INFRAREIT, INC., 10-Q filed on 8/3/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2016
Jul. 29, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
HIFR 
 
Entity Registrant Name
InfraREIT, Inc. 
 
Entity Central Index Key
0001506401 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
43,764,471 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Current Assets
 
 
Cash and cash equivalents
$ 10,806 
$ 9,471 
Restricted cash
1,682 
1,682 
Due from affiliates
24,600 
31,172 
Inventory
6,648 
6,731 
Prepaids and other current assets
1,050 
560 
Total current assets
44,786 
49,616 
Electric Plant, net
1,539,722 
1,434,531 
Goodwill
138,384 
138,384 
Other Assets
39,638 
40,979 
Total Assets
1,762,530 
1,663,510 
Current Liabilities
 
 
Accounts payable and accrued liabilities
35,537 
22,943 
Short-term borrowings
48,500 
54,000 
Current portion of long-term debt
7,633 
7,423 
Dividends and distributions payable
15,158 
13,634 
Accrued taxes
3,791 
3,312 
Total current liabilities
110,619 
101,312 
Long-Term Debt, Less Deferred Financing Costs
713,452 
617,305 
Regulatory Liability
16,024 
10,625 
Total liabilities
840,095 
729,242 
Commitments and Contingencies
   
   
Equity
 
 
Common stock, $0.01 par value; 450,000,000 shares authorized; 43,575,727 and 43,565,495 issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
436 
436 
Additional paid-in capital
702,391 
702,213 
Accumulated deficit
(33,389)
(24,526)
Total InfraREIT, Inc. equity
669,438 
678,123 
Noncontrolling interest
252,997 
256,145 
Total equity
922,435 
934,268 
Total Liabilities and Equity
$ 1,762,530 
$ 1,663,510 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Statement Of Financial Position [Abstract]
 
 
Common stock, par or stated value per share
$ 0.01 
$ 0.01 
Common stock, shares authorized
450,000,000 
450,000,000 
Common stock, shares issued
43,575,727 
43,565,495 
Common stock, shares, outstanding
43,575,727 
43,565,495 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Statement [Abstract]
 
 
 
 
Lease revenue
$ 33,785 
$ 29,458 
$ 67,450 
$ 58,830 
Operating costs and expenses
 
 
 
 
General and administrative expense
4,980 
4,728 
10,525 
53,461 
Depreciation
11,410 
9,671 
22,484 
19,179 
Total operating costs and expenses
16,390 
14,399 
33,009 
72,640 
Income (loss) from operations
17,395 
15,059 
34,441 
(13,810)
Other (expense) income
 
 
 
 
Interest expense, net
(9,055)
(6,939)
(17,897)
(14,361)
Other income, net
1,137 
847 
1,896 
1,473 
Total other expense
(7,918)
(6,092)
(16,001)
(12,888)
Income (loss) before income taxes
9,477 
8,967 
18,440 
(26,698)
Income tax expense
293 
124 
479 
332 
Net income (loss)
9,184 
8,843 
17,961 
(27,030)
Less: Net income (loss) attributable to noncontrolling interest
2,576 
2,481 
5,038 
(6,519)
Net income (loss) attributable to InfraREIT, Inc.
$ 6,608 
$ 6,362 
$ 12,923 
$ (20,511)
Net income (loss) attributable to InfraREIT, Inc. common stockholders per share:
 
 
 
 
Basic
$ 0.15 
$ 0.15 
$ 0.30 
$ (0.48)
Diluted
$ 0.15 
$ 0.15 
$ 0.30 
$ (0.48)
Cash dividends declared per common share
$ 0.250 
$ 0.225 
$ 0.500 
$ 0.625 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Cash flows from operating activities
 
 
Net income (loss)
$ 17,961 
$ (27,030)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
Depreciation
22,484 
19,179 
Amortization of deferred financing costs
2,007 
1,824 
Allowance for funds used during construction — other funds
(1,896)
(1,481)
Reorganization structuring fee
 
44,897 
Realized gain on sale of marketable securities
 
(66)
Equity based compensation
520 
308 
Changes in assets and liabilities:
 
 
Due from affiliates
6,572 
6,046 
Inventory
83 
455 
Prepaids and other current assets
(490)
(855)
Accounts payable and accrued liabilities
13,308 
7,683 
Net cash provided by operating activities
60,549 
50,960 
Cash flows from investing activities
 
 
Additions to electric plant
(120,615)
(115,627)
Proceeds from sale of assets
 
41,211 
Sale of marketable securities
 
1,065 
Cash paid to InfraREIT, L.L.C. investors in the merger, net of cash assumed
 
(172,400)
Net cash used in investing activities
(120,615)
(245,751)
Cash flows from financing activities
 
 
Net proceeds from issuance of common stock upon initial public offering
 
493,722 
Proceeds from short-term borrowings
50,500 
33,000 
Repayments of short-term borrowings
(56,000)
(253,000)
Proceeds from borrowings of long-term debt
100,000 
 
Repayments of long-term debt
(3,660)
(9,569)
Deferred financing costs
(649)
(153)
Dividends and distributions paid
(28,790)
(34,326)
Net cash provided by financing activities
61,401 
229,674 
Net increase in cash and cash equivalents
1,335 
34,883 
Cash and cash equivalents at beginning of period
9,471 
15,612 
Cash and cash equivalents at end of period
$ 10,806 
$ 50,495 
Description of Business and Presentation of Financial Statements
Description of Business and Presentation of Financial Statements

1.

Description of Business and Presentation of Financial Statements

Basis of Presentation

InfraREIT, Inc. is a Maryland corporation and the surviving corporation of a merger (Merger) with InfraREIT, L.L.C., a Delaware limited liability company, completed on February 4, 2015 in connection with the initial public offering (IPO) of InfraREIT, Inc. and related transactions effected during the first quarter of 2015 (collectively, the Reorganization). For additional information related to our IPO and Reorganization, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the U.S. Securities and Exchange Commission (SEC) on March 3, 2016.

The Merger was accounted for as a reverse acquisition, which means for accounting purposes we treated the assets and liabilities of InfraREIT, Inc. as assumed and incorporated with the assets and liabilities of InfraREIT, L.L.C. The accompanying unaudited interim financial statements of InfraREIT, Inc. (which may be referred to as the “Company,” “InfraREIT,” “we,” “our” and “us”) include our accounts and the accounts of all other entities in which we have a controlling financial interest with noncontrolling interest of consolidated subsidiaries reported separately. This Quarterly Report on Form 10-Q presents the operations of InfraREIT, L.L.C. prior to the Merger and the operations of InfraREIT, Inc. after the Merger.

These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 3, 2016.

We held 71.9% of the outstanding partnership units (OP Units) in InfraREIT Partners, LP (Operating Partnership or InfraREIT LP) as of June 30, 2016 and are its general partner. We include the accounts of the Operating Partnership and its subsidiaries in our consolidated financial statements. MC Transmission Holdings, Inc., which is a subsidiary of Marubeni Corporation (Marubeni), seven members of our board of directors and affiliates of Hunt Consolidated, Inc. (HCI) held the other 28.1% of the outstanding OP Units as of June 30, 2016.

Recent Accounting Guidance

Recently Adopted Accounting Guidance

In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis. This amendment affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 was effective for periods beginning after December 15, 2015 with early adoption permitted. We adopted the guidance on January 1, 2016. The adoption of the new guidance did not have an impact on our current consolidation.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. ASU 2015-03 was effective for periods beginning after December 15, 2015 with early adoption permitted. The adoption of the new guidance was applied on a retrospective basis with each balance sheet presented reflecting the new guidance along with transitional disclosures. The adoption did change the presentation of our financial position. As a result, $0.2 million of unamortized deferred financing costs were reclassified from other assets to long-term debt, less deferred financing costs on our Consolidated Balance Sheets as of December 31, 2015. The adoption of the new guidance did not have an impact on our results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The change in provisional amounts will be recorded in the period in which they are determined with changes to the income statement for any effect on earnings for changes in depreciation, amortization or other income effect calculated as if the accounting had been completed at the acquisition date. ASU 2015-16 was effective for periods beginning after December 15, 2015 with early adoption permitted. The new guidance was adopted as of January 1, 2016 and will be applied prospectively to adjustments to provisional amounts that occur for any future business combination. The adoption of the new guidance has not affected our financial position, results of operations or cash flows.

Recent Accounting Guidance Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amended the existing accounting standard for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for periods beginning after December 15, 2018 with early adoption permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the new guidance and have not determined the impact this standard may have on our financial position, results of operations or cash flows.

Related Party Transactions
Related Party Transactions

2.

Related Party Transactions

Our subsidiary, Sharyland Distribution & Transmission, L.L.C. (SDTS), is party to several lease agreements with Sharyland Utilities, L.P. (Sharyland) through which we lease all of our electric transmission and distribution assets (T&D assets) to Sharyland. Under the leases we have agreed to fund capital expenditures for footprint projects. Our leases define “footprint projects” to be transmission or distribution projects primarily situated within our distribution service territory, that physically hang from our existing transmission assets or that are physically located within one of our substations.

We earned lease revenues from Sharyland under these agreements of $33.8 million and $29.5 million during the three months ended June 30, 2016 and 2015, respectively. We earned $67.5 million and $58.8 million from Sharyland during the six months ended June 30, 2016 and 2015, respectively. In connection with our leases with Sharyland, we recorded a deferred rent liability of $24.0 million and $11.5 million as of June 30, 2016 and December 31, 2015, respectively, which is included in accounts payable and accrued liabilities on the Consolidated Balance Sheets.

