4 q2016 earnings_ppt_final

InfraREIT, Inc.2016 Full Year Results & Supplemental Information

February 28, 2017

Safe Harbor

Forward Looking StatementsThese presentations contain “forward-looking statements” about the business, financial performance, contracts, leases and prospects of InfraREIT, Inc. (the Company).

Words such as “could,” “will,” “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “guidance,” “outlook,” “target,” “expect,” “intend,” “plan,” “estimate,” “anticipate,”

“believe,” “project,” “budget,” “potential” or “continue” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements

contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on

currently available information as to the outcome and timing of future events. The Company’s actual results, performance or achievements could differ materially from those

expressed or implied by any forward-looking statements made in connection with this presentation. The Company’s capabilities or performance, stockholder value as well

as any other statements that are not historical facts in this presentation are forward-looking statements that involve certain risks and uncertainties, many of which are difficult

to predict and beyond the Company’s control. Factors that could cause actual results to differ materially from the results contemplated by such forward-looking statements

include, without limitation, decisions by regulators or changes in governmental policies or regulations with respect to the Company’s organizational structure, lease

arrangements, capitalization, acquisitions and dispositions of assets, recovery of investments, authorized rate of return and other regulatory parameters; the Company’s

current reliance on its tenant for all of its revenues and, as a result, the Company’s dependence on its tenant’s solvency and financial and operating performance; the effects

of existing and future tax and other laws and governmental regulations; the Company's failure to qualify or maintain its status as a real estate investment trust (REIT) or

changes in the tax laws applicable to REITs; the amount of available investment to grow the Company’s rate base; insufficient cash available to meet distribution

requirements; the price and availability of debt and equity financing; the Company’s level of indebtedness or debt service ob ligations; cyber breaches, weather conditions or

other natural phenomena; the effects of existing and future tax and other laws and governmental regulations; the termination of the Company’s management agreement or

the loss of the services of the Company’s manager or other qualified personnel; and adverse developments in the electric power industry or in business conditions generally.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors”

included in the Company’s filings with the U.S. Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying

assumptions prove incorrect, actual results may vary materially from those indicated. Forward-looking statements speak only as of the date made and reaffirmed, and the

Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required

by law.

Non-GAAP LegendThis presentation contains certain financial measures that are not recognized under generally accepted accounting principles (GAAP). InfraREIT’s management uses non-

GAAP measures as important supplemental measures of its operating performance. For example, management uses the cash available for distribution (CAD)

measurement when recommending dividends to its Board of Directors. These non-GAAP measures are also presented because management believes they help investors

understand InfraREIT’s business, performance and ability to earn and distribute cash to its stockholders by providing perspec tives not immediately apparent from net

income. InfraREIT has a diverse set of investors, including investors that primarily focus on utilities, yieldcos, MLPs or REITs. Management believes that each of these

different classes of investors focus on different types of metrics in their evaluation of InfraREIT. For instance, many util ity investors focus on earnings per share (EPS) and

management believes its presentation of non-GAAP earnings per share (Non-GAAP EPS) enables a better comparison to other utilities. Management believes it is

appropriate to calculate and provide these measures in order to be responsive to these investors. Including the reporting on these measures in InfraREIT’s public

disclosures also ensures that this information is available to all of InfraREIT’s investors. The presentation of Non-GAAP EPS; CAD; net income (loss) before interest

expense, net, income tax expense, depreciation and amortization (EBITDA); Adjusted EBITDA; funds from operations (FFO); and adjusted FFO (AFFO) in this presentation

are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition,

InfraREIT’s method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures

as calculated by other companies that do not use the same methodology as InfraREIT. Reconciliations of these measures to their most directly comparable GAAP

measures are included in Schedules 1-4 to this presentation.

