirety as follows:

“In addition to the foregoing, (i) at any time that Fundamental appoints an Administrative Member other than Hunt, MEC or any of their respective Affiliates upon the existence of a Change/Absence of Specified Control hereunder, MEC may give Notice to Fundamental that a deadlock exists, and (ii) if Fundamental at any time determines in good faith that Hunt has failed in any material respect to carry out its Primary Responsibilities in accordance with the terms of this Agreement or has otherwise materially breached its obligations under this Agreement, and (x) Fundamental notifies MEC of such determination and requests MEC to agree upon a replacement for Hunt as, and jointly to replace Hunt as, the Administrative Member and (z) Fundamental and MEC fail to agree on such joint replacement or MEC fails to join with Fundamental in replacing Hunt as Administrative Member, in each case within 30 days of such notice from Fundamental, then, at any time within 180 days thereafter, Fundamental may give notice to MEC that a deadlock exists.”;

(o)The existing second sentence of Section 9.2(A) of the Existing Operating Agreement (i.e., prior to giving effect to this Agreement) is hereby modified to replace the words “such deadlock” with the words “any deadlock declared to exist under either of the two preceding sentences”; and

(p)The Existing Operating Agreement is hereby amended to add a new Section 11.8 thereto, reading in its entirety as follows:

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“11.8  Amendment.  This Agreement or the Certificate may not be amended, modified or supplemented except by, but in any event (and any other term of this Agreement to the contrary notwithstanding) may be amended, modified or supplemented by, an instrument executed in writing by each of the Members (i.e., excluding the Administrative Member), provided that the consent of the Administrative Member shall be required for any amendment, modification or supplement of this Agreement directly modifying the rights, duties or obligations of the Administrative Member hereunder.”.

2.Execution by Administrative Member.  By its execution hereof, Hunt hereby agrees to be bound in all respects to the terms of (i) this Agreement and (ii) the Existing Operating Agreement, as amended and/or otherwise supplemented hereby, as Administrative Member as though a party thereto, and agrees that this Agreement shall be treated in all respects as if it were a counterpart signature page to the Existing Operating Agreement.  For the avoidance of doubt, all of the parties hereto (including without limitation Hunt) agree that any breach of this Agreement by any party hereto shall constitute a breach by such party of the Existing Operating Agreement (as amended and/or otherwise supplemented hereby) for all purposes thereof.

3.Fundamental Substitution.  Effective as of October 31, 2017, (i) 100% of Fundamental II’s Interests in the Company were transferred to Fundamental Intermediate (such transfer, the “Fundamental II Transfer”), and (ii) 100% of Fundamental III’s Interests in the Company were transferred to Fundamental Intermediate (such transfer, the “Fundamental III Transfer”), and MEC consented thereto.  For the avoidance of doubt, (x) each of the Fundamental II Transfer and the Fundamental III Transfer is hereby re-confirmed and re-approved in all respects by all of the Members (and the Administrative Member), and Fundamental II and Fundamental III, and (y) any term of the Existing Operating Agreement (or this Agreement) to the contrary notwithstanding (and without limiting the generality of clause (x)), Fundamental Intermediate is hereby confirmed to have been substituted for Fundamental II and Fundamental III as a member of the Company (and as a Member), with effect from and after October 31, 2017.  In furtherance of the foregoing, with effect from and after October 31, 2017, (x) Section 2.1 of the Existing Operating Agreement is hereby amended to:  (A) change the definition of “Fundamental” to read in its entirety as follows:  “‘Fundamental’ means [Affiliate of Fundamental Advisors, LP], a Delaware limited liability company, and includes any permitted assignees and/or any successors to any of the Interest held thereby, in each case for so long as such Person is a Member.”; and (B) delete the definitions of the terms “Fundamental II” and “Fundamental III”, and (y) Schedule A to the Existing Operating Agreement is hereby amended to read in its entirety as set forth in Annex A to this Agreement.

4.Miscellaneous.

(a)Except as specifically modified or supplemented herein, the Existing Operating Agreement shall remain in full force and effect.  If any conflict exists between the provisions in this Agreement and the Existing Operating Agreement, this Agreement shall control.  The Existing Operating Agreement, as amended and supplemented by this Agreement, constitutes the entire agreement of the parties hereto with respect to the subject matter of this Agreement, and contains all of the covenants and agreements of the parties hereto

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with respect thereto.  This Agreement may not be altered, changed or amended except by an instrument in writing signed by all parties hereto.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  All section headings of this Agreement are inserted solely as a matter of convenience and for reference, and are not a substantive part of this Agreement.  The recitals hereto are hereby incorporated by reference into and form an integral part of this Agreement.

(b)This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

(c)This Agreement may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(d)By their execution of this Agreement, the undersigned Members and the Administrative Member hereby confirm that they are duly authorized to execute this Agreement and any necessary requisite approval has been obtained with respect to this Agreement and all matters set forth herein.

(e)By its execution of this Agreement, MEC and Hunt each hereby represents and warrants to each of Fundamental II, Fundamental III and Fundamental Intermediate that (i) a true and correct copy of the Renewable Energy Lending, LLC Management Agreement dated as of November 7, 2016 by and among REL and MEC has been provided to Fundamental, (ii) as a result of the REL Management Assignment and REL Consent (each as defined below), if and when executed, Hunt will take the place of MEC as constituting the Person that, in relation to REL, is the equivalent of (x) the Administrative Member of the Company, (y) the Administrative Member (as such term is defined in the SPL Operating Agreement) of SPL, and (z) the Administrative Member (as such term is defined in the SCL Operating Agreement) of SCL, and (iii) as of the Specified Sections Effective Date, no Change/Absence of Specified Control (as such term is to be defined in the Existing Operating Agreement as to be amended, modified and supplemented hereby) shall exist.  

(f)Effectiveness.  Sections 1 and 2 hereof shall be effective upon (but only upon) the occurrence of each of the following prior to or on (but not after) January 31, 2018:  (i) (A) the execution and delivery by MEC and Hunt of that certain Assignment and Assumption Agreement in the form attached hereto as Exhibit A (the “REL Management Assignment”) and (B) the execution and delivery by REL and MEC, and acknowledgement for limited purposes by RDH, of that certain Irrevocable Consent to Assignment of Renewable Energy Lending, LLC Management Agreement in the form attached hereto as Exhibit B (the “REL Consent”); (ii) delivery to Fundamental Intermediate by MEC of a written certificate certifying to Fundamental Intermediate that (x) the REL Management Assignment has occurred, and (y) attached thereto is a true and correct copy of the REL Management Assignment (and attaching the same thereto);  (iii) delivery to Fundamental Intermediate by MEC of a written certificate certifying to Fundamental Intermediate that (1) each of the REL Consent, and the “Consent Effective Date” (as defined in the REL Consent), has occurred, and (2) attached thereto is a true and correct copy

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of the REL Consent (and attaching the same thereto); and (iv) delivery to Fundamental Intermediate by MEC of a written certificate certifying to Fundamental Intermediate that the representations and warranties set forth in Section 4(e) of this Agreement are true and correct as of the date of such certificate (and after giving effect to the REL Management Assignment and the REL Consent) (such effective date being the “Specified Sections Effective Date”).  For the avoidance of doubt, the remainder of this Agreement is effective immediately upon the execution and delivery hereof (regardless of whether Sections 1 and 2 hereof ever become effective).  For the further avoidance of doubt, nothing herein modifies or otherwise affects any of the terms of the CCR Sunshare/Novel MN Letter Agreement and/or any Prior Letter Agreement (as defined in the CCR Sunshare/Novel MN Letter Agreement), and (without limitation of the foregoing) in the event of any conflict between any of terms hereof (including without limitation any of the amendments to the Existing Operating Agreement set forth herein), on the one hand, and any of the terms of the CCR Sunshare/Novel MN Letter Agreement and/or any Prior Letter Agreement, on the other hand, the terms of the CCR Sunshare/Novel MN Letter Agreement and/or the relevant Prior Letter Agreement(s) shall prevail.  

[Signatures on the Following Page]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

MEMBERS:

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], Its Managing Member
	By:	[Affiliate of Fundamental Advisors, LP], its Managing Member
	By:	/s/Laurence Gottlieb
		Name:	Laurence Gottlieb
		Title:	Managing Member
MMA ENERGY CAPITAL, LLC
By:	/s/Michael L. Falcone
	Name:	Michael L. Falcone
	Title:	President

ADMINISTRATIVE MEMBER:

HUNT INVESTMENT MANAGEMENT, LLC
By:	/s/Kara E. Harchuck
	Name:	Kara E. Harchuck
	Title:	EVP / General Counsel

FORMER FUNDAMENTAL MEMBERS (SOLELY FOR THE PURPOSE OF SECTION 3 OF THE ABOVE AGREEMENT)

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Authorized Signatory
[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its general partner
By:	/s/Laurence L. Gottlieb
	Name:	Laurence L. Gottlieb
	Title:	Authorized Signatory

EX-10.7

Exhibit 10.7

Certain identified information has been excluded because it is not material and would be competitively harmful if disclosed.

SOLAR DEVELOPMENT LENDING, LLC

second AMENDMENT to
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

This SECOND AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Amendment”) of Solar Development Lending, LLC, a Delaware limited liability company (the “Company”), is made and entered into as of July 13, 2018, by and among Renewable Energy Lending, LLC, a Delaware limited liability company, [Affiliate of Fundamental Advisors, LP], LLC, a Delaware limited liability company, and Hunt Investment Management, LLC, a Delaware limited liability company, as administrative member;

Whereas, the Members are party to that certain Limited Liability Company Operating Agreement of the Company, dated as of November 21, 2016 (as heretofore amended, supplemented or otherwise modified to the date hereof, the “Existing Operating Agreement”);

Whereas, the Investment Period of the Company would end on July 15, 2018 in accordance with the terms of the Existing Operating Agreement;

Whereas, the Members desire to extend the Investment Period of the Company through July 15, 2023;

Whereas, Section 7.1(D)(xix) of the Existing Operating Agreement permits amendment only with the affirmative written consent of the Members; and

Whereas, capitalized terms used in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Existing Operating Agreement.

Now, Therefore, in consideration of the mutual agreements, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Amendments to Existing Operating Agreement.

(a)The definition of “Investment Period” in Section 2.1 of the Existing Operating Agreement is hereby amended by deleting the date “July 15, 2018” and replacing it with the date “July 15, 2023”.

(b)Section 7.4(E)(ii) of the Existing Operating Agreement is hereby amended by deleting the date “September 1, 2019” and replacing it with the date “September 1, 2024”.

(c)Exhibit B to the Existing Operating Agreement is hereby amended by deleting each reference to the date “September 1, 2019” and replacing it with the date “September 1, 2024”.

2.Miscellaneous.

(a)Except as specifically modified or supplemented herein, the Existing Operating Agreement shall remain in full force and effect.  If any conflict exists between the provisions in this Amendment and the Existing Operating Agreement, this Amendment shall control.  The Existing Operating Agreement, as amended and supplemented by this Amendment, constitutes the entire agreement of the parties hereto with respect to the subject matter of the Existing Operating Agreement and this Amendment, and contains all of the covenants and agreements of the parties with respect thereto.  This Amendment may not be altered, changed or amended except by an instrument in writing signed by all parties hereto.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  All section headings of this Amendment are inserted solely as a matter of convenience and for reference, and are not a substantive part of this Amendment.  The recitals hereto are hereby incorporated by reference into and form an integral part of this Amendment.

(b)This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State.

(c)This Amendment may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(d)By their execution of this Amendment, the undersigned Members and the Administrative Member hereby confirm that they are duly authorized to execute this Amendment and any necessary requisite approval has been obtained with respect to this Amendment and all matters set forth herein.

[Signatures on the Following Page]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

[AFFILIATE OF FUNDAMENTAL ADVISORS, LP]
By:	[Affiliate of Fundamental Advisors, LP], its managing member
	By:	[Affiliate of Fundamental Advisors, LP], its managing member
	By:	/s/Laurence Gottlieb
		Name:	Laurence Gottlieb
		Title:	Managing Member
RENEWABLE ENERGY LENDING, LLC
	By:	Hunt Investment Management, LLC, its administrative member
	By:	/s/Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Executive Vice President
HUNT INVESTMENT MANAGEMENT, LLC
	By:	/s/Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Executive Vice President

[Signature Page to Second Amendment to SDL Limited Liability Company Operating Agreement]

EX-31.1

Exhibit 31.1

MMA CAPITAL HOLDINGS, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Interim Chief Executive Officer

I, Gary A. Mentesana, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2020 of MMA Capital Holdings, Inc. (this “Report”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the periods for which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide, for the periods covered by this Report, reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2020

/s/ Gary A. Mentesana

Gary A. Mentesana 

Interim Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

MMA CAPITAL HOLDINGS, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Chief Financial Officer

I, David C. Bjarnason, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2020 of MMA Capital Holdings, Inc. (this “Report”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the periods for which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide, for the periods covered by this Report, reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or person performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2020

/s/ David C. Bjarnason

David C. Bjarnason 

Chief Financial Officer 

EX-32.1

Exhibit 32.1

MMA CAPITAL HOLDINGS, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of MMA Capital Holdings, Inc,, a Delaware corporation (the “Company”), on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary A. Mentesana, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2020

/s/ Gary A. Mentesana

Gary A. Mentesana

Interim Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to MMA Capital Holdings, Inc. and will be retained by MMA Capital Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

MMA CAPITAL HOLDINGS, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of MMA Capital Holdings, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David C. Bjarnason, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2020

/s/ David C. Bjarnason

David C. Bjarnason

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to MMA Capital Holdings, Inc. and will be retained by MMA Capital Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 02, 2020
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2020
Entity Registrant Name	MMA CAPITAL HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-11981
Entity Tax Identification Number	52-1449733
Entity Address, Address Line One	3600 O’Donnell Street, Suite 600
Entity Address, City or Town	Baltimore
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	21224
City Area Code	443
Local Phone Number	263-2900
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Central Index Key	0001003201
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020
Amendment Flag	false
Entity Common Stock, Shares Outstanding		5,706,366
Entity Shell Company	false
Common Shares
Title of 12(b) Security	Common Shares, no par value
Trading Symbol	MMAC
Security Exchange Name	NASDAQ
Common Stock Purchase Rights [Member]
Title of 12(b) Security	Common Stock Purchase Rights
Trading Symbol	MMAC
Security Exchange Name	NASDAQ

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 21,784	$ 8,555
Restricted cash	17,224	4,250
Investments in debt securities (includes $24,099 and $0 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)	30,305	31,365
Investments in partnerships (includes $364,001 and $296,855 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)	373,707	316,677
Deferred tax assets, net	56,156	57,711
Loans held for investment (includes $0 and $53,600 of related party loans at September 30, 2020 and December 31, 2019, respectively)	1,302	54,100
Other assets (includes $17,958 and $0 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)	21,951	12,984
Total assets	522,429	485,642
LIABILITIES AND EQUITY
Debt	238,381	201,816
Accounts payable and accrued expenses	3,772	2,527
Other liabilities	2,658	174
Total liabilities	244,811	204,517
Commitments and contingencies (see Note 10)
Preferred shares:
Preferred shares, no par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2020 and December 31, 2019
Common shareholders' equity:
Common shares, no par value, 50,000,000 shares are authorized (5,706,366 and 5,701,946 shares issued and outstanding and 109,015 and 103,069 non-employee directors' deferred shares issued at September 30, 2020 and December 31, 2019, respectively)	270,111	273,492
Accumulated other comprehensive income ("AOCI")	7,507	7,633
Total shareholders' equity	277,618	281,125
Total liabilities and equity	$ 522,429	$ 485,642

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Bonds available-for-sale, pledged as collateral	$ 24,099,000	$ 0
Available-for-sale Securities Pledged as Collateral	24,099,000	0
Investments in partnerships, used as collateral	364,001,000	296,855,000
Loans to a related party	0	53,600,000
Other assets pledged as collateral	$ 17,958,000	$ 0
Preferred shares, no par value	$ 0	$ 0
Preferred shares, shares authorized	5,000,000	5,000,000
Preferred shares, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0	$ 0
Common stock, authorized	50,000,000	50,000,000
Common shares, shares issued (in shares)	5,706,366	5,701,946
Common shares, shares outstanding (in shares)	5,706,366	5,701,946
Common shares, non-employee directors' and employee deferred shares (in shares)	109,015	103,069

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest income
Interest on bonds	$ 466	$ 481	$ 1,490	$ 3,106
Interest on loans and short-term investments	49	1,701	185	3,931
Total interest income	515	2,182	1,675	7,037
Asset related interest expense
Bond related debt	168		215	428
Non-bond related debt		51		169
Total interest expense	168	51	215	597
Net interest income	347	2,131	1,460	6,440
Non-interest income
Equity in income from unconsolidated funds and ventures	8,898	6,024	26,397	15,643
Net gains on bonds		2,156		26,420
Net losses on derivatives	(156)	(679)	(2,451)	(3,993)
Net loss on other assets	(214)	0	(415)	0
Net gains (losses) on loans and extinguishment of liabilities	11	0	22	(30)
Other income	67	80	69	112
Non-interest income	8,606	7,581	23,622	38,152
Other expenses
Interest expense	2,169	1,207	6,856	3,613
External management fees and reimbursable expenses	1,836	1,646	7,045	6,042
General and administrative	388	237	1,119	855
Professional fees	644	608	1,977	1,826
Impairment losses	0	0	8,972	0
Other expenses	(130)	412	864	482
Total other expenses	4,907	4,110	26,833	12,818
Net income (loss) from continuing operations before income taxes	4,046	5,602	(1,751)	31,774
Income tax expense	(1,110)	(26)	(1,879)	(89)
Net income (loss) from continuing operations	2,936	5,576	(3,630)	31,685
Net loss from discontinued operations, net of tax				(8)
Net income (loss)	$ 2,936	$ 5,576	$ (3,630)	$ 31,677
Basic and diluted income per common share:
Income (loss) from continuing operations	$ 0.51	$ 0.95	$ (0.63)	$ 5.38
Loss from discontinued operations
Income (loss) per common share	$ 0.51	$ 0.95	$ (0.63)	$ 5.38
Weighted-average common shares outstanding:
Basic and diluted	5,811	5,887	5,807	5,884

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 2,936	$ 5,576	$ (3,630)	$ 31,677
Bond related changes:
Net unrealized gains (losses)	272	961	(1,024)	997
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		(26,115)
Income tax (loss) gain	(75)		281
Net change in other comprehensive income (loss) due to bonds, net of taxes	197	(890)	(743)	(25,118)
Foreign currency translation adjustment	(99)	217	617	162
Other comprehensive income (loss)	98	(673)	(126)	(24,956)
Comprehensive income (loss)	$ 3,034	$ 4,903	$ (3,756)	$ 6,721