In addition to rent payments that Sharyland makes to us, we and Sharyland also make payments to each other under the leases that primarily consist of payments to reimburse Sharyland for the costs of gross plant and equipment added to our T&D assets. For the six months ended June 30, 2016 and 2015, the net amount of the payments we made to Sharyland was $120.1 million and $121.3 million, respectively.

As of June 30, 2016 and December 31, 2015, accounts payable and accrued liabilities on the Consolidated Balance Sheets included $7.7 million and $9.2 million, respectively, related to amounts owed to Sharyland. As of June 30, 2016 and December 31, 2015, amounts due from affiliates on the Consolidated Balance Sheets included $24.6 million and $31.2 million, respectively, related to amounts owed by Sharyland associated with our leases.

Our management fee paid to Hunt Utility Services, LLC (Hunt Manager) for the six months ended June 30, 2016 and 2015 was $6.8 million and $5.8 million, respectively. As of June 30, 2016 and December 31, 2015, there were no prepaid or accrued amounts associated with management fees on the Consolidated Balance Sheets. Additionally, during the six months ended June 30, 2016 and 2015, we paid Hunt Manager less than $0.1 million and $0.3 million, respectively, for reimbursement of annual software license and maintenance fees and other expenses in accordance with our management agreement.

Our current management agreement with Hunt Manager provided for an annual base fee, or management fee, of $10.0 million through April 1, 2015. Effective as of April 1, 2015, the annual base fee was automatically adjusted to $13.1 million annually through March 31, 2016. Effective as of April 1, 2016, the annual base fee was automatically adjusted to $14.0 million annually through March 31, 2017. The base fee and each base fee going forward for the twelve month period beginning on each April 1 thereafter will equal 1.50% of our total equity (including noncontrolling interest) as of December 31 of the immediately preceding year, subject to a $30.0 million cap, unless a greater amount is approved by a majority of our independent directors or a committee comprised solely of independent directors. The term of the management agreement expires December 31, 2019 and will automatically renew for successive five-year terms unless a majority of our independent directors decides to terminate the agreement.

In connection with the organization of InfraREIT, L.L.C. in November 2010, our Operating Partnership agreed to issue deemed capital credits and Class A OP Units to Hunt-InfraREIT, L.L.C. (Hunt-InfraREIT), a subsidiary of HCI. Our Operating Partnership agreed to issue up to $82.5 million to Hunt-InfraREIT, pro-rata, as we funded the capital expenditures related to our competitive renewable energy zones (CREZ) project up to $737.0 million. In addition, our Operating Partnership also agreed to issue to Hunt-InfraREIT deemed capital credits in an amount equal to 5% of our capital expenditures on certain development projects. As of December 31, 2014, our Operating Partnership issued Hunt-InfraREIT an aggregate of 6.8 million Class A OP Units in respect of these obligations. On January 1, 2015, our Operating Partnership issued an additional 70,846 Class A OP Units to Hunt-InfraREIT, and, upon completion of our IPO, our Operating Partnership issued Hunt-InfraREIT an accelerated deemed capital credit equal to 983,418 Class A OP Units, which settled the related obligations to Hunt-InfraREIT. Following this issuance, our Operating Partnership no longer has the obligation to issue deemed capital credits or related equity to Hunt-InfraREIT. We recorded these capital account credits as asset acquisition costs included as part of the capital project in our construction work in progress (CWIP) balance.

In connection with the IPO, Reorganization and related transactions, we incurred an aggregate of $5.0 million of legal fees, a portion of which was paid to reimburse HCI and its subsidiaries (collectively, Hunt), to reimburse certain of our pre-IPO investors and to reimburse certain of our pre-IPO independent directors, in each case for legal expenses they incurred in connection with such transactions. Of the total legal fees incurred, $0.1 million of the legal fees were recorded during the first quarter of 2015. There were no such costs incurred after the completion of our IPO. For additional information related to our IPO and Reorganization refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 3, 2016.

In November 2014, InfraREIT, Inc. borrowed $1.0 million from HCI pursuant to a promissory note. The note accrued interest at 2.5% per year and was due on November 1, 2015. This note and accrued interest were repaid in February 2015 with proceeds from our IPO for a total of $1.0 million.

Effective January 15, 2015, we sold all the assets related to the Cross Valley transmission line (Cross Valley Project) to a newly formed development company owned by Hunt and certain of its affiliates for cash of $34.2 million, which equaled the CWIP of the project on the date of sale, plus reimbursement of out of pocket expenses associated with the project financing. Also on January 15, 2015, we sold all the assets related to the Golden Spread Electric Cooperative interconnection (Golden Spread Project) to Hunt for cash of $7.0 million, which equaled the CWIP of the project on the date of sale.

In November 2015 and February 2016, the Conflicts Committee of our board of directors received an offer for the purchase of the Golden Spread Project and Cross Valley Project, respectively. On March 10, 2016, we announced our decision to postpone the consideration of the purchase of the Golden Spread Project and Cross Valley Project.

 

Electric Plant and Depreciation
Electric Plant and Depreciation

3.

Electric Plant and Depreciation

The major classes of electric plant are as follows:

 

(In thousands)

 

June 30, 2016

 

 

December 31, 2015

 

Electric plant:

 

 

 

 

 

 

 

 

Transmission plant

 

$

1,134,030

 

 

$

1,080,050

 

Distribution plant

 

 

519,953

 

 

 

457,988

 

General plant

 

 

15,951

 

 

 

15,655

 

Total plant in service

 

 

1,669,934

 

 

 

1,553,693

 

CWIP

 

 

122,612

 

 

 

121,602

 

Total electric plant

 

 

1,792,546

 

 

 

1,675,295

 

Accumulated depreciation

 

 

(252,824

)

 

 

(240,764

)

Electric plant, net

 

$

1,539,722

 

 

$

1,434,531

 

 

General plant consists primarily of a warehouse, buildings and associated assets. CWIP relates to various transmission and distribution projects underway. The capitalized amounts of CWIP consist primarily of route development expenditures, labor and materials expenditures, right of way acquisitions, engineering services and legal fees. Electric plant, net includes plant acquisition adjustments of $28.1 million and $28.6 million at June 30, 2016 and December 31, 2015, respectively.

In 2013, SDTS purchased from Southwestern Public Service Company approximately 66 miles of existing transmission lines and two substations located near Stanton, Texas for $37.1 million. SDTS holds legal title to the assets and they are subject to a lease with Sharyland. Sharyland has the responsibility for operating these T&D assets and complying with all applicable regulatory requirements. As of December 31, 2014, these transmission lines and substations were classified as electric plant held for future use within electric plant, net. During August 2015, the assets classified as electric plant held for future use were placed in service and reclassified to transmission plant within electric plant, net on the Consolidated Balance Sheets and began depreciating.

 

Goodwill
Goodwill

4.

Goodwill

Goodwill represents the excess of costs of an acquired business over the fair value of the assets acquired, less liabilities assumed. We conduct an impairment test of goodwill at least annually. As of June 30, 2016 and December 31, 2015, $138.4 million was recorded as goodwill on the Consolidated Balance Sheets.

Other Assets
Other Assets

5.

Other Assets

Other assets are as follows:

 

 

 

June 30, 2016

 

 

December 31, 2015

 

(In thousands)

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Deferred financing costs on undrawn revolver

 

$

967

 

 

$

(300

)

 

$

667

 

 

$

967

 

 

$

(204

)

 

$

763

 

Other regulatory assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred financing costs

 

 

27,761

 

 

 

(15,102

)

 

 

12,659

 

 

 

27,112

 

 

 

(13,208

)

 

 

13,904

 

Deferred costs recoverable in future years

 

 

23,793

 

 

 

 

 

 

23,793

 

 

 

23,793

 

 

 

 

 

 

23,793

 

Other regulatory assets, net

 

 

51,554

 

 

 

(15,102

)

 

 

36,452

 

 

 

50,905

 

 

 

(13,208

)

 

 

37,697

 

Investments

 

 

2,519

 

 

 

 

 

 

2,519

 

 

 

2,519

 

 

 

 

 

 

2,519

 

Other assets

 

$

55,040

 

 

$

(15,402

)

 

$

39,638

 

 

$

54,391

 

 

$

(13,412

)

 

$

40,979

 

 

 

Deferred financing costs on undrawn revolver consist of costs incurred in connection with the establishment of the InfraREIT LP revolving credit facility, see Note 6, Borrowings Under Credit Facilities.

Other regulatory assets consist of deferred financing costs within our regulated entities. These assets are classified as regulatory assets and amortized over the length of the related loan. These costs will be included in the costs to be recovered in connection with a future rate case. Deferred financing costs included in other regulatory assets primarily consist of debt issuance costs incurred in connection with the construction credit agreement entered into in 2011 by Sharyland Projects, LLC (SPLLC), which was at the time one of our subsidiaries; refinancing costs incurred in connection with the amended and restated revolving credit facility entered into by SDTS in 2013; refinancing costs incurred to amend and restate the SDTS credit facility in order to increase the revolving credit facility to a total of $250.0 million in 2014 and financing costs incurred in connection with SDTS’s senior secured notes, series A and series B in December 2015 and January 2016. See Note 6, Borrowings Under Credit Facilities and Note 7, Long-Term Debt.