2

Q4 2016 Highlights

Solid Q4 2016 performance; in line with expectations

Increase in lease revenue and net income

$52 million of capital expenditures

Strong growth fundamentals in Sharyland service territory

Distribution peak load increased 8.7% and distribution volume grew 6.5% in

2016 vs 2015

Oil prices have recently stabilized in the low $50s per barrel

Large number of wind interconnection agreements in the Texas Panhandle

Hunt projects

In operation: Cross Valley and Golden Spread Interconnection

Ongoing discussions regarding generation interconnections, South Plains

Interconnection, LP&L integration into ERCOT, Verde, and Southline

projects

Amended rate case filed on December 30, 2016

3

System

Peak Load

(MW)

Annual

Change

2011 230

2012 259 12.6%

2013 296 14.3%

2014 341 15.2%

2015 392 15.0%

2016 426 8.7%

230

259

296

341

392

426

0 MW

100 MW

200 MW

300 MW

400 MW

2011 2012 2013 2014 2015 2016

2011-2016 Sharyland System Peak Load

System Coincident Peak Load (MW)

4

System Coincident Peak Load (MW)

Source: Sharyland Utilities

2011-2016 Sharyland Distribution Volume Trends

5

Total Distribution GWh (1)

1,240

1,487

1,823

2,148

2,420

2,579

2011 2012 2013 2014 2015 2016

19.9%

6.5%

22.6%

17.9%

12.7%

(1) Reflects total distribution volumes adjusted for cancel/rebills and normalized weather for 2014-2016. These adjustments netted to a < 1% downward

adjustment to 2016 volumes and a < 1% upward adjustment to 2014 and 2015 volumes.

Sharyland Distribution: Residential And Industrial Trends

6

(1) Change in net residential customers – end of the period vs. beginning of the period.

(2) Change in KW for Primary and Large Secondary (>10 kW) rate classes

(3) Q1 to Q3 data updated since Q3 presentation

Growth in Residential Customers (1)Growth in Industrial and Large

Business Customer Demand, KW (2)

Period% Annual

Growth

2015 6.0%

2016 2.3%

Period% Growth Over

Prior Year

2015 vs 2014 23.7%

Q1 2016 vs Q1 2015 (3) 16.0%

Q2 2016 vs Q2 2015 (3) 16.9%

Q3 2016 vs Q3 2015 (3) 15.8%

Q4 2016 vs Q4 2015 13.2%

2016 vs 2015 15.5%

1.02

1.19

1.35

1.63

1.87

2.01 2.03 2.07

2011 2012 2013 2014 2015 2016 Q3 16 Q4 16

Millions barrels (bbls) / day (1)

Permian Region Total Oil Production

7

Change in Annual Average

bbls/day 2011-2016

2012 vs. 2011 16.7%

2013 vs. 2012 13.9%

2014 vs. 2013 20.4%

2015 vs. 2014 15.0%

2016 vs. 2015 7.6%

Change in Quarterly

Average bbls/day 2015-2016

Q2 15 vs. Q1 15 5.8%

Q3 15 vs. Q2 15 0.0%

Q4 15 vs. Q3 15 0.2%

Q1 16 vs. Q4 15 2.8%

Q2 16 vs. Q1 16 1.9%

Q3 16 vs. Q2 16 2.1%

Q4 16 vs. Q3 16 1.9%(1) Represents the average bbls/day of the respective time period from the U.S. EIA Monthly Drilling

Productivity Report for the Permian Basin

208 208

1,278

2,6723,429 3,429 3,429

1,415 1,784

903

4,295

208 MW 208 MW

1,278 MW

2,672 MW

3,429 MW

5,747 MW

9,508 MW

0 MW

2,000 MW

4,000 MW

6,000 MW

8,000 MW

10,000 MW

2012 2013 2014 2015 2016 2017 2018

Cumulative MW Installed IA Signed - Financial Security Posted IA Signed - No Financial Security

Interconnections Agreements For Panhandle Wind

Generation

8

Source: ERCOT – Seasonal Assessment of Resource Adequacy (Winter 2016-2017) and Generation Interconnection Status Report (Jan. 2017)

Pipeline of Hunt Projects

9

Additional U.S. –

Mexico DC Ties

Generation Interconnections

South Plains

Reinforcement

Southline

Transmission

Project

Verde Transmission

Project

Cross Valley

Transmission Line

Golden Spread

Electric

Cooperative (GSEC)

Interconnection

Lubbock Power &

Light Interconnection

Under Development

Operational; Owned by

Sharyland Utilities, L.P.