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Shares	AOCI	Total
Balance at Dec. 31, 2018	$ 175,213	$ 37,697	$ 212,910
Balance (in shares) at Dec. 31, 2018	5,882
Net income (loss)	$ 2,882		2,882
Other comprehensive income (loss)		(3,140)	(3,140)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 82		82
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	2
Balance at Mar. 31, 2019	$ 177,910	34,557	212,467
Balance (in shares) at Mar. 31, 2019	5,884
Balance at Dec. 31, 2018	$ 175,213	37,697	212,910
Balance (in shares) at Dec. 31, 2018	5,882
Net income (loss)			31,677
Balance at Sep. 30, 2019	$ 206,854	12,741	219,595
Balance (in shares) at Sep. 30, 2019	5,889
Cumulative Effect of New Accounting Principle in Period of Adoption	$ (267)		(267)
Balance at Mar. 31, 2019	$ 177,910	34,557	212,467
Balance (in shares) at Mar. 31, 2019	5,884
Net income (loss)	$ 23,219		23,219
Other comprehensive income (loss)		(21,143)	(21,143)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 83		83
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	3
Balance at Jun. 30, 2019	$ 201,212	13,414	214,626
Balance (in shares) at Jun. 30, 2019	5,887
Net income (loss)	$ 5,576		5,576
Other comprehensive income (loss)		(673)	(673)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 66		66
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	2
Balance at Sep. 30, 2019	$ 206,854	12,741	219,595
Balance (in shares) at Sep. 30, 2019	5,889
Balance at Dec. 31, 2019	$ 273,492	7,633	281,125
Balance (in shares) at Dec. 31, 2019	5,805
Net income (loss)	$ (3,058)		(3,058)
Other comprehensive income (loss)		(453)	(453)
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 96		96
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	3
Common share repurchases	$ (41)		(41)
Common share repurchases (in shares)	(1)
Balance at Mar. 31, 2020	$ 270,489	7,180	277,669
Balance (in shares) at Mar. 31, 2020	5,807
Balance at Dec. 31, 2019	$ 273,492	7,633	281,125
Balance (in shares) at Dec. 31, 2019	5,805
Net income (loss)			(3,630)
Balance at Sep. 30, 2020	$ 270,111	7,507	277,618
Balance (in shares) at Sep. 30, 2020	5,815
Balance at Mar. 31, 2020	$ 270,489	7,180	277,669
Balance (in shares) at Mar. 31, 2020	5,807
Net income (loss)	$ (3,508)		(3,508)
Other comprehensive income (loss)		229	229
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 97		97
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	4
Balance at Jun. 30, 2020	$ 267,078	7,409	274,487
Balance (in shares) at Jun. 30, 2020	5,811
Net income (loss)	$ 2,936		2,936
Other comprehensive income (loss)		98	98
Common shares (restricted and deferred) issued under employee and non-employee director share plans	$ 97		97
Common shares (restricted and deferred) issued under employee and non-employee director share plans (in shares)	4
Balance at Sep. 30, 2020	$ 270,111	$ 7,507	$ 277,618
Balance (in shares) at Sep. 30, 2020	5,815

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (3,630)	$ 31,677
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Provisions for credit losses and impairment	8,972	0
Net equity in income from investments in partnerships	(26,397)	(15,643)
Net gains on bonds	0	(26,420)
Net losses on derivatives	2,346	5,539
Net losses on loans, other assets and extinguishment of liabilities	393	30
Current and deferred federal income tax expense	1,789	110
Distributions received from investments in partnerships	24,706	11,317
Depreciation and amortization	430	(1,560)
Foreign currency losses	864	242
Stock-based compensation expense	290	230
Other, net	942	(279)
Net cash provided by operating activities	10,705	5,243
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments and sales proceeds received on bonds and loans held for investment (includes $53,600 and zero from a related party)	53,770	27,591
Advances on and originations of loans held for investment	(702)	(11,279)
Investments in partnerships and real estate	(130,206)	(168,971)
Capital distributions received from investments in partnerships	55,199	92,404
Net cash used in investing activities	(21,939)	(60,255)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing activity	112,385	45,000
Repayment of borrowings	(74,184)	(4,709)
Debt issuance costs	(723)	(2,205)
Repurchase of common shares	(41)
Net cash provided by financing activities	37,437	38,086
Net increase (decrease) in cash, cash equivalents and restricted cash	26,203	(16,926)
Cash, cash equivalents and restricted cash at beginning of period	12,805	33,878
Cash, cash equivalents and restricted cash at end of period	39,008	16,952
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	6,431	4,426
Income taxes paid	112	16
Non-cash investing and financing activities:
Unrealized losses included in other comprehensive income	(126)	(24,956)
Debt and liabilities extinguished through sales and collections on bonds and loans	0	37,606
Decrease in investments in debt securities and common shareholders' equity due to change in accounting principle	0	267
Increase in loans held for investment and decrease in investment in partnerships due to secured lending	0	8,392
Hunt Companies [Member]
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments and sales proceeds received on bonds and loans held for investment (includes $53,600 and zero from a related party)	$ 53,600	$ 0

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Reconciliation) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$ 21,784	$ 10,837
Restricted cash	17,224	6,115
Total cash, cash equivalents and restricted cash shown in statement of cash flows	$ 39,008	$ 16,952

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CONSOLIDATED STATEMENTs OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Principal payments and sales proceeds received on bonds and loans held for investment	$ 53,770	$ 27,591
Advances on and originations of loans held for investment	702	11,279
Hunt Companies [Member]
Principal payments and sales proceeds received on bonds and loans held for investment	$ 53,600	$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Note 1— Summary of Significant Accounting Policies

Organization

MMA Capital Holdings, Inc. focuses on infrastructure-related investments that generate positive environmental and social impacts and deliver attractive risk-adjusted total returns to our shareholders, with an emphasis on debt associated with infrastructure, including renewable energy projects. Unless the context otherwise requires, and when used in these Notes, the “Company,” “MMA,” “we,” “our” or “us” refers to MMA Capital Holdings, Inc. and its subsidiaries. We were originally organized as a Delaware limited liability company in 1996, converted to a Delaware corporation on January 1, 2019, and are externally managed by Hunt Investment Management, LLC (our “External Manager”), an affiliate of Hunt Companies, Inc. (Hunt Companies, Inc. and its affiliates are hereinafter referred to as “Hunt”).

Our current objective is to produce attractive risk adjusted returns by investing in the large, growing and fragmented renewable energy market in the United States (“U.S”). We believe that we are well positioned to take advantage of these and other investment opportunities because of our External Manager’s origination network built off of extensive relationships and credit expertise gathered through years of experience. We also seek to increase the Company’s return on equity by prudently deploying debt and recycling equity out of lower yielding investments that are unrelated to renewable energy and other infrastructure projects.

In addition to renewable energy investments, we continue to own a limited number of bond investments and real estate-related investments, and we continue to have subordinated debt with beneficial economic terms. Further, we have significant net operating loss carryforwards (“NOLs”) that may be used to offset future federal income tax obligations, a portion of which were reported as deferred tax assets (“DTAs”) in our Consolidated Balance Sheets at September 30, 2020 and December 31, 2019. Effective December 31, 2019, we no longer organize our assets and liabilities into discrete portfolios (in each Quarterly Report on Form 10-Q that was filed in 2019, assets and liabilities of the Company were allocated to one of two portfolios, “Energy Capital” and “Other Assets and Liabilities”).  

We operate as a single reporting segment.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Company evaluates subsequent events through the date of filing with the U.S. Securities and Exchange Commission (“SEC”).

Changes in Presentation

We have made certain reclassifications to prior year financial statements in order to enhance their comparability with current year financial statements.

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, commitments and contingencies, and revenues and expenses. Management made estimates in certain areas, including the determination of the Company’s valuation allowance established against its DTAs as well as in the fair value measurement of bonds and derivative instruments. Actual results could differ materially from these estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company as well as those entities in which the Company has a controlling financial interest, including wholly owned subsidiaries of the Company. All intercompany transactions and balances have been eliminated in consolidation. Equity investments in unconsolidated entities where the Company has the ability to exercise significant influence over the operations of the entity, but is not considered the primary beneficiary, are accounted for using the equity method of accounting.

Accounting Guidance

Adoption of Accounting Standards

Accounting for Financial Instruments

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This guidance amends the amortization period for certain callable debt securities held at a premium, shortening the period to the earliest call date. We adopted this new guidance on its effective date of January 1, 2019. Upon adoption of this guidance, the Company assessed that certain of our bond investments were being held at a premium resulting in a reduction in amortization periods used for interest income recognition. Accordingly, during the first quarter of 2019, the Company recognized a cumulative effect adjustment of $0.3 million charge to retained earnings.

Accounting for Income Taxes

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance permits companies to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) from AOCI to retained earnings and also requires new disclosures. We adopted this guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Stock Compensation

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This guidance expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. We adopted this new guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Fair Value Measurement

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This guidance eliminates certain disclosure requirements for fair value measurements, requires public entities to disclose certain new information and modifies some disclosure requirements. We adopted this guidance on its effective date of January 1, 2020. The adoption of this guidance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Rate Reform

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This guidance is elective and is provided for contract modifications that meet certain Codification topics and subtopics. The optional amendment of this new guidance is effective March 12, 2020 through December 31, 2022. We did not make any elections provided by this new guidance and, therefore, the

adoption of these accounting principles did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Issued Accounting Standards Not Yet Adopted

Accounting for Financial Instruments – Credit Losses

In November 2019, the FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates.” This guidance gives private companies, not-for-profit organizations, and certain smaller reporting companies additional time to implement FASB standards on credit losses, leases, derivatives and hedging and intangible-goodwill and other (ASC 350). Because the Company is a smaller reporting company the following “credit loss” ASUs will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Improvements.” This guidance is intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. This guidance establishes an impairment methodology that reflects lifetime expected credit losses rather than incurred losses. This guidance requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This guidance is intended to clarify aspects of accounting for credit losses, hedging activities, and financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This guidance provides transition relief for entities adopting ASU 2016-13. This guidance allows entities to elect the fair value options on certain financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This guidance amends certain aspects of the FASB’s new credit losses standard, including an amendment requiring entities to include certain expected recoveries in the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In February 2020, the FASB issued ASU No. 2020-02, “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update).” This guidance updates certain SEC guidance in the Codification for the issuance of SEC Staff Accounting Bulletin 119 and effective date related to the leases standard. This new guidance is effective upon issuance on February 6, 2020. However, because the Company is a smaller reporting company the ASU will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of this new guidance on our consolidated financial statements.

Accounting for Financial Instruments – General

In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments.” This guidance amends certain topics including fair value option disclosures and credit losses. This guidance is effective upon issuance on March 9, 2020 for some topics and on January 1, 2023 for topics relating to credit loss. The adoption of this guidance that is effective upon issuance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows. For those aspects of the new guidance that

are not effective until January 1, 2023, we are evaluating the potential impact of the new guidance on our consolidated financial statements.

Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. We are evaluating the potential impact of the new guidance on our consolidated financial statements.

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INVESTMENTS IN DEBT SECURITIES

9 Months Ended

Sep. 30, 2020

INVESTMENTS IN DEBT SECURITIES [Abstract]

Investments in Debt Securities

Note 2—Investments in Debt Securities

At September 30, 2020 and December 31, 2019, the Company’s investments in debt securities consist of one subordinated multifamily tax-exempt mortgage revenue bond and one tax-exempt infrastructure bond. These investments are classified as available-for-sale for reporting purposes and are measured on a fair value basis in our Consolidated Balance Sheets.

Multifamily tax-exempt bonds are issued by state and local governments or their agencies or authorities to finance affordable multifamily rental housing. Generally, the only source of security on these bonds is a mortgage on the underlying property. The Company’s non-amortizing subordinated cash flow bond principal is due in full in November 2044.

The Company’s infrastructure bond financed the development of infrastructure for a mixed-use town center development in Spanish Fort, Alabama and is secured by incremental tax revenues generated from the development and its landowners (this investment is hereinafter referred to as our “Infrastructure Bond”). At September 30, 2020, the Company’s Infrastructure Bond amortizes on a scheduled basis and has a stated maturity date of December 2048.

The following tables provide information about the unpaid principal balance (“UPB”), amortized cost, gross unrealized gains and fair value (“FV”) associated with the Company’s investments in bonds that are classified as available-for-sale:

	At
	September 30, 2020
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,715	$	20,761	$	3,338	$	24,099		90%
Multifamily tax-exempt bond		4,000		—		6,206		6,206		155%
Total	$	30,715	$	20,761	$	9,544	$	30,305		99%

	At
	December 31, 2019
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,885	$	20,797	$	4,542	$	25,339	94%
Multifamily tax-exempt bond		4,000		—		6,026		6,026	151%
Total	$	30,885	$	20,797	$	10,568	$	31,365	102%

(1) Amortized cost consists of the UPB, unamortized premiums, discounts and other cost basis adjustments, as well as other-than-temporary-impairment (“OTTI”) recognized in “Impairments” in our Consolidated Statements of Operations.

See Note 8, “Fair Value,” which describes factors that contributed to the $1.1 million decrease in the reported fair value of the Company’s investments in debt securities for the nine months ended September 30, 2020.

Nonaccrual Bonds

At September 30, 2020 and December 31, 2019, the Company had no bonds that were on nonaccrual status.

Bond Sales and Redemptions

There were no sales or redemption in full of investments in bonds during the three months and nine months ended September 30, 2020.

The Company received cash proceeds in connection with the sale or redemption in full of investments in bonds of $2.4 million and $26.6 million for the three months and nine months ended September 30, 2019.

The following table provides information about gains or losses that were recognized in the Company’s Consolidated Statements of Operations in connection with the Company’s investments in bonds:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gains recognized at time of sale or redemption	$	—	$	2,156	$	—	$	26,420

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INVESTMENTS IN PARTNERSHIPS

9 Months Ended

Sep. 30, 2020

INVESTMENTS IN PARTNERSHIPS [Abstract]

Investment in Partnerships

Note 3—Investments in Partnerships

The following table provides information about the carrying value of the Company’s investments in partnerships and ventures:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Investment in Solar Ventures	$	362,403	$	289,123
Investments in U.S. real estate partnerships		9,706		19,822
Investment in South Africa Workforce Housing Fund ("SAWHF")		1,598		7,732
Total investments in partnerships	$	373,707	$	316,677

Investments Related to the Solar Ventures

At September 30, 2020, we were a 50% investor member in the renewable joint ventures in which we invest though we may periodically have a minority economic interest as a result of non-pro rata capital contributions made by our capital partner pursuant to a non-pro-rata funding agreement between the Company and our capital partner. Distributions from such ventures are generally made in proportion to the members’ respective economic interests but may be made disproportionately to our capital partner, when our capital partner has made non-pro rata capital contributions, until such time that the amount of equity invested by the Company and its capital partner have come back into equal balance. At September 30, 2020, the Company held 43.4%, 50.0% and 42.9% economic interests in Solar Construction Lending, LLC (“SCL”), Solar Permanent Lending, LLC (“SPL”), Solar Development Lending, LLC (“SDL”), respectively, and was the sole member in Renewable Energy Lending, LLC (“REL”), respectively (collectively referred to as the “Solar Ventures”).

At September 30, 2020, the carrying value of the Company’s equity investments in SCL, SPL and SDL was $239.8 million, $0 and $122.6 million, respectively. None of these investees were assessed to constitute a Variable Interest Entity (“VIE”) and the Company accounts for all of these investments using the equity method of accounting. At September 30, 2020, these joint ventures had $305.4 million of unfunded loan commitments that required borrowers to meet various conditions set forth in governing loan agreements in order for funding to occur. At September 30, 2020, $147.0 million of such commitments were attributable to the Company based upon its interest in these ventures. The unfunded loan commitments that qualified for funding, were anticipated to be funded primarily by capital within the joint ventures through a combination of existing loan redemptions and idle capital. To the extent capital within the joint ventures is not sufficient to meet their funding obligations additional capital contributions by the members would be required.

During the third quarter of 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed the full $56.0 million in SCL capital calls and $24.0 million of $39.0 million in SDL capital calls, while the Company contributed the $15.0 million balance with respect to SDL. In addition, in accordance with a non-pro rata funding agreement between the Company and our capital partner, our capital partner in SCL received distributions of $65.0 million, while the Company received distributions of $15.0 million. As a consequence of these non-pro rata capital contributions and distributions during the third quarter of 2020, our economic interest in SCL and SDL decreased in percentage terms from 44.2% and 43.6% in SCL and SDL, respectively, at June 30, 2020.

Subsequent to September 30, 2020, the Company and its capital partner in SCL and SDL funded various non-pro rata capital calls pursuant to which our capital partner contributed $82.0 million of $97.0 million in SCL and SDL capital calls, while the Company contributed the balance of these capital calls, or $15.0 million, which represented the full $15.0 million of distributions received from the ventures subsequent to the third quarter. As a consequence of these non-pro rata capital contribution and distributions, our economic interest in SCL and SDL decreased to 39.2% and 39.6%, respectively.

The Company paid $5.1 million for the buyout of our prior investment partner’s ownership interest in REL, on June 1, 2018, which was allocated to the net assets acquired based upon their relative fair values. This allocation resulted in a cumulative basis adjustment of $4.5 million to the Company’s investments that is amortized over the remaining investment period of SCL. The amortization expense related to the Company’s basis difference was $0.2 million for the three months ended September 30, 2020 and September 30, 2019, and $0.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. At September 30, 2020 and December 31, 2019, the unamortized balance of the Company’s basis difference was $2.5 million and $3.1 million, respectively.

The following table provides information about the carrying amount of total assets and liabilities of all renewable energy related investees in which the Company had an equity method investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets (1)	$	837,977	$	706,792
Other liabilities (2)		4,988		22,135

(1)Assets of these ventures are primarily comprised of loans that are carried at fair value.

(2)Other liabilities of these ventures are primarily comprised of interest reserves.

The following table provides information about the gross revenue, operating expenses and net income of all renewable energy related investees in which the Company had an equity method investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	23,123	$	16,081	$	69,540	$	38,367
Operating expenses		1,403		1,144		4,945		4,687
Net income and net income attributable to the entities		21,754		14,940		64,585		33,749

Investments in U.S. Real Estate Partnerships

At September 30, 2020, the $9.7 million reported carrying value of investments in U.S. real estate partnerships represented the Company’s 80% ownership interest in a joint venture that owns and operates a mixed-use town center and undeveloped land parcels in Spanish Fort, Alabama (“SF Venture”). Based upon the venture’s operating agreement, the Company has the right to a preferred return on its unreturned capital contributions with the exception of such contributions that have been contributed for the payment of undeveloped land license fees, which have a lower priority of repayment; as well as the right to share in excess cash flows of the real estate venture. As of September 30, 2020, the Company held an 80% economic interest based upon the partnership’s distribution waterfall. This entity was determined not to be a VIE because

decision-making rights are shared equally among its members. Accordingly, the Company accounts for this investment using the equity method of accounting.

