XML 36 R26.htm IDEA: XBRL DOCUMENT

Net Investment in Sales-type Leases, Ground Lease Receivables and Loans Receivable, net - Related Party (Tables)

3 Months Ended

Mar. 31, 2023

The Company’s net investment in sales-type leases were comprised of the following ($ in thousands):


	March 31, 2023		December 31, 2022
Total undiscounted cash flows	$	29,565,276	$	29,586,227
Unguaranteed estimated residual value		2,900,513		2,900,218
Present value discount		(29,325,633)		(29,379,846)
Allowance for credit losses		(325)		—
Net investment in sales-type leases	$	3,139,831	$	3,106,599

Schedule of rollforward of net investment in sales-type leases and Ground Lease receivables

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the three months ended March 31, 2023 and 2022 ($ in thousands):


	Net Investment in		Ground Lease
	Sales-type Leases		Receivables		Total
Three Months Ended March 31, 2023
Beginning balance	$	3,106,599	$	1,374,716	$	4,481,315
Impact from adoption of new accounting standard (refer to Note 3)		(351)		(199)		(550)
Origination/acquisition/fundings⁽¹⁾		19,331		50,803		70,134
Accretion		14,226		6,154		20,380
Recovery of credit losses		26		4		30
Ending balance⁽²⁾	$	3,139,831	$	1,431,478	$	4,571,309


	Net Investment in		Ground Lease
	Sales-type Leases		Receivables		Total
Three Months Ended March 31, 2022
Beginning balance	$	2,412,716	$	796,252	$	3,208,968
Origination/acquisition/fundings⁽¹⁾		315,503		216,765		532,268
Accretion		11,705		4,143		15,848
Ending balance	$	2,739,924	$	1,017,160	$	3,757,084

(1)

The net investment in sales-type leases is initially measured at the present value of the fixed and determinable lease payments, including any guaranteed or unguaranteed estimated residual value of the asset at the end of the lease, discounted at the rate implicit in the lease. For newly originated or acquired Ground Leases, the Company’s estimate of residual value equals the fair value of the land at lease commencement.

(2)

As of March 31, 2023 and December 31, 2022, all of the Company’s net investment in sales-type leases and Ground Lease receivables were current in their payment status. As of March 31, 2023, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.1% and 5.4%, respectively. As of March 31, 2023, the weighted average remaining life of the Company’s 33 Ground Lease receivables was 98.7 years.

Schedule of changes in allowance for credit losses on net investment in sales-type leases and Ground Lease receivables


	Net investment in sales-type leases
	Stabilized		Development		Unfunded
Three Months Ended March 31, 2023	Properties		Properties		Commitments		Total
Allowance for credit losses at beginning of period	$	—	$	—	$	—	$	—
Impact from adoption of new accounting standard (refer to Note 3)⁽¹⁾		280		71		6		357
Recovery of credit losses⁽²⁾		(25)		(1)		(5)		(31)
Allowance for credit losses at end of period⁽³⁾	$	255	$	70	$	1	$	326


	Ground Lease receivables
	Stabilized		Development		Unfunded
Three Months Ended March 31, 2023	Properties		Properties		Commitments		Total
Allowance for credit losses at beginning of period	$	—	$	—	$	—	$	—
Impact from adoption of new accounting standard (refer to Note 3)⁽¹⁾		102		97		84		283
(Recovery of) provision for credit losses⁽²⁾		(9)		5		(21)		(25)
Allowance for credit losses at end of period⁽³⁾	$	93	$	102	$	63	$	258

(1)

On January 1, 2023, the Company recorded an allowance for credit losses on net investment in sales-type leases of $0.4 million and an allowance for credit losses on Ground Lease receivables of $0.2 million upon the adoption of ASU 2016-13, of which an aggregate of $0.1 million related to expected credit losses for unfunded commitments and was recorded in "Accounts payable, accrued expenses and other liabilities."

(2)

During the three months ended March 31, 2023, the Company recorded a recovery of credit losses on net investment in sales-type leases and Ground Lease receivables of $31 thousand and $25 thousand, respectively. The recovery of credit losses was due primarily to an improving macroeconomic forecast since December 31, 2022.

(3)	Allowance for credit losses on unfunded commitments is recorded in “Accounts payable and accrued expenses” on the Company’s consolidated balance sheets.

Amortized Cost Basis in Ground Lease Receivables

The Company’s amortized cost basis in Ground Lease receivables, presented by year of origination and by stabilized or development status, was as follows as of March 31, 2023 ($ in thousands):


	Year of Origination
	2023		2022		2021		2020		2019		Prior to 2019		Total
Ground Lease receivables
Stabilized properties	$	—	$	521,172	$	237,690	$	178,276	$	443,558	$	—	$	1,380,696
Development properties		—		24,769		26,208		—		—		—		50,977
Total	$	—	$	545,941	$	263,898	$	178,276	$	443,558	$	—	$	1,431,673

Future Minimum Lease Payments Under Sales-type Leases

Future Minimum Lease Payments under Sales-type Leases—Future minimum lease payments to be collected under sales-type leases accounted for under ASC 842 - Leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2023, are as follows by year ($ in thousands):


					Fixed Bumps
	Fixed Bumps				with
	with Inflation		Fixed		Percentage
	Adjustments		Bumps		Rent		Total
2023 (remaining nine months)	$	73,390	$	1,673	$	436	$	75,499
2024		100,972		2,256		586		103,814
2025		102,926		2,283		586		105,795
2026		104,873		2,311		586		107,770
2027		106,767		2,339		586		109,692
Thereafter		28,379,582		583,455		99,669		29,062,706
Total undiscounted cash flows	$	28,868,510	$	594,317	$	102,449	$	29,565,276

Recognized Interest Income from Sales type Leases

During the three months ended March 31, 2023 and 2022, the Company recognized interest income from sales-type leases in its consolidated statements of operations as follows ($ in thousands):


	Net Investment		Ground
	in Sales-type		Lease
Three Months Ended March 31, 2023	Leases		Receivables		Total
Cash	$	24,882	$	11,804	$	36,686
Non-cash		14,222		6,154		20,376
Total interest income from sales-type leases	$	39,104	$	17,958	$	57,062


	Net Investment		Ground
	in Sales-type		Lease
Three Months Ended March 31, 2022	Leases		Receivables		Total
Cash	$	19,825	$	7,358	$	27,183
Non-cash		11,705		4,143		15,848
Total interest income from sales-type leases	$	31,530	$	11,501	$	43,031