Deferred costs recoverable in future years of $23.8 million at June 30, 2016 and December 31, 2015 represent operating costs incurred from inception of Sharyland through 2007. We have determined that these costs are probable of recovery through future rates based on orders of the Public Utility Commission of Texas (PUCT) in Sharyland’s prior rate cases and regulatory precedent.

In connection with the acquisition of Cap Rock Holding Corporation (Cap Rock) in 2010, we received a participation in the National Rural Cooperative Corporation (NRUCFC). We account for this investment under the cost method of accounting. We believe that the investment is not impaired at June 30, 2016 and December 31, 2015.

 

Borrowings Under Credit Facilities
Borrowings Under Credit Facilities

6.

Borrowings Under Credit Facilities

InfraREIT LP Revolving Credit Facility

In December 2014, InfraREIT LP entered into a $75.0 million revolving credit facility, led by Bank of America, N.A., as administrative agent, with up to $15.0 million available for issuance of letters of credit and a maturity date of December 10, 2019. The revolving credit facility is secured by substantially all of the assets of InfraREIT LP. In addition, Transmission and Distribution Company, LLC (TDC) guarantees the revolving credit facility and this guarantee is secured by the assets of, and InfraREIT LP’s equity interests in, TDC on materially the same basis as with TDC’s senior secured notes described below. Upon consummation of the IPO and Merger, InfraREIT, Inc. became a guarantor under this revolving credit facility.

The credit agreement requires InfraREIT LP to comply with coverage ratios on a consolidated basis and contains affirmative and negative covenants, including: limitations on additional debt, liens, investments, mergers, acquisitions, dispositions or entry into any line of business other than the business of the transmission and distribution of electric power and the provision of ancillary services and certain restrictions on the payment of dividends. The credit agreement also contains restrictions on the amount of Sharyland’s indebtedness and other restrictions on, and covenants applicable to, Sharyland.

Borrowings and other extensions of credit under the revolving credit facility bear interest, at InfraREIT LP’s election, at a rate equal to (1) the one, two, three or six month London Interbank Offered Rate (LIBOR) plus 2.5%, or (2) a base rate (equal to the highest of (a) the Federal Funds Rate plus ½ of 1%, (b) the Bank of America prime rate and (c) LIBOR plus 1%) plus 1.5%. Letters of credit are subject to a letter of credit fee equal to the daily amount available to be drawn multiplied by 2.5%. InfraREIT LP is also required to pay a commitment fee and other customary fees under the revolving credit facility. InfraREIT LP may prepay amounts outstanding under the revolving credit facility in whole or in part without premium or penalty.

At June 30, 2016 and December 31, 2015, there were no outstanding borrowings or letters of credit and there was $75.0 million of borrowing capacity available under the revolving credit facility. As of June 30, 2016 and December 31, 2015, InfraREIT LP was in compliance with all covenants under the credit agreement.

SDTS Revolving Credit Facility

SDTS’s revolving credit facility has a borrowing capacity of up to $250.0 million and a maturity date of December 10, 2019. Up to $25.0 million of the revolving credit facility is available for issuance of letters of credit, and up to $5.0 million of the revolving facility is available for swingline loans. The revolving credit facility is secured by SDTS’s T&D assets, the leases, certain accounts and TDC’s equity interests in SDTS on the same basis as SDTS’s various senior secured note obligations described below in Note 7, Long-Term Debt.

The interest rate for the revolving credit facility is based, at SDTS’s option, at a rate equal to either (1) a base rate, determined as the greatest of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus ½ of 1% and (c) LIBOR plus 1.00% per annum, plus a margin of either 0.75% or 1.00% per annum, depending on the total debt to capitalization ratio of SDTS on a consolidated basis or (2) LIBOR plus a margin of either 1.75% or 2.00% per annum, depending on the total debt to capitalization ratio of SDTS on a consolidated basis. SDTS is also required to pay a commitment fee and other customary fees under its revolving credit facility. SDTS is entitled to prepay amounts outstanding under the revolving credit facility with no prepayment penalty.

At June 30, 2016, SDTS had $48.5 million of borrowings outstanding at a weighted average interest rate of 2.21%, no letters of credit outstanding and $201.5 million of remaining borrowing capacity available under this revolving credit facility. At December 31, 2015, SDTS had $54.0 million of borrowings outstanding at a weighted average interest rate of 2.05% with no letters of credit outstanding and $196.0 million of remaining borrowing capacity under this revolving credit facility. As of June 30, 2016 and December 31, 2015, SDTS was in compliance with all covenants under its credit agreement.

The revolving credit facilities of InfraREIT LP and SDTS are subject to customary events of default. If an event of default occurs under either facility and is continuing, the lenders may accelerate amounts due under such revolving credit facility (except in the case of a bankruptcy event of default, in which case such amounts will automatically become due and payable).

Long-Term Debt
Long-Term Debt

7.

Long-Term Debt

Long-term debt consisted of the following:

 

 

 

 

 

June 30, 2016

 

 

December 31, 2015

 

(In thousands)

 

Maturity Date

 

Amount

Outstanding

 

 

Interest

Rate

 

 

Amount

Outstanding

 

 

Interest

Rate

 

TDC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured notes - $25.0 million

 

December 30, 2020

 

$

18,125

 

 

 

8.50%

 

 

$

18,750

 

 

 

8.50%

 

SDTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured notes - $60.0 million

 

June 20, 2018

 

 

60,000

 

 

 

5.04%

 

 

 

60,000

 

 

 

5.04%

 

Senior secured notes - $400.0 million

 

December 3, 2025

 

 

400,000

 

 

 

3.86%

 

 

 

400,000

 

 

 

3.86%

 

Senior secured notes - $100.0 million

 

January 14, 2026

 

 

100,000

 

 

 

3.86%

 

 

 

 

 

N/A

 

Senior secured notes - $53.5 million

 

December 30, 2029

 

 

43,574

 

 

 

7.25%

 

 

 

44,512

 

 

 

7.25%

 

Senior secured notes - $110.0 million

 

September 30, 2030

 

 

99,531

 

 

 

6.47%

 

 

 

101,627

 

 

 

6.47%

 

Total SDTS debt

 

 

 

 

703,105

 

 

 

 

 

 

 

606,139

 

 

 

 

 

Total long-term debt

 

 

 

 

721,230

 

 

 

 

 

 

 

624,889

 

 

 

 

 

Less unamortized deferred financing costs

 

 

 

 

(145

)

 

 

 

 

 

 

(161

)

 

 

 

 

Total long-term debt, less deferred

    financing costs

 

 

 

 

721,085

 

 

 

 

 

 

 

624,728

 

 

 

 

 

Less current portion of long-term debt

 

 

 

 

(7,633

)

 

 

 

 

 

 

(7,423

)

 

 

 

 

Debt classified as long-term debt, less

    deferred financing costs

 

 

 

$

713,452

 

 

 

 

 

 

$

617,305

 

 

 

 

 

 

Senior Secured Notes – In 2010, in connection with the acquisition of Cap Rock, TDC issued $25.0 million aggregate principal amount of 8.50% per annum senior secured notes to The Prudential Insurance Company of America and affiliates. Principal and interest on these senior secured notes are payable quarterly and these senior secured notes are collateralized by the equity interest of TDC and substantially all of the assets of TDC on materially the same basis as with lenders under InfraREIT LP’s revolving credit facility described above in Note 6, Borrowings Under Credit Facilities. In connection with the issuance of these senior secured notes, TDC incurred deferred financing costs which are shown as a reduction of the senior secured notes balance. The amount of unamortized deferred financing costs associated with these senior secured notes was $0.1 million and $0.2 million as of June 30, 2016 and December 31, 2015, respectively. These costs were reclassified from other assets to long-term debt, less deferred financing costs on the Consolidated Balance Sheets in accordance with new accounting guidance adopted January 1, 2016, see Note 1, Description of Business and Presentation of Financial Statements.

In December 2015, SDTS issued $400.0 million in 10 year senior secured notes, series A (Series A Notes), due December 3, 2025, and on January 14, 2016 issued an additional $100.0 million in 10 year senior secured notes, series B (Series B Notes), due January 14, 2026. These senior secured notes were issued through a private placement conducted pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and bear interest at a rate of 3.86% per annum, payable semi-annually. The Series A Notes are due at maturity with outstanding accrued interest payable each June and December. The Series B Notes are due at maturity with outstanding accrued interest payable each January and July.

In 2009, SDTS issued $53.5 million aggregate principal amount of 7.25% per annum senior secured notes to The Prudential Insurance Company of America and affiliates (2009 Notes). Principal and interest on these senior secured notes are payable quarterly.

In 2010, in connection with the acquisition of Cap Rock, SDTS issued $110.0 million aggregate principal amount of 6.47% per annum senior secured notes to The Prudential Insurance Company of America (2010 Notes). Principal and interest on these senior secured notes are payable quarterly.

SDTS and TDC are entitled to prepay amounts outstanding under their senior secured notes, subject to a prepayment penalty equal to the excess of the discounted value of the remaining scheduled payments with respect to such notes over the amount of the prepaid notes.

The agreements governing the senior secured notes contain certain default triggers related to the failure to maintain compliance with financial and other covenants contained in the agreements, such as limitations on liens, investments and the incurrence of additional indebtedness. As of June 30, 2016 and December 31, 2015, SDTS and TDC were in compliance with all covenants under the applicable agreements.

Senior Secured Credit Facilities - In 2011, SPLLC entered into a construction term loan agreement syndicated broadly to a group of international banks, and issued fixed rate notes to The Prudential Insurance Company of America and affiliates (Fixed Rate Notes).

