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Investments
 9 Months Ended
Sep. 30, 2023
Investments [Abstract]  
Investments Investments
The following table presents information about the number of investments in the Company’s real estate investment portfolio as of each date presented:
September 30,
2023		December 31,
2022
Owned properties (1)
1,6441,489
Properties securing investments in mortgage loans (2)
138153
Ground lease interests1111
Total number of investments1,7931,653
_____________________________________
(1)Includes seven and eight properties which are subject to leases accounted for as direct financing leases or loans as of September 30, 2023 and December 31, 2022, respectively.
(2)Properties secure 19 and 20 mortgage loans receivable as of September 30, 2023 and December 31, 2022, respectively.
The following table presents information about the gross investment value of the Company’s real estate investment portfolio as of each date presented:
(in thousands)September 30,
2023		December 31,
2022
Real estate investments, at cost$4,403,478 $3,810,570 
Loans and direct financing lease receivables, net227,114 240,035 
Real estate investments held for sale, net3,539 4,780 
Total gross investments$4,634,131 $4,055,385 
Investments in 2023 and 2022
The following table presents information about the Company’s acquisition activity during the nine months ended September 30, 2023 and 2022:
Nine months ended September 30,
(in thousands)20232022
Ownership type
(1)
(2)
Number of properties 199124
Purchase price allocation
Land and improvements $234,260 $183,270 
Building and improvements392,777 311,651 
Construction in progress(3)
63,541 34,967 
Intangible lease assets903 2,836 
Total purchase price 691,481 532,724 
Intangible lease liabilities(32)— 
Purchase price (including acquisition costs) $691,449 $532,724 
_____________________________________
(1)During the nine months ended September 30, 2023, the Company acquired fee interests in 198 properties and acquired one property subject to a ground lease.
(2)During the nine months ended September 30, 2022, the Company acquired fee interests in 123 properties and acquired one property subject to a ground lease.
(3)Represents amounts incurred at and subsequent to acquisition and includes $1.8 million and $0.4 million of capitalized interest expense during the nine months ended September 30, 2023 and 2022, respectively.
During the nine months ended September 30, 2023 and 2022, the Company did not make any new investments that individually represented more than 5% of the Company’s total real estate investment portfolio.
Gross Investment Activity
During the nine months ended September 30, 2023 and 2022, the Company had the following gross investment activity:
(Dollar amounts in thousands)Number of
Investment
Locations		Dollar
Amount of
Investments
Gross investments, January 1, 20221,451$3,355,561 
Acquisitions of and additions to real estate investments124529,278 
Sales of investments in real estate(28)(69,147)
Provision for impairment of real estate (1)
(10,541)
Investments in loans receivable6096,907 
Principal collections on and settlements of loans and direct financing lease receivables(35)(81,315)
Other(3,318)
Gross investments, September 30, 20223,817,425 
Less: Accumulated depreciation and amortization (2)
(259,092)
Net investments, September 30, 20221,572$3,558,333 
Gross investments, January 1, 20231,653$4,055,385 
Acquisitions of and additions to real estate investments199691,079 
Sales of investments in real estate(42)(93,326)
Relinquishment of property at end of ground lease term(1)(837)
Provision for impairment of real estate (3)
(1,645)
Investments in loans and direct financing lease receivables110,200 
Principal collections on and settlements of loans and direct financing lease receivables(17)(23,206)
Other(3,519)
Gross investments, September 30, 20234,634,131 
Less: Accumulated depreciation and amortization (2)
(343,637)
Net investments, September 30, 20231,793$4,290,494 
_____________________________________
(1)During the nine months ended September 30, 2022, the Company identified and recorded provisions for impairment at seven tenanted properties and two vacant properties.
(2)Includes $303.6 million and $225.3 million of accumulated depreciation as of September 30, 2023 and 2022, respectively.
(3)During the nine months ended September 30, 2023, the Company identified and recorded provisions for impairment at three tenanted properties and two vacant properties.
Real Estate Investments
The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more renewal options. See Note 4—Leases for more information about the Company’s leases.
Loans and Direct Financing Lease Receivables
As of September 30, 2023 and December 31, 2022, the Company had 19 and 23 loans receivable outstanding, respectively, and three leases accounted for as loans, with an aggregate carrying amount of $226.3 million and $238.7 million, respectively. The maximum amount of loss due to credit risk is the Company's current principal balance of $226.3 million as of September 30, 2023.
