Net Investment In Sales-type Leases and Ground Lease Receivables (Tables)

12 Months Ended

Dec. 31, 2021

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


	December 31, 2021		December 31, 2020
Total undiscounted cash flows⁽¹⁾	$	23,707,424	$	13,676,701
Unguaranteed estimated residual value		2,319,761		1,243,292
Present value discount		(23,614,469)		(13,614,474)
Net investment in sales-type leases	$	2,412,716	$	1,305,519

(1)

As of December 31, 2021, includes $1,676 million of undiscounted cash flows due from iStar pursuant to three Ground Leases with a weighted average remaining lease term of 96.0 years. For the years ended December 31, 2021, 2020 and 2019, the Company recorded $8.4 million, $8.2 million and $5.0 million, respectively, of “Interest income from sales-type leases” in its consolidated statements of operations from its Ground Leases with iStar.

The following table presents a rollforward of the Company’s net investment in sales-type leases and Ground Lease receivables for the year ended December 31, 2021 ($ in thousands):


	Net Investment in		Ground Lease
	Sales-type Leases		Receivables		Total
Beginning balance	$	1,305,519	$	577,457	$	1,882,976
Purchase price allocation adjustment		(182)		—		(182)
Transfer from real estate, net		40,900		—		40,900
Origination/acquisition/fundings⁽¹⁾		1,035,580		205,886		1,241,466
Accretion		30,899		12,909		43,808
Ending balance⁽²⁾	$	2,412,716	$	796,252	$	3,208,968

(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 December 31, 2021, the Company’s weighted average accrual rate for its net investment in sales-type leases and Ground Lease receivables was 5.1% and 5.5%, respectively. As of December 31, 2021, the weighted average remaining life of the Company’s 23 Ground Lease receivables was 99.3 years.

During the years ended December 31, 2021, 2020 and 2019, 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
Year Ended December 31, 2021	Leases		Receivables		Total
Cash	$	52,091	$	22,925	$	75,016
Non-cash		30,899		12,909		43,808
Total interest income from sales-type leases	$	82,990	$	35,834	$	118,824

Year Ended December 31, 2020
Cash	$	36,098	$	15,615	$	51,713
Non-cash		21,186		8,945		30,131
Total interest income from sales-type leases	$	57,284	$	24,560	$	81,844

Year Ended December 31, 2019
Cash	$	10,086	$	1,898	$	11,984
Non-cash		5,541		1,006		6,547
Total interest income from sales-type leases	$	15,627	$	2,904	$	18,531

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 December 31, 2021, are as follows by year ($ in thousands):


					Fixed Bumps
	Fixed Bumps				with
	with Inflation		Fixed		Percentage
	Adjustments		Bumps		Rent		Total
2022	$	75,034	$	1,303	$	537	$	76,874
2023		78,109		1,329		586		80,024
2024		82,015		1,356		586		83,957
2025		83,484		1,383		586		85,453
2026		85,049		1,411		586		87,046
Thereafter		22,839,557		353,852		100,661		23,294,070
Total undiscounted cash flows	$	23,243,248	$	360,634	$	103,542	$	23,707,424