During the second quarter of 2020, our equity investment in the SF Venture was determined to be other-than-temporarily impaired due to the downturn in the economy that stemmed from the novel coronavirus (“COVID-19”) pandemic. In this regard, the Company adjusted the carrying value of such investment to its fair value as of such reporting date and recognized a $9.0 million impairment loss in our Consolidated Statements of Operations during the second quarter of 2020.  

The following table provides information about the total assets, debt and other liabilities of the U.S. real estate partnerships in which the Company held an equity investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	50,406	$	51,718
Debt		6,752		6,426
Other liabilities		20,307		20,493

The following table provides information about the gross revenue, operating expenses and net loss of U.S. real estate partnerships in which the Company had an equity investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	648	$	624	$	1,839	$	1,920
Operating expenses		515		437		1,623		1,380
Net loss and net loss attributable to the entities		(538)		(727)		(1,937)		(1,288)

Investment in SAWHF

SAWHF was determined not to be a VIE, and therefore, the Company accounts for this investment using the equity method of accounting. At September 30, 2020, the carrying value of the Company’s 11.85% equity investment in SAWHF was $1.6 million, which reflects a $6.1 million decline from December 31, 2019, due to: (i) a distribution from SAWHF of 7.2 million shares of a residential real estate investment trust (“REIT”) listed on the Johannesburg Stock Exchange (“JSE”) and whose carrying value is classified within “Other Assets” in the Company’s Consolidated Balance Sheets; (ii) investment dispositions; and (iii) foreign currency translation losses that were attributable to the weakening of the South African rand against the U.S. dollar during the first nine months of 2020. See Note 5, “Other Assets,” for more information regarding the distributed REIT shares held by the Company.

The following table provides information about the carrying value of total assets and other liabilities of SAWHF:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	13,785	$	56,356
Other liabilities		91		130

The following table provides information about the gross revenue, operating expenses and net income of SAWHF:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	57	$	1,321	$	1,574	$	4,090
Operating expenses		119		236		755		722
Net income (loss) and net income (loss) attributable to the entity		790		(1,092)		1,911		1,690

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LOANS HELD FOR INVESTMENT ("HFI")

9 Months Ended

Sep. 30, 2020

LOANS HELD FOR INVESTMENT ("HFI") [Abstract]

Loans Held for Investment ("HFI")

Note 4—Loans Held for Investment (“HFI”)

We report the carrying value of HFI loans at their UPB, net of unamortized premiums, discounts and other cost basis adjustments and related allowances for loan losses, except in instances where we have elected the fair value option as further discussed below.

The following table provides information about the UPB and fair value adjustments that were recognized in the Company’s Consolidated Balance Sheets related to loans that it classified as HFI:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
UPB	$	1,280	$	54,100
Fair value adjustments		22		—
Loans HFI, net	$	1,302	$	54,100

On January 3, 2020, the entire $53.6 million UPB of the Hunt Note was fully repaid. At September 30, 2020 and December 31, 2019, the Company had one and two HFI loans, respectively, that had a combined UPB and fair value of $1.3 million and $54.1 million, respectively.

The Company elected the fair value option for one of its HFI loans that had a UPB and fair value of $1.3 million and $0.5 million at September 30, 2020 and December 31, 2019, respectively. The fair value option was elected upon its recognition so as to minimize certain operational challenges associated with accounting for this loan.

At September 30, 2020 and December 31, 2019, the Company had no HFI loans that were on nonaccrual status or that were past due in scheduled principal or interest payments and still accruing interest.

Unfunded Loan Commitments

At September 30, 2020 and December 31, 2019, the Company, through its wholly owned subsidiary of REL, had $0.8 million and $1.6 million, respectively, of unfunded loan commitments.

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OTHER ASSETS

9 Months Ended

Sep. 30, 2020

OTHER ASSETS [Abstract]

Other Assets

Note 5—Other Assets

The following table provides information related to the carrying value of the Company’s other assets:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Other assets:
Real estate owned	$	15,384	$	8,397
Debt issue costs		2,297		2,675
Equity investments		2,574		—
Derivative assets		569		597
Accrued interest receivable		551		853
Other assets		576		462
Total other assets	$	21,951	$	12,984

Real Estate Owned (“REO”)

The following table provides information about the carrying value of the Company’s REO held for use, net:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Land improvements	$	12,765	$	5,778
Land		2,619		2,619
Total	$	15,384	$	8,397

Land improvements are depreciated over a period of 15 years.

The Company’s investments include the Company’s REO, which consists of a parcel of land that is currently in the process of being developed. During the first nine months of 2020, the Company invested $7.0 million in additional land improvements that were capitalized as part of the carrying value of such investment. Since REO has not been placed in service, no depreciation expense was recognized in connection with this land investment for the three months and nine months ended September 30, 2020 and September 30, 2019, nor were any impairment losses recognized by the Company during these periods in connection with REO.

Debt Issuance Costs

During the first quarter of 2020, the Company incurred, but deferred in the Consolidated Balance Sheets, $0.5 million of additional debt issuance costs in connection with the execution by MMA Energy Holdings, LLC (“MEH” or “Borrower”), a wholly owned subsidiary of the Company, of a credit agreement for a revolving credit facility with various lenders. These additional costs were due to the joinder of an additional lender and an increase in commitment by one of the existing lenders. These costs are being amortized ratably over the three-year term of the revolving credit facility. During the three months and nine months ended September 30, 2020, the Company recognized $0.3 million and $0.8 million of interest expense in the Company’s Consolidated Statements of Operations related to the amortization of debt issuance costs for the revolving credit facility. At September 30, 2020 and December 31, 2019, the unamortized balance of debt issuance costs was $2.3 million and $2.7 million, respectively. See Note 6, “Debt,” for more information.

Equity Investments

On May 22, 2020, the Company received a $2.9 million pro-rata distribution from SAWHF of 7.2 million shares of a residential REIT that are listed on the Main Board of the JSE. These REIT shares, which trade under the trading symbol “TPF,” are reported at their fair value and are denominated in South African rand. During the nine months ended September 30, 2020, the Company recognized $0.4 million in “Net loss on other assets” within the Company’s Consolidated Statements of Operations. At September 30, 2020, the carrying value of these shares was $2.6 million. See Note 8, “Fair Value,” for more information.

Derivative Assets

At September 30, 2020 and December 31, 2019, the Company recognized $0.6 million of derivative assets. See Note 7, “Derivative Instruments,” for more information.  

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DEBT

9 Months Ended

Sep. 30, 2020

DEBT [Abstract]

Debt

Note 6—Debt

The table below provides information about the carrying values and weighted-average effective interest rates of the Company’s debt obligations that were outstanding at September 30, 2020 and December 31, 2019:

	At				At
	September 30, 2020				December 31, 2019
			Wtd. Avg.				Wtd. Avg.
			Effective				Effective
	Carrying		Interest		Carrying		Interest
(dollars in thousands)	Value (4)		Rate (4)		Value (4)		Rate (4)
Other Debt
Subordinated debt (1)
Due within one year	$	2,225	1.6	%	$	2,212	3.2	%
Due after one year		91,549	1.6			93,276	3.2
Revolving credit facility debt obligations
Due within one year		—	—			—	—
Due after one year		103,700	5.6			94,500	5.6
Notes payable and other debt (2)
Due within one year		4,072	14.0			6,828	14.7
Due after one year		13,458	5.2			1,500	5.0
Total other debt		215,004	4.0			198,316	4.8
Asset Related Debt
Notes Payable and Other Debt
Bond related debt (3)
Due within one year		275	2.8			—	—
Due after one year		23,102	2.8			—	—
Non-bond related debt
Due within one year		—	—			650	5.0
Due after one year		—	—			2,850	5.0
Total asset related debt		23,377	2.8			3,500	5.0
Total debt	$	238,381	3.9	%	$	201,816	4.8	%

(1) The subordinated debt balances include net cost basis adjustments of $7.0 million and $7.4 million at September 30, 2020 and December 31, 2019, respectively, that pertain to premiums and debt issuance costs.

(2) Included in Other Debt – notes payable and other debt were unamortized debt issuance costs of $0.1 million at September 30, 2020 and December 31, 2019.

(3) Included in Asset Related Debt – notes payable and other debt – bond related debt were unamortized debt issuance costs of $0.1 million at September 30, 2020.

(4) Carrying value amounts and weighted-average interest rates reported in this table include the effects of any discounts, premiums and other cost basis adjustments. An effective interest rate represents an internal rate of return of a debt instrument that makes the net present value of all cash flows, inclusive of cash flows that give rise to cost basis adjustments, equal zero and in the case of (i) fixed rate instruments, is measured as of an instrument’s issuance date and (ii) variable rate instruments, is measured as of each date that a reference interest rate resets.

Covenant Compliance and Debt Maturities

The following table provides information about scheduled principal payments associated with the Company’s debt agreements that were outstanding at September 30, 2020:

	Asset Related Debt
(in thousands)	and Other Debt
2020	$	4,529
2021		2,278
2022		128,550
2023		11,222
2024		1,813
Thereafter		83,197
Net premium and debt issue costs		6,792
Total debt	$	238,381

At September 30, 2020, the Company was in compliance with all covenants under its debt obligations.

Other Debt

Other debt of the Company finances non-interest-bearing assets and other business activities of the Company. The interest expense associated with this debt is classified as “Interest expense” under “Other expenses” on the Consolidated Statements of Operations.

Subordinated Debt

The table below provides information about the key terms of the subordinated debt that was issued by MMA Financial Holdings, Inc. (“MFH”), the Company’s wholly owned subsidiary, and that was outstanding at September 30, 2020:

(dollars in thousands)			Net Premium				Interim
			and Debt		Carrying		Principal
Issuer	UPB		Issuance Costs		Value		Payments (1)	Maturity Date	Coupon
MFH	$	25,611	$	2,152	$	27,763	Amortizing	March 30, 2035	three-month LIBOR plus 2.0%
MFH		23,288		1,954		25,242	Amortizing	April 30, 2035	three-month LIBOR plus 2.0%
MFH		13,424		1,042		14,466	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
MFH		24,408		1,895		26,303	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
Total	$	86,731	$	7,043	$	93,774

(1) The subordinated principal amortizes 2.0% per annum.

Revolving Credit Facility Debt Obligations

On September 19, 2019, MEH entered into a $125.0 million (the “Facility Amount”) revolving credit agreement with various lenders. During the first quarter of 2020, the maximum Facility Amount increased to $175.0 million and the committed amount of the revolving credit facility increased from $100.0 million to $120.0 million upon the joinder of an additional lender and an increase in commitment by one of the existing lenders.

Obligations associated with the revolving credit facility are guaranteed by the Company and are secured by specified assets of the Borrower and a pledge of all of the Company’s equity interest in the Borrower, which holds the equity interests in the Solar Ventures, through pledge and security documentation. Availability and amounts advanced under the revolving credit facility are subject to compliance with a borrowing base comprised of assets that comply with certain eligibility criteria, and includes late-stage development, construction and permanent loans to finance renewable energy projects and cash.

The revolving credit facility contains affirmative and negative covenants binding on the Borrower that are customary for credit facilities of this type. Additionally, the credit agreement includes collateral performance tests and the following financial covenants of the Company and its consolidated subsidiaries: minimum debt service coverage ratio, maximum debt to net worth, minimum consolidated net worth and minimum consolidated net income.

Borrowing under the revolving credit facility bears interest at the one-month London Interbank Offered Rate (“LIBOR”), adjusted for statutory reserve requirements (subject to a 1.5% floor), plus a fixed spread of 2.75% per annum. At September 30, 2020, the LIBOR base rate plus the fixed spread was 4.25%. At September 30, 2020, the weighted-average effective interest rate of the Company’s obligation was 5.6%. The Borrower has also agreed to pay certain customary fees and expenses and to provide certain indemnities. In certain circumstances where the interest rate is unable to be determined, including in the event LIBOR ceases to be published, the administrative agent to the credit agreement will select a new rate in its reasonable judgment, including any adjustment to the replacement rate to reflect a different credit spread. The maturity date of the credit agreement is September 19, 2022, subject to a 12-month extension solely to allow refinancing or orderly repayment of the facility.  

At September 30, 2020, the UPB and carrying value of amounts borrowed from the revolving credit facility was $103.7 million. The Company recognized $1.5 million and $4.3 million of related interest expense in the Consolidated Statements of Operations for the three months and nine months ended September 30, 2020, respectively.

Notes Payable and Other Debt

At September 30, 2020, the UPB and carrying value of notes payable and other debt that was used to finance the Company’s 11.85% ownership interest in SAWHF was $3.9 million. This debt, which is denominated in South African rand, had an original contractual maturity date of September 8, 2020 and requires the Company to pay its counterparty a rate equal to the Johannesburg Interbank Agreed Rate (“JIBAR”) plus a fixed spread of 5.15%. At September 30, 2020, the JIBAR base rate was 3.4% and this debt obligation’s weighted-average effective interest rate, which is recalculated over the life of the debt instrument when JIBAR resets and incorporates the impact of the unamortized balance of debt issuance costs into its derivation, was 14.5%. Subsequent to September 30, 2020, the Company and its counterparty agreed to an extension of this debt financing.

At September 30, 2020, the UPB and carrying value of notes payable and other debt obligations to the Morrison Grove Management, LLC principals (“MGM Principals”) was $4.4 million. This debt bears interest at 5.0%. The $2.9 million debt obligation amortizes over its contractual life and is due to mature on January 1, 2026. The $1.5 million debt obligation pays interest only until March 31, 2026 and then amortizes in three equal installments until its maturity date of January 1, 2027.

On June 1, 2020, the Company entered into a $10.0 million construction loan that is secured by our direct investment in real estate that is in the process of development. The initial advance from this debt was $9.3 million and $0.5 million of capacity that has been reserved for interest payments. The total amount advanced by the lender shall not exceed 65% of the value of pledged real estate and 75% of the development allowable hard costs incurred by borrower. The loan is prepayable at any time without penalty, with all net proceeds realized from the sale of any portion of the real property required to be used to repay the outstanding UPB of the loan. Construction draws may not exceed a total principal sum of

$11.1 million over the life of the facility, with the maximum outstanding UPB at any point in time not to exceed $10.0 million. The contractual maturity date of this facility is June 1, 2023, although the facility is subject to three extension options (at the discretion of the borrower and lender): (i) the first extension term would expire on November 1, 2023; (ii) the second extension term would expire on May 1, 2024 and (iii) the final amortized term would expire three years after the initial term, first extension term and second extension term, as applicable. Amounts drawn from this debt facility are repayable on an interest only basis at a rate of 4.85% with all outstanding principal due at maturity during the initial term, first extension term and second extension term. However, during the final extension term the debt bears interest at a rate of three-month LIBOR plus 3.0% per annum, subject to a 5.0% floor with principal amortization required monthly over the three year extension term. Obligations associated with this debt are guaranteed by the Company. At September 30, 2020, the UPB and carrying value of this debt obligation was $9.4 million and $9.3 million, respectively.    

Asset Related Debt

Asset related debt is debt that finances interest-bearing assets of the Company. The interest expense associated with this debt is included within “Net interest income” on the Consolidated Statements of Operations.

Bond Related Debt

On June 5, 2020, the Company entered into a total return swap (“TRS”) agreement related to our Infrastructure Bond. The Company conveyed its interest in such bond investment to a counterparty in exchange for cash consideration while simultaneously executing a TRS agreement with the same counterparty for purposes of retaining the economic risks and returns of such investments. The conveyance of the Company’s interest in such bond was treated for reporting purposes as a secured borrowing while the TRS agreement that was executed simultaneously with such conveyance did not receive financial statement recognition since such derivative instrument caused the conveyance of the Company’s interest in this bond not to qualify as a sale for reporting purposes.

At September 30, 2020, under the terms of this TRS agreement, which has a maturity date of June 6, 2022, the counterparty is required to pay the Company an amount equal to the interest payments received on the underlying bond (UPB of $26.7 million with a pay rate of 6.3% at September 30, 2020). The Company is required to pay the counterparty a rate that is based upon the Securities Industry and Financial Markets Association (“SIFMA”) index rate, subject to a 0.5% floor, plus a spread of 2.0% (notional amount of $23.5 million with a pay rate of 2.5% at September 30, 2020). Additionally, as required by the TRS agreement, the Company pledged cash collateral of $10.0 million representing 37.5% of the referenced bond’s UPB. Furthermore, under the terms of the TRS, the Company’s TRS counterparty is entitled to share in 10% of the increase in fair value, if any, of the conveyed Infrastructure Bond between the trade and termination dates of the TRS agreement. For reporting purposes, this provision is treated as a freestanding derivative instrument that is reported on a fair value basis.

Non-bond Related Debt

During the first quarter of 2020, the $3.5 million debt obligation to MGM Principals was reclassified to Other Debt upon the full repayment of the Hunt Note.

Letters of Credit

The Company had no letters of credit outstanding at September 30, 2020 and December 31, 2019.

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DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2020

DERIVATIVE INSTRUMENTS [Abstract]

Derivative Instruments

Note 7—Derivative Instruments

The Company uses derivative instruments for various purposes. Pay-fixed interest rate swaps, interest rate basis swaps and interest rate caps are used to manage interest rate risk. Foreign currency forward exchange agreements are used to manage currency risk associated with the financing of our SAWHF equity investment.

Derivative instruments that are recognized in the Consolidated Balance Sheets are measured on a fair value basis. Because the Company does not designate any of its derivative instruments as fair value or cash flow hedges, changes in fair value of these instruments are recognized in the Consolidated Statements of Operations as a component of “Net losses on

derivatives.” Derivative assets are presented in the Consolidated Balance Sheets as a component of “Other assets” and derivative liabilities are presented in the Consolidated Balance Sheets as a component of “Other liabilities.”

The following table provides information about the carrying value of the Company’s derivative instruments:

	Fair Value
	At				At
	September 30, 2020				December 31, 2019
(in thousands)	Assets		Liabilities		Assets		Liabilities
Basis swaps	$	—	$	618	$	318	$	—
Interest rate caps		53		—		227		—
Interest rate swaps		—		1,886		52		—
Foreign currency forward exchange		516		—		—		117
Gain share arrangement (1)		—		24		—		—
Total carrying value of derivative instruments	$	569	$	2,528	$	597	$	117

(1) Refer to Note 6, “Debt” for more information.

The following table provides information about the notional amounts of the Company’s derivative instruments:

	Notional Amounts
	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Basis swaps	$	35,000	$	35,000
Interest rate caps		35,000		35,000
Interest rate swaps		35,000		35,000
Foreign currency forward exchange		3,915		4,685
Total notional amount of derivative instruments	$	108,915	$	109,685

The following table provides information about the net losses that were recognized by the Company in connection with its derivative instruments:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Total return swaps (1)	$	—	$	—	$	—	$	(42)
Basis swaps (2)		29		(273)		(907)		(526)
Interest rate caps		(20)		(234)		(174)		(797)
Interest rate swaps (3)		(28)		(441)		(2,072)		(2,717)
Foreign currency forward exchange		(149)		269		726		89
Gain share arrangement		12		—		(24)		—
Total net losses of derivative instruments	$	(156)	$	(679)	$	(2,451)	$	(3,993)

(1) The accrual of net interest payments that are made in connection with TRS agreements that are reported as derivative instruments are classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.2 million for the nine months ended September 30, 2019.