The Company’s loans receivable portfolio as of September 30, 2023 and December 31, 2022 is summarized below (dollars in thousands): 
Principal Balance Outstanding
Loan Type
Monthly
Payment (1)
Number of Secured PropertiesEffective Interest RateStated Interest RateMaturity DateSeptember 30,
2023		December 31,
2022
Mortgage (2)(3)
I/O28.80%8.00%2039$12,000 $12,000 
Mortgage (2)
I/O28.53%7.75%20397,300 7,300 
Mortgage (2)
I/O698.16%7.70%203451,000 51,000 
Mortgage (2)
I/O18.42%7.65%20405,300 5,300 
Mortgage (2)
I/O28.54%8.50%20241,785 2,324 
Mortgage (2)
I/O17.00%7.00%2023500 600 
Mortgage (2)
I/O28.30%8.25%2024994 3,146 
Mortgage (2)
I/O26.87%6.40%20362,520 2,520 
Mortgage (2)
I/O—7.51%7.00%2036— 2,673 
Mortgage (2)
I/O28.29%8.25%20242,389 2,389 
Mortgage (2)
I/O18.96%8.06%205124,100 24,100 
Mortgage (2)
I/O—7.44%7.10%2036— 9,808 
Mortgage (2)
I/O77.32%6.80%203635,474 35,474 
Mortgage (2)
I/O17.73%7.20%20362,470 2,470 
Mortgage (2)
I/O18.00%8.00%20231,754 1,754 
Mortgage (2)
I/O287.00%7.00%202719,160 26,307 
Mortgage (2)
I/O17.73%7.20%20373,600 3,600 
Mortgage (2)
I/O18.30%8.25%2024760 760 
Mortgage (2)
I/O48.64%8.05%203712,250 12,250 
Mortgage (2)
I/O108.85%8.25%203728,938 28,938 
Mortgage (2)
I/O18.83%8.25%203810,200 — 
Leasehold interestP+I12.25%
(4)
2034945 992 
Leasehold interestP+I12.41%
(4)
20341,404 1,473 
Leasehold interestP+I14.97%
(4)
20381,478 1,517 
Net investment$226,321 $238,695 
_____________________________________
(1)I/O: Interest Only; P+I: Principal and Interest
(2)Loan requires monthly payments of interest only with a balloon payment due at maturity.
(3)Loan allows for prepayments in whole or in part without penalty.
(4)These leasehold interests are accounted for as loans receivable, as the lease for each property contains an option for the lessee to repurchase the leased property in the future.
Scheduled principal payments due to be received under the Company’s loans receivable as of September 30, 2023 were as follows:
(in thousands)Future Principal Payments Due
October 1 - December 31, 2023$2,307 
20246,149 
2025234 
2026248 
202719,423 
Thereafter197,960 
Total$226,321 
As of September 30, 2023 and December 31, 2022, the Company had $1.5 million and $2.1 million, respectively, of net investments accounted for as direct financing lease receivables. The components of the investments accounted for as direct financing lease receivables were as follows:
(in thousands)September 30,
2023		December 31,
2022
Minimum lease payments receivable$1,773 $2,812 
Estimated unguaranteed residual value of leased assets250 251 
Unearned income from leased assets(550)(957)
Net investment$1,473 $2,106 
Scheduled future minimum non-cancelable base rental payments due to be received under the direct financing lease receivables as of September 30, 2023 were as follows:
(in thousands)Future Minimum
Base Rental
Payments
October 1 - December 31, 2023$64 
2024210 
2025178 
2026167 
2027143 
Thereafter1,011 
Total$1,773 
Allowance for Credit Losses
The Company utilizes a real estate loss estimate model (i.e., a RELEM model) which estimates losses on loans and direct financing lease receivables for purposes of calculating an allowance for credit losses. As of September 30, 2023 and December 31, 2022, the Company recorded an allowance for credit losses of $0.7 million and $0.8 million, respectively. Changes in the Company’s allowance for credit losses are presented within change in provision for credit losses in the Company’s consolidated statements of operations.
