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

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Net Investment in Sales Type Leases

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

​	​	​	​	​	​	​
​		September 30, 2023			December 31, 2022
Total undiscounted cash flows(1)	​	$	29,715,761	​	$	29,586,227
Unguaranteed estimated residual value(1)	​		2,915,013	​		2,900,218
Present value discount	​		(29,447,714)	​		(29,379,846)
Allowance for credit losses	​	​	(468)	​	​	—
Net investment in sales-type leases(2)	​	$	3,182,592	​	$	3,106,599

(1) As of September 30, 2023, total discounted cash flows were approximately $3,153 million and the discounted unguaranteed estimated residual value was $30.1 million. As of December 31, 2022, total discounted cash flows were approximately $3,077 million and the discounted unguaranteed estimated residual value was $29.1 million.

(2) As of September 30, 2023, $6.5 million was attributable to noncontrolling interests.

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 nine months ended September 30, 2023 and 2022 ($ in thousands):

​

​	​	​	​	​	​	​	​	​	​
​	​	Net Investment in		​	Ground Lease		​	​	​
​		Sales-type Leases			Receivables			Total
Nine Months Ended September 30, 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)	​		33,400	​		170,194	​		203,594
Accretion	​		43,061	​		19,078	​		62,139
Provision for credit losses	​	​	(117)	​	​	(119)	​	​	(236)
Ending balance(2)	​	$	3,182,592	​	$	1,563,670	​	$	4,746,262

​

​	​	​	​	​	​	​	​	​	​
​	​	Net Investment in		​	Ground Lease		​	​	​
​		Sales-type Leases			Receivables			Total
Nine Months Ended September 30, 2022		​			​			​
Beginning balance	​	$	2,412,716	​	$	796,252	​	$	3,208,968
Sales	​	​	(76,701)	​		—	​	​	(76,701)
Origination/acquisition/fundings(1)	​		691,305	​		515,618	​		1,206,923
Accretion	​		38,793	​		14,762	​		53,555
Ending balance	​	$	3,066,113	​	$	1,326,632	​	$	4,392,745

(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 September 30, 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 September 30, 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 September 30, 2023, the weighted average remaining life of the Company’s 35 Ground Lease receivables was 98.3 years.

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

Allowance for Credit Losses—Changes in the Company’s allowance for credit losses on net investment in sales-type leases and Ground Lease receivables for the three and nine months ended September 30, 2023 were as follows ($ in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net investment in sales-type leases

​

​

Stabilized

​

Development

​

Unfunded

​

​

Three Months Ended September 30, 2023

​

Properties

​

Properties

​

Commitments

​

Total

Allowance for credit losses at beginning of period

​

$

259

​

$

77

​

$

1

​

$

337

Provision for credit losses(1)

​

​

110

​

22

​

—

​

132

Allowance for credit losses at end of period(2)

​

$

369

​

$

99

​

$

1

​

$

469

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ground Lease receivables

​

​

Stabilized

​

Development

​

Unfunded

​

​

Three Months Ended September 30, 2023

​

Properties

​

Properties

​

Commitments

​

Total

Allowance for credit losses at beginning of period

​

$

94

​

$

127

​

$

60

​

$

281

Provision for (recovery of) credit losses(1)

​

​

40

​

57

​

(3)

​

94

Allowance for credit losses at end of period(2)

​

$

134

​

$

184

​

$

57

​

$

375

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net investment in sales-type leases

​

​

Stabilized

​

Development

​

Unfunded

​

​

Nine Months Ended September 30, 2023

​

Properties

​

Properties

​

Commitments

​

Total

Allowance for credit losses at beginning of period

​

$

—

​

$

—

​

$

—

​

$

—

Impact from adoption of new accounting standard (refer to Note 3)(3)

​

​

280

​

​

71

​

​

6

​

​

357

Provision for (recovery of) credit losses(1)

​

​

89

​

28

​

(5)

​

112

Allowance for credit losses at end of period(2)

​

$

369

​

$

99

​

$

1

​

$

469

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Ground Lease receivables

​

​

Stabilized

​

Development

​

Unfunded

​

​

Nine Months Ended September 30, 2023

​

Properties

​

Properties

​

Commitments

​

Total

Allowance for credit losses at beginning of period

​

$

—

​

$

—

​

$

—

​

$

—

Impact from adoption of new accounting standard (refer to Note 3)(3)