(2) The accrual of net interest payments that are made in connection with basis swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.1 million for the three months and nine months ended September 30, 2020. Net cash received was $0.1 million and $0.2 million for the three months and nine months ended September 30, 2019, respectively.

(3) The accrual of net interest payments that are made in connection with interest rate swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash paid was $0.1 million for the three months and nine

months ended September 30, 2020, while the net cash received was de minimis for the three months ended September 30, 2019 and $0.2 million for the nine months ended September 30, 2019.

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FAIR VALUE

9 Months Ended

Sep. 30, 2020

FAIR VALUE [Abstract]

Fair Value

Note 8—Fair Value

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis are presented in the first table below in this Note. From time to time, we may be required to measure at fair value other assets on a nonrecurring basis such as certain loans held for investment or investments in partnerships. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets.

Fair Value Hierarchy

The Company measures the fair value of its assets and liabilities based upon their contractual terms and using relevant market information. A description of the methods used by the Company to measure fair value is provided below. Fair value measurements are subjective in nature, involve uncertainties and often require the Company to make significant judgments. Changes in assumptions could significantly affect the Company’s measurement of fair value.

GAAP establishes a three-level hierarchy that prioritizes inputs into the valuation techniques used to measure fair value. Fair value measurements associated with assets and liabilities are categorized into one of the following levels of the hierarchy based upon how observable the valuation inputs are that are used in the fair value measurements.

● Level 1:  Valuation is based upon quoted prices in active markets for identical instruments.

● Level 2:  Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs or significant value drivers are observable in active markets.

● Level 3:  Valuation is generated from techniques that use significant assumptions that are not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.

Recurring Changes in Fair Value

The following tables present the carrying amounts of assets and liabilities that are measured at fair value on a recurring basis by instrument type and based upon the level of the fair value hierarchy within which fair value measurements of our assets and liabilities are categorized:

	At
	September 30,		Fair Value Measurements
(in thousands)	2020		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	30,305	$	—	$	—	$	30,305
Loans held for investment		1,302		—		—		1,302
Equity investments		2,574		2,574		—		—
Derivative instruments		569		—		569		—
Liabilities:
Derivative instruments	$	2,528	$	—	$	2,528	$	—

	At
	December 31,		Fair Value Measurements
(in thousands)	2019		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	31,365	$	—	$	—	$	31,365
Loans held for investment		500		—		—		500
Derivative instruments		597		—		597		—
Liabilities:
Derivative instruments	$	117	$	—	$	117	$	—

Changes in Fair Value

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2020:

	Investments in		Loans Held for
(in thousands)	Debt Securities		Investment
Balance, July 1, 2020	$	29,988	$	1,291
Net gains included in earnings (1)		—		11
Net change in AOCI (2)		272		—
Impact from sales or redemptions		—		—
Impact from settlements (3)		45		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $11 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $0.3 million of net unrealized gains recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2019:

	Investments
	in Debt
(in thousands)	Securities
Balance, July 1, 2019	$	35,236
Net change in AOCI (1)		(890)
Impact from sales or redemptions		(264)
Impact from settlements (2)		39
Balance, September 30, 2019	$	34,121

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $1.9 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments.

The following table provides information about the amount of realized and unrealized gains that were reported in the Company’s Consolidated Statements of Operations for the three months ended September 30, 2019, related to activity presented in the preceding table:

	Net losses on
(in thousands)	bonds (1)
Additional realized gains recognized	$	2,156
Total net gains reported in earnings	$	2,156

(1) Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2020:

	Investments
	in Debt		Loans Held for
(in thousands)	Securities		Investment
Balance, January 1, 2020	$	31,365	$	500
Net gains included in earnings (1)		—		22
Net change in AOCI (2)		(1,024)		—
Impact from loan originations / advances		—		780
Impact from settlements (3)		(36)		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $22 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $1.0 million of net unrealized losses recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2019:

	Investments
	in Debt		Derivative
(in thousands)	Securities		Assets
Balance, January 1, 2019	$	97,190	$	1,130
Net losses included in earnings		—		(195)
Net change in AOCI (1)		(25,118)		—
Impact from sales or redemptions		(37,633)		—
Impact from settlements (2)		(318)		(935)
Balance, September 30, 2019	$	34,121	$	—

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $26.1 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments. Included in this amount is $0.3 million of cumulative transition adjustment to retained earnings that was recognized in connection with the Company’s adoption of ASU No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-10):  Premium Amortization on Purchased Callable Debt Securities” on January 1, 2019.

The following table provides information about the amount of realized and unrealized gains (losses) that were reported in the Company’s Consolidated Statements of Operations for the nine months ended September 30, 2019, related to activity presented in the preceding table:

	Net gains on		Net losses on
(in thousands)	bonds (1)		derivatives (2)
Change in unrealized losses related to assets and liabilities held at January 1, 2019, but settled during 2019	$	—	$	(195)
Additional realized gains recognized		26,420		152
Total net gains (losses) reported in earnings	$	26,420	$	(43)

(1)Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

(2) Amounts are classified as “Net losses on derivatives” in the Company’s Consolidated Statements of Operations.

Fair Value Measurements of Instruments That Are Classified as Level 3

Significant unobservable inputs presented in the tables that follow are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change, or based on qualitative factors, such as nature of the instrument, type of valuation technique used and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs that are referenced in the tables below:

● Market yield – is a market rate of return used to calculate the present value of future expected cash flows to arrive at the fair value of an instrument. The market yield typically consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, Municipal Market Data or SIFMA index rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instrument’s cash flows resulting from risks such as credit and liquidity. A significant decrease in this input in isolation would result in a significantly higher fair value measurement.

● Capitalization rate – is calculated as the ratio between the NOI produced by a commercial real estate property and the price for the asset. A significant decrease in this input in isolation would result in a significantly higher fair value measurement.

● NOI annual growth rate – is the amount of future growth in NOI that the Company projects each property to generate on an annual basis over the 10-year projection period. These annual growth estimates take into account the Company’s expectation about the future increases, or decreases, in rental rates, vacancy rates, bad debt expense, concessions and operating expenses for each property. Generally, an increase in NOI will result in an increase to the fair value of the property.

● Valuation technique weighting factors – represent factors that, in the aggregate, sum to 100% and that are individually applied to two or more indications of fair value considering the reasonableness of the range indicated by those results.

● Contract or bid prices – represents a third-party sale agreement or purchase offer executed in connection with the pending sale of an affordable housing property that secures one of the Company’s bond investments. In instances where multiple purchase offers have been received an average of the offers received is utilized. Estimated proceeds from the sale, or average offers, of such property that are determined to be allocable to a bond investment are used to measure the investment’s fair value at a given reporting date.

The tables that follow provide quantitative information about the valuation techniques and the range and weighted-average of significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model to measure fair value. The significant unobservable inputs for Level 3 assets and liabilities that are valued using dealer pricing are not included in the tables, as the specific inputs applied are not provided by the dealer.

	Fair Value Measurement at September 30, 2020
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	24,099	Discounted cash flow	Market yield		7.5	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,206	Discounted cash flow	Market yield		7.2			N/A
				Capitalization rate		6.4			N/A
Loans held for investment		1,302	Discounted cash flow	Market yield		7.1			N/A

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

	Fair Value Measurement at December 31, 2019
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average (2)
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	25,339	Discounted cash flow	Market yield		7.0	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,026	Discounted cash flow	Market yield		7.3			N/A
				Capitalization rate		6.2			N/A
				Valuation technique weighting factors:
				• NOI annual growth rate (50% weighting factor)		0.7			N/A
				• Bid price (50% weighting factor)	$	16,611			N/A
Loans held for investment		500	Discounted cash flow	Market yield		8.0	%		8.0	%

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

(2) Weighted-averages are calculated using outstanding UPB for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Nonrecurring Changes in Fair Value

At June 30, 2020, the Company’s equity investment in the SF Venture was assessed to be other-than-temporarily impaired. Consequently, the Company adjusted the carrying value of such investment to its fair value as of such reporting date, which was estimated by determining the Company’s share of the net asset value (“NAV”) of the SF Venture at June 30, 2020, where the assets and liabilities of the SF Venture were adjusted to their fair values as of such reporting date and a discount for lack of marketability was then applied to the Company’s share of the measured NAV of the SF Venture. The Company recognized a $9.0 million impairment loss in adjusting this investment’s carrying value to its measured fair value. Because of the limited observability of certain valuation inputs that were used to measure the fair value of this equity investment, it was classified as level 3 in the fair value hierarchy at June 30, 2020. There were no nonrecurring fair value adjustments recognized by the Company during the three months ended September 30, 2020 and September 30, 2019 and nine months ended September 30, 2019.

Additional Disclosures Related To The Fair Value of Financial Instruments That Are Not Carried On The Consolidated Balance Sheets at Fair Value

The tables that follow provide information about the carrying amounts and fair values of those financial instruments of the Company for which fair value is not measured on a recurring basis and organizes the information based upon the level of the fair value hierarchy within which fair value measurements are categorized. Assets and liabilities that do not represent financial instruments (e.g., premises and equipment) are excluded from these disclosures.

	At
	September 30, 2020
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	21,784	$	21,784	$	—	$	—
Restricted cash		17,224		17,224		—		—
Liabilities:
Notes payable and other debt - bond related		23,377		—		—		23,509
Notes payable and other debt - non-bond related		17,530		—		—		16,872
Revolving credit facility obligations		103,700		—		—		103,700
Subordinated debt issued by MFH		93,774		—		—		44,122

	At
	December 31, 2019
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	8,555	$	8,555	$	—	$	—
Restricted cash		4,250		4,250		—		—
Loans held for investment		53,600		—		—		54,276
Liabilities:
Notes payable and other debt - non-bond related		11,828		—		—		10,888
Revolving credit facility obligations		94,500		—		—		94,500
Subordinated debt issued by MFH		95,488		—		—		46,934

Valuation Techniques

Cash and cash equivalents and restricted cash – The carrying value of these assets approximated fair value due to the short-term nature and negligible credit risk inherent in them.

Loans held for investment – Fair value is measured using a discounted cash flow methodology pursuant to which contractual payments are discounted based upon market yields for similar credit risks.

Notes payable and other debt – Fair value is measured by discounting contractual cash flows using a market rate of interest or by estimating the fair value of the collateral supporting a debt arrangement, taking into account credit risk.

Subordinated debt – Fair value is measured by discounting projected contractual payments of principal and interest using the instrument’s estimated market yield, which was 10.5% and 11.7% at September 30, 2020 and December 31, 2019, respectively. As outlined in the table above, at September 30, 2020, the aggregate fair value was measured at $44.1 million. At September 30, 2020, the measured fair value of this debt would have been $54.2 million and $36.6 million had its market yield been 8.0% and 13.0%, respectively. The measured fair value of this debt is inherently judgmental and based on management’s assumption of market yields. There can be no assurance that the Company could repurchase the remaining subordinated debt at the measured fair values reflected in the table above or that the debt would trade at that price.

Revolving credit facility debt obligations – Fair value of these debt obligations is measured by discounting projected contractual payments of interest and principal using an estimated market yield.

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GUARANTEES AND COLLATERAL

9 Months Ended

Sep. 30, 2020

GUARANTEES AND COLLATERAL [Abstract]

GUARANTEES AND COLLATERAL

Note 9—Guarantees and Collateral

Guarantees

The Company has guaranteed the performance of payment obligations of certain of its subsidiaries under various debt agreements to third parties. The Company has guaranteed all MFH payment obligations and performance under the terms of the Company’s subordinated debt. However, the Company’s guarantee of the subordinated debt is subordinated to repayment of any senior debt of the Company. Additionally, contemporaneously with the execution of the revolving credit facility, the Company agreed to guarantee all payment and performance obligations of MEH under the credit agreement to the lenders. Furthermore, the Company agreed to guarantee all payment and performance obligations of the borrower associated with financing obtained in the second quarter of 2020 related to our direct investment in real estate that is in process of development. Currently, the Company expects that it will not need to make any payments under these guarantees.

Collateral and Restricted Assets

The following tables summarize assets that are either pledged or restricted for the Company’s use at September 30, 2020 and December 31, 2019:

	At
	September 30, 2020
			Investments						Total
	Restricted		in Debt		Investments in			Other	Assets
(in thousands)	Cash		Securities		Partnerships			Assets	Pledged
Debt related to the revolving credit facility	$	1,110	$	—	$	362,403	$	—	$	363,513
Debt related to TRS agreement		10,020		24,099		—		—		34,119
Debt related to the Company's REO		250		—		—		15,384		15,634
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,374		—		1,598		2,574		5,546
Interest rate swaps		4,462		—		—		—		4,462
Other		8		—		—		—		8
Total	$	17,224	$	24,099	$	364,001	$	17,958	$	423,282

	At
	December 31, 2019
					Total
	Restricted		Investments in		Assets
(in thousands)	Cash		Partnerships		Pledged
Debt related to the revolving credit facility	$	1,070	$	289,123	$	290,193
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,369		7,732		9,101
Interest rate swaps		1,803		—		1,803
Other		8		—		8
Total	$	4,250	$	296,855	$	301,105

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

COMMITMENTS AND CONTINGENCIES [Abstract]

Commitments and Contingencies

Note 10—Commitments and Contingencies

Operating Leases

The Company had no future rental commitments at September 30, 2020.

Litigation and Other Legal Matters

In the ordinary course of business, the Company and its subsidiaries are named from time to time as defendants in various litigation matters or may have other claims made against them. These legal proceedings may include claims for substantial or indeterminate compensatory, consequential or punitive damages, or for injunctive or declaratory relief.

The Company establishes reserves for litigation matters or other loss contingencies when a loss is probable and can be reasonably estimated. Once established, reserves may be adjusted when new information is obtained. At September 30, 2020, we had no significant litigation matters and we were not aware of any other claims that we believe would have a material adverse impact on our financial condition or results of operations.

Other Risks and Uncertainties

We are monitoring the economic impact of the COVID-19 pandemic on the performance of our investments and underlying real estate values. Although we have not recognized impairment charges other than that for the SF Venture discussed above, we believe it is reasonably possible that we may be required to recognize one or more material impairment charges over the next 12 months, particularly if underlying economic conditions continue to deteriorate. Because any such impairment charge will be based on future circumstances, we cannot predict at this time whether we will be required to recognize any further impairment charges and, if required, the timing or amount of any impairment charge.

With respect to recognized DTA, the Company’s assessment of the likelihood of realizing tax benefits related to DTAs recognized in the fourth quarter of 2019 did not change in the third quarter of 2020. That is, while COVID-19 caused a sharp deterioration in macro-economic conditions, the potential amount and permanence of long-term impacts of those conditions on the Company’s business was uncertain at September 30, 2020. Consequently, the Company did not make an adjustment in the third quarter of 2020 to the carrying value of DTAs that were recognized at December 31, 2019. Nonetheless, given such uncertainty and other factors, we believe it is reasonably possible that, within the next 12 months, a change to the carrying value of recognized DTAs that is material to the Company’s financial statements could be recognized. However, the exact timing and amount of loss recognition depends upon future circumstances and, therefore, cannot be predicted at this time.

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EQUITY

9 Months Ended

Sep. 30, 2020

EQUITY [Abstract]

Equity

Note 11—Equity

Preferred Share Information

On January 1, 2019, as part of the Company’s conversion to a corporation, the Company was authorized to issue 5,000,000 of preferred shares, in one or more series, with no par value. As of September 30, 2020, the Board of Directors (“Board”) has not authorized any of these shares to be issued and no rights have been established for any of these shares.

Common Share Information

As of September 30, 2020, the Company was authorized to issue 50,000,000 common shares. The following table provides information about net (loss) income to common shareholders as well as provides information that pertains to weighted-average share counts that were used in per share calculations as presented on the Consolidated Statements of Operations:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Net income (loss) from continuing operations	$	2,936	$	5,576	$	(3,630)	$	31,685
Net loss from discontinued operations		—		—		—		(8)
Net income (loss)	$	2,936	$	5,576	$	(3,630)	$	31,677
Basic and diluted weighted-average shares (1)		5,811		5,887		5,807		5,884

(1) Includes common shares issued and outstanding, as well as deferred shares of non-employee directors that have vested but are not issued and outstanding.

Common Shares

Effective May 5, 2015, the Company adopted a Tax Benefits Rights Agreement (the “Rights Plan”) to help preserve the Company’s net operating losses (“NOLs”). In connection with adopting the Rights Plan, the Company declared a distribution of one right per common share to shareholders of record as of May 15, 2015. The rights do not trade apart from the current common shares until the distribution date, as defined in the Rights Plan. Under the Rights Plan, the acquisition by an investor (or group of related investors) of greater than a 4.9% stake in the Company, could result in all existing shareholders other than the new 4.9% holder having the right to acquire new shares for a nominal cost, thereby significantly diluting the ownership interest of the acquiring person. On March 11, 2020, the Board approved an extension of the original five-year term of the Rights Plan until May 5, 2023, or until the Board determines the plan is no longer required, whichever comes first. Subsequently, shareholders ratified the Board’s decision to extend the Rights Plan at the Company’s 2020 annual meeting of shareholders.

On January 3, 2018, the Board approved a waiver of the 4.9% ownership limitation for Hunt, increasing this limitation to the acquisition of 9.9% of the Company’s issued and outstanding shares in any rolling 12-month period without causing a triggering event.

At September 30, 2020, the Company had two shareholders who held greater than a 4.9% interest in the Company, one of which was its former Chief Executive Officer and current member of the Board, Michael L. Falcone. On March 11, 2020, the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for open-market share purchases of up to an additional 7,500 common shares, to be completed by December 31, 2020, with the Board reserving all its rights under the Rights Plan for any subsequent purchases. Upon Mr. Falcone’s resignation as Chief Executive Officer on August 12, 2020, he became eligible for Board compensation. Pursuant to the policy of our Governance Committee, each Board member receives one-half of his or her Board compensation in common shares. On November 5, 2020, the Board adopted an Amended and Restated 2012 Non-Employee Directors’ Compensation Plan to coordinate elements of the Rights Plan and share compensation for directors, in addition the Board named Mr. Falcone an exempted person in accordance with the Rights Plan for purposes of his share-based Board compensation.

