Leases

6 Months Ended

Jun. 30, 2021

Leases of Lessor Disclosure [Text Block]

4. Leases

The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue. When evaluating the collectability of tenants’ accrued rent and accounts receivable balances, management considers tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns, on a lease-by-lease basis. As a result, the Company wrote off approximately $0.6 million and $1.2 million, respectively, during the three and six months ended June 30, 2021 and $35.9 million and $37.4 million, respectively, during the three and six months ended June 30, 2020, related to accrued rent, net balances. Additionally, the Company wrote off approximately $0.3 million and $0.1 million, respectively, during the three and six months ended June 30, 2021 and $18.0 million and $18.9 million, respectively, during the three and six months ended June 30, 2020, related to accounts receivable, net balances. The write-offs were for tenants, primarily in the retail sector, that either terminated their leases or for which the Company considered their accrued rent and/or accounts receivable balances were no longer probable of collection.

Lessor

The following table summarizes the components of lease revenue recognized during the three and six months ended June 30, 2021 and 2020 included within the Company's Consolidated Statements of Operations (in thousands):


	Three months ended June 30,				Six months ended June 30,
Lease Revenue	2021		2020		2021		2020
Fixed contractual payments	$	576,184	$	529,514	$	1,151,537	$	1,116,471
Variable lease payments	107,841		100,605		218,305		223,759
	$	684,025	$	630,119	$	1,369,842	$	1,340,230

Lessee, Operating Leases

Lessee

On May 19, 2021, the Company amended its ground lease at Sumner Square in Washington, DC. The amendment extends the ground lease for an additional 15 years. Prior to the amendment, the ground lease was scheduled to expire on August 10, 2066. The ground lease will now expire on August 9, 2081. The lease requires the Company to pay $23.0 million in 2021 and requires the Company’s remaining obligation of approximately $4.0 million be used to fund certain operation and maintenance costs for the next five years, with no payments thereafter. The Company’s incremental borrowing rate is 3.95% per annum. The net present value of the ground lease payments is approximately $26.7 million. The Company continues to classify this ground lease as an operating lease. As a result, the Company recorded a Right-of-Use Assets - Operating Leases and Lease Liabilities - Operating Leases of approximately $27.1 million and $26.7 million, respectively, on its Consolidated Balance Sheet. The Sumner Square ground lease had operating lease costs of approximately $0.2 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $0.5 million and $0.7 million for the six months ended June 30, 2021 and 2020, respectively. Sumner Square is an approximately 210,000 net rentable square foot Class A office building.

The following table provides a maturity analysis for the Company’s lease liabilities related to its Sumner Square operating lease as of May 19, 2021 (in thousands):


	Operating
Period from May 19, 2021 through December 31, 2021	$	23,599
2022	761
2023	784
2024	808
2025	832
2026	422
Thereafter	—
Total lease payments	27,206
Less: Interest portion	(536)
Present value of lease payments	$	26,670