The Company owns a portfolio of SFR homes that it operates as rental properties. The Company is party to an agreement with a third-party investment firm to identify, acquire and manage investments in SFR properties on behalf of the Company. Under the terms of the agreement, the Company has committed to fund up to $65,000 of capital to fund the acquisition of SFR properties. The Company’s commitment to fund up to $65,000 of capital may be reduced to $55,000 to the extent the Company utilizes debt financing to fund certain acquisitions of SFR properties. The Company is obligated to pay the third-party firm a minimum fee plus an incentive fee equal to a percentage of the total investment return in excess of a hurdle rate of return. If the Company were to terminate the commitment, the Company would incur a termination fee equal to a fixed amount less inception to date minimum fees paid to the third-party firm.

Pursuant to its SFR investment strategy, the Company leases its SFR properties to tenants who occupy the properties. The leases generally have terms of one year or more and are classified as operating leases. Rental revenue, net of any concessions, is recognized over the term of each lease on a straight-line basis. If the Company determines that collectability of lease payments is not probable, any lease receivables previously recognized are reversed and rental revenue is limited to cash received.

Costs directly associated with the origination of a lease, such as a commission paid to a property manager when a lease agreement is obtained, are deferred at the commencement of the lease and subsequently recognized ratably as an expense over the lease term, consistent with the recognition of rental revenue from the lease. The ratable expense recognition of lease direct costs is reported as a component of “single-family property operating expenses” in the Company’s consolidated statements of comprehensive income. In addition to the expense items previously mentioned, “single-family property operating expenses” also include accruals for, but not limited to, third-party property management fees, local real estate tax assessments, utilities, homeowners’ association dues and insurance.

The Company evaluates its SFR properties for impairment whenever circumstances indicate that their carrying amounts may not be recoverable. Significant indicators of potential impairment include, but are not limited to, declines in home values, adverse changes in rental or occupancy rates and relevant unfavorable changes in the broader economy. If indicators of potential impairment exist, the Company performs a recoverability test by comparing the property’s net carrying amount to its estimate of the undiscounted future net cash flows expected to be obtained from the use and eventual disposition of the property. If the property’s carrying amount exceeds the Company’s estimate of the undiscounted future net cash flows expected to be obtained from the property, the Company recognizes an impairment loss equal to the amount that the property’s net carrying amount exceeds the property’s estimated fair value. As of June 30, 2022 and December 31, 2021, the Company had not recognized any impairment losses for its investments in SFR properties.

From time to time, the Company may identify SFR properties to be sold. At the time that any such properties are identified, the Company performs an evaluation to determine whether or not such properties should be classified as held for sale. Factors considered as part of the Company's held for sale evaluation process include whether the following conditions have been met: (i) the Company has committed to a plan to sell a property; (ii) the property is immediately available for sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell a property have been initiated; (iv) the sale of a property is probable within one year (generally determined based upon listing for sale); (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. To the extent that these factors are all present, the Company ceases depreciating the property, measures the property at the lower of its carrying amount or its fair value less estimated costs to sell, and presents the property separately on its consolidated balance sheets.

On May 10, 2022, the Company entered into a purchase and sale agreement to sell 378 SFR properties for $132,750 with an original closing date no later than June 23, 2022. Pursuant to the purchase and sale agreement, the buyer made a $2,655 initial deposit with an escrow agent. On May 27, 2022, the Company entered into an amendment to the purchase and sale agreement to remove two properties from the sale transaction reducing the total properties to be sold to 376 SFR properties for $131,921. On June 20, 2022, the Company entered into an additional amendment to the purchase and sale agreement that required the buyer to fund an additional $2,655 deposit with the escrow agent for a total deposit of $5,310 to extend the closing date to no later than August 19, 2022. During the three months ended June 30, 2022, the Company classified the 376 SFR properties as held for sale.

As of June 30, 2022 and December 31, 2021, the Company had investments in 586 and 214 SFR properties, respectively, for a total cost of $182,783 and $61,188, respectively. During the three and six months ended June 30, 2022, the Company recognized $604 and $1,319, respectively, of depreciation expense related to its SFR properties. The following table summarizes the Company’s net carrying amount of its SFR properties by component as of June 30, 2022:


	Single-family Residential Real Estate			Single-family Residential Real Estate Held-for-Sale			Total
Land	$	11,423		$	18,913		$	30,336
Buildings and improvements		57,093			95,354			152,447
Investments in single-family residential real estate, at cost		68,516			114,267			182,783
Less: accumulated depreciation		(326	)		(1,288	)		(1,614	)
Investments in single-family residential real estate, net	$	68,190		$	112,979		$	181,169

The following table summarizes the Company’s net carrying amount of its SFR properties by component as of December 31, 2021:


	Single-family Residential Real Estate			Single-family Residential Real Estate Held-for-Sale		Total
Land	$	10,128		$	—	$	10,128
Buildings and improvements		51,060			—		51,060
Investments in single-family residential real estate, at cost		61,188			—		61,188
Less: accumulated depreciation		(299	)		—		(299	)
Investments in single-family residential real estate, net	$	60,889		$	—	$	60,889

As of June 30, 2022, the Company had commitments to acquire 25 SFR properties for an aggregate purchase price of $9,034.