Accumulated Other Comprehensive Income

The following table provides information related to the net change in AOCI for the three months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2020	$	6,726	$	683	$	7,409
Net unrealized gains (losses)		272		(99)		173
Income tax losses		(75)		—		(75)
Net change in AOCI		197		(99)		98
Balance, September 30, 2020	$	6,923	$	584	$	7,507

The following table provides information related to the net change in AOCI for the three months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2019	$	13,397	$	17	$	13,414
Net unrealized gains		961		217		1,178
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		—		(1,851)
Net change in AOCI		(890)		217		(673)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2020	$	7,666	$	(33)	$	7,633
Net unrealized (losses) gains		(1,024)		617		(407)
Income tax gains		281		—		281
Net change in AOCI		(743)		617		(126)
Balance, September 30, 2020	$	6,923	$	584	$	7,507

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2019	$	37,625	$	72	$	37,697
Net unrealized gains		997		162		1,159
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(26,115)		—		(26,115)
Net change in AOCI		(25,118)		162		(24,956)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

STOCK-BASED COMPENSATION [Abstract]

Stock-Based Compensation

Note 12—Stock-Based Compensation

On January 8, 2018, the Company engaged the External Manager through the execution of a management agreement with the External Manager (the “Management Agreement”) to externally manage the Company’s operations. In connection therewith, all employees of the Company were hired by the External Manager. The Company has stock-based compensation plans (“Plans”) for non-employee Directors (“Non-employee Directors’ Stock-Based Compensation Plans”) and stock-based incentive compensation plans for employees (“Employees’ Stock-Based Compensation Plans”).

The following table provides information related to total compensation expense that was recorded for these Plans:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Non-employee Directors’ Stock-Based Compensation Plans	$	223	$	133	$	611	$	461

Employees’ Stock-Based Compensation Plans

At September 30, 2020, there were 571,066 share awards available to be issued under Employees’ Stock-Based Compensation Plans. While each existing Employees’ Stock-Based Compensation Plan has been approved by the Board, not all of the Plans have been approved by the Company’s shareholders. The Plans that have not been approved by the Company’s shareholders are currently restricted to the issuance of only stock options. As a result, of the 571,066 shares available under the plans, 73,556 are available to be issued in the form of either stock options or shares, while the remaining 497,510 shares available for issuance must be issued in the form of stock options. Since the Company has no employees, the Company does not expect to issue any of these shares or options.

Non-Employee Directors’ Stock-Based Compensation Plans

The Non-employee Directors’ Stock-based Compensation Plans authorize a total of 1,130,000 shares for issuance, of which 372,494 were available to be issued at September 30, 2020. The Non-employee Directors’ Stock-based Compensation Plans provide for grants of non-qualified common stock options, common shares, restricted shares and deferred shares.

The Non-employee Directors’ Stock-based Compensation Plans provide for directors to be paid $120,000 per year for their services. In addition, the Chairman receives an additional $20,000 per year, the Audit Committee Chair receives an additional $15,000 per year and the other committee chairs receive an additional $10,000 per year. Under this plan, 50% of such compensation is paid in cash and the remaining sum through common share-based grants. In the event that a receipt of shares by a director would potentially result in a trigger event of the Tax Benefits Rights Agreement, such compensation shall be paid in cash, absent action by the Board to specifically exempt such share payment prior to the issuance date.

The table below summarizes non-employee director compensation, including cash, vested options and common and deferred shares, for services rendered for the nine months ended September 30, 2020 and September 30, 2019. The directors are fully vested in the deferred shares at the grant date.

				Common		Deferred		Weighted-average
				Shares		Shares		Grant Date		Options		Directors' Fees
		Cash		Granted		Granted		Share Price		Vested		Expense
September 30, 2020	(1)	$	320,625		5,720		5,946	$	24.91		—	$	611,250
September 30, 2019			230,625		1,667		5,628		31.61		—		461,250

(1) During the first quarter of 2020, the Board approved the addition of two independent directors. Furthermore, during the third quarter of 2020, our former Chief Executive Officer became a non-employee director.

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RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

9 Months Ended

Sep. 30, 2020

RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES [Abstract]

Related Party Transactions and Transactions with Affiliates

Note 13—Related Party Transactions and Transactions with Affiliates

Transactions with Hunt

External Management Fees and Expense Reimbursements

On January 8, 2018, the Company sold certain businesses and assets (the “Disposition”) and entered into the Management Agreement. At the time of the Disposition, all employees of the Company were hired by the External Manager. In consideration for the management services being provided by the External Manager, the Company pays the External Manager a base management fee, which is payable quarterly in arrears in an amount equal to (i) 0.50% of the Company’s

first $500 million of common shareholders’ equity determined in accordance with GAAP in the U.S. on a fully diluted basis, adjusted to exclude the effect of (a) the carrying value of the Company’s DTAs, and (b) any gains or losses attributable to noncontrolling interests (“GAAP Common Shareholders’ Equity”); and (ii) 0.25% of the Company’s GAAP Common Shareholders’ Equity in excess of $500 million. Additionally, the Company agreed to pay the External Manager an incentive fee equal to 20% of the total annual return of diluted common shareholders’ equity per share in excess of 7%, which excludes the effects of the Company’s DTAs. The Company also agreed to reimburse the External Manager for certain allocable overhead costs including an allocable share of the costs of (i) noninvestment personnel of the External Manager and an affiliate thereof who spend all or a portion of their time managing the Company’s operations and reporting as a public company (based on their time spent on these matters) and (ii) the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) based on the percentage of their time spent managing the Company. Reimbursement of compensation-related expenses is, however, subject to an annual cap of $2.5 million through 2019 and $3.5 million thereafter, until the Company’s GAAP common shareholders’ equity exceeds $500 million.

The current term of the Management Agreement extends to December 31, 2022 and automatically renews thereafter for additional two-year terms. Either the Company or the External Manager may, upon written notice, decline to renew or terminate the Management Agreement without cause, effective at the end of the initial term or any renewal term. If the Company declines to renew or terminates the Management Agreement without cause or the External Manager terminates for cause, the Company is required to pay a termination fee to the External Manager equal to three times the sum of the average annual base and incentive management fees, plus one times the sum of the average renewable energy business expense reimbursements and the employee cost reimbursement expense, in each case, during the prior two-year period. The Company may also terminate the Management Agreement for cause. No termination fee is payable upon a termination by the Company for cause or upon a termination by the External Manager without cause.

For the three months and nine months ended September 30, 2020 and September 30, 2019, no incentive fee was earned by our External Manager. During the three months ended September 30, 2020 and September 30, 2019, the Company recognized $1.8 million and $1.6 million, respectively, and $7.0 million and $6.0 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, of management fees and expense reimbursements payable to our External Manager in its Consolidated Statements of Operations. At September 30, 2020 and December 31, 2019, $1.8 million and $1.2 million, respectively, of management fees and expense reimbursements was payable to the External Manager.

Loans HFI and Investment in Partnerships

As consideration for the Disposition, Hunt agreed to pay the Company $57.0 million and to assume certain liabilities of the Company. The Company provided seller financing through a $57.0 million note receivable from Hunt that had an initial term of seven years, prepayable at any time and bearing interest at the rate of 5% per annum. On October 4, 2018, the Company’s receivable from Hunt increased to $67.0 million as part of Hunt’s election to take assignment of the Company’s agreements to acquire (i) the LIHTC business of Morrison Grove Management and (ii) certain assets pertaining to a specific LIHTC property from affiliates of Morrison Grove Management, LLC (these agreements are collectively referred hereinafter to as the “MGM Agreements”). On December 20, 2019, Hunt prepaid $13.4 million of the note receivable and as a result, the UPB of the note was $53.6 million at December 31, 2019. During the three months and nine months ended September 30, 2019, the Company recognized $0.8 million and $2.5 million, respectively, of interest income associated with this note receivable in the Consolidated Statements of Operations. At December 31, 2019, $0.7 million of accrued interest was payable by Hunt. On January 3, 2020, the note receivable was fully repaid.

On April 1, 2019, the Company purchased Hunt’s 30% ownership interest in SDL that pertained to an investment in a specific loan for $11.3 million, which represents the price that was projected to cause the Company and Hunt to achieve the same internal rate of return (“IRR”) on the amount of capital each had invested in the loan for the period of time that each party was invested in the loan. In this regard, upon full repayment of the loan, a post-purchase true-up payment may have been required to be made by one party to the other depending upon the actual IRR achieved by each party on the investment. Due to continuing involvement by Hunt as the transferor, the transfer did not qualify as a purchase for reporting purposes and, as a result, cash consideration paid by the Company was reported as a loan receivable that is secured by the interest in SDL that Hunt conveyed to the Company. On December 20, 2019, the Company and Hunt terminated all obligations relating to the post-purchase true-up payment and, as a result, the Company derecognized this loan receivable and increased its investment in partnership in SDL.  

On December 20, 2019, the Company sold to Hunt a loan and three limited partner interests in partnerships that own affordable housing and in which our ownership interest ranged from 74.25% to 74.92%. This loan had a UPB and carrying value of $1.1 million and $0.3 million, respectively, while the three limited partner interests had a carrying value of $0.9 million at the time of sale. The Company received $3.1 million in sales proceed and recognized $1.9 million of gains in the Consolidated Statements of Operations.

Investment in Debt Securities

On April 25, 2019, the Company received $13.1 million of net proceeds from the sale of an affordable housing property that secured one of the Company’s non-performing bond investments. Hunt, as bond servicing agent, waived $0.9 million of servicing fees that were otherwise due and payable in priority to the Company’s bond investment. As a result, the Company received $0.9 million of additional bond redemption proceeds that we otherwise would not have received.

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2020

SEGMENT INFORMATION [Abstract]

Segment Information

Note 14—Segment Information

At September 30, 2020 and December 31, 2019, the Company operates as a single reporting segment. Therefore, all required segment information can be found in our consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

9 Months Ended

Sep. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Company evaluates subsequent events through the date of filing with the U.S. Securities and Exchange Commission (“SEC”).

Changes in Presentation

Changes in Presentation

We have made certain reclassifications to prior year financial statements in order to enhance their comparability with current year financial statements.

Use of Estimates

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, commitments and contingencies, and revenues and expenses. Management made estimates in certain areas, including the determination of the Company’s valuation allowance established against its DTAs as well as in the fair value measurement of bonds and derivative instruments. Actual results could differ materially from these estimates.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company as well as those entities in which the Company has a controlling financial interest, including wholly owned subsidiaries of the Company. All intercompany transactions and balances have been eliminated in consolidation. Equity investments in unconsolidated entities where the Company has the ability to exercise significant influence over the operations of the entity, but is not considered the primary beneficiary, are accounted for using the equity method of accounting.

New Accounting Guidance

Accounting Guidance

Adoption of Accounting Standards

Accounting for Financial Instruments

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This guidance amends the amortization period for certain callable debt securities held at a premium, shortening the period to the earliest call date. We adopted this new guidance on its effective date of January 1, 2019. Upon adoption of this guidance, the Company assessed that certain of our bond investments were being held at a premium resulting in a reduction in amortization periods used for interest income recognition. Accordingly, during the first quarter of 2019, the Company recognized a cumulative effect adjustment of $0.3 million charge to retained earnings.

Accounting for Income Taxes

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance permits companies to reclassify stranded tax effects caused by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) from AOCI to retained earnings and also requires new disclosures. We adopted this guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Stock Compensation

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This guidance expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. We adopted this new guidance on its effective date of January 1, 2019. The adoption of this guidance did not impact the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Fair Value Measurement

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This guidance eliminates certain disclosure requirements for fair value measurements, requires public entities to disclose certain new information and modifies some disclosure requirements. We adopted this guidance on its effective date of January 1, 2020. The adoption of this guidance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Accounting for Financial Instruments – Rate Reform

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This guidance is elective and is provided for contract modifications that meet certain Codification topics and subtopics. The optional amendment of this new guidance is effective March 12, 2020 through December 31, 2022. We did not make any elections provided by this new guidance and, therefore, the

adoption of these accounting principles did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows as of the adoption date.

Issued Accounting Standards Not Yet Adopted

Accounting for Financial Instruments – Credit Losses

In November 2019, the FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates.” This guidance gives private companies, not-for-profit organizations, and certain smaller reporting companies additional time to implement FASB standards on credit losses, leases, derivatives and hedging and intangible-goodwill and other (ASC 350). Because the Company is a smaller reporting company the following “credit loss” ASUs will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Improvements.” This guidance is intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. This guidance establishes an impairment methodology that reflects lifetime expected credit losses rather than incurred losses. This guidance requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This guidance is intended to clarify aspects of accounting for credit losses, hedging activities, and financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In May 2019, the FASB issued ASU No. 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This guidance provides transition relief for entities adopting ASU 2016-13. This guidance allows entities to elect the fair value options on certain financial instruments. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This guidance amends certain aspects of the FASB’s new credit losses standard, including an amendment requiring entities to include certain expected recoveries in the amortized cost basis in the allowance for credit losses for purchased credit deteriorated assets. This new guidance is effective on January 1, 2023, with early adoption permitted. We are currently evaluating the potential impact of the new guidance on our consolidated financial statements.

In February 2020, the FASB issued ASU No. 2020-02, “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update).” This guidance updates certain SEC guidance in the Codification for the issuance of SEC Staff Accounting Bulletin 119 and effective date related to the leases standard. This new guidance is effective upon issuance on February 6, 2020. However, because the Company is a smaller reporting company the ASU will become effective for the Company on January 1, 2023. We are currently evaluating the potential impact of this new guidance on our consolidated financial statements.

Accounting for Financial Instruments – General

In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments.” This guidance amends certain topics including fair value option disclosures and credit losses. This guidance is effective upon issuance on March 9, 2020 for some topics and on January 1, 2023 for topics relating to credit loss. The adoption of this guidance that is effective upon issuance did not impact the Company’s Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Equity or Consolidated Statements of Cash Flows. For those aspects of the new guidance that

are not effective until January 1, 2023, we are evaluating the potential impact of the new guidance on our consolidated financial statements.

Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. We are evaluating the potential impact of the new guidance on our consolidated financial statements.

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INVESTMENTS IN DEBT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2020

INVESTMENTS IN DEBT SECURITIES [Abstract]

Schedule of Available-for-sale Securities Reconciliation

	At
	September 30, 2020
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,715	$	20,761	$	3,338	$	24,099		90%
Multifamily tax-exempt bond		4,000		—		6,206		6,206		155%
Total	$	30,715	$	20,761	$	9,544	$	30,305		99%

	At
	December 31, 2019
					Gross
			Amortized		Unrealized				FV as a %
(in thousands)	UPB		Cost (1)		Gains		FV		of UPB
Infrastructure Bond	$	26,885	$	20,797	$	4,542	$	25,339	94%
Multifamily tax-exempt bond		4,000		—		6,026		6,026	151%
Total	$	30,885	$	20,797	$	10,568	$	31,365	102%

(1) Amortized cost consists of the UPB, unamortized premiums, discounts and other cost basis adjustments, as well as other-than-temporary-impairment (“OTTI”) recognized in “Impairments” in our Consolidated Statements of Operations.

Gain (Loss) on Investments

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gains recognized at time of sale or redemption	$	—	$	2,156	$	—	$	26,420

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INVESTMENTS IN PARTNERSHIPS (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Equity Method Investments [Line Items]

Schedule of Investments in Partnerships

The following table provides information about the carrying value of the Company’s investments in partnerships and ventures:

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Investment in Solar Ventures	$	362,403	$	289,123
Investments in U.S. real estate partnerships		9,706		19,822
Investment in South Africa Workforce Housing Fund ("SAWHF")		1,598		7,732
Total investments in partnerships	$	373,707	$	316,677

U.S. Real Estate Partnerships [Member]

Schedule of Equity Method Investments [Line Items]

Schedule of Investments in Partnerships

The following table provides information about the total assets, debt and other liabilities of the U.S. real estate partnerships in which the Company held an equity investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	50,406	$	51,718
Debt		6,752		6,426
Other liabilities		20,307		20,493

The following table provides information about the gross revenue, operating expenses and net loss of U.S. real estate partnerships in which the Company had an equity investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	648	$	624	$	1,839	$	1,920
Operating expenses		515		437		1,623		1,380
Net loss and net loss attributable to the entities		(538)		(727)		(1,937)		(1,288)

Solar Ventures Investment [Member]

Schedule of Equity Method Investments [Line Items]

Schedule of Investments in Partnerships

The following table provides information about the carrying amount of total assets and liabilities of all renewable energy related investees in which the Company had an equity method investment:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets (1)	$	837,977	$	706,792
Other liabilities (2)		4,988		22,135

(1)Assets of these ventures are primarily comprised of loans that are carried at fair value.

(2)Other liabilities of these ventures are primarily comprised of interest reserves.

The following table provides information about the gross revenue, operating expenses and net income of all renewable energy related investees in which the Company had an equity method investment:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	23,123	$	16,081	$	69,540	$	38,367
Operating expenses		1,403		1,144		4,945		4,687
Net income and net income attributable to the entities		21,754		14,940		64,585		33,749

SAWHF

Schedule of Equity Method Investments [Line Items]

Schedule of Investments in Partnerships

The following table provides information about the carrying value of total assets and other liabilities of SAWHF:

	At		At
	September 30,		December 31,
	2020		2019
(in thousands)
Total assets	$	13,785	$	56,356
Other liabilities		91		130

The following table provides information about the gross revenue, operating expenses and net income of SAWHF:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Gross revenue	$	57	$	1,321	$	1,574	$	4,090
Operating expenses		119		236		755		722
Net income (loss) and net income (loss) attributable to the entity		790		(1,092)		1,911		1,690

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LOANS HELD FOR INVESTMENT ("HFI") (Tables)

9 Months Ended

Sep. 30, 2020

LOANS HELD FOR INVESTMENT ("HFI") [Abstract]

Schedule of loans Held For Investments

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
UPB	$	1,280	$	54,100
Fair value adjustments		22		—
Loans HFI, net	$	1,302	$	54,100

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OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2020

OTHER ASSETS [Abstract]

Schedule of Other Assets

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Other assets:
Real estate owned	$	15,384	$	8,397
Debt issue costs		2,297		2,675
Equity investments		2,574		—
Derivative assets		569		597
Accrued interest receivable		551		853
Other assets		576		462
Total other assets	$	21,951	$	12,984

Schedule Of Real Estate Owned, Held For Use

	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Land improvements	$	12,765	$	5,778
Land		2,619		2,619
Total	$	15,384	$	8,397

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DEBT (Tables)

9 Months Ended

Sep. 30, 2020

DEBT [Abstract]

Schedule of Debt

	At				At
	September 30, 2020				December 31, 2019
			Wtd. Avg.				Wtd. Avg.
			Effective				Effective
	Carrying		Interest		Carrying		Interest
(dollars in thousands)	Value (4)		Rate (4)		Value (4)		Rate (4)
Other Debt
Subordinated debt (1)
Due within one year	$	2,225	1.6	%	$	2,212	3.2	%
Due after one year		91,549	1.6			93,276	3.2
Revolving credit facility debt obligations
Due within one year		—	—			—	—
Due after one year		103,700	5.6			94,500	5.6
Notes payable and other debt (2)
Due within one year		4,072	14.0			6,828	14.7
Due after one year		13,458	5.2			1,500	5.0
Total other debt		215,004	4.0			198,316	4.8
Asset Related Debt
Notes Payable and Other Debt
Bond related debt (3)
Due within one year		275	2.8			—	—
Due after one year		23,102	2.8			—	—
Non-bond related debt
Due within one year		—	—			650	5.0
Due after one year		—	—			2,850	5.0
Total asset related debt		23,377	2.8			3,500	5.0
Total debt	$	238,381	3.9	%	$	201,816	4.8	%

(1) The subordinated debt balances include net cost basis adjustments of $7.0 million and $7.4 million at September 30, 2020 and December 31, 2019, respectively, that pertain to premiums and debt issuance costs.