The $447.0 million construction term loan was converted into a term loan with a balance of $407.0 million in May 2014. After this conversion, interest accrued at LIBOR plus 2.25%. Interest under the term loan was payable the last day of the selected interest period for interest periods of three months or less, and every three months for interest periods greater than three months. Amortized principal amounts of the term loan were payable quarterly after the conversion. The term loan had an interest rate of 2.44% at June 30, 2015.

In December 2015, the outstanding principal and interest on the term loan were paid in full with proceeds from the SDTS Series A Notes. Also in December 2015, the Fixed Rate Notes were assumed by SDTS in connection with the merger of SPLLC into SDTS.

The Fixed Rate Notes have a principal balance of $60.0 million which is due in full on June 20, 2018. Interest is payable quarterly at an interest rate of 5.04% per annum. The Fixed Rate Notes do not provide for any principal payments.

The credit agreement governing the Fixed Rate Notes contains certain default triggers related to the failure to maintain compliance with financial and other covenants contained in the agreements, such as limitations on liens, investments and the incurrence of additional indebtedness. SDTS was in compliance with all covenants for the Fixed Rate Notes as of June 30, 2016 and December 31, 2015.

SDTS’s Series A Notes, Series B Notes, 2009 Notes, 2010 Notes and Fixed Rate Notes are secured by SDTS’s T&D assets, the leases, certain accounts and TDC’s equity interests in SDTS on the same basis as SDTS’s revolving credit facility described above in Note 6, Borrowings Under Credit Facilities.

 

Fair Value of Financial Instruments
Fair Value of Financial Instruments

8.

Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, restricted cash, due from affiliates and accounts payable approximate fair value due to the short-term nature of these assets and liabilities.

We had borrowings totaling $721.2 million and $624.9 million under our senior secured notes with a weighted average interest rate of 4.64% and 4.78% per annum as of June 30, 2016 and December 31, 2015, respectively. The fair value of these borrowings is estimated using discounted cash flow analysis based on current market rates.

Financial instruments, measured at fair value, by level within the fair value hierarchy were as follows:

 

 

 

Carrying

 

 

Fair Value

 

(In thousands)

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

721,230

 

 

$

 

 

$

790,687

 

 

$

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

624,889

 

 

$

 

 

$

657,270

 

 

$

 

 

Regulatory Liability
Regulatory Liability

9.

Regulatory Liability

Our regulatory liability is established through our depreciation rates related to cost of removal and represents amounts that we expect to incur in the future. As of June 30, 2016 and December 31, 2015, we recorded on the Consolidated Balance Sheets as a long-term liability $16.0 million and $10.6 million, respectively, net of actual removal costs incurred.

Commitments and Contingencies
Commitments and Contingencies

10.

Commitments and Contingencies

The amounts reported as regulatory assets as of June 30, 2016 and December 31, 2015 are subject to the review by the PUCT and as with all utility assets may change at a later date based on that review, see Note 5, Other Assets.

We are not a party to any legal proceedings other than legal proceedings arising in the ordinary course of business. We do not believe the resolution of these proceedings, individually or in the aggregate, will have a material impact on our business, financial condition or results of operations, liquidity and cash flows.

 

Equity
Equity

11.

Equity

On June 3, 2016, our board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, Inc., on June 30, 2016 of $0.25 per unit for a total distribution of $15.2 million ($10.9 million to InfraREIT, Inc.). Also, on June 3, 2016, our board of directors approved a cash dividend to stockholders of record of InfraREIT, Inc. on June 30, 2016 of $0.25 per share for a total of $10.9 million. The cash distribution and cash dividend were paid on July 21, 2016.

On March 2, 2016, our board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, Inc., on March 31, 2016 of $0.25 per unit for a total distribution of $15.2 million ($10.9 million to InfraREIT, Inc.). Also, on March 2, 2016, our board of directors approved a cash dividend to stockholders of record of InfraREIT, Inc. on March 31, 2016 of $0.25 per share for a total of $10.9 million. The cash distribution and cash dividend were paid on April 21, 2016.

On June 5, 2015, our board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, Inc., on June 30, 2015 of $0.225 per unit for a total distribution of $13.6 million ($9.8 million to InfraREIT, Inc.). Also, on June 5, 2015, our board of directors approved a cash dividend to stockholders of record of InfraREIT, Inc. on June 30, 2015 of $0.225 per share for a total of $9.8 million. The cash distribution and cash dividend were paid on July 23, 2015.

On March 6, 2015, our board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, Inc., on March 31, 2015 of $0.14 per unit for a total distribution of $8.5 million ($6.1 million to InfraREIT, Inc.). Also, on March 6, 2015, our board of directors approved a cash dividend to stockholders of record of InfraREIT, Inc. on March 31, 2015 of $0.14 per share for a total of $6.1 million. The cash distribution and cash dividend were paid on April 23, 2015.

On January 13, 2015, InfraREIT, L.L.C.’s board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, L.L.C., on January 20, 2015 of $0.26 per unit for a total distribution of $11.7 million ($9.0 million to InfraREIT, L.L.C.). Also, on January 13, 2015, InfraREIT, L.L.C.’s board of directors approved a cash dividend to shareholders of record of InfraREIT, L.L.C. on January 20, 2015 of $0.26 per share for a total of $9.0 million. The cash distribution and cash dividend were paid on January 29, 2015.

On December 18, 2014, InfraREIT, L.L.C.’s board of directors approved a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, L.L.C., on December 18, 2014 of $0.31 per unit for a total distribution of $14.1 million ($10.8 million to InfraREIT, L.L.C.). Also, on December 18, 2014, InfraREIT, L.L.C.’s board of directors approved a cash dividend to shareholders of record of InfraREIT, L.L.C. on December 18, 2014 of $0.31 per share for a total of $10.8 million. The cash distribution and cash dividend were paid on January 16, 2015.

Noncontrolling Interest
Noncontrolling Interest

12.

Noncontrolling Interest

We present as a noncontrolling interest the portion of any equity in entities that we control and consolidate but do not own. Generally, OP Units of our Operating Partnership participate in net income allocations and distributions and entitle their holder the right, subject to the terms set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner. At our option, we may satisfy this redemption with cash or by exchanging shares of InfraREIT, Inc. common stock on a one-for-one basis. As of June 30, 2016 and December 31, 2015, there were a total of 17.1 million and 17.0 million OP Units, respectively, held by the limited partners of the Operating Partnership.

During the six months ended June 30, 2016 and 2015, our Operating Partnership issued an aggregate of 29,722 and 28,000 long-term incentive units (LTIP Units), respectively, to seven members of our board of directors. For additional information, refer to Note 15, Share-Based Compensation.

We follow the guidance issued by the FASB regarding the classification and measurement of redeemable securities. Accordingly, we have determined that the OP Units meet the requirements to be classified as permanent equity. The Operating Partnership did not redeem any OP Units during the six months ended June 30, 2016. During the year ended December 31, 2015, we did not redeem any OP Units other than, in connection with the Reorganization: (1) 1,551,878 Class A OP Units held by Hunt-InfraREIT, which were exchanged with InfraREIT, Inc. for 1,551,878 shares of common stock of InfraREIT, Inc. and (2) 6,242,999 Class A OP Units in exchange for the assignment of a promissory note in the principal amount of $66.5 million.

Earnings Per Share
Earnings Per Share

13.

Earnings Per Share

Basic earnings per share is calculated by dividing net earnings after noncontrolling interest by the weighted average shares outstanding. Diluted earnings per share is calculated similarly, except that it includes the dilutive effect of the assumed redemption of OP Units for shares of common stock of InfraREIT, Inc. or common shares of InfraREIT, L.L.C., as applicable, if such redemption were dilutive. The redemption of OP Units would have been anti-dilutive during the three and six months ended June 30, 2016 and 2015.

Earnings per share are calculated as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands, except per share data)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to InfraREIT, Inc.

 

$

6,608

 

 

$

6,362

 

 

$

12,923

 

 

$

(20,511

)

Weighted average common shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Basic net income (loss) per share

 

$

0.15

 

 

$

0.15

 

 

$

0.30

 

 

$

(0.48

)

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to InfraREIT, Inc.

 

$

6,608

 

 

$

6,362

 

 

$

12,923

 

 

$

(20,511

)

Weighted average common shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Redemption of operating partnership units

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average dilutive shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Diluted net income (loss) per share

 

$

0.15

 

 

$

0.15

 

 

$

0.30

 

 

$

(0.48

)

Due to the anti-dilutive effect, the computation of diluted earnings

    per share does not reflect the following adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interest

 

$

2,576

 

 

$

2,481

 

 

$

5,038

 

 

$

(6,519

)

Redemption of operating partnership units

 

 

17,058

 

 

 

17,028

 

 

 

17,057

 

 

 

15,424

 

 

Leases
Leases

14.

Leases

The following table shows the composition of our lease revenue:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Base rent (straight-line)

 

$

33,785

 

 

$

29,458

 

 

$

67,450

 

 

$

58,830

 

Percentage rent

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenue

 

$

33,785

 

 

$

29,458

 

 

$

67,450

 

 

$

58,830

 

 

 

SDTS has entered into various leases with Sharyland for all of our placed in service T&D assets. The master lease agreements, as amended, expire at various dates from December 31, 2017 through December 31, 2022. Each agreement includes annual base rent while all but one agreement includes additional percentage rent (based on an agreed upon percentage of the gross revenue of Sharyland, as defined in the lease agreements, in excess of annual specified breakpoints). The rate used for percentage rent for the reported time periods varies by lease and ranges from a high of 37% to a low of 23%. Because an annual specified breakpoint must be met under our leases before we can recognize any percentage rent, we anticipate our revenue will grow over the year with little to no percentage rent recognized in the first and second quarters of each year and with the largest amounts recognized during the third and fourth quarters of each year.

