In June 2021, the Company acquired two parcels of land for $42.0 million each and simultaneously entered into two Ground Leases with the respective tenants. Each Ground Lease also provides for a leasehold improvement allowance up to a maximum of $83.0 million. The Company also concurrently entered into an agreement pursuant to which SAFE would acquire the Ground Leases from the Company. If certain construction conditions are not met within a specified time period, SAFE will have no obligation to acquire the Ground Leases or fund the leasehold improvement allowances. The Company classified one of the Ground Leases as a sales-type lease and it was recorded in “Net investment in leases” on the Company’s consolidated balance sheet at the time of acquisition. One Ground Lease was entered into with the seller of the land and did not qualify for sale leaseback accounting, and as such, was accounted for as a financing transaction and $42.0 million was recorded in “Loans receivable held for sale” on the Company’s consolidated balance sheet at the time of acquisition. In January 2022, the Company sold the Ground Leases to an investment fund in which the Company owns a 53% noncontrolling interest (refer to Note 8 – Ground Lease Plus Fund). There can be no assurance that the conditions to closing will be satisfied and that SAFE will acquire the properties and Ground Leases from the Ground Lease Plus Fund.

In January 2022, the Company entered into a commitment to acquire land for $36.0 million and simultaneously structured and entered into a Ground Lease as part of the Ground Lease tenant’s recapitalization of an existing multifamily property. The Company funded $34.6 million of its commitment and then, pursuant to an agreement with SAFE (refer to Note 8) and upon certain construction related conditions being met, sold the Ground Lease to SAFE in July 2022 for $36.0 million and recognized a gain of $1.0 million in “Income from sales of real estate” in its consolidated statements of operations.

The Company’s net investment in leases were comprised of the following as of December 31, 2022 and 2021 ($ in thousands):

(1)	As of December 31, 2021, the Company’s net investment in lease was current in its payment status and performing in accordance with the terms of the lease. As of December 31, 2021, the risk rating on the Company’s net investment in leases was 1.0.

Allowance for Losses on Net Investment in Leases—Changes in the Company’s allowance for losses on net investment in leases for the years ended December 31, 2022 and 2021 were as follows ($ in thousands):


	Year Ended
	December 31, 2022		December 31, 2021
Allowance for losses on net investment in leases at beginning of period⁽¹⁾	$	—	$	10,871
Provision for (recovery of) losses on net investment in leases included in discontinued operations⁽¹⁾		—		(10,871)
Allowance for losses on net investment in leases at end of period⁽¹⁾	$	—	$	—

(1)

Refer to Note 3 - Net Lease Sale and Discontinued Operations. During the year ended December 31, 2021, the Company recorded a recovery of losses on net investment in leases of $10.9 million. The recovery of losses on net investment in leases for the year ended December 31, 2021 resulted primarily from the cash flows the Company received upon disposition of the Company’s net investment in leases included in “Real estate and other assets available and held for sale and classified as discontinued operations” and “Net investment in leases” on the Company’s consolidated balance sheets.