(2) Included in Other Debt – notes payable and other debt were unamortized debt issuance costs of $0.1 million at September 30, 2020 and December 31, 2019.

(3) Included in Asset Related Debt – notes payable and other debt – bond related debt were unamortized debt issuance costs of $0.1 million at September 30, 2020.

(4) Carrying value amounts and weighted-average interest rates reported in this table include the effects of any discounts, premiums and other cost basis adjustments. An effective interest rate represents an internal rate of return of a debt instrument that makes the net present value of all cash flows, inclusive of cash flows that give rise to cost basis adjustments, equal zero and in the case of (i) fixed rate instruments, is measured as of an instrument’s issuance date and (ii) variable rate instruments, is measured as of each date that a reference interest rate resets.

Schedule of Maturities of Long-term Debt

	Asset Related Debt
(in thousands)	and Other Debt
2020	$	4,529
2021		2,278
2022		128,550
2023		11,222
2024		1,813
Thereafter		83,197
Net premium and debt issue costs		6,792
Total debt	$	238,381

Schedule of Subordinate Debt

(dollars in thousands)			Net Premium				Interim
			and Debt		Carrying		Principal
Issuer	UPB		Issuance Costs		Value		Payments (1)	Maturity Date	Coupon
MFH	$	25,611	$	2,152	$	27,763	Amortizing	March 30, 2035	three-month LIBOR plus 2.0%
MFH		23,288		1,954		25,242	Amortizing	April 30, 2035	three-month LIBOR plus 2.0%
MFH		13,424		1,042		14,466	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
MFH		24,408		1,895		26,303	Amortizing	July 30, 2035	three-month LIBOR plus 2.0%
Total	$	86,731	$	7,043	$	93,774

(1) The subordinated principal amortizes 2.0% per annum.

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DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2020

DERIVATIVE INSTRUMENTS [Abstract]

Schedule of the Company's Derivative Assets and Liabilities

	Fair Value
	At				At
	September 30, 2020				December 31, 2019
(in thousands)	Assets		Liabilities		Assets		Liabilities
Basis swaps	$	—	$	618	$	318	$	—
Interest rate caps		53		—		227		—
Interest rate swaps		—		1,886		52		—
Foreign currency forward exchange		516		—		—		117
Gain share arrangement (1)		—		24		—		—
Total carrying value of derivative instruments	$	569	$	2,528	$	597	$	117

(1) Refer to Note 6, “Debt” for more information.

Schedule of Derivative Notional Amounts

	Notional Amounts
	At		At
	September 30,		December 31,
(in thousands)	2020		2019
Basis swaps	$	35,000	$	35,000
Interest rate caps		35,000		35,000
Interest rate swaps		35,000		35,000
Foreign currency forward exchange		3,915		4,685
Total notional amount of derivative instruments	$	108,915	$	109,685

Schedule of Net Gains Recognized Recognized In Connection With Derivative Instruments

The following table provides information about the net losses that were recognized by the Company in connection with its derivative instruments:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Total return swaps (1)	$	—	$	—	$	—	$	(42)
Basis swaps (2)		29		(273)		(907)		(526)
Interest rate caps		(20)		(234)		(174)		(797)
Interest rate swaps (3)		(28)		(441)		(2,072)		(2,717)
Foreign currency forward exchange		(149)		269		726		89
Gain share arrangement		12		—		(24)		—
Total net losses of derivative instruments	$	(156)	$	(679)	$	(2,451)	$	(3,993)

(1) The accrual of net interest payments that are made in connection with TRS agreements that are reported as derivative instruments are classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.2 million for the nine months ended September 30, 2019.

(2) The accrual of net interest payments that are made in connection with basis swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash received was $0.1 million for the three months and nine months ended September 30, 2020. Net cash received was $0.1 million and $0.2 million for the three months and nine months ended September 30, 2019, respectively.

(3) The accrual of net interest payments that are made in connection with interest rate swaps is classified as a component of “Net losses on derivatives” on the Consolidated Statements of Operations. Net cash paid was $0.1 million for the three months and nine

months ended September 30, 2020, while the net cash received was de minimis for the three months ended September 30, 2019 and $0.2 million for the nine months ended September 30, 2019.

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2020

FAIR VALUE [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

	At
	September 30,		Fair Value Measurements
(in thousands)	2020		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	30,305	$	—	$	—	$	30,305
Loans held for investment		1,302		—		—		1,302
Equity investments		2,574		2,574		—		—
Derivative instruments		569		—		569		—
Liabilities:
Derivative instruments	$	2,528	$	—	$	2,528	$	—

	At
	December 31,		Fair Value Measurements
(in thousands)	2019		Level 1		Level 2		Level 3
Assets:
Investments in debt securities	$	31,365	$	—	$	—	$	31,365
Loans held for investment		500		—		—		500
Derivative instruments		597		—		597		—
Liabilities:
Derivative instruments	$	117	$	—	$	117	$	—

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2020:

	Investments in		Loans Held for
(in thousands)	Debt Securities		Investment
Balance, July 1, 2020	$	29,988	$	1,291
Net gains included in earnings (1)		—		11
Net change in AOCI (2)		272		—
Impact from sales or redemptions		—		—
Impact from settlements (3)		45		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $11 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $0.3 million of net unrealized gains recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the three months ended September 30, 2019:

	Investments
	in Debt
(in thousands)	Securities
Balance, July 1, 2019	$	35,236
Net change in AOCI (1)		(890)
Impact from sales or redemptions		(264)
Impact from settlements (2)		39
Balance, September 30, 2019	$	34,121

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $1.9 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments.

The following table provides information about the amount of realized and unrealized gains that were reported in the Company’s Consolidated Statements of Operations for the three months ended September 30, 2019, related to activity presented in the preceding table:

	Net losses on
(in thousands)	bonds (1)
Additional realized gains recognized	$	2,156
Total net gains reported in earnings	$	2,156

(1) Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2020:

	Investments
	in Debt		Loans Held for
(in thousands)	Securities		Investment
Balance, January 1, 2020	$	31,365	$	500
Net gains included in earnings (1)		—		22
Net change in AOCI (2)		(1,024)		—
Impact from loan originations / advances		—		780
Impact from settlements (3)		(36)		—
Balance, September 30, 2020	$	30,305	$	1,302

(1) This amount represents $22 thousand of unrealized gains recognized during this reporting period in connection with the Company’s loan investment held at September 30, 2020. This amount is classified as “Net gains (losses) on loans and extinguishment of liabilities” in the Company’s Consolidated Statement of Operations.

(2) This amount represents $1.0 million of net unrealized losses recognized during this reporting period in connection with the Company’s bond investments.

(3) This impact considers the effect of principal payments received and amortization of cost basis adjustments.  

Changes in the fair value of assets and liabilities that are measured at fair value on a recurring basis and that are categorized as Level 3 within the fair value hierarchy are attributed in the following table to identified activities that occurred during the nine months ended September 30, 2019:

	Investments
	in Debt		Derivative
(in thousands)	Securities		Assets
Balance, January 1, 2019	$	97,190	$	1,130
Net losses included in earnings		—		(195)
Net change in AOCI (1)		(25,118)		—
Impact from sales or redemptions		(37,633)		—
Impact from settlements (2)		(318)		(935)
Balance, September 30, 2019	$	34,121	$	—

(1) This amount represents the reclassification into the Consolidated Statements of Operations of $26.1 million of net fair value gains related to bonds that were sold or redeemed during this reporting period, partially offset by $1.0 million of net unrealized gains recognized during this reporting period.

(2) This impact considers the effect of principal payments received and amortization of cost basis adjustments. Included in this amount is $0.3 million of cumulative transition adjustment to retained earnings that was recognized in connection with the Company’s adoption of ASU No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-10):  Premium Amortization on Purchased Callable Debt Securities” on January 1, 2019.

The following table provides information about the amount of realized and unrealized gains (losses) that were reported in the Company’s Consolidated Statements of Operations for the nine months ended September 30, 2019, related to activity presented in the preceding table:

	Net gains on		Net losses on
(in thousands)	bonds (1)		derivatives (2)
Change in unrealized losses related to assets and liabilities held at January 1, 2019, but settled during 2019	$	—	$	(195)
Additional realized gains recognized		26,420		152
Total net gains (losses) reported in earnings	$	26,420	$	(43)

(1)Amounts are classified as “Net gains on bonds” in the Company’s Consolidated Statements of Operations.

(2) Amounts are classified as “Net losses on derivatives” in the Company’s Consolidated Statements of Operations.

Fair Value Measurements By Level 3 Valuation Technique

	Fair Value Measurement at September 30, 2020
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	24,099	Discounted cash flow	Market yield		7.5	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,206	Discounted cash flow	Market yield		7.2			N/A
				Capitalization rate		6.4			N/A
Loans held for investment		1,302	Discounted cash flow	Market yield		7.1			N/A

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

	Fair Value Measurement at December 31, 2019
			Significant	Significant
			Valuation	Unobservable				Weighted
(dollars in thousands)	Fair Value		Techniques	Inputs (1)	Range (1)			Average (2)
Recurring Fair Value Measurements:
Investments in debt securities:
Infrastructure Bond	$	25,339	Discounted cash flow	Market yield		7.0	%		N/A
Multifamily tax-exempt bond
Subordinated cash flow		6,026	Discounted cash flow	Market yield		7.3			N/A
				Capitalization rate		6.2			N/A
				Valuation technique weighting factors:
				• NOI annual growth rate (50% weighting factor)		0.7			N/A
				• Bid price (50% weighting factor)	$	16,611			N/A
Loans held for investment		500	Discounted cash flow	Market yield		8.0	%		8.0	%

(1) Unobservable inputs reflect information that is not based upon independent sources that are readily available. These inputs are based upon assumptions and internally generated data made by the Company, which may include significant judgment that has been developed based upon available information from third-party sources or dealers about what a market participant would use in valuing the asset.

(2) Weighted-averages are calculated using outstanding UPB for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Fair Value, by Balance Sheet Grouping

	At
	September 30, 2020
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	21,784	$	21,784	$	—	$	—
Restricted cash		17,224		17,224		—		—
Liabilities:
Notes payable and other debt - bond related		23,377		—		—		23,509
Notes payable and other debt - non-bond related		17,530		—		—		16,872
Revolving credit facility obligations		103,700		—		—		103,700
Subordinated debt issued by MFH		93,774		—		—		44,122

	At
	December 31, 2019
	Carrying		Fair Value
(in thousands)	Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	8,555	$	8,555	$	—	$	—
Restricted cash		4,250		4,250		—		—
Loans held for investment		53,600		—		—		54,276
Liabilities:
Notes payable and other debt - non-bond related		11,828		—		—		10,888
Revolving credit facility obligations		94,500		—		—		94,500
Subordinated debt issued by MFH		95,488		—		—		46,934

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GUARANTEES AND COLLATERAL (Tables)

9 Months Ended

Sep. 30, 2020

GUARANTEES AND COLLATERAL [Abstract]

Schedule of Financial Instruments Owned and Pledged as Collateral

	At
	September 30, 2020
			Investments						Total
	Restricted		in Debt		Investments in			Other	Assets
(in thousands)	Cash		Securities		Partnerships			Assets	Pledged
Debt related to the revolving credit facility	$	1,110	$	—	$	362,403	$	—	$	363,513
Debt related to TRS agreement		10,020		24,099		—		—		34,119
Debt related to the Company's REO		250		—		—		15,384		15,634
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,374		—		1,598		2,574		5,546
Interest rate swaps		4,462		—		—		—		4,462
Other		8		—		—		—		8
Total	$	17,224	$	24,099	$	364,001	$	17,958	$	423,282

	At
	December 31, 2019
					Total
	Restricted		Investments in		Assets
(in thousands)	Cash		Partnerships		Pledged
Debt related to the revolving credit facility	$	1,070	$	289,123	$	290,193
Debt and derivatives related to the Company's 11.85% ownership interest in SAWHF		1,369		7,732		9,101
Interest rate swaps		1,803		—		1,803
Other		8		—		8
Total	$	4,250	$	296,855	$	301,105

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EQUITY (Tables)

9 Months Ended

Sep. 30, 2020

EQUITY [Abstract]

Summary of Net (Loss) Income to Common Shareholders

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Net income (loss) from continuing operations	$	2,936	$	5,576	$	(3,630)	$	31,685
Net loss from discontinued operations		—		—		—		(8)
Net income (loss)	$	2,936	$	5,576	$	(3,630)	$	31,677
Basic and diluted weighted-average shares (1)		5,811		5,887		5,807		5,884

(1) Includes common shares issued and outstanding, as well as deferred shares of non-employee directors that have vested but are not issued and outstanding.

Schedule of Accumulated Other Comprehensive Income

The following table provides information related to the net change in AOCI for the three months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2020	$	6,726	$	683	$	7,409
Net unrealized gains (losses)		272		(99)		173
Income tax losses		(75)		—		(75)
Net change in AOCI		197		(99)		98
Balance, September 30, 2020	$	6,923	$	584	$	7,507

The following table provides information related to the net change in AOCI for the three months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, July 1, 2019	$	13,397	$	17	$	13,414
Net unrealized gains		961		217		1,178
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		—		(1,851)
Net change in AOCI		(890)		217		(673)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2020:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2020	$	7,666	$	(33)	$	7,633
Net unrealized (losses) gains		(1,024)		617		(407)
Income tax gains		281		—		281
Net change in AOCI		(743)		617		(126)
Balance, September 30, 2020	$	6,923	$	584	$	7,507

The following table provides information related to the net change in AOCI for the nine months ended September 30, 2019:

	Investments		Foreign
	in Debt		Currency
(in thousands)	Securities		Translation		AOCI
Balance, January 1, 2019	$	37,625	$	72	$	37,697
Net unrealized gains		997		162		1,159
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(26,115)		—		(26,115)
Net change in AOCI		(25,118)		162		(24,956)
Balance, September 30, 2019	$	12,507	$	234	$	12,741

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2020

STOCK-BASED COMPENSATION [Abstract]

Summary of Stock-Based Compensation Expense

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2020		2019		2020		2019
Non-employee Directors’ Stock-Based Compensation Plans	$	223	$	133	$	611	$	461

Summary of Nonemployee Director Stock Award Activity

				Common		Deferred		Weighted-average
				Shares		Shares		Grant Date		Options		Directors' Fees
		Cash		Granted		Granted		Share Price		Vested		Expense
September 30, 2020	(1)	$	320,625		5,720		5,946	$	24.91		—	$	611,250
September 30, 2019			230,625		1,667		5,628		31.61		—		461,250

(1) During the first quarter of 2020, the Board approved the addition of two independent directors. Furthermore, during the third quarter of 2020, our former Chief Executive Officer became a non-employee director.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020 segment	Dec. 31, 2019 segment	Jan. 01, 2019 USD ($)
Number of reportable segments | segment	1	1
ASU 2017-08 | Restatement Adjustment [Member]
Retained earnings | $			$ (0.3)

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INVESTMENTS IN DEBT SECURITIES (Narrative) (Details)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) security	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Increase (Decrease) in Fair Value Of Bonds		$ (1,100,000)
Nonaccrual bonds		0		$ 0
Proceeds from sale of investments in bonds	$ 2,400,000		$ 26,600,000
Investments in debt securities		30,305,000		31,365,000
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in debt securities		30,305,000		31,365,000
Unpaid principal balance of bond investments		30,715,000		30,885,000
Multifamily Tax-Exempt Bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Investments in debt securities		6,206,000		6,026,000
Unpaid principal balance of bond investments		$ 4,000,000		$ 4,000,000
Subordinated Multifamily Tax-Exempt Bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of municipal bonds classified as available for sale | security		1		1
Infrastructure Bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of municipal bonds classified as available for sale | security		1		1
Investments in debt securities		$ 24,099,000		$ 25,339,000
Unpaid principal balance of bond investments		$ 26,715,000		$ 26,885,000

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INVESTMENTS IN DEBT SECURITIES (Bonds and Related Unrealized Gains and Losses) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Fair Value	$ 30,305	$ 31,365
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Unpaid principal balance of bond investments	30,715	30,885
Amortized Cost	20,761	20,797
Gross Unrealized Gains	9,544	10,568
Fair Value	$ 30,305	$ 31,365
FV as a % of UPB	99.00%	102.00%
Multifamily Tax-Exempt Bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Unpaid principal balance of bond investments	$ 4,000	$ 4,000
Amortized Cost	0	0
Gross Unrealized Gains	6,206	6,026
Fair Value	$ 6,206	$ 6,026
FV as a % of UPB	155.00%	151.00%
Infrastructure Bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Unpaid principal balance of bond investments	$ 26,715	$ 26,885
Amortized Cost	20,761	20,797
Gross Unrealized Gains	3,338	4,542
Fair Value	$ 24,099	$ 25,339
FV as a % of UPB	90.00%	94.00%

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INVESTMENTS IN DEBT SECURITIES (Realized Gains on Bond Sales and Redemptions) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
INVESTMENTS IN DEBT SECURITIES [Abstract]
Gains recognized at time of sale or redemption		$ 2,156		$ 26,420