PUCT Docket No. 45414; Test Year: 2015

SDTS rate base in the rate case filing was $1,245 million

Requested $30 million return on and of deferred regulatory assets

Complied with requirement for a system-wide tariff and cost based rates for

each customer class

New rates likely to become effective no earlier than 45 days after rate case

approval

SDTS requested CCN

Requested approval of two tariff leases

Rate Request Summary

10

SDTS and Sharyland Combined Rate Request Summary

► Equity 45%

► Debt 55%

► Return on Equity 10%

► Cost of Debt 4.97%

► Rate of Return 7.24%

Q4 2016 Performance Summary$ millions, except per share amounts

11

Growth in lease revenue in line with expectations

Net Income Attributable to InfraREIT, Inc.

Common Stockholders Per Share

$0.45 $0.46

Q4 2015 Q4 2016

Lease Revenue

$50.9$55.2

Q4 2015 Q4 2016

+8%

Net Income

$27.5 $27.7

Q4 2015 Q4 2016

+1%

Q4 2016 Performance Summary$ millions, except per share amounts

12

Mixed Non-GAAP results due to increased interest expense and depreciation

outpacing growth in cash revenue during Q4 2016

Cash Available for Distribution

$19.0$17.5

Q4 2015 Q4 2016

Non-GAAP EPS

$0.31$0.28

Q4 2015 Q4 2016

Adjusted EBITDA

$36.6$38.6

Q4 2015 Q4 2016

+5%

-10% -8%

Full Year 2016 Performance Summary$ millions, except per share amounts

13

YTD performance of lease revenue and net income in line with expectations

Net Income Attributable to InfraREIT, Inc.

Common Stockholders Per Share

$0.31

$1.14

2015 2016

Lease Revenue

$151.2$172.1

2015 2016

+14%

Net Income

$19.9

$69.3

2015 2016

Full Year 2016 Performance Summary$ millions, except per share amounts

14

Increase in Adjusted EBITDA and CAD in line with expectations

Cash Available for Distribution

$72.6 $74.5

2015 2016

Non-GAAP EPS (1)

$1.21 $1.21

2015 2016

Adjusted EBITDA

$138.4$154.3

2015 2016

+11%

+3%

(1) Non-GAAP EPS for the year ended December 31, 2016 was based on 60.6 million weighted average shares outstanding compared to 59.2 million weighted average shares

outstanding during the same period of 2015.

Debt Obligations and Available Liquidity$ millions

15

Long-Term Debt (rate / maturity)

Outstanding

As of

December 31, 2016

TDC – Senior Secured Notes (8.50% / December 30, 2020) $ 17.5

SDTS – Senior Secured Notes (5.04% / June 20, 2018) 60.0

SDTS – Senior Secured Notes, Series A (3.86% / December 3, 2025) 400.0

SDTS – Senior Secured Notes, Series B (3.86% / January 14, 2026) 100.0

SDTS – Senior Secured Notes (7.25% / December 30, 2029) 42.6

SDTS – Senior Secured Notes (6.47% / September 30, 2030) 97.4

Total $ 717.5

Liquidity Facilities Amount

Outstanding

As of

December 31, 2016 Available

InfraREIT Partners Revolver $ 75.0 $ — $ 75.0

SDTS Revolver 250.0 137.5 112.5

Total $ 325.0 $ 137.5 $ 187.5

Cash (as of December 31, 2016) 17.6

Total Available Liquidity $ 205.1

Growth and Financing Strategy

16

Focus on Regulated

T&D Opportunities

Maintain Strong Financial Profile

Grow Dividends

► Sign long-term leases that reflect regulated

rate structure

► Construct Footprint Projects

► Opportunistically acquire T&D assets

► Maintain significant liquidity to support

capex plan and financial flexibility

► Maintain 55% debt to capitalization at

InfraREIT’s regulated subsidiary, SDTS

► Target consolidated credit metrics of 60%

debt to capitalization and 12% AFFO to

debt

2017E - 2019E Footprint Capital Expenditures (1)

$ millions

17

(1) Footprint Projects are transmission or distribution projects primarily situated within our distribution service territory, or that physically hang from our existing transmission assets

or are physically located within one of our existing substations.

