Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

Note 5—Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

The Company’s real estate assets consist of the following ($ in thousands):

	As of
	June 30, 2023		December 31, 2022
Land and land improvements, at cost	$	547,739	$	547,739
Buildings and improvements, at cost		193,232		193,232
Less: accumulated depreciation		(37,385)		(34,371)
Total real estate, net	$	703,586	$	706,600
Real estate-related intangible assets, net		214,446		217,795
Total real estate, net and real estate-related intangible assets, net(1)	$	918,032	$	924,395

(1) During the three and six months ended June 30, 2023, the Company sold $1.5 million of residential homes that were acquired from iStar that were classified as available for sale. The Company recognized $0.1 million of gains on the sales, which is recorded in “Other income” in the Company’s consolidated statements of operations.

Real estate-related intangible assets, net consist of the following items ($ in thousands):

	As of June 30, 2023
	Gross		Accumulated		Carrying
	Intangible		Amortization		Value
Above-market lease assets, net(1)	$	186,002	$	(16,821)	$	169,181
In-place lease assets, net(2)		65,345		(20,789)		44,556
Other intangible assets, net		750		(41)		709
Total	$	252,097	$	(37,651)	$	214,446

	As of December 31, 2022
	Gross		Accumulated		Carrying
	Intangible		Amortization		Value
Above-market lease assets, net(1)	$	186,002	$	(15,254)	$	170,748
In-place lease assets, net(2)		65,345		(19,011)		46,334
Other intangible assets, net		750		(37)		713
Total	$	252,097	$	(34,302)	$	217,795

(1) Above-market lease assets are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease is less than the present value of the contractual in-place rental cash flows. Above-market lease assets are amortized over the non-cancelable term of the leases.

(2) In-place lease assets are recognized during asset acquisitions and are estimated based on the value associated with the costs avoided in originating leases comparable to the acquired in-place leases as well as the value associated with lost rental revenue during the assumed lease-up period. In-place lease assets are amortized over the non-cancelable term of the leases.

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 ($ in thousands):

	Income Statement	For the Three Months Ended June 30,
Intangible asset	Location	2023		2022
Above-market lease assets (decrease to income)	Operating lease income	$	784	$	784
In-place lease assets (decrease to income)	Depreciation and amortization		889		897
Other intangible assets (decrease to income)	Operating lease income		2		2

	Income Statement	For the Six Months Ended June 30,
Intangible asset	Location	2023		2022
Above-market lease assets (decrease to income)	Operating lease income	$	1,567	$	1,567
In-place lease assets (decrease to income)	Depreciation and amortization		1,778		1,789
Other intangible assets (decrease to income)	Operating lease income		4		4

The estimated amortization of real estate-related intangible assets for each of the five succeeding fiscal years is as follows ($ in thousands):⁽¹⁾

Year	Amount
2023 (remaining six months)	$	3,333
2024		6,634
2025		6,634
2026		3,725
2027		3,725

(1) As of June 30, 2023, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 80.2 years.

Real estate-related intangible liabilities, net consist of the following items ($ in thousands):

	As of June 30, 2023
	Gross		Accumulated		Carrying
	Intangible		Amortization		Value
Below-market lease liabilities(1)	$	68,618	$	(4,446)	$	64,172

	As of December 31, 2022
	Gross		Accumulated		Carrying
	Intangible		Amortization		Value
Below-market lease liabilities(1)	$	68,618	$	(4,027)	$	64,591

(1) Below-market lease liabilities are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease exceeds the present value of the contractual in-place rental cash flows. Below-market lease liabilities are amortized over the non-cancelable term of the leases.

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 ($ in thousands):

	Income Statement	For the Three Months Ended June 30,
Intangible liability	Location	2023		2022
Below-market lease liabilities (increase to income)	Operating lease income	$	209	$	209

	Income Statement	For the Six Months Ended June 30,
Intangible liability	Location	2023		2022
Below-market lease liabilities (increase to income)	Operating lease income	$	419	$	419

Future Minimum Operating Lease Payments—Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of June 30, 2023, are as follows by year ($ in thousands):

			Fixed Bumps						Fixed
			with						Bumps with
	Inflation-		Inflation		Fixed		Percentage		Percentage
Year	Linked		Adjustments		Bumps		Rent		Rent		Total
2023 (remaining six months)	$	2,906	$	8,710	$	1,111	$	5,509	$	196	$	18,432
2024		5,811		17,677		2,247		11,018		421		37,174
2025		5,811		18,004		2,313		11,018		421		37,567
2026		5,811		18,370		2,357		986		421		27,945
2027		5,811		18,755		2,388		986		421		28,361
Thereafter		435,056		4,308,109		433,110		15,826		304		5,192,405

(1) During the three months ended June 30, 2023 and 2022, the Company recognized $0.3 million and $0.2 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations. During the six months ended June 30, 2023 and 2022, the Company recognized $4.0 million and $0.9 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.