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INVESTMENTS IN PARTNERSHIPS (Narrative) (Details) - USD ($) $ in Thousands, shares in Millions		1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended
	Jun. 01, 2018	Nov. 09, 2020	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Apr. 01, 2019
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 373,707				$ 373,707		$ 316,677
Purchase price paid	$ 5,100
Distributions received from investments in partnerships							24,706	$ 11,317
Impairment losses, other than temporary						$ 9,000
Subsequent Event [Member] | Solar Construction Lending LLC and Solar Development Lending LLC [Member]
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership		$ 97,000
U.S. Real Estate Partnerships [Member]
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			9,706				9,706		19,822
Impairment losses, other than temporary				$ 9,000
U.S. Real Estate Partnerships formed in Q4 2014[Member]
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 9,700				$ 9,700
Equity method investment, ownership percentage			80.00%				80.00%
Equity method investment, economic interest percentage			80.00%				80.00%
Solar Ventures Investment [Member]
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 362,403				$ 362,403		289,123
Cumulative basis adjustment	$ 4,500		2,500				2,500		3,100
Amortization expense of basis difference			$ 200		$ 200		$ 700	700
Equity method investment, ownership percentage			50.00%				50.00%
Unfunded loan commitments to borrowers					$ 147,000			$ 147,000
Solar Ventures Investment [Member] | Solar Ventures [Member]
Schedule of Equity Method Investments [Line Items]
Unfunded loan commitments to borrowers			$ 305,400				$ 305,400
Solar Construction Lending LLC [Member]
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 239,800				$ 239,800
Equity method investment, ownership percentage				44.20%		44.20%
Equity method investment, economic interest percentage			43.40%				43.40%
Distributions received from investments in partnerships			$ 15,000
Solar Construction Lending LLC [Member] | Capital Partner
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership			56,000
Distributions received from investments in partnerships			65,000
Solar Construction Lending LLC [Member] | Subsequent Event [Member]
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage		39.20%
Solar Permanent Lending LLC [Member]
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 0				$ 0
Equity method investment, economic interest percentage			50.00%				50.00%
Solar Development Lending, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership			$ 15,000
Carrying value of equity investments			$ 122,600				$ 122,600
Equity method investment, ownership percentage				43.60%		43.60%
Equity method investment, economic interest percentage			42.90%				42.90%
Solar Development Lending, LLC [Member] | Capital Partner
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership			$ 24,000
Solar Development Lending, LLC [Member] | Solar Development Lending, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership			$ 39,000
Solar Development Lending, LLC [Member] | Subsequent Event [Member]
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage		39.60%
Solar Construction Lending LLC and Solar Development Lending LLC [Member] | Subsequent Event [Member]
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership		$ 15,000
Distributions received from investments in partnerships		15,000
Solar Construction Lending LLC and Solar Development Lending LLC [Member] | Subsequent Event [Member] | Capital Partner
Schedule of Equity Method Investments [Line Items]
Capital contribution amount for partnership		$ 82,000
Renewable Energy Lending, LLC [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Schedule of Equity Method Investments [Line Items]
Venture equity percentage of ownership			100.00%				100.00%
SAWHF
Schedule of Equity Method Investments [Line Items]
Carrying value of equity investments			$ 1,598				$ 1,598		$ 7,732
Equity method investment, ownership percentage			11.85%				11.85%
Equity method investment increase (decrease) in carrying value							$ (6,100)
Equity method investment share distribution shares							7.2
Hunt Companies [Member] | Solar Development Lending, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage										30.00%

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INVESTMENTS IN PARTNERSHIPS (Schedule of Real Estate Investment Partnerships) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Schedule of Equity Method Investments [Line Items]
Total investments in partnerships	$ 373,707	$ 316,677
Solar Ventures Investment [Member]
Schedule of Equity Method Investments [Line Items]
Total investments in partnerships	362,403	289,123
U.S. Real Estate Partnerships [Member]
Schedule of Equity Method Investments [Line Items]
Total investments in partnerships	9,706	19,822
SAWHF
Schedule of Equity Method Investments [Line Items]
Total investments in partnerships	$ 1,598	$ 7,732

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INVESTMENTS IN PARTNERSHIPS (Schedule of Balance Sheet Accounts Related to Equity Method Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Solar Ventures Investment [Member]
Schedule of Equity Method Investments [Line Items]
Total assets	$ 837,977	$ 706,792
Other Liabilities	4,988	22,135
U.S. Real Estate Partnerships [Member]
Schedule of Equity Method Investments [Line Items]
Total assets	50,406	51,718
Debt	6,752	6,426
Other Liabilities	20,307	20,493
SAWHF
Schedule of Equity Method Investments [Line Items]
Total assets	13,785	56,356
Other Liabilities	$ 91	$ 130

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INVESTMENTS IN PARTNERSHIPS (Schedule of Income (Loss) in Earnings of Unconsolidated Venture) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
U.S. Real Estate Partnerships [Member]
Schedule of Equity Method Investments [Line Items]
Gross revenue	$ 648	$ 624	$ 1,839	$ 1,920
Operating expenses	515	437	1,623	1,380
Net income (loss)	(538)	(727)	(1,937)	(1,288)
Solar Ventures Investment [Member]
Schedule of Equity Method Investments [Line Items]
Gross revenue	23,123	16,081	69,540	38,367
Operating expenses	1,403	1,144	4,945	4,687
Net income (loss)	21,754	14,940	64,585	33,749
SAWHF
Schedule of Equity Method Investments [Line Items]
Gross revenue	57	1,321	1,574	4,090
Operating expenses	119	236	755	722
Net income (loss)	$ 790	$ (1,092)	$ 1,911	$ 1,690

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LOANS HELD FOR INVESTMENT ("HFI") (Narrative) (Details)	Jan. 03, 2020 USD ($)	Nov. 09, 2020	Sep. 30, 2020 USD ($) loan	Jun. 30, 2020	Dec. 31, 2019 USD ($) loan
Number of loans held for investment			1		2
UPB			$ 1,280,000		$ 54,100,000
Financing receivable UPB and fair value			$ 1,300,000		$ 54,100,000
Number of loans held for investment on non accrual status | loan			0		0
Repayment of hunt notes	$ 53,600,000
Unfunded loan commitments			$ 800,000		$ 1,600,000
Carrying value of Loan receivable			1,302,000		54,100,000
Finance Receivable Fair Value Option Elected [Member]
Financing receivable UPB and fair value			$ 1,300,000		$ 500,000
Solar Development Lending, LLC [Member]
Equity method investment, ownership percentage				43.60%
Solar Development Lending, LLC [Member] | Subsequent Event [Member]
Equity method investment, ownership percentage		39.60%

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LOANS HELD FOR INVESTMENT ("HFI") (Composition of Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
LOANS HELD FOR INVESTMENT ("HFI") [Abstract]
UPB	$ 1,280	$ 54,100
Fair value adjustments	22	0
Financing Receivable, Net	$ 1,302	$ 54,100

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LOANS HELD FOR INVESTMENT ("HFI") (Loan Aging Analysis) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
LOANS HELD FOR INVESTMENT ("HFI") [Abstract]
Loans Receivable, Net	$ 1,302	$ 54,100
Loans Receivable, Net, Unpaid Principal Balance	$ 1,280	$ 54,100

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OTHER ASSETS (Narrative) (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	May 22, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 19, 2019
Derivative assets	$ 569		$ 569				$ 597
Derivative assets	569		569				597
Debt issue costs	2,297		2,297				2,675
Interest expense, debt	2,169	$ 1,207	6,856	$ 3,613
Impairment losses recognized	0	0	0	0
SAWHF
Equity investment distribution fair value	2,600		2,600		$ 2,900
Equity investment distribution shares received					7.2
Gain (losses) on equity investments			400
Revolving Credit Facility [Member]
Debt issuance costs, gross						$ 500
Interest expense, debt	1,500		4,300
Unamortized debt issue costs	2,300		$ 2,300				$ 2,700
Debt instrument, term			3 years
Borrowing capacity						175,000
Amortization expense	300		$ 800
Revolving Credit Facility [Member] | Facility Amount [Member] | Subsidiaries [Member]
Borrowing capacity								$ 125,000
Revolving Credit Facility [Member] | Committed Amount [Member]
Borrowing capacity						$ 120,000		$ 100,000
Land improvements
Property, Plant and Equipment, Useful Life			15 years
Land investment			$ 7,000
Depreciation	$ 0	$ 0	0	$ 0
Property, Plant and Equipment, Additions			$ 7,000

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OTHER ASSETS (Summary of Other Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Other assets:
Real estate owned	$ 15,384	$ 8,397
Debt issue costs	2,297	2,675
Equity investments	2,574	0
Derivative assets	569	597
Accrued interest receivable	551	853
Other assets	576	462
Other Assets, Total	$ 21,951	$ 12,984

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OTHER ASSETS (REO held for use, net) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Real estate held for use, net	$ 15,384	$ 8,397
Land
Real estate held for use, net	2,619	2,619
Land improvements
Real estate held for use, net	$ 12,765	$ 5,778

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DEBT (Narrative) (Details)		3 Months Ended		9 Months Ended
	Jun. 01, 2020 USD ($) item	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) installment	Sep. 30, 2019 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 19, 2019 USD ($)
Debt Instrument [Line Items]
Effective interest rate		3.90%		3.90%			4.80%
Carrying Value		$ 238,381,000		$ 238,381,000			$ 201,816,000
Letters of credit outstanding		0		0			0
Interest expense, debt		2,169,000	$ 1,207,000	6,856,000	$ 3,613,000
Derivative, notional amount		$ 108,915,000		$ 108,915,000			$ 109,685,000
Final Extension [Member]
Debt Instrument [Line Items]
Fixed spread (as a percent)	3.00%
Debt instrument floor interest rate	$ 5.0
Other Debt [Member]
Debt Instrument [Line Items]
Effective interest rate		4.00%		4.00%			4.80%
Carrying Value		$ 215,004,000		$ 215,004,000			$ 198,316,000
Construction Loan [Member[
Debt Instrument [Line Items]
Carrying Value		9,300,000		9,300,000
Principal amount of debt		$ 9,400,000		$ 9,400,000
Construction Loan [Member[ | Initial Term, First and Second Extension [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)	4.85%
SAWHF
Debt Instrument [Line Items]
Ownership interest (as a percent)		11.85%		11.85%
Morrison Grove Management LLC [Member] | Other Debt [Member]
Debt Instrument [Line Items]
Notes Payable						$ 3,500,000
Notes Payable and Other Debt [Member] | SAWHF
Debt Instrument [Line Items]
Weighted average effective interest rates of debt obligations		14.50%		14.50%
Ownership interest (as a percent)		11.85%		11.85%
Principal amount of debt		$ 3,900,000		$ 3,900,000
Bond Related Notes Payable and Other Debt [Member]
Debt Instrument [Line Items]
Underlying bond notional amount		$ 26,700,000		$ 26,700,000
Underlying Bond Interest Rate		6.30%		6.30%
Long-term Debt, Gross		$ 23,500,000		$ 23,500,000
Fixed spread (as a percent)				2.00%
Debt instrument floor interest rate		$ 0.5		$ 0.5
Percentage that represents cash collateral of referenced bonds		37.50%		37.50%
Debt instrument average interest rate		2.50%		2.50%
Cash collateral for agreement		$ 10,000,000.0		$ 10,000,000.0
Bond Related Notes Payable and Other Debt [Member] | Morrison Grove Management LLC [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)		5.00%		5.00%
Principal amount of debt		$ 4,400,000		$ 4,400,000
Notes Payable		4,400,000		4,400,000
Bond Related Notes Payable and Other Debt [Member] | Morrison Grove Management LLC [Member] | Debt Obligations Mature In 2026
Debt Instrument [Line Items]
Notes Payable		2,900,000		2,900,000
Bond Related Notes Payable and Other Debt [Member] | Morrison Grove Management LLC [Member] | Debt Obligations Mature In 2027
Debt Instrument [Line Items]
Notes Payable		$ 1,500,000		$ 1,500,000
Number of installments for amortization of debt | installment				3
NonBond Related Notes Payable and Other Debt [Member] | Construction Loan [Member[
Debt Instrument [Line Items]
Number of extensions related to debt instrument | item	3
Debt instrument covenant maximum percentage of credit to pledged assets	65.00%
Debt instrument covenant maximum percentage development hard costs	75.00%
Debt instrument covenant construction loan maximum draw	$ 11,100,000
Debt instrument covenant construction loan unpaid principal amount maximum	10,000,000.0
Long-term construction loan	10,000,000.0
Proceeds from construction loan	9,300,000
Amount reserved for interest payments	$ 500,000
Total Return Swap [Member]
Debt Instrument [Line Items]
Percentage of increase in fair value of referenced bond entitled to counterparty		10.00%		10.00%
Johannesburg Interbank Agreed Rate (JIBAR) [Member] | Notes Payable and Other Debt [Member] | SAWHF
Debt Instrument [Line Items]
Fixed spread (as a percent)				5.15%
Base rate (as percentage)		3.40%		3.40%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Effective interest rate		5.60%		5.60%
Carrying Value		$ 103,700,000		$ 103,700,000
Fixed spread (as a percent)				2.75%
Principal amount of debt		103,700,000		$ 103,700,000
Borrowing capacity						175,000,000.0
Debt instrument, maturity date				Sep. 19, 2022
Line of credit facility extension period				12 months
Interest expense, debt		$ 1,500,000		$ 4,300,000
Debt instrument base rate plus fixed spread percentage rate		4.25%		4.25%
Line of credit facility, maximum borrowing capacity						175,000,000.0
Revolving Credit Facility [Member] | Committed Amount [Member]
Debt Instrument [Line Items]
Borrowing capacity						120,000,000.0		$ 100,000,000.0
Line of credit facility, maximum borrowing capacity						$ 120,000,000.0		$ 100,000,000.0
Minimum [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)								1.50%
Subsidiaries [Member] | Revolving Credit Facility [Member] | Facility Amount [Member]
Debt Instrument [Line Items]
Borrowing capacity								$ 125,000,000.0
Line of credit facility, maximum borrowing capacity								$ 125,000,000.0

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DEBT (Outstanding Debt Balances) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Debt, Carrying Value	$ 238,381,000	$ 201,816,000
Debt Instrument, Interest Rate, Effective Percentage	3.90%	4.80%
Asset Related Debt [Member]
Debt Instrument [Line Items]
Debt, Carrying Value	$ 23,377,000	$ 3,500,000
Debt Instrument, Interest Rate, Effective Percentage	2.80%	5.00%
Other Debt [Member]
Debt Instrument [Line Items]
Debt, Carrying Value	$ 215,004,000	$ 198,316,000
Debt Instrument, Interest Rate, Effective Percentage	4.00%	4.80%
NonBond Related Notes Payable and Other Debt [Member] | Asset Related Debt [Member]
Debt Instrument [Line Items]
Debt, Due within one year	$ 0	$ 650,000
Debt, Due after one year	$ 0	$ 2,850,000
Debt Instrument, Interest Rate, Effective Percentage, Current Portion	0.00%	5.00%
Debt Instrument, Interest Rate, Effective Percentage, Noncurrent Portion	0.00%	5.00%
Notes Payable and Other Debt [Member] | Other Debt [Member]
Debt Instrument [Line Items]
Debt, Due within one year	$ 4,072,000	$ 6,828,000
Debt, Due after one year	$ 13,458,000	$ 1,500,000
Debt Instrument, Interest Rate, Effective Percentage, Current Portion	14.00%	14.70%
Debt Instrument, Interest Rate, Effective Percentage, Noncurrent Portion	5.20%	5.00%
Unamortized debt issue costs	$ 100,000	$ 100,000
Bond Related Notes Payable and Other Debt [Member] | Asset Related Debt [Member]
Debt Instrument [Line Items]
Debt, Due within one year	275,000	0
Debt, Due after one year	$ 23,102,000	0
Debt Instrument, Interest Rate, Effective Percentage, Current Portion	2.80%
Debt Instrument, Interest Rate, Effective Percentage, Noncurrent Portion	2.80%
Unamortized debt issue costs	$ 100,000
Subordinated Loan [Member]
Debt Instrument [Line Items]
Net Premium and Debt Issuance Costs	7,000,000.0	7,400,000
Subordinated Loan [Member] | Other Debt [Member]
Debt Instrument [Line Items]
Debt, Due within one year	2,225,000	2,212,000
Debt, Due after one year	$ 91,549,000	$ 93,276,000
Debt Instrument, Interest Rate, Effective Percentage, Current Portion	1.60%	3.20%
Debt Instrument, Interest Rate, Effective Percentage, Noncurrent Portion	1.60%	3.20%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt, Carrying Value	$ 103,700,000
Debt Instrument, Interest Rate, Effective Percentage	5.60%
Unamortized debt issue costs	$ 2,300,000	$ 2,700,000
Revolving Credit Facility [Member] | Other Debt [Member]
Debt Instrument [Line Items]
Debt, Due within one year	0	0
Debt, Due after one year	$ 103,700,000	$ 94,500,000
Debt Instrument, Interest Rate, Effective Percentage, Current Portion	0.00%
Debt Instrument, Interest Rate, Effective Percentage, Noncurrent Portion	5.60%	5.60%

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DEBT (Principal Commitments) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
DEBT [Abstract]
2020	$ 4,529
2021	2,278
2022	128,550
2023	11,222
2024	1,813
Thereafter	83,197
Net premium and debt issue costs	(6,792)
Total	$ 238,381	$ 201,816

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DEBT (Subordinate Debt) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Net premium and debt issue costs	$ 6,792
Carrying Value	$ 238,381	$ 201,816
Subordinated principal (as percent)	2.00%
Subordinated Loan [Member] | MMA Financial Holdings Inc. Debt [Member]
Debt Instrument [Line Items]
Principal amount of debt	$ 86,731
Net premium and debt issue costs	7,043
Carrying Value	93,774
Subordinated Loan [Member] | MFH Issue 1 [Member]
Debt Instrument [Line Items]
Principal amount of debt	25,611
Net premium and debt issue costs	2,152
Carrying Value	$ 27,763
Maturity Date	March 30, 2035
Coupon Interest Rate	three-month LIBOR plus 2.0%
Subordinated Loan [Member] | MFH Issue 2 [Member]
Debt Instrument [Line Items]
Principal amount of debt	$ 23,288
Net premium and debt issue costs	1,954
Carrying Value	$ 25,242
Maturity Date	April 30, 2035
Coupon Interest Rate	three-month LIBOR plus 2.0%
Subordinated Loan [Member] | MFH Issue 3 [Member]
Debt Instrument [Line Items]
Principal amount of debt	$ 13,424
Net premium and debt issue costs	1,042
Carrying Value	$ 14,466
Maturity Date	July 30, 2035
Coupon Interest Rate	three-month LIBOR plus 2.0%
Subordinated Loan [Member] | MFH Issue 4 [Member]
Debt Instrument [Line Items]
Principal amount of debt	$ 24,408
Net premium and debt issue costs	1,895
Carrying Value	$ 26,303
Maturity Date	July 30, 2035
Coupon Interest Rate	three-month LIBOR plus 2.0%

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DERIVATIVE INSTRUMENTS (Schedule of the Company's Derivative Assets and Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Derivative Asset	$ 569	$ 597
Derivative Liability	2,528	117
Basis Swap [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset	0	318
Derivative Liability	618	0
Interest rate cap [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset	53	227
Derivative Liability	0	0
Interest rate swap [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset	0	52
Derivative Liability	1,886	0
Foreign Exchange Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset	516	0
Derivative Liability	0	117
Gain Share Arrangement [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset	0	0
Derivative Liability	$ 24	$ 0

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DERIVATIVE INSTRUMENTS (Schedule of Derivative Notional Amounts) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total notional amount of derivative instruments	$ 108,915	$ 109,685
Basis Swap [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total notional amount of derivative instruments	35,000	35,000
Interest rate cap [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total notional amount of derivative instruments	35,000	35,000
Interest rate swap [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total notional amount of derivative instruments	35,000	35,000
Foreign Exchange Forward [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total notional amount of derivative instruments	$ 3,915	$ 4,685

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DERIVATIVE INSTRUMENTS (Summary of Derivative Activity) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	$ (156)	$ (679)	$ (2,451)	$ (3,993)
Total Return Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	0	0	0	(42)
Net proceeds from derivative instrument				200
Basis Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	29	(273)	(907)	(526)
Net proceeds from derivative instrument	100	100	100	200
Interest rate cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	(20)	(234)	(174)	(797)
Interest rate swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	(28)	(441)	(2,072)	(2,717)
Net proceeds from derivative instrument				200
Payments For Proceeds From Derivative Instrument Operating Activities	100		100
Foreign Exchange Forward [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	(149)	269	726	89
Gain Share Arrangement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total net gains of derivative instruments	$ 12	$ 0	$ (24)	$ 0

