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Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2024
Credit Loss [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
Under ASC 326, we are required to estimate and record non-cash credit losses related to our historical and any future investments in sales-type leases, lease financing receivables, loans and securities classified as held-to-maturity. The following tables detail the allowance for credit losses as of December 31, 2024 and December 31, 2023:
December 31, 2024
($ In thousands)Amortized Cost
Allowance (1)
Net InvestmentAllowance as a % of Amortized Cost
Investments in leases - sales-type$24,383,843 $(802,742)$23,581,101 3.29 %
Investments in leases - financing receivables19,167,432 (737,112)18,430,320 3.85 %
Investments in loans and securities1,676,530 (24,997)1,651,533 1.49 %
Other assets - sales-type sub-leases863,374 (20,598)842,776 2.39 %
Totals$46,091,179 $(1,585,449)$44,505,730 3.44 %
December 31, 2023
($ In thousands)Amortized Cost
Allowance (1)
Net InvestmentAllowance as a % of Amortized Cost
Investments in leases - sales-type$23,717,060 $(701,129)$23,015,931 2.96 %
Investments in leases - financing receivables18,914,734 (703,632)18,211,102 3.72 %
Investments in loans and securities1,173,949 (29,772)1,144,177 2.54 %
Other assets - sales-type sub-leases866,052 (18,722)847,330 2.16 %
Totals$44,671,795 $(1,453,255)$43,218,540 3.25 %
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(1) The total allowance excludes the CECL allowance for unfunded commitments of our loans and for unfunded commitments made to our tenants to fund the development and construction of improvements at our properties. As of December 31, 2024 and December 31, 2023, such allowance is $9.5 million and $19.1 million, respectively, and is recorded in Other liabilities.
The following chart reflects the roll-forward of the allowance for credit losses on our real estate portfolio for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
(In thousands)202420232022
Beginning Balance January 1, $1,472,386 $1,368,819 $534,325 
Initial allowance from current period investments2,914 293,033 573,624 
Current period change in credit allowance119,631 (189,466)260,870 
Charge-offs— — — 
Recoveries— — — 
Ending Balance December 31, $1,594,931 $1,472,386 $1,368,819 
During the year ended December 31, 2024, we recognized a $122.5 million increase in our allowance for credit losses primarily driven by the market performance of our tenants and negative changes in the macroeconomic forecast during the period, both of which impact the R&S Period PD, as well as adjustments made to the assumptions used to project future cash flows for one of our investments.
During the year ended December 31, 2023, we recognized a $103.6 million increase in our allowance for credit losses primarily driven by initial CECL allowances on our property acquisition and loan origination activity of $4.8 billion during such period and an increase in the Long-Term Period PD as a result of a standard annual update made to the default study we utilize to estimate our CECL allowance. This increase was partially offset by an overall decrease in the R&S Period PD of our tenants and their parent guarantors as a result of their market performance during the year.
During the year ended December 31, 2022, we recognized a $834.5 million increase in our allowance for credit losses primarily driven by the initial CECL allowances on $21.6 billion of property acquisition activity and $1.2 billion of loan origination activity during the period, market performance of our tenants and positive changes in the macroeconomic forecast during the period and an increase in the Long-Term Period PD as a result of a standard annual update made to the default study we utilize
to estimate our CECL allowance. This increase was partially offset by a decrease in the Long-Term Period PD, due to an upgrade of the credit rating of the senior secured debt used to determine the Long-Term Period PD for one of our tenants.
Credit Quality Indicators
We assess the credit quality of our investments through the credit ratings of the senior secured debt of the guarantors of our leases, as we believe that our lease agreements have a similar credit profile to a senior secured debt instrument. The credit quality indicators are reviewed by us on a quarterly basis as of quarter-end. In instances where the guarantor of one of our lease agreements does not have senior secured debt with a credit rating, we use either a comparable proxy company or the overall corporate credit rating, as applicable. We also use this credit rating to determine the Long-Term Period PD when estimating credit losses for each investment.
The following tables detail the amortized cost basis and year of origination of our Investments in leases - sales-type and financing receivable, Investments in loans and Other assets by the credit quality indicator we assigned to each lease or loan guarantor as of December 31, 2024 and 2023:
Amortized Cost Basis by Year of Origination as of December 31, 2024 (1)
(In thousands)20242023202220212020PriorTotal
Ba2$— $— $4,795,479 $— $— $— $4,795,479 
Ba3— — 12,882,102 2,182,313 5,667,136 12,634,167 33,365,718 
B1— — 2,359,188 — — 924,344 3,283,532 
B2— 447,554 — — 887,545 — 1,335,099 
B3— 667,922 299,859 — — 341,426 1,309,207 
N/A (2)
313,761 987,422 700,961 — — — 2,002,144 
Total$313,761 $2,102,898 $21,037,589 $2,182,313 $6,554,681 $13,899,937 $46,091,179 
Amortized Cost Basis by Year of Origination as of December 31, 2023 (1)
(In thousands)20232022202120202019PriorTotal
Ba2$— $4,317,380 $— $— $— $— $4,317,380 
Ba3— 12,670,502 2,168,701 5,576,739 937,325 11,623,166 32,976,433 
B1444,948 2,319,701 — — 552,521 365,633 3,682,803 
B2— — — 881,917 — — 881,917 
B3694,950 298,425 — — 323,442 — 1,316,817 
N/A (2)
789,472 627,473 79,500 — — — 1,496,445 
Total$1,929,370 $20,233,481 $2,248,201 $6,458,656 $1,813,288 $11,988,799 $44,671,795 
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(1)Excludes the CECL allowance for unfunded commitments recorded in Other liabilities as such commitments are not currently reflected on our Balance Sheets, rather the CECL allowance is based on our current best estimate of future funding commitments.
(2)We estimate the CECL allowance for our loan investments using a traditional commercial real estate model based on standardized credit metrics to estimate potential losses.