Forecast range of $275 million – $500 million for 2017 – 2019.

Significant system upgrades since 2013, particularly in the Stanton (West Texas) area, have

accommodated growth and created capacity for future expansion

2017 2018 2019

Base Distribution $35 - $60 $35 - $60 $20 - $60

Base Transmission $45 - $75 $20 - $50 $5 - $30

Base Footprint

Capex$80 - $135 $55 - $110 $25 - $90

Synchronous

Condensers &

Second Circuit

$95 - $105 $20 - $40 $0 - $20

Total Footprint

Capex$175 - $240 $75 - $150 $25 - $110

Existing leases will be terminated and SDTS and SU will enter into two

new leases based on asset type

Transmission assets

Distribution assets

Leases will be directly regulated and approved by the PUCT as part of

an SDTS tariff

New leases are designed to continue to comply with the “true lease”

requirement and other tax rules applicable to REITs

Rent updated through rate cases, TCOS and DCRF filings instead of

annual rent supplements and validations

New leases will each have four-year terms compared to staggered,

multi-year expirations

Rate Case:Proposed Lease Changes

18

Test Year SDTS transmission rate base ($916 million)

Contains both base and percentage rent

Approximately 85 percent will be a fixed amount, paid

monthly

Percentage rent will be paid quarterly and will include a 35

percent percentage rent rate

Transmission lease payments will be updated for TCOS

filings approved subsequent to the Test Year

Rate Case:Proposed Transmission Lease

19

Test Year SDTS distribution rate base ($329 million)

Contains both base and percentage rent

Approximately 80 percent will be a fixed amount, paid monthly

Percentage rent will be paid quarterly and have a two-tier breakpoint

• 15.4% rate between first and second breakpoint

• 39.9% rate above the second breakpoint

Distribution lease payments will be updated for DCRF filings approved

subsequent to the rate case

The unregulated owners of SDTS and Sharyland intend to enter into a

transition payment agreement to allocate distribution revenue growth after the

2015 test year

Expected to be based on a variety of factors, including Sharyland’s distribution

revenue growth and the amount of distribution assets placed in service

This agreement will not affect ratepayers

Rate Case:Proposed Distribution Lease

20

Reg G Reconciliation

21

Schedule 1:

Reconciliation of Non-GAAP EPSQ4 2016 vs. Q4 2015

22

Non-GAAP EPS

InfraREIT defines non-GAAP net income as net income (loss) adjusted in a manner the Company believes is appropriate to show

its core operational performance, including: (a) adding back the non-cash reorganization structuring fee, (b) adding back the

reorganization expense related to the Company’s initial public offering (IPO) and related reorganization transactions, (c) adding

back the expense related to the contingent consideration issued as deemed capital credits, (d) a quarterly, not annual, adjustment

for the difference between the amount of percentage rent payments that the Company expects to receive with respect to the

applicable period and the amount of percentage rent the Company recognizes under GAAP during the period and (e) an

adjustment for the difference between the amount of base rent payments that the Company receives with respect to the applicable

period and the amount of straight-line base rent recognized under GAAP. The Company defines Non-GAAP EPS as non-GAAP

net income (loss) divided by the weighted average shares outstanding calculated in the manner described in the footnotes below.

The following table set forth a reconciliation of net income attributable to InfraREIT, Inc. per diluted share to Non-GAAP EPS for

the three months ended December 31, 2016 and 2015:

($ thousands, except per share amounts)

Q4 2016

Amount Per Share (3)

Q4 2015


Net income attributable to InfraREIT, Inc. $ 19,990 $ 0.46 $ 19,806 $ 0.45

Net income attributable to noncontrolling interest 7,749 0.46 7,725 0.45

Net income 27,739 0.46 27,531 0.45

Non-cash reorganization structuring fee — — — —

Reorganization expenses — — — —

Percentage rent adjustment (1) (10,038) (0.17) (9,768) (0.16)

Base rent adjustment (2) (567) (0.01) 1,069 0.02

Non-GAAP net income $ 17,134 $ 0.28 $ 18,832 $ 0.31

Schedule 1:

Reconciliation of Non-GAAP EPSFull Year 2016 vs. Full Year 2015

23

Non-GAAP EPS

The following table set forth a reconciliation of net income attributable to InfraREIT, Inc. per diluted share to Non-GAAP EPS for

the years ended December 31, 2016 and 2015:

($ thousands, except per share amounts)

2016


2015


Net income attributable to InfraREIT, Inc. $ 49,954 $ 1.14 $ 13,267 $ 0.31

Net income attributable to noncontrolling

interest19,347 1.14 6,664 0.41

Net income 69,301 1.14 19,931 0.34

Non-cash reorganization structuring fee — — 44,897 0.76

Reorganization expenses — — 333 —

Percentage rent adjustment (1) — — — —

Base rent adjustment (2) 4,035 0.07 6,538 0.11

Non-GAAP net income $ 73,336 $ 1.21 $ 71,699 $ 1.21

Schedule 1:

Reconciliation of Non-GAAP EPS

(1) Represents the difference between the amount of percentage rent payments and the amount recognized during the applicable

period, if any. Although the Company receives percentage rent payments related to each quarter, it does not recognize lease

revenue related to these percentage rent payments until the Company’s tenant’s annual gross revenues exceed minimum specified

annual breakpoints under the leases.

(2) This adjustment relates to the difference between the timing of cash base rent payments made under the Company’s leases and

when the Company recognizes base rent revenue under GAAP. The Company recognizes base rent on a straight-line basis over

the applicable term of the lease commencing when the related assets are placed in service, which is frequently different than the

period in which the cash rent becomes due.

(3) The weighted average common shares outstanding during the three months ended December 31, 2016 of 43.7 million was used to

calculate net income attributable to InfraREIT, Inc. per diluted share. The weighted average redeemable partnership units

outstanding during the three months ended December 31, 2016 of 16.9 million was used to calculate the net income attributable to

noncontrolling interest per share. The combination of the weighted average common shares and redeemable partnership units

outstanding during the three months ended December 31, 2016 of 60.6 million was used for the remainder of the per share

calculations.

(4) The weighted average common shares outstanding during the three months ended December 31, 2015 of 43.6 million was used to

calculate net income attributable to InfraREIT, Inc. per diluted share. The weighted average redeemable partnership units

outstanding during the three months ended December 31, 2015 of 17.0 million was used to calculate the net income attributable to

noncontrolling interest per share. The combination of the weighted average shares and redeemable partnership units outstanding

during the three months ended December 31, 2015 of 60.6 million was used for the remainder of the per share calculations.

(5) The weighted average common shares outstanding during the year ended December 31, 2016 of 43.6 million was used to calculate

net income attributable to InfraREIT, Inc. per diluted share. The weighted average redeemable partnership units outstanding during

the year ended December 31, 2016 of 17.0 million was used to calculate net income attributable to noncontrolling interest per share.

The combination of the weighted average common shares and redeemable partnership units outstanding during the year ended

December 31, 2016 of 60.6 million was used for the remainder of the per share calculations.

(6) The weighted average common shares outstanding during the year ended December 31, 2015 of 43.0 million was used to calculate

net loss attributable to InfraREIT, Inc. per diluted share. The weighted average redeemable partnership units outstanding during the

year ended December 31, 2015 of 16.2 million was used to calculate net loss attributable to noncontrolling interest per share. The

combination of the weighted average common shares and redeemable partnership units outstanding during the year ended

December 31, 2015 of 59.2 million was used for the remainder of the per share calculations.

24

Schedule 2:

Explanation and Reconciliation of CADQ4 2016 vs. Q4 2015

25

CAD

The Company defines CAD in a manner that it believes is appropriate to show its core operational performance, which includes a

deduction of the portion of capital expenditures needed to maintain its net assets. This deduction equals depreciation expense

within the applicable period. The portion of the capital expenditures in excess of depreciation, which the Company refers to as

growth capital expenditures, will increase the Company’s net assets. The CAD calculation also includes various other

adjustments from net income, as outlined below and described in more detail on Schedules 1, 3 and 4.