​

​

102

​

​

97

​

​

84

​

​

283

Provision for (recovery of) credit losses(1)

​

​

32

​

87

​

(27)

​

92

Allowance for credit losses at end of period(2)

​

$

134

​

$

184

​

$

57

​

$

375

(1) During the three months ended September 30, 2023, the Company recorded a provision for credit losses on net investment in sales-type leases and Ground Lease receivables of $0.1 million and $0.1 million, respectively. The provision for credit losses was due primarily to a declining macroeconomic forecast since June 30, 2023. During the nine months ended September 30, 2023, the Company recorded a provision for credit losses on net investment in sales-type leases and Ground Lease receivables of $0.1 million and $0.1 million, respectively. The provision for credit losses on net investment in leases and Ground Lease receivables was due primarily to a declining macroeconomic forecast since December 31, 2022.

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

(3) 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."

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 September 30, 2023 ($ in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year of Origination

​

​

2023

2022

2021

2020

2019

Prior to 2019

Total

Ground Lease receivables

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Stabilized properties

​

$

19,004

​

$

295,600

​

$

133,296

​

$

179,914

​

$

447,915

​

$

—

​

$

1,075,729

Development properties

​

1

​

345,220

​

143,038

​

—

​

—

​

—

​

488,259

Total

​

$

19,005

​

$

640,820

​

$

276,334

​

$

179,914

​

$

447,915

​

$

—

​

$

1,563,988

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 September 30, 2023, are as follows by year ($ in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fixed Bumps

​

​

​

​

Fixed Bumps

​

​

​

​

with

​

​

​

​

​

with Inflation

​

Fixed

​

Percentage

​

​

​

​

Adjustments

Bumps

Rent

Total

2023 (remaining three months)

​

$

24,735

​

$

561

​

$

146

​

$

25,442

2024

​

101,639

​

2,256

​

586

​

104,481

2025

​

103,607

​

2,283

​

586

​

106,476

2026

​

105,567

​

2,311

​

586

​

108,464

2027

​

​

107,475

​

​

2,339

​

​

586

​

​

110,400

Thereafter

​

28,577,374

​

583,455

​

99,669

​

29,260,498

Total undiscounted cash flows

​

$

29,020,397

​

$

593,205

​

$

102,159

​

$

29,715,761

Recognized Interest Income from Sales type Leases

During the three and nine months ended September 30, 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 September 30, 2023		Leases			Receivables			Total
Cash	​	$	25,309	​	$	12,767	​	$	38,076
Non-cash	​		14,482	​		6,572	​		21,054
Total interest income from sales-type leases	​	$	39,791	​	$	19,339	​	$	59,130

​

​	​	​	​	​	​	​	​	​	​
​		Net Investment			Ground			​	​
​	​	in Sales-type		​	Lease		​	​	​
Three Months Ended September 30, 2022	​	Leases		​	Receivables		​	Total
Cash	​	$	24,256	​	$	10,585	​	$	34,841
Non-cash	​		14,108	​		5,787	​		19,895
Total interest income from sales-type leases	​	$	38,364	​	$	16,372	​	$	54,736

​

​

​

​

​

​

​

​	​	​	​	​	​	​	​	​	​
​	​	Net Investment		​	Ground		​	​	​
​	​	in Sales-type		​	Lease		​	​	​
Nine Months Ended September 30, 2023		Leases			Receivables			Total
Cash	​	$	75,355	​	$	36,856	​	$	112,211
Non-cash	​		43,061	​		19,078	​		62,139
Total interest income from sales-type leases	​	$	118,416	​	$	55,934	​	$	174,350

​

​	​	​	​	​	​	​	​	​	​
​		Net Investment			Ground			​	​
​	​	in Sales-type		​	Lease		​	​	​
Nine Months Ended September 30, 2022	​	Leases		​	Receivables		​	Total
Cash	​	$	66,017	​	$	26,442	​	$	92,459
Non-cash	​		38,793	​		14,762	​		53,555
Total interest income from sales-type leases	​	$	104,810	​	$	41,204	​	$	146,014

​

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Tabular disclosure of maturity of undiscounted cash flows to be received on annual basis for sales-type and direct financing leases receivable. Includes, but is not limited to, reconciliation to lease receivable recognized in statement of financial position.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479773/842-30-50-5

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-Section 50
-Paragraph 6A
-Publisher FASB
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