v3.26.3
Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2026
Credit Loss [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
Under ASC 326, we are required to estimate and record a non-cash allowance for current expected credit losses, or CECL allowance, related to our historical and any future investments in sales-type leases, lease financing receivables, and loans, over the life of each respective investment as determined under GAAP (including tenant renewal options under lease agreements, as applicable).
The following tables detail the allowance for credit losses as of September 30, 2026 and December 31, 2025:
September 30, 2026
($ In thousands)Amortized Cost
Allowance (1)
Net InvestmentAllowance as a % of Amortized Cost
Investments in leases - sales-type$25,652,968 $(1,282,396)$24,370,572 5.00 %
Investments in leases - financing receivables20,120,668 (884,894)19,235,774 4.40 %
Investments in loans3,143,035 (159,025)2,984,010 5.06 %
Other assets – sales-type sub-leases860,599 (29,704)830,895 3.45 %
Totals$49,777,270 $(2,356,019)$47,421,251 4.73 %
December 31, 2025
($ In thousands)Amortized Cost
Allowance (1)
Net InvestmentAllowance as a % of Amortized Cost
Investments in leases - sales-type$24,625,749 $(919,186)$23,706,563 3.73 %
Investments in leases - financing receivables19,467,011 (769,878)18,697,133 3.95 %
Investments in loans and securities2,581,839 (56,382)2,525,457 2.18 %
Other assets – sales-type sub-leases862,845 (23,909)838,936 2.77 %
Totals$47,537,444 $(1,769,355)$45,768,089 3.72 %
____________________
(1) The total allowance excludes the CECL allowance for unfunded commitments of our loans and for unfunded commitments made to our tenants to fund the development and construction of improvements at our properties. As of September 30, 2026 and December 31, 2025, such allowance was $27.7 million and $6.4 million, respectively, and is recorded in Other liabilities.
The following table reflects the roll-forward of the allowance for credit losses on our real estate portfolio for the three and nine months ended September 30, 2026 and 2025:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2026202520262025
Beginning Balance$1,925,823 $1,643,241 $1,775,753 $1,594,931 
Initial allowance from current period investments— — 112,490 8,126 
Current period change in credit allowance457,862 (21,314)495,442 18,870 
Charge-offs— — — — 
Recoveries— — — — 
Ending Balance$2,383,685 $1,621,927 $2,383,685 $1,621,927 

During the three months ended September 30, 2026, we recognized a $458.0 million increase in our allowance for credit losses. Of this amount, approximately $313.2 million related to Caesars, reflecting (i) an increase in the estimate for the Long-Term Period PD for Caesars as a result of a rating agency’s downgrade of the credit rating of Caesars’ senior secured debt, which reflected the rating agency’s assessment of Caesars’ anticipated capital structure upon completion of its pending acquisition, and (ii) an increase in the allowance on the Caesars Regional Master Lease and the Joliet Lease.

The change in allowance of the Caesars Regional Master Lease and the Joliet Lease for the quarter is primarily driven by revised estimates of future credit losses during the tenant renewal periods, commencing on August 1, 2035, which are included in the lease term under GAAP and required to be included in the CECL estimate (refer to Note 2 – Summary of Significant
Accounting Policies – Lease Term for further details). The change accounts for the current operating performance of the properties, and assumptions regarding the future operating performance and estimated market rent at the time of renewal.

The remaining increase was primarily driven by (i) the equity market performance of certain of our tenants, which impacts the reasonable and supportable period, or R&S Period, probability of default, or PD, (ii) updated assumptions relating to certain of our loans, including estimated recoveries, as applicable, and (iii) standard annual updates to the CECL model and certain related inputs and negative changes in the macroeconomic forecast during the current quarter.