 

Share Based Compensation
Share-Based Compensation

15.

Share-Based Compensation

We currently utilize the InfraREIT, Inc. 2015 Equity Incentive Plan (2015 Equity Incentive Plan) to compensate the non-employee directors for their service on our board of directors. In January 2016, we issued an aggregate of 4,735 shares of common stock and 29,722 LTIP Units to members of our board of directors with a grant date fair value of $18.58 per common share or LTIP Unit and an aggregate fair value of $0.6 million. The 29,722 LTIP Units will vest in January 2017, subject to continued service, and the 4,735 shares of common stock fully vested upon issuance. In April 2016, we issued 5,497 shares of common stock to members of our board of directors with a grant date fair value of $16.81 per common share and an aggregate fair value of $0.1 million. These shares of common stock fully vested upon issuance. In February 2015, an aggregate of 28,000 LTIP Units were issued by the Operating Partnership with a grant date fair value of $26.41 per share to members of our board of directors which vested in full in February 2016. We recognized $0.2 million of compensation expense in general and administrative expense on the Consolidated Statements of Operations during the three months ended June 30, 2016 and 2015. We recognized $0.5 million and $0.3 million of compensation expense in general and administrative expense on the Consolidated Statements of Operations during the six months June 30, 2016 and 2015, respectively, related to these equity awards.

Supplemental Cash Flow Information
Supplemental Cash Flow Information

16.

Supplemental Cash Flow Information

Supplemental cash flow information and non-cash investing and financing activities are as follows:

 

 

 

Six Months Ended June 30,

 

(In thousands)

 

2016

 

 

2015

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

15,745

 

 

$

13,569

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Change in accrued additions to electric plant

 

 

1,544

 

 

 

5,475

 

Allowance for funds used during construction - debt

 

 

1,779

 

 

 

919

 

Net non-cash equity issuances related to the Merger and Reorganization

 

 

 

 

 

97,193

 

Net non-cash noncontrolling equity issuances related to the Merger and Reorganization

 

 

 

 

 

119,607

 

Non-cash noncontrolling interests equity issuance

 

 

 

 

 

755

 

Dividends and distributions payable

 

 

15,158

 

 

 

13,634

 

 

Description of Business and Presentation of Financial Statements (Policies)

Basis of Presentation

InfraREIT, Inc. is a Maryland corporation and the surviving corporation of a merger (Merger) with InfraREIT, L.L.C., a Delaware limited liability company, completed on February 4, 2015 in connection with the initial public offering (IPO) of InfraREIT, Inc. and related transactions effected during the first quarter of 2015 (collectively, the Reorganization). For additional information related to our IPO and Reorganization, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the U.S. Securities and Exchange Commission (SEC) on March 3, 2016.

The Merger was accounted for as a reverse acquisition, which means for accounting purposes we treated the assets and liabilities of InfraREIT, Inc. as assumed and incorporated with the assets and liabilities of InfraREIT, L.L.C. The accompanying unaudited interim financial statements of InfraREIT, Inc. (which may be referred to as the “Company,” “InfraREIT,” “we,” “our” and “us”) include our accounts and the accounts of all other entities in which we have a controlling financial interest with noncontrolling interest of consolidated subsidiaries reported separately. This Quarterly Report on Form 10-Q presents the operations of InfraREIT, L.L.C. prior to the Merger and the operations of InfraREIT, Inc. after the Merger.

These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 3, 2016.

We held 71.9% of the outstanding partnership units (OP Units) in InfraREIT Partners, LP (Operating Partnership or InfraREIT LP) as of June 30, 2016 and are its general partner. We include the accounts of the Operating Partnership and its subsidiaries in our consolidated financial statements. MC Transmission Holdings, Inc., which is a subsidiary of Marubeni Corporation (Marubeni), seven members of our board of directors and affiliates of Hunt Consolidated, Inc. (HCI) held the other 28.1% of the outstanding OP Units as of June 30, 2016.

Recent Accounting Guidance

Recently Adopted Accounting Guidance

In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis. This amendment affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 was effective for periods beginning after December 15, 2015 with early adoption permitted. We adopted the guidance on January 1, 2016. The adoption of the new guidance did not have an impact on our current consolidation.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. ASU 2015-03 was effective for periods beginning after December 15, 2015 with early adoption permitted. The adoption of the new guidance was applied on a retrospective basis with each balance sheet presented reflecting the new guidance along with transitional disclosures. The adoption did change the presentation of our financial position. As a result, $0.2 million of unamortized deferred financing costs were reclassified from other assets to long-term debt, less deferred financing costs on our Consolidated Balance Sheets as of December 31, 2015. The adoption of the new guidance did not have an impact on our results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805), Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The change in provisional amounts will be recorded in the period in which they are determined with changes to the income statement for any effect on earnings for changes in depreciation, amortization or other income effect calculated as if the accounting had been completed at the acquisition date. ASU 2015-16 was effective for periods beginning after December 15, 2015 with early adoption permitted. The new guidance was adopted as of January 1, 2016 and will be applied prospectively to adjustments to provisional amounts that occur for any future business combination. The adoption of the new guidance has not affected our financial position, results of operations or cash flows.

Recent Accounting Guidance Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amended the existing accounting standard for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for periods beginning after December 15, 2018 with early adoption permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the new guidance and have not determined the impact this standard may have on our financial position, results of operations or cash flows.

Electric Plant and Depreciation (Tables)
Schedule of Major Classes of Electric Plant

The major classes of electric plant are as follows:

 

(In thousands)

 

June 30, 2016

 

 

December 31, 2015

 

Electric plant:

 

 

 

 

 

 

 

 

Transmission plant

 

$

1,134,030

 

 

$

1,080,050

 

Distribution plant

 

 

519,953

 

 

 

457,988

 

General plant

 

 

15,951

 

 

 

15,655

 

Total plant in service

 

 

1,669,934

 

 

 

1,553,693

 

CWIP

 

 

122,612

 

 

 

121,602

 

Total electric plant

 

 

1,792,546

 

 

 

1,675,295

 

Accumulated depreciation

 

 

(252,824

)

 

 

(240,764

)

Electric plant, net

 

$

1,539,722

 

 

$

1,434,531

 

 

Other Assets (Tables)
Summary of Other Assets

Other assets are as follows:

 

 

 

June 30, 2016

 

 

December 31, 2015

 

(In thousands)

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Deferred financing costs on undrawn revolver

 

$

967

 

 

$

(300

)

 

$

667

 

 

$

967

 

 

$

(204

)

 

$

763

 

Other regulatory assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred financing costs

 

 

27,761

 

 

 

(15,102

)

 

 

12,659

 

 

 

27,112

 

 

 

(13,208

)

 

 

13,904

 

Deferred costs recoverable in future years

 

 

23,793

 

 

 

 

 

 

23,793

 

 

 

23,793

 

 

 

 

 

 

23,793

 

Other regulatory assets, net

 

 

51,554

 

 

 

(15,102

)

 

 

36,452

 

 

 

50,905

 

 

 

(13,208

)

 

 

37,697

 

Investments

 

 

2,519

 

 

 

 

 

 

2,519

 

 

 

2,519

 

 

 

 

 

 

2,519

 

Other assets

 

$

55,040

 

 

$

(15,402

)

 

$

39,638

 

 

$

54,391

 

 

$

(13,412

)

 

$

40,979

 

 

Long-Term Debt (Tables)
Components of Long-Term Debt

Long-term debt consisted of the following:

 

 

 

 

 

June 30, 2016

 

 

December 31, 2015

 

(In thousands)

 

Maturity Date

 

Amount

Outstanding

 

 

Interest

Rate

 

 

Amount

Outstanding

 

 

Interest

Rate

 

TDC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured notes - $25.0 million

 

December 30, 2020

 

$

18,125

 

 

 

8.50%

 

 

$

18,750

 

 

 

8.50%

 

SDTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured notes - $60.0 million

 

June 20, 2018

 

 

60,000

 

 

 

5.04%

 

 

 

60,000

 

 

 

5.04%

 

Senior secured notes - $400.0 million

 

December 3, 2025

 

 

400,000

 

 

 

3.86%

 

 

 

400,000

 

 

 

3.86%

 

Senior secured notes - $100.0 million

 

January 14, 2026

 

 

100,000

 

 

 

3.86%

 

 

 

 

 

N/A

 

Senior secured notes - $53.5 million

 

December 30, 2029

 

 

43,574

 

 

 

7.25%

 

 

 

44,512

 

 

 

7.25%

 

Senior secured notes - $110.0 million

 

September 30, 2030

 

 

99,531

 

 

 

6.47%

 

 

 

101,627

 

 

 

6.47%

 

Total SDTS debt

 

 

 

 

703,105

 

 

 

 

 

 

 

606,139

 

 

 

 

 

Total long-term debt

 

 

 

 

721,230

 

 

 

 

 

 

 

624,889

 

 

 

 

 

Less unamortized deferred financing costs

 

 

 

 

(145

)

 

 

 

 

 

 

(161

)

 

 

 

 

Total long-term debt, less deferred

    financing costs

 

 

 

 

721,085

 

 

 

 

 

 

 

624,728

 

 

 

 

 

Less current portion of long-term debt

 

 

 

 

(7,633

)

 

 

 

 

 

 

(7,423

)

 

 

 

 

Debt classified as long-term debt, less

    deferred financing costs

 

 

 

$

713,452

 

 

 

 

 

 

$

617,305

 

 

 

 

 

 

Fair Value of Financial Instruments (Tables)
Financial Instruments Measured at Fair Value

Financial instruments, measured at fair value, by level within the fair value hierarchy were as follows:

 

 

 

Carrying

 

 

Fair Value

 

(In thousands)

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

721,230

 

 

$

 

 

$

790,687

 

 

$

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

624,889

 

 

$

 

 

$

657,270

 

 

$

 

 

Earnings Per Share (Tables)
Computation of Earnings Per Share

Earnings per share are calculated as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands, except per share data)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to InfraREIT, Inc.