The following table sets forth a reconciliation of net income to CAD for the three months ended December 31, 2016 and 2015:

($ thousands) Q4 2016 Q4 2015

Net income $ 27,739 $ 27,531

Depreciation 12,392 10,773

Non-cash reorganization structuring fee — —

Percentage rent adjustment (1) (10,038) (9,768)

Base rent adjustment (2) (567) 1,069

Amortization of deferred financing costs 1,004 805

Reorganization expenses — —

Non-cash equity compensation 228 185

Other income, net (3) (861) (868)

Capital expenditures to maintain net assets (12,392) (10,773)

CAD $ 17,505 $ 18,954

Schedule 2:

Explanation and Reconciliation of CADFull Year 2016 vs. Full Year 2015

26

CAD

The following table sets forth a reconciliation of net income to CAD for the years ended December 31, 2016 and 2015:

($ thousands) 2016 2015

Net income $ 69,301 $ 19,931


Non-cash reorganization structuring fee — 44,897

Percentage rent adjustment (1) — —

Base rent adjustment (2) 4,035 6,538

Amortization of deferred financing costs 4,014 3,241

Reorganization expenses — 333

Non-cash equity compensation 978 678

Other income, net (3) (3,781) (3,048)

Capital expenditures to maintain net assets (46,704) (40,211)

CAD $ 74,547 $ 72,570

(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation on Non-GAAP EPS

(2) See footnote (2) on Schedule 1 on Explanation and Reconciliation on Non-GAAP EPS

(3) Includes allowance for funds used during construction (AFUDC) on other funds of $0.8 million and $0.9 million for the

three months ended December 31, 2016 and 2015, respectively, and $3.7 million and $3.0 million for the years ended

December 31, 2016 and 2015, respectively.

Schedule 3:

Explanation and Reconciliation of EBITDA and Adjusted EBITDAQ4 2016 vs. Q4 2015

27

EBITDA and Adjusted EBITDA

InfraREIT defines EBITDA as net income (loss) before interest expense, net; income tax expense; depreciation and amortization.

Adjusted EBITDA is defined as EBITDA adjusted in a manner the Company believes is appropriate to show its core operational

performance, including: (a) adding back the non-cash reorganization structuring fee, (b) a quarterly, not annual, adjustment for the

difference between the amount of percentage rent payments that the Company expects to receive with respect to the applicable

period and the amount of percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the

difference between the amount of base rent payments that the Company receives with respect to the applicable period and the

amount of straight-line base rent recognized under GAAP, (d) adding back the reorganization expense related to the Company’s

IPO and related reorganization transactions and (e) adjusting for other income (expense), net.

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended

December 31, 2016 and 2015:

($ thousands) Q4 2016 Q4 2015

Net income $ 27,739 $ 27,531

Interest expense, net 9,644 7,470

Income tax expense 325 374


EBITDA 50,100 46,148






Adjusted EBITDA $ 38,634 $ 36,581

(1) See footnote (1) on Schedule 1 on Explanation and Reconciliation of Non-GAAP EPS


(3) See footnote (3) on Schedule 2 on Explanation and Reconciliation of CAD

Schedule 3:

Explanation and Reconciliation of EBITDA and Adjusted EBITDAFull Year 2016 vs. Full Year 2015

28

EBITDA and Adjusted EBITDA

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the years ended

December 31, 2016 and 2015:

($ thousands) 2016 2015

Net income $ 69,301 $ 19,931

Interest expense, net 36,920 28,554

Income tax expense 1,103 949


EBITDA 154,028 89,645





Other income, net (3) (3,781) (3,048)

Adjusted EBITDA $ 154,282 $ 138,365




Schedule 4:

Explanation of FFO and AFFO

29

FFO and AFFO

The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (computed in accordance with

GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate

depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated

partnerships and joint ventures. Applying the NAREIT definition to the Company’s consolidated financial statements, which is the

basis for the FFO and the reconciliations below, results in FFO representing net income (loss) before depreciation, impairment of

assets and gain (loss) on sale of assets. FFO does not represent cash generated from operations as defined by GAAP and it is

not indicative of cash available to fund all cash needs, including distributions.