During the nine months ended September 30, 2026, we recognized a $610.3 million increase in our allowance for credit losses primarily driven by (i) the factors listed above, (ii) the initial CECL allowance of $72.6 million upon completing the acquisitions of the Gamehost Portfolio and Golden Portfolio, (iii) the initial CECL allowance of $39.9 million on our net debt investment activity, and (iv) an increase in the estimate for the Long-Term Period PD for one of our tenants during the second quarter as a result of the tenant issuing new senior secured debt with a lower credit rating than our prior estimate. The increase was partially offset by the equity market performance of our tenants and positive changes in the macroeconomic forecast during the first half of the year, both of which impact the R&S Period PD.
During the three months ended September 30, 2025, we recognized a $20.2 million decrease in our allowance for credit losses primarily driven by a decrease in the volatility of the equity market performance of our tenants partially offset by negative changes in the macroeconomic forecast during the quarter, both of which impact the R&S Period PD.
During the nine months ended September 30, 2025, we recognized a $24.8 million increase in our allowance for credit losses primarily driven by the equity market performance of our tenants and negative changes in the macroeconomic forecast during the period. In addition, we recorded an initial CECL allowance of $8.1 million on our $960.0 million of debt investment activity during the period. The increase was partially offset by standard annual updates to the CECL model used and certain related inputs, which decreased the estimate used for the Long-Term Period PD.
During the nine months ended September 30, 2026, we modified one loan by reducing the current interest rate and extending the initial maturity date in connection with the underlying asset experiencing operational challenges. In return, the borrower agreed to increase the required principal amortization and provided additional real estate collateral. As of September 30, 2026, the modified loan had an unpaid principal balance of $89.5 million, or 2.8% of our total loan portfolio and was performing in accordance with its modified terms. As of September 30, 2026, we have one fully funded senior secured loan collateralized by a luxury golf-resort development with an unpaid principal balance of $80.7 million on non-accrual status.
Credit Quality Indicators
We assess the credit quality of our investments through the credit ratings of the senior secured debt of the guarantors of our leases, as we believe that our lease agreements have a similar credit profile to a senior secured debt instrument. The credit quality indicators are reviewed by us on a quarterly basis as of quarter-end. In instances where the guarantor of one of our lease agreements does not have senior secured debt with a credit rating, we use either a comparable proxy company or the overall corporate credit rating, as applicable. We also use this credit rating to determine the Long-Term Period PD when estimating credit losses for each investment.
The following tables detail the amortized cost basis and year of origination of our Investments in leases - sales-type and financing receivables, Investments in loans and securities and Other assets by the credit quality indicator we assigned to each lease or loan guarantor as of September 30, 2026 and December 31, 2025:
Amortized Cost Basis by Year of Origination as of September 30, 2026 (1)
(In thousands)20262025202420232022PriorTotal
Ba3$— $— $— $— $12,554,492 $6,740,424 $19,294,916 
B1— — — — 2,428,335 14,964,105 17,392,440 
B21,156,984 — — — 4,933,225 — 6,090,209 
B3851,034 — — 653,910 301,936 895,813 2,702,693 
Caa1— — — 393,573 — 345,985 739,558 
N/A (2)
848,902 382,924 349,385 1,126,128 850,115 — 3,557,454 
Total$2,856,920 $382,924 $349,385 $2,173,611 $21,068,103 $22,946,327 $49,777,270 
Amortized Cost Basis by Year of Origination as of December 31, 2025 (1)
(In thousands)20252024202320222021PriorTotal
Ba2$— $— $— $4,873,999 $— $— $4,873,999 
Ba3— — — 13,095,110 2,194,863 18,458,589 33,748,562 
B1— — — 2,398,728 — 927,427 3,326,155 
B2— — 449,694 — — — 449,694 
B3— — 290,139 301,167 — 892,567 1,483,873 
Caa1— — 398,903 — — 344,104 743,007 
N/A (2)
671,696 350,183 1,089,558 800,717 — — 2,912,154 
Total$671,696 $350,183 $2,228,294 $21,469,721 $2,194,863 $20,622,687 $47,537,444 
____________________
(1)Excludes the CECL allowance for unfunded commitments recorded in Other liabilities as such commitments are not currently reflected on our Balance Sheet, rather the CECL allowance is based on our current best estimate of future funding commitments.
(2)We estimate the CECL allowance for our loan investments, and certain of our lease investments with similar credit characteristics, using a traditional commercial real estate model based on standardized credit metrics to estimate potential losses.