 

$

6,608

 

 

$

6,362

 

 

$

12,923

 

 

$

(20,511

)

Weighted average common shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Basic net income (loss) per share

 

$

0.15

 

 

$

0.15

 

 

$

0.30

 

 

$

(0.48

)

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to InfraREIT, Inc.

 

$

6,608

 

 

$

6,362

 

 

$

12,923

 

 

$

(20,511

)

Weighted average common shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Redemption of operating partnership units

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average dilutive shares outstanding

 

 

43,576

 

 

 

43,565

 

 

 

43,573

 

 

 

42,391

 

Diluted net income (loss) per share

 

$

0.15

 

 

$

0.15

 

 

$

0.30

 

 

$

(0.48

)

Due to the anti-dilutive effect, the computation of diluted earnings

    per share does not reflect the following adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interest

 

$

2,576

 

 

$

2,481

 

 

$

5,038

 

 

$

(6,519

)

Redemption of operating partnership units

 

 

17,058

 

 

 

17,028

 

 

 

17,057

 

 

 

15,424

 

 

Leases (Tables)
Schedule of Composition of Lease Revenue

The following table shows the composition of our lease revenue:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Base rent (straight-line)

 

$

33,785

 

 

$

29,458

 

 

$

67,450

 

 

$

58,830

 

Percentage rent

 

 

 

 

 

 

 

 

 

 

 

 

Total lease revenue

 

$

33,785

 

 

$

29,458

 

 

$

67,450

 

 

$

58,830

 

 

Supplemental Cash Flow Information(Tables)
Supplemental Cash Flow Information and Non-cash Investing and Financing Activities

Supplemental cash flow information and non-cash investing and financing activities are as follows:

 

 

 

Six Months Ended June 30,

 

(In thousands)

 

2016

 

 

2015

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

15,745

 

 

$

13,569

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Change in accrued additions to electric plant

 

 

1,544

 

 

 

5,475

 

Allowance for funds used during construction - debt

 

 

1,779

 

 

 

919

 

Net non-cash equity issuances related to the Merger and Reorganization

 

 

 

 

 

97,193

 

Net non-cash noncontrolling equity issuances related to the Merger and Reorganization

 

 

 

 

 

119,607

 

Non-cash noncontrolling interests equity issuance

 

 

 

 

 

755

 

Dividends and distributions payable

 

 

15,158

 

 

 

13,634

 

 

Description of Business and Presentation of Financial Statements - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended 12 Months Ended 6 Months Ended
Jun. 30, 2016
Director
Dec. 31, 2015
Reclassification From Other Assets To Long-Term Debt
Jun. 30, 2016
Hunt Consolidated Incorporation
Description Of Business And Presentation Of Financial Statements [Line Items]
 
 
 
Percentage of partnership units outstanding
71.90% 
 
28.10% 
Number of directors
 
 
Retrospective change in deferred financing costs
 
$ 0.2 
 
Related Party Transactions - Additional Information (Details) (USD $)
6 Months Ended 12 Months Ended 12 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
CREZ Project
Jun. 30, 2016
Hunt Utility Services L L C
Jun. 30, 2015
Hunt Utility Services L L C
Mar. 31, 2016
Hunt Utility Services L L C
Mar. 31, 2015
Hunt Utility Services L L C
Dec. 31, 2015
Hunt Utility Services L L C
Mar. 31, 2017
Hunt Utility Services L L C
Scenario, Forecast
Jan. 15, 2015
Hunt Consolidated, Inc. and affiliates
Golden Spread Project
Jan. 15, 2015
Hunt Consolidated, Inc. and affiliates
Cross Valley
Jun. 30, 2016
Maximum
Hunt Utility Services L L C
Jun. 30, 2016
Sharyland
Jun. 30, 2015
Sharyland
Jun. 30, 2016
Sharyland
Jun. 30, 2015
Sharyland
Dec. 31, 2015
Sharyland
Jun. 30, 2016
Hunt-InfraREIT
Dec. 31, 2014
Hunt-InfraREIT
Jun. 30, 2016
Hunt-InfraREIT
Class A OP Units
Jan. 1, 2015
Hunt-InfraREIT
Class A OP Units
Mar. 31, 2015
Hunt And Affiliated Entity
Jun. 30, 2016
Hunt And Affiliated Entity
Feb. 28, 2015
Hunt Consolidated Incorporation
Promissory Notes at 2.5% Accrued Percentage
Jun. 30, 2016
Hunt Consolidated Incorporation
Promissory Notes at 2.5% Accrued Percentage
Nov. 30, 2014
Hunt Consolidated Incorporation
Promissory Notes at 2.5% Accrued Percentage
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue from related party
 
 
 
 
 
 
 
 
 
 
 
 
$ 33,800,000 
$ 29,500,000 
$ 67,500,000 
$ 58,800,000 
 
 
 
 
 
 
 
 
 
 
Deferred rent liability
 
 
 
 
 
 
 
 
 
 
 
 
24,000,000 
 
24,000,000 
 
11,500,000 
 
 
 
 
 
 
 
 
 
Payments to acquire plant, and equipment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
120,100,000 
121,300,000 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
 
 
 
 
 
 
 
 
 
 
 
7,700,000 
 
7,700,000 
 
9,200,000 
 
 
 
 
 
 
 
 
 
Due from affiliates
24,600,000 
31,172,000 
 
 
 
 
 
 
 
 
 
 
24,600,000 
 
24,600,000 
 
31,200,000 
 
 
 
 
 
 
 
 
 
Payment for management fee
 
 
 
6,800,000 
5,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid management fee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued management fee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reimbursement of annual software license and maintenance fees and other expenses
 
 
 
 
300,000 
 
 
 
 
 
 
100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fee
 
 
 
 
 
13,100,000 
10,000,000 
 
14,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management agreement expiration date
 
 
 
Dec. 31, 2019 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agreement successive renewal terms
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fee, description
 
 
 
The base fee and each base fee going forward for the twelve month period beginning on each April 1 thereafter will equal 1.50% of our total equity (including noncontrolling interest) as of December 31 of the immediately preceding year, subject to a $30.0 million cap, unless a greater amount is approved by a majority of our independent directors or a committee comprised solely of independent directors 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fee equity multiplier
 
 
 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fee cap
 
 
 
30,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Unit, Issuance Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
82,500,000 
6,800,000 
 
 
 
 
 
 
 
Percentage of capital expenditure agreed to issue upon operating partnership units
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.00% 
 
 
 
 
 
 
 
 
Members capital, shares issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
70,846 
 
 
 
 
 
Merger of shares related obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
983,418 
 
 
 
 
 
 
Business combination, contingent consideration, cash payments
 
 
737,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate legal fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
5,000,000 
 
 
 
Borrowings from related parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
Accrued interest bearing note
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.50% 
Interest bearing note, maturity date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nov. 01, 2015 
 
Interest bearing note, maturity date, description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This note and accrued interest were repaid in February 2015 with proceeds from our IPO for a total of $1.0 million 
 
Repayments of related party debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
Purchase price of assets sold
 
 
 
 
 
 
 
 
 
$ 7,000,000 
$ 34,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electric Plant and Depreciation - Schedule of Major Classes of Electric Plant (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Electric plant:
 
 
Transmission plant
$ 1,134,030 
$ 1,080,050 
Distribution plant
519,953 
457,988 
General plant
15,951 
15,655 
Total plant in service
1,669,934 
1,553,693 
CWIP
122,612 
121,602 
Total electric plant
1,792,546 
1,675,295 
Accumulated depreciation
(252,824)
(240,764)
Electric plant, net
$ 1,539,722 
$ 1,434,531 
Electric Plant and Depreciation - Additional Information (Details) (USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Dec. 31, 2013
Electric Plant Held For Future Use
mi
Dec. 31, 2013
Electric Plant Held For Future Use
Stanton
Substations
Public Utility Property Plant And Equipment [Line Items]
 
 
 
 
 
Electric plant, net includes plant acquisition adjustments
$ 28,100,000 
 
$ 28,600,000 
 
 
Electric plant, transmission lines
 
 
 
66 
 
Number of substations
 
 
 
 
Payments to acquire electric plant
$ 120,615,000 
$ 115,627,000 
 
 
$ 37,100,000 
Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Goodwill
$ 138,384 
$ 138,384 
Other Assets - Summary of Other Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Other Assets Noncurrent [Abstract]
 