AFFO is defined as FFO adjusted in a manner the Company believes is appropriate to show its core operational performance,

including: (a) adding back the non-cash reorganization structuring fee, (b) a quarterly, not annual, adjustment for the difference

between the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and

the amount of percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the difference

between the amount of base rent payments that the Company receives with respect to the applicable period and the amount of

straight-line base rent recognized under GAAP, (d) adding back the reorganization expense related to the Company’s IPO and

related reorganization transactions and (e) adjusting for other income (expense), net.

Schedule 4:

Reconciliation of FFO and AFFOQ4 2016 vs. Q4 2015

30

FFO and AFFO

The following table sets forth a reconciliation of net income to FFO and AFFO for the three months ended December 31, 2016 and

2015:

($ thousands) Q4 2016 Q4 2015

Net income $ 27,739 $ 27,531


FFO 40,131 38,304






AFFO $ 28,665 $ 28,737




Schedule 4:

Reconciliation of FFO and AFFOFull Year 2016 vs. Full Year 2015

31

FFO and AFFO

The following table sets forth a reconciliation of net income to FFO and AFFO for the years ended December 31, 2016 and 2015:

($ thousands) 2016 2015

Net income $ 69,301 $ 19,831


FFO 116,005 60,142





Other income, net (3) (3,781) (3,048)

AFFO $ 116,259 $ 108,862




Appendix

32

Attractive Asset Profile

Transmission

► ~70% of our rate base is transmission

► ~815 circuit miles of transmission lines

► Transmission Operations Center

► Railroad DC Tie with Mexico

(300 MW)

Distribution

► ~30% of our rate base is distribution

► ~35,800 circuit miles of overhead

distribution lines

► ~4,700 circuit miles of underground

distribution lines

► ~54,000 electric delivery points

As of December 31, 201633

Summary Procedural Schedule and Timeline

Amended rate case filing – December 30, 2016

Hearings – March 29 – April 7, 2017

Initial briefs to be filed – April 18, 2017

Reply briefs due – April 28, 2017

Jurisdictional deadline for Commission’s final order – July 3, 2017

Rate Case:Key Regulatory Dates

34

Rate Case:Rate Base

35

($ thousands)

Test Year 2015

SDTS Sharyland TotalTest Year

2012 Change

Plant in service 1,523,740 27,733 1,551,473 437,514 1,113,959

Accumulated depreciation (253,368) (15,042) (268,410) (188,313) (80,097)

Net plant in service 1,270,372 12,691 1,283,063 249,201 1,033,862

Working capital (811) (2,660) (3,471) 972 (4,443)

Accumulated deferred

federal income tax (ADFIT)(90,992) 7,231 (83,761) (11,507) (72,254)

Materials and supplies 7,129 — 7,129 2,344 4,785

Prepayments — 1,067 1,067 89 978

Plant acquisition adjustment 28,970 — 28,970 — 28,970

Regulatory assets 30,000 (1,255) 28,745 55,654 (26,909)

Total Rate Base 1,244,668 17,074 1,261,742 296,753 964,989

Rate Case:Revenue Requirement

36

($ thousands)

Test Year 2015

SDTS Sharyland Total

Operating & maintenance expense 6,488 75,748 82,236

Depreciation, amortization & other expenses 43,246 1,991 45,237

Taxes other than federal income tax — 19,964 19,964

Federal income tax 30,159 (301) 29,858

Return on rate base 90,114 1,236 91,350

Total cost of service 170,007 98,638 268,645

Other revenues (3) (974) (977)

Transition to competition — (479) (479)

Revenues recovered in Docket 21591 deferral rider (3,000) — (3,000)

Account 565 revenue — (15,390) (15,390)

Total Adjusted Revenue Requirement 167,004 81,795 248,799

Long-term investments in rate base

Supported significant distribution load growth of

approximately 13 percent per year over the past five years

(through 2016), primarily due to increased oil and gas

exploration and production activity throughout the West Texas

region

Improved long-term reliability by investing over $300 million in

transmission and distribution infrastructure outside of the

Texas Panhandle over the last three years (through 2015)

Expanded access for wind farms in the Texas Panhandle to

provide clean, cost-effective electricity for Texas customers

Rate Case:Customer Benefits

37

Rate Case:Change in Sharyland’s Customer Rates (including riders)