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FAIR VALUE (Narrative) (Details)	6 Months Ended
	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impairment losses, other than temporary	$ 9,000,000.0
Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, Fair Value		$ 44,100,000
Minimum [Member] | Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Subordinated debt obligation		36,600,000
Maximum [Member] | Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Subordinated debt obligation		$ 54,200,000
Measurement Input, Discount Rate [Member] | Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Subordinated debt measurement input		10.5	11.7
Measurement Input, Discount Rate [Member] | Minimum [Member] | Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Hypothetical fair value input discount rate		8.0
Measurement Input, Discount Rate [Member] | Maximum [Member] | Subordinated Debt Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Hypothetical fair value input discount rate		13.0

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FAIR VALUE (Fair Value of Assets and Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets:
Fair value of bond investments	$ 30,305	$ 31,365
Loans held for investment	1,302	500
Equity investments	2,574
Derivative assets	569	597
Liabilities:
Derivative liabilities	2,528	117
Level 1 [Member]
Assets:
Fair value of bond investments	0	0
Loans held for investment	0	0
Equity investments	2,574
Derivative assets	0	0
Liabilities:
Derivative liabilities	0	0
Level 2 [Member]
Assets:
Fair value of bond investments	0	0
Loans held for investment	0	0
Equity investments	0
Derivative assets	569	597
Liabilities:
Derivative liabilities	2,528	117
Level 3 [Member]
Assets:
Fair value of bond investments	30,305	31,365
Loans held for investment	1,302	500
Equity investments	0
Derivative assets	0	0
Liabilities:
Derivative liabilities	$ 0	$ 0

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FAIR VALUE (Activity for Assets and Liabilities Measured on Recurring Level 3 Basis) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jan. 01, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Reclassification of net fair value gains on sold/redeemed bonds		$ 1,851		$ 26,115
Net unrealized gains (losses) arising during the period	272	961	(1,024)	997
Net gains (losses) on loans and extinguishment of liabilities	11	0	22	(30)
Net losses on derivatives	156	679	2,451	3,993
Investments in Debt Securities
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at start of period		35,236
Net change in AOCI (1)		(890)
Impacts from sales/redemptions		(264)
Impacts from settlements		39
Balance at end of period		34,121		34,121
Reclassification of net fair value gains on sold/redeemed bonds		1,900
Net unrealized gains (losses) arising during the period	300	1,000
Loans Held for Investment
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at start of period			500
Balance at end of period	1,302		1,302
Bonds Available For Sale [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net unrealized gains (losses) arising during the period			1,000
Level 3 [Member] | Investments in Debt Securities
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at start of period	29,988		31,365	97,190
Net (losses) gain included in earnings	0		0	0
Net change in AOCI (1)	272		(1,024)	(25,118)
Impact from loan originations / advances			0
Impacts from sales/redemptions	0			(37,633)
Impacts from settlements	45		(36)	(318)
Balance at end of period	30,305	34,121	30,305	34,121
Reclassification of net fair value gains on sold/redeemed bonds				26,100
Level 3 [Member] | Loans Held for Investment
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at start of period	1,291		500
Net (losses) gain included in earnings	11		22
Net change in AOCI (1)	0		0
Impact from loan originations / advances			780
Impacts from sales/redemptions	0
Impacts from settlements	0		0
Balance at end of period	1,302		1,302
Net gains (losses) on loans and extinguishment of liabilities	$ 11		$ 22
Level 3 [Member] | Derivative Assets [Member]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning period				1,130
Net (losses) gains included in earnings				(195)
Net change in AOCI				0
Impact from sales/redemptions				0
Impact from settlements				(935)
Balance at ending period		$ 0		$ 0
Restatement Adjustment [Member] | ASU 2017-08
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Retained earnings					$ (300)

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FAIR VALUE (Amount of Activity Pertaining to Level 3 Assets and Liabilities Included in Earnings) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Bonds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Change in unrealized losses related to assets and liabilities settled during the period		$ 0
Additional realized gains recognized	$ 2,156	26,420
Total net (losses) gains reported in earnings	$ 2,156	26,420
Derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Change in unrealized losses related to assets and liabilities settled during the period		(195)
Additional realized gains recognized		152
Total net (losses) gains reported in earnings		$ (43)

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FAIR VALUE (Fair Value Measurements By Level 3 Valuation Technique) (Details)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investments in debt securities	$ 30,305,000	$ 31,365,000
Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation technique weighting factor for contract price (as percentage)		50.00%
Measurement Input, NOI Annual Growth Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation technique weighting factor for NOI annual growth rate (as percentage)		50.00%
Available-for-sale, Multifamily Tax-exempt, Subordinated Cash Flow Bonds [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value, asset	$ 6,206,000	$ 6,026,000
Available-for-sale, Multifamily Tax-exempt, Subordinated Cash Flow Bonds [Member] | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	7.2	7.3
Available for sale bid price		$ 16,611
Available-for-sale, Multifamily Tax-exempt, Subordinated Cash Flow Bonds [Member] | Measurement Input, Cap Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	6.4	6.2
Available-for-sale, Multifamily Tax-exempt, Subordinated Cash Flow Bonds [Member] | Measurement Input, NOI Annual Growth Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input		0.7
Available-for-sale, Infrastructure Bonds [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value, asset	$ 24,099,000	$ 25,339,000
Available-for-sale, Infrastructure Bonds [Member] | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	7.5	7.0
Loans Held for Investment
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value, asset	$ 1,302,000	$ 500,000
Loans Held for Investment | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans receivable, measurement input	7.1	8.0
Weighted Average [Member] | Loans Held for Investment | Measurement Input, Discount Rate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans receivable, measurement input		8.0

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FAIR VALUE (Carrying Amounts and Fair Values of Financial Instruments ) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets:
Loans held for investment	$ 1,302	$ 500
Level 1 [Member]
Assets:
Loans held for investment	0	0
Level 1 [Member] | Fair Value, Nonrecurring [Member]
Assets:
Cash and cash equivalents	21,784	8,555
Restricted cash	17,224	4,250
Loans held for investment		0
Liabilities:
Revolving credit facility obligations		0
Level 2 [Member]
Assets:
Loans held for investment	0	0
Level 2 [Member] | Fair Value, Nonrecurring [Member]
Assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Loans held for investment		0
Liabilities:
Revolving credit facility obligations		0
Level 3 [Member]
Assets:
Loans held for investment	1,302	500
Level 3 [Member] | Fair Value, Nonrecurring [Member]
Assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Loans held for investment		54,276
Liabilities:
Revolving credit facility obligations		94,500
Non Bond Related Debt [Member] | Level 1 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	0	0
Non Bond Related Debt [Member] | Level 2 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	0	0
Non Bond Related Debt [Member] | Level 3 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	16,872	10,888
Notes Payable and Bond-Related Debt [Member] | Level 1 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	0
Notes Payable and Bond-Related Debt [Member] | Level 2 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	0
Notes Payable and Bond-Related Debt [Member] | Level 3 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Notes payable and other debt	23,509
Debt Related To Consolidated Funds and Ventures [Member] | Level 1 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Revolving credit facility obligations	0
Debt Related To Consolidated Funds and Ventures [Member] | Level 2 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Revolving credit facility obligations	0
Debt Related To Consolidated Funds and Ventures [Member] | Level 3 [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Revolving credit facility obligations	103,700
Subordinated Loan [Member] | Level 1 [Member] | MFH [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Subordinated debt	0	0
Subordinated Loan [Member] | Level 2 [Member] | MFH [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Subordinated debt	0	0
Subordinated Loan [Member] | Level 3 [Member] | MFH [Member] | Fair Value, Nonrecurring [Member]
Liabilities:
Subordinated debt	44,122	46,934
Reported Value Measurement [Member]
Assets:
Cash and cash equivalents	21,784	8,555
Restricted cash	17,224	4,250
Loans held for investment		53,600
Liabilities:
Revolving credit facility obligations		94,500
Reported Value Measurement [Member] | Non Bond Related Debt [Member]
Liabilities:
Notes payable and other debt	17,530	11,828
Reported Value Measurement [Member] | Notes Payable and Bond-Related Debt [Member]
Liabilities:
Notes payable and other debt	23,377
Reported Value Measurement [Member] | Debt Related To Consolidated Funds and Ventures [Member]
Liabilities:
Revolving credit facility obligations	103,700
Reported Value Measurement [Member] | Subordinated Loan [Member] | MFH [Member]
Liabilities:
Subordinated debt	$ 93,774	$ 95,488

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GUARANTEES AND COLLATERAL (Collateral and Restricted Assets) (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	$ 17,224,000	$ 4,250,000
Bonds Available-for-Sale	24,099,000	0
Investments in partnerships	364,001,000	296,855,000
Other Assets	17,958,000
Total Assets Pledged	423,282,000	301,105,000
Interest rate swap [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	4,462,000	1,803,000
Bonds Available-for-Sale	0
Investments in partnerships	0	0
Other Assets	0
Total Assets Pledged	4,462,000	1,803,000
Debt and derivatives | SAWHF [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	1,374,000	1,369,000
Bonds Available-for-Sale	0
Investments in partnerships	1,598,000	7,732,000
Other Assets	2,574,000
Total Assets Pledged	$ 5,546,000	$ 9,101,000
Ownership interest (as a percent)	11.85%	11.85%
Debt and derivatives TRSs [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	$ 10,020,000
Bonds Available-for-Sale	24,099,000
Investments in partnerships	0
Other Assets	0
Total Assets Pledged	34,119,000
Debt Related to Real Estate Owned [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	250,000
Bonds Available-for-Sale	0
Investments in partnerships	0
Other Assets	15,384,000
Total Assets Pledged	15,634,000
Other, Pledged or Restricted [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	8,000	$ 8,000
Bonds Available-for-Sale	0
Investments in partnerships	0	0
Other Assets	0
Total Assets Pledged	8,000	8,000
Revolving Credit Facility [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Restricted cash	1,110,000	1,070,000
Bonds Available-for-Sale	0
Investments in partnerships	362,403,000	289,123,000
Other Assets	0
Total Assets Pledged	$ 363,513,000	$ 290,193,000

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Sep. 30, 2020 USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]
Future rental commitments	$ 0

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EQUITY (Narrative) (Details)		9 Months Ended
	Mar. 11, 2020 shares	Sep. 30, 2020 shareholder director $ / shares shares	Dec. 31, 2019 $ / shares shares	Jan. 01, 2019 $ / shares shares	Jan. 03, 2018	May 05, 2015 shares
Class of Stock [Line Items]
Preferred shares, shares authorized		5,000,000	5,000,000	5,000,000
Preferred shares, no par value | $ / shares		$ 0	$ 0	$ 0
Maximum percentage of Company stock ownership allowed		9.90%			4.90%
Number of rights issued per common stock						1
Tax benefit agreement term		5 years
Number of shareholders held more than 4.9% | shareholder		2
Number of executives held more than 4.9% | director		1
Common stock, shares, issued		5,706,366	5,701,946
Common stock, shares authorized		50,000,000	50,000,000
Common stock ownership percentage benchmark		4.90%
Executive Officer [Member]
Class of Stock [Line Items]
Maximum percentage of Company stock ownership allowed		4.90%
Additional authorization of share purchase by exempt person	7,500

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EQUITY (Summary of Net (Loss) Income to Common Shareholders) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
EQUITY [Abstract]
Net income from continuing operations	$ 2,936			$ 5,576			$ (3,630)	$ 31,685
Net income (loss) from discontinued operations								(8)
Net income (loss)	$ 2,936	$ (3,508)	$ (3,058)	$ 5,576	$ 23,219	$ 2,882	$ (3,630)	$ 31,677
Basic and diluted weighted-average shares	5,811			5,887			5,807	5,884

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EQUITY (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Balance	$ 274,487	$ 214,626	$ 281,125	$ 212,910
Other Comprehensive Income (Loss), before Tax Period Change [Abstract]
Net change AOCI	98	(673)	(126)	(24,956)
Other Comprehensive Income (Loss), Tax [Abstract]
Income tax (loss) gain	(75)		281
Balance	277,618	219,595	277,618	219,595
AOCI
Balance	7,409	13,414	7,633	37,697
Other Comprehensive Income (Loss), before Tax Period Change [Abstract]
Net unrealized gains (losses), before tax	173	1,178	(407)	1,159
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		26,115
Net change AOCI	98	(673)	(126)	(24,956)
Other Comprehensive Income (Loss), Tax [Abstract]
Income tax (loss) gain	(75)		281
Balance	7,507	12,741	7,507	12,741
Investments in Debt Securities [Member]
Balance	6,726	13,397	7,666	37,625
Other Comprehensive Income (Loss), before Tax Period Change [Abstract]
Net unrealized gains (losses), before tax	272	961	(1,024)	997
Reclassification of fair value gains on sold or redeemed bonds into the Consolidated Statements of Operations		(1,851)		26,115
Net change AOCI	197	(890)	(743)	(25,118)
Other Comprehensive Income (Loss), Tax [Abstract]
Income tax (loss) gain	(75)		281
Balance	6,923	12,507	6,923	12,507
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	683	17	(33)	72
Other Comprehensive Income (Loss), before Tax Period Change [Abstract]
Net unrealized gains (losses), before tax	(99)	217	617	162
Net change AOCI	(99)	217	617	162
Other Comprehensive Income (Loss), Tax [Abstract]
Balance	$ 584	$ 234	$ 584	$ 234

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STOCK-BASED COMPENSATION (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) shares
Employees' Stock-Based Compensation Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance	571,066
Employees' Stock-Based Compensation Plans [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance	497,510
Employees' Stock-Based Compensation Plans [Member] | Employee Stock Options or Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance	73,556
Non-employee Directors' Stock-Based Compensation Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance	1,130,000
Annual compensation | $	$ 120,000
Number of shares currently available for issuance	372,494
Compensation paid in cash (as percentage)	50.00%
Compensation paid in shares (as percentage)	50.00%
Non-employee Directors' Stock-Based Compensation Plans [Member] | Audit Committee Chair [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional Stock based Compensation | $	$ 15,000
Non-employee Directors' Stock-Based Compensation Plans [Member] | Board Of Directors Chairman [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional Stock based Compensation | $	20,000
Non-employee Directors' Stock-Based Compensation Plans [Member] | Other Committee [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional Stock based Compensation | $	$ 10,000

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STOCK-BASED COMPENSATION (Summary of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Non-employee Directors' Stock-Based Compensation Plans [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expense	$ 223	$ 133	$ 611	$ 461

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STOCK-BASED COMPENSATION (Summary of Nonemployee Director Stock Award Activity) (Details) - Non-employee Directors' Stock-Based Compensation Plans [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-employee director compensation, cash	$ 320,625	$ 230,625
Weighted - average Grant Date Share Price	$ 24.91	$ 31.61
Options Vested	0	0
Directors' Fees Expense	$ 611,250	$ 461,250
Common Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	5,720	1,667
Deferred Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	5,946	5,628

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RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES (Details) - USD ($)						1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 20, 2019	Apr. 25, 2019	Apr. 01, 2019	Oct. 04, 2018	Jan. 08, 2018	Dec. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Base management fee percentage on first $500 million share capital					0.50%
Base management fee percentage in excess of $500 million share capital					0.25%
Annual reimbursement cap until 2019					$ 2,500,000
Annual reimbursement cap after 2019 until share capital exceeds of $500 million					$ 3,500,000
Renewal period of the agreement					2 years
Agreement Violation Termination Fee Includes An Amount Times Sum of Average Annual Base and Incentive Management Fee					3
Agreement Violation Termination Fee Includes An Amount Times Sum of Average Energy Capital Business Expense Reimbursement and Employee Cost Reimbursement Expense					1
Termination fee period					2 years
Consideration on disposal							$ 57,000,000.0		$ 57,000,000.0
Notes receivable							57,000,000.0		$ 57,000,000.0
Interest rate for note									5.00%
HFS loan acquired by Hunt						$ 54,100,000	1,302,000		$ 1,302,000
Termination fee payable upon termination of Management Agreement							0		0
External management fees and reimbursable expenses							1,836,000	$ 1,646,000	$ 7,045,000	$ 6,042,000
Term of note receivable									7 years
Equity Method Investments						316,677,000	373,707,000		$ 373,707,000
Reimbursement of compensation related expenses shareholders equity benchmark amount							500,000,000		500,000,000
Financing Receivable, Net, Unpaid Principal Balance						54,100,000	1,280,000		1,280,000
Carrying value of Loan receivable						54,100,000	1,302,000		1,302,000
Investments in partnerships (includes $364,001 and $296,855 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)						316,677,000	373,707,000		373,707,000
Hunt Companies [Member]
Interest income, related party								800,000
External Management Fees and Expenses Reimbursement | Hunt Companies [Member]
External management fees and reimbursable expenses									7,000,000.0	6,000,000.0
Investment in Debt Securities
Net proceeds from sale of affordable house property		$ 13,100,000
Hunt Companies [Member]
Loans and leases receivable from related party				$ 67,000,000.0		53,600,000
Interest income, related party										2,500,000
Interest Receivable						700,000
Financing Receivable, Net, Unpaid Principal Balance	$ 1,100,000
Carrying value of Loan receivable	300,000
Investments in partnerships (includes $364,001 and $296,855 pledged as collateral at September 30, 2020 and December 31, 2019, respectively)	900,000
Proceeds from the sale of real estate and other investments	3,100,000
Gain (loss) on sale of loans and real estate related investments	1,900,000
Proceeds from loans receivable	$ 13,400,000
Hunt Companies [Member] | External Management Fees and Expenses Reimbursement
Incentive fee					20.00%
External management fee, contract in excess for incentive fee.					7.00%
Related party incentive fee expense							0	0	0	$ 0
External management fees and reimbursable expenses							1,800,000	$ 1,600,000
Hunt Companies [Member] | External Management Fees and Expenses Reimbursement | External Manager [Member]
Management fees and expense reimbursements payable						$ 1,200,000	$ 1,800,000		$ 1,800,000
Hunt Companies [Member] | Investment in Debt Securities
Service fees waived by agent		900,000
Hunt Companies [Member] | Investment in Debt Securities
Proceeds from redemption of bonds		$ 900,000
Solar Development Lending, LLC [Member] | Hunt Companies [Member]
Ownership interest			30.00%
Payments to Acquire Equity Method Investments			$ 11,300,000
Minimum [Member] | Hunt Companies [Member] | Affordable Housing Partnerships [Member]
Ownership interest	74.25%
Maximum [Member] | Hunt Companies [Member] | Affordable Housing Partnerships [Member]
Ownership interest	74.92%

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SEGMENT INFORMATION (Narrative) (Details) - segment	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
SEGMENT INFORMATION [Abstract]
Number of reportable segments	1	1