 
Deferred financing costs, Gross Carrying Amount
$ 967 
$ 967 
Other regulatory assets Deferred financing costs, Gross Carrying Amount
27,761 
27,112 
Deferred costs recoverable in future years, Gross Carrying Amount
23,793 
23,793 
Other regulatory assets, Net Gross Carrying Amount
51,554 
50,905 
Investments, Gross Carrying Amount
2,519 
2,519 
Other assets, Gross Carrying Amount
55,040 
54,391 
Deferred financing costs, Accumulated Amortization
(300)
(204)
Other regulatory assets Deferred financing costs, Accumulated Amortization
(15,102)
(13,208)
Other regulatory assets, Net Accumulated Amortization
(15,102)
(13,208)
Other assets, Accumulated Amortization
(15,402)
(13,412)
Deferred financing costs, Net Carrying Amount
667 
763 
Other regulatory assets Deferred financing costs, Net Carrying Amount
12,659 
13,904 
Deferred costs recoverable in future years, Net Carrying Amount
23,793 
23,793 
Other regulatory assets, Net Carrying Amount
36,452 
37,697 
Investments, Net Carrying Amount
2,519 
2,519 
Other assets, Net Carrying Amount
$ 39,638 
$ 40,979 
Other Assets - Additional Information (Details) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
Revolving Credit Facility
Sharyland Distribution & Transmission Services
Dec. 31, 2014
Revolving Credit Facility
Sharyland Distribution & Transmission Services
Other Assets [Line Items]
 
 
 
 
Credit facility, maximum borrowing capacity
 
 
$ 250,000,000 
$ 250,000,000 
Deferred costs recoverable in future years
$ 23,793,000 
$ 23,793,000 
 
 
Borrowings Under Credit Facilities - Additional Information (Details) (USD $)
6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
SDTS Credit Agreements
Dec. 31, 2015
SDTS Credit Agreements
Jun. 30, 2016
InfraREIT LP Revolving Credit Facility
Dec. 31, 2014
InfraREIT LP Revolving Credit Facility
Jun. 30, 2016
Revolving Credit Facility
SDTS Credit Agreements
Dec. 31, 2014
Revolving Credit Facility
SDTS Credit Agreements
Jun. 30, 2016
Revolving Credit Facility
Letter Of Credit
SDTS Credit Agreements
Dec. 31, 2015
Revolving Credit Facility
Letter Of Credit
SDTS Credit Agreements
Jun. 30, 2016
Revolving Credit Facility
Swingline Loans
SDTS Credit Agreements
Line Of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Amount of revolving credit facility under agreement
$ 0 
$ 0 
$ 48,500,000 
$ 54,000,000 
 
$ 75,000,000 
 
 
$ 0 
$ 0 
 
Line of credit facility, remaining borrowing capacity
75,000,000 
75,000,000 
201,500,000 
 
 
15,000,000 
 
 
 
196,000,000 
5,000,000 
Credit facility, maturity date
 
 
 
 
Dec. 10, 2019 
 
 
 
 
 
 
Revolving credit facility, interest rate description
a rate equal to (1) the one, two, three or six month London Interbank Offered Rate (LIBOR) plus 2.5%, or (2) a base rate (equal to the highest of (a) the Federal Funds Rate plus ½ of 1%, (b) the Bank of America prime rate and (c) LIBOR plus 1%) plus 1.5%. Letters of credit are subject to a letter of credit fee equal to the daily amount available to be drawn multiplied by 2.5%. 
 
a rate equal to either (1) a base rate, determined as the greatest of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus ½ of 1% and (c) LIBOR plus 1.00% per annum, plus a margin of either 0.75% or 1.00% per annum, depending on the total debt to capitalization ratio of SDTS on a consolidated basis or (2) LIBOR plus a margin of either 1.75% or 2.00% per annum 
 
 
 
 
 
 
 
 
Credit facility, maximum borrowing capacity
 
 
 
 
 
 
$ 250,000,000 
$ 250,000,000 
$ 25,000,000 
 
 
Credit facility, extended maturity date
 
 
 
 
 
 
Dec. 10, 2019 
 
 
 
 
Debt, weighted average interest rate
 
 
 
 
 
 
 
 
2.21% 
2.05% 
 
Long-Term Debt - Components of Long-Term Debt (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2015
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2010
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Dec. 31, 2015
SDTS Credit Agreements
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 5.04% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 5.04% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 3.86% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 3.86% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 3.86% Maturing in 2026 [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Dec. 31, 2009
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Dec. 31, 2010
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, Interest Rate
 
 
8.50% 
8.50% 
8.50% 
 
 
5.04% 
5.04% 
3.86% 
3.86% 
3.86% 
7.25% 
7.25% 
7.25% 
6.47% 
6.47% 
6.47% 
Long-term debt, Amount Outstanding
$ 721,230 
$ 624,889 
$ 18,125 
$ 18,750 
 
$ 703,105 
$ 606,139 
$ 60,000 
$ 60,000 
$ 400,000 
$ 400,000 
$ 100,000 
$ 43,574 
$ 44,512 
 
$ 99,531 
$ 101,627 
 
Less unamortized deferred financing costs
(145)
(161)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt, less deferred financing costs
721,085 
624,728 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current portion of long-term debt
(7,633)
(7,423)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt classified as long-term debt, less deferred financing costs
$ 713,452 
$ 617,305 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing note, maturity date
 
 
Dec. 30, 2020 
 
 
 
 
Jun. 20, 2018 
 
Dec. 03, 2025 
 
Jan. 14, 2026 
Dec. 30, 2029 
 
 
Sep. 30, 2030 
 
 
Long-Term Debt - Components of Long-Term Debt (Parenthetical) (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2010
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 5.04% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 3.86% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 3.86% Maturing in 2026 [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Dec. 31, 2009
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Dec. 31, 2010
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Long-term debt, face amount
$ 25.0 
$ 25.0 
$ 60.0 
$ 400.0 
$ 100.0 
$ 53.5 
$ 53.5 
$ 110.0 
$ 110.0 
Long-Term Debt - Additional Information (Details) (USD $)
6 Months Ended 1 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 6 Months Ended 0 Months Ended 1 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2015
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2010
TDC [Member]
Senior Secured Notes, 8.50% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Series A Notes [Member]
Jun. 30, 2016
SDTS Credit Agreements
Series A Notes [Member]
Jan. 14, 2016
SDTS Credit Agreements
Series B Notes [Member]
Jun. 30, 2016
SDTS Credit Agreements
Series B Notes [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Dec. 31, 2009
SDTS Credit Agreements
Senior Secured Notes, 7.25% [Member]
Jun. 30, 2016
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Dec. 31, 2015
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Dec. 31, 2010
SDTS Credit Agreements
Senior Secured Notes, 6.47% [Member]
Jun. 30, 2015
Sharyland Projects, L.L.C [Member]
Senior Secured Credit Facilities [Member]
May 31, 2014
Sharyland Projects, L.L.C [Member]
Senior Secured Credit Facilities [Member]
Jun. 30, 2016
Sharyland Projects, L.L.C [Member]
Senior Secured Credit Facilities [Member]
Mar. 31, 2013
Sharyland Projects, L.L.C [Member]
Senior Secured Credit Facilities [Member]
Jun. 30, 2016
Sharyland Projects, L.L.C [Member]
Senior Secured Credit Facilities [Member]
LIBOR [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, face amount
 
 
$ 25,000,000 
 
$ 25,000,000 
$ 400,000,000 
 
$ 100,000,000 
 
$ 53,500,000 
 
$ 53,500,000 
$ 110,000,000 
 
$ 110,000,000 
 
 
$ 60,000,000 
 
 
Long-term debt, stated interest rate
 
 
8.50% 
8.50% 
8.50% 
3.86% 
 
3.86% 
 
7.25% 
7.25% 
7.25% 
6.47% 
6.47% 
6.47% 
 
 
5.04% 
 
 
Deferred financing costs, Net Carrying Amount
667,000 
763,000 
100,000 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt Maturity Period
 
 
 
 
 
10 years 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing note, maturity date
 
 
Dec. 30, 2020 
 
 
 
Dec. 03, 2025 
 
Jan. 14, 2026 
Dec. 30, 2029 
 
 
Sep. 30, 2030 
 
 
 
 
Jun. 20, 2018 
 
 
Construction-term loan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
447,000,000 
 
Construction term loan outstanding converted into term loan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 407,000,000 
 
 
 
Interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.44% 
 
 
 
2.25% 
Fair Value of Financial Instruments - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
 
 
Long-term debt
$ 713,452 
$ 617,305 
Senior Secured Notes
 
 
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
 
 
Long-term debt
$ 721,200 
$ 624,900 
Debt, weighted average interest rate
4.64% 
4.78% 
Fair Value of Financial Instruments - Financial Instruments Measured at Fair Value (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Long-term debt
$ 721,230 
$ 624,889 
Level 2 |
Fair Value
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Long-term debt
$ 790,687 
$ 657,270 
Regulatory Liability - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Regulated Operations [Abstract]
 