38

(Average $/month) Current Proposed % Current Proposed %

Residential $ 112.79 $ 112.14 -0.6% $ 57.23 $ 112.14 95.9%

Secondary <= 10kW 67.66 58.65 -13.3% 114.20 58.65 -48.6%

Secondary > 10kW 322.31 273.23 -15.2% 296.70 273.23 -7.9%

Primary 25,800.30 28,963.80 12.3% N/A N/A N/A

Customer Class

Stanton, Brady, Celeste

(~51,000 Customers)McAllen

(~3,000 Customers)

Total Permian Basin –

Average Weekly Rig Count

Period Avg. # of Rigs

2012 499

2013 466

2014 539

2015 Q1 399

2015 Q2 243

2015 Q3 248

2015 Q4 224

2016 Q1 177

2016 Q2 140

2016 Q3 184

2016 Q4 230

Rig Count Trends In West Texas

39

Counties in Sharyland Service

Territory – Average Weekly

Rig Count

Period Avg. # of Rigs

2012 294

2013 266

2014 300

2015 Q1 195

2015 Q2 127

2015 Q3 128

2015 Q4 115

2016 Q1 85

2016 Q2 70

2016 Q3 93

2016 Q4 113

Source: Baker Hughes, North American Rotary Rig Count

Permian Basin Rig Deployment By County

40Source: Baker Hughes, North American Rotary Rig Count

As of 9/30/2016

(1) (17) (11) (1) (3)

(0) (1) (2) (1)

(2) (31) (10) (1)

(0)(2)(7)(11)

To be updated

with 12/30/16 and/or

2/10/17 information

As of 2/10/2017

(8) (20) (16) (1) (2)

(1) (2) (4) (1)

(3) (40) (12)

(3)(9)(15)

(1)

Hunt Projects (1)

As of February 28, 2017

41

Project State Net Plant

Golden Spread TX ~ $90 mm

Cross Valley TX ~ $170 mm

Project State Status

Generation Interconnections TX Development

Nogales – DC Tie AZ Development

Southline AZ – NM Development

South Plains / LP&L Integration TX Development

Verde NM Development

Construction or Development Projects

Assets in Operation

(1) InfraREIT holds a right of first offer applicable to many, but not all, of Hunt’s development projects. However, Hunt has informed InfraREIT

that it intends for InfraREIT to be the primary owner of its transmission and distribution development projects as they are completed and

placed in service.

SDTS (2)

Structure Mechanics

42

SDTS owns our T&D

assets and leases them

to Sharyland

Sharyland collects rate-

regulated revenue from

other utilities and retail

electric providers

Sharyland makes regular

lease payments to SDTS

InfraREIT pays dividends

to stockholders

1

2

3

4

Shareholders

InfraREIT (1)

Hunt Family

Sharyland

Utilities

Customers

T&D Services Cash

Lease

Rent

1

2

3

4 Ownership (3)

Hunt Manager

Hunt Developer

100% Interest

(1) Represents InfraREIT, Inc., InfraREIT Partners, LP (Operating Partnership) and Transmission and Distribution Company, L.L.C. (TDC)

(2) Represents Sharyland Distribution & Transmission Services, L.L.C. (SDTS)

(3) Represents Hunt Transmission Services, L.L.C. (limited partner of the Operating Partnership, shareholder of InfraREIT and Hunt Developer)

Conducted business as a REIT since 2010

Hunt

Consolidated,

Inc.

Board Structure

Management

Related Party

Transactions

Management

Agreement

9 total members, 6 independent

CEO, CFO and General Counsel are officers of InfraREIT and Hunt

Manager; InfraREIT’s CEO is also CEO of Sharyland

Require majority approval by the independent board members (i.e.

Hunt project acquisitions)

Responsible for the day-to-day business and legal activities of

InfraREIT

Annual base fee equal to $14.2 million for April 1, 2017 through March

31, 2018 representing 1.50% of total book equity as of year-end 2016

Capped at $30 million per year

Incentive fee equal to 20% of quarterly dividends per share in excess

of the threshold distribution amount payable quarterly

2017 dividend per share: $0.25

Threshold dividend: $0.27

Governance and Management

43

Investor Relations

4 q2016 earnings_ppt_final