For the nine months ended September 30, 2023 and 2022, the changes to the Company's allowance for credit losses were as follows:
(in thousands)Loans and Direct Financing Lease Receivables
Balance at January 1, 2022$814 
Current period change in provision for expected credit losses138 
Write-offs charged(137)
Recoveries— 
Balance at September 30, 2022$815 
Balance at January 1, 2023$765 
Current period change in provision for expected credit losses(85)
Write-offs charged— 
Recoveries— 
Balance at September 30, 2023$680 
The Company considers the ratio of loan to value ("LTV") to be a significant credit quality indicator for its loans and direct financing lease portfolio. The following table presents information about the LTV of the Company's loans and direct financing lease receivables measured at amortized cost as of September 30, 2023:
Amortized Cost Basis by Origination YearTotal Amortized Cost Basis
(in thousands)20232022202120202019Prior
LTV <60%$— $23,000 $— $— $28,000 $1,019 $52,019 
LTV 60%-70%— — 28,734 — — — 28,734 
LTV >70%10,200 82,318 23,857 9,967 20,245 454 147,041 
$10,200 $105,318 $52,591 $9,967 $48,245 $1,473 $227,794 
Real Estate Investments Held for Sale
The Company continually evaluates its portfolio of real estate investments and may elect to dispose of investments considering criteria including, but not limited to, tenant concentration, tenant credit quality, tenant operation type (e.g., industry, sector or concept), unit-level financial performance, local market conditions and lease rates, associated indebtedness and asset location. Real estate investments held for sale are expected to be sold within twelve months.
The following table shows the activity in real estate investments held for sale and intangible lease liabilities held for sale during the nine months ended September 30, 2023 and 2022.
(Dollar amounts in thousands)Number of PropertiesReal Estate InvestmentsIntangible Lease LiabilitiesNet Carrying Value
Held for sale balance, January 1, 20229$15,434 $— $15,434 
Transfers to held for sale classification723,613 — 23,613 
Sales(11)(27,140)— (27,140)
Transfers to held and used classification—— — — 
Held for sale balance, September 30, 20225$11,907 $— $11,907 
Held for sale balance, January 1, 20234$4,780 $— $4,780 
Transfers to held for sale classification611,856 — 11,856 
Sales(8)(12,528)— (12,528)
Transfers to held and used classification(1)(569)— (569)
Held for sale balance, September 30, 20231$3,539 $— $3,539 
Significant Concentrations
The Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose rental revenue for the nine months ended September 30, 2023 or 2022 represented 10% or more of total rental revenue in the Company’s consolidated statements of operations.
The following table lists the state where the rental revenue from the properties in that state during the periods presented represented 10% or more of total rental revenue in the Company’s consolidated statements of operations:
Three months ended September 30,Nine months ended September 30,
State2023202220232022
Texas13.5%13.9%13.3%13.5%
Intangible Assets and Liabilities
Intangible assets and liabilities consisted of the following as of the dates presented:
September 30, 2023December 31, 2022
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets:
In-place leases$76,595 $34,621 $41,974 $77,096 $30,217 $46,879 
Intangible market lease assets11,254 5,443 5,811 11,268 4,917 6,351 
Total intangible assets$87,849 $40,064 $47,785 $88,364 $35,134 $53,230 
Intangible market lease liabilities$15,357 $4,127 $11,230 $15,325 $3,774 $11,551 
The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of September 30, 2023, by category and in total, were as follows:
Years Remaining
In-place leases8.2
Intangible market lease assets10.4
Total intangible assets8.5
Intangible market lease liabilities8.9
The following table discloses amounts recognized within the consolidated statements of operations related to amortization of in-place leases, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented:
Three months ended September 30,Nine months ended September 30,
(in thousands)2023202220232022
Amortization of in-place leases (1)
$1,609 $1,735 $4,839 $5,184 
Amortization (accretion) of market lease intangibles, net (2)
6 (214)13 (213)
Amortization (accretion) of above- and below-market ground lease intangibles, net (3)
(68)(88)(224)(263)
_____________________________________
(1)Reflected within depreciation and amortization expense.
(2)Reflected within rental revenue.
(3)Reflected within property expenses.
The following table provides the estimated amortization of in-place lease assets to be recognized as a component of depreciation and amortization expense for the next five years and thereafter:
(in thousands)In-Place Lease Assets
October 1 - December 31, 2023$1,538 
20245,690 
20254,400 
20264,096 
20273,567 
Thereafter22,683 
Total$41,974 
The following table provides the estimated net amortization of above- and below-market lease intangibles to be recognized as a component of rental revenue for the next five years and thereafter:
(in thousands)Above Market Lease AssetBelow Market Lease Liabilities Net Adjustment to Rental Revenue
October 1 - December 31, 2023$(170)$170 $— 
2024(665)682 17 
2025(657)684 27 
2026(648)688 40 
2027(626)712 86 
Thereafter(3,045)8,294 5,249 
Total$(5,811)$11,230 $5,419