 
Regulatory Liability
$ 16,024 
$ 10,625 
Equity - Additional Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Jun. 3, 2016
Cash Distribution Approved on June 3, 2016
Jun. 30, 2016
Cash Distribution Approved on June 3, 2016
Mar. 2, 2016
Cash Distribution Approved on March 2, 2016
Jun. 30, 2016
Cash Distribution Approved on March 2, 2016
Jun. 5, 2015
Cash Distribution Approved on June 5, 2015
Jun. 30, 2016
Cash Distribution Approved on June 5, 2015
Mar. 6, 2015
Cash Distribution Approved on March 6, 2015
Jun. 30, 2016
Cash Distribution Approved on March 6, 2015
Jan. 13, 2015
Cash Distribution Approved on January 13, 2015
Jun. 30, 2016
Cash Distribution Approved on January 13, 2015
Dec. 18, 2014
Cash Distribution Approved on December 18, 2014
Jun. 30, 2016
Cash Distribution Approved on December 18, 2014
Jun. 3, 2016
Accumulated Deficit
Cash Distribution Approved on June 3, 2016
Mar. 2, 2016
Accumulated Deficit
Cash Distribution Approved on March 2, 2016
Jun. 5, 2015
Accumulated Deficit
Cash Distribution Approved on June 5, 2015
Mar. 6, 2015
Accumulated Deficit
Cash Distribution Approved on March 6, 2015
Jan. 13, 2015
Accumulated Deficit
Cash Distribution Approved on January 13, 2015
Dec. 18, 2014
Accumulated Deficit
Cash Distribution Approved on December 18, 2014
Jun. 3, 2016
InfraREIT, L.L.C.
Cash Distribution Approved on June 3, 2016
Mar. 2, 2016
InfraREIT, L.L.C.
Cash Distribution Approved on March 2, 2016
Jun. 5, 2015
InfraREIT, L.L.C.
Cash Distribution Approved on June 5, 2015
Mar. 6, 2015
InfraREIT, L.L.C.
Cash Distribution Approved on March 6, 2015
Jan. 13, 2015
InfraREIT, L.L.C.
Cash Distribution Approved on January 13, 2015
Dec. 18, 2014
InfraREIT, L.L.C.
Cash Distribution Approved on December 18, 2014
Jun. 3, 2016
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on June 3, 2016
Mar. 2, 2016
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on March 2, 2016
Jun. 5, 2015
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on June 5, 2015
Mar. 6, 2015
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on March 6, 2015
Jan. 13, 2015
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on January 13, 2015
Dec. 18, 2014
InfraREIT, L.L.C.
Accumulated Deficit
Cash Distribution Approved on December 18, 2014
Class Of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash distribution declaration date
 
 
 
 
 
Jun. 03, 2016 
 
Mar. 02, 2016 
 
Jun. 05, 2015 
 
Mar. 06, 2015 
 
Jan. 13, 2015 
 
Dec. 18, 2014 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions to unit holders, date of record
 
 
 
 
 
Jun. 30, 2016 
 
Mar. 31, 2016 
 
Jun. 30, 2015 
 
Mar. 31, 2015 
 
Jan. 20, 2015 
 
Dec. 18, 2014 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions declared to unit holders, per unit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.25 
$ 0.25 
$ 0.225 
$ 0.14 
$ 0.26 
$ 0.31 
 
 
 
 
 
 
Cash distribution to unit holders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 15.2 
$ 15.2 
$ 13.6 
$ 8.5 
$ 11.7 
$ 14.1 
 
 
 
 
 
 
Cash dividends declared to shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 10.9 
$ 10.9 
$ 9.8 
$ 6.1 
$ 9.0 
$ 10.8 
 
 
 
 
 
 
$ 10.9 
$ 10.9 
$ 9.8 
$ 6.1 
$ 9.0 
$ 10.8 
Dividends Payable, date declared
 
 
 
 
 
Jun. 03, 2016 
 
Mar. 02, 2016 
 
Jun. 05, 2015 
 
Mar. 06, 2015 
 
Jan. 13, 2015 
 
Dec. 18, 2014 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends payable date of record
 
 
 
 
 
Jun. 30, 2016 
 
Mar. 31, 2016 
 
Jun. 30, 2015 
 
Mar. 31, 2015 
 
Jan. 20, 2015 
 
Dec. 18, 2014 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared per share to shareholders
$ 0.250 
$ 0.225 
$ 0.500 
$ 0.625 
$ 0.25 
 
$ 0.25 
 
$ 0.225 
 
$ 0.14 
 
$ 0.26 
 
$ 0.31 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash distribution and dividend paid date
 
 
 
 
 
Jul. 21, 2016 
 
Apr. 21, 2016 
 
Jul. 23, 2015 
 
Apr. 23, 2015 
 
Jan. 29, 2015 
 
Jan. 16, 2015 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling Interest - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Dec. 31, 2015
Class A OP Units
Jun. 30, 2016
Class A OP Units
Hunt-InfraREIT
Dec. 31, 2015
Class A OP Units
Hunt-InfraREIT
Jun. 30, 2016
LTIP Units
Jun. 30, 2015
LTIP Units
Minority Interest [Line Items]
 
 
 
 
 
 
 
Description of units redeemed for cash or, at option, exchanged for common shares
one-for-one basis 
 
 
 
 
 
 
OP Units held by the limited partners
17,100,000 
17,000,000 
 
 
 
 
 
Operating partnership units issued
 
 
 
 
 
29,722 
28,000 
Operating partnership units redeem
 
 
 
1,551,878 
 
 
Common shares received
 
 
 
 
1,551,878 
 
 
Shares purchased consideration for promissory note
 
 
6,242,999 
 
 
 
 
Principal amount of shares purchased consideration for promissory note
 
 
$ 66.5 
 
 
 
 
Earnings Per Share - Computation of Earnings Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Basic net income per share:
 
 
 
 
Net income (loss) attributable to InfraREIT, Inc.
$ 6,608 
$ 6,362 
$ 12,923 
$ (20,511)
Weighted average common shares outstanding
43,576 
43,565 
43,573 
42,391 
Basic net income (loss) per share
$ 0.15 
$ 0.15 
$ 0.30 
$ (0.48)
Diluted net income per share:
 
 
 
 
Net income (loss) attributable to InfraREIT, Inc.
6,608 
6,362 
12,923 
(20,511)
Weighted average common shares outstanding
43,576 
43,565 
43,573 
42,391 
Weighted average dilutive shares outstanding
43,576 
43,565 
43,573 
42,391 
Diluted net income (loss) per share
$ 0.15 
$ 0.15 
$ 0.30 
$ (0.48)
Due to the anti-dilutive effect, the computation of diluted earnings per share does not reflect the following adjustments:
 
 
 
 
Net income (loss) attributable to noncontrolling interest
$ 2,576 
$ 2,481 
$ 5,038 
$ (6,519)
Redemption of operating partnership units
17,058 
17,028 
17,057 
15,424 
Leases - Schedule of Composition of Lease Revenue (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Leases [Abstract]
 
 
 
 
Base rent (straight-line)
$ 33,785 
$ 29,458 
$ 67,450 
$ 58,830 
Total lease revenue
$ 33,785 
$ 29,458 
$ 67,450 
$ 58,830 
Leases - Additional Information (Details)
6 Months Ended
Jun. 30, 2016
Operating Leased Assets [Line Items]
 
Operating leases placed in services dates description
SDTS has entered into various leases with Sharyland for all of our placed in service T&D assets. The master lease agreements, as amended, expire at various dates from December 31, 2017 through December 31, 2022. 
Lease expiration date range, start date
Dec. 31, 2017 
Lease expiration date range, end date
Dec. 31, 2022 
Maximum
 
Operating Leased Assets [Line Items]
 
Rate of rent used, Percentage
37.00% 
Minimum
 
Operating Leased Assets [Line Items]
 
Rate of rent used, Percentage
23.00% 
Share-Based Compensation - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2016
LTIP Units
Jun. 30, 2015
LTIP Units
Jun. 30, 2016
2015 Equity Incentive Plan
General And Administrative Expense
Jun. 30, 2015
2015 Equity Incentive Plan
General And Administrative Expense
Jun. 30, 2016
2015 Equity Incentive Plan
General And Administrative Expense
Jun. 30, 2015
2015 Equity Incentive Plan
General And Administrative Expense
Apr. 30, 2016
2015 Equity Incentive Plan
Director
Jan. 31, 2016
2015 Equity Incentive Plan
Director
Jan. 31, 2016
2015 Equity Incentive Plan
Director
LTIP Units
Feb. 28, 2015
2015 Equity Incentive Plan
Director
LTIP Units
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
 
 
 
 
 
 
Aggregate common stock shares issued to directors
 
 
 
 
 
 
5,497 
4,735 
 
 
LTIP Units issued to directors
 
 
 
 
 
 
 
 
29,722 
 
Grant date fair value per share
 
 
 
 
 
 
$ 16.81 
 
$ 18.58 
$ 26.41 
Grant date fair value
 
 
 
 
 
 
$ 0.1 
 
$ 0.6 
 
Vesting period of LTIP Units
 
 
 
 
 
 
 
 
Jan. 01, 2017 
 
Operating partnership units issued
29,722 
28,000 
 
 
 
 
 
 
 
28,000 
Compensation Expenses
 
 
$ 0.2 
$ 0.2 
$ 0.5 
$ 0.3 
 
 
 
 
Supplemental Cash Flow Information - Supplemental Cash Flow Information and Non-cash Investing and Financing Activities (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Supplemental cash flow information
 
 
 
Cash paid during the period for interest
$ 15,745 
$ 13,569 
 
Non-cash investing and financing activities
 
 
 
Change in accrued additions to electric plant
1,544 
5,475 
 
Allowance for funds used during construction - debt
1,779 
919 
 
Net non-cash equity issuances related to the Merger and Reorganization
 
97,193 
 
Net non-cash noncontrolling equity issuances related to the Merger and Reorganization
 
119,607 
 
Non-cash noncontrolling interests equity issuance
 
755 
 
Dividends and distributions payable
$ 15,158 
$ 13,634 
$ 13,634