Operating Leases (Tables)

9 Months Ended

Sep. 30, 2019

Lessee, Lease, Description [Line Items]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The following table summarizes the future minimum lease payments under the ground lease obligations and the office lease at September 30, 2019 and December 31, 2018, excluding contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales (in thousands):



	September 30, 2019				December 31, 2018 ⁽³⁾
	Ground Leases ⁽¹⁾		Office lease ⁽²⁾		Ground Leases		Office lease ⁽²⁾
Year:
2019	$	6,345	$	214	$	22,867	$	856
2020	24,592		856		23,236		856
2021	25,036		884		23,600		884
2022	24,468		967		22,996		967
2023	23,812		967		22,303		967
Thereafter	271,911		2,658		257,446		2,658
Total lease payments	$	376,164	$	6,546	$	372,448	$	7,188
Less: imputed interest	137,368		984
Present value of lease liabilities	$	238,796	$	5,562

⁽¹⁾Included in property operating expense.

⁽²⁾Included in general and administrative expense.

⁽³⁾Balances as of December 31, 2018 are prior to the adoption of Topic 842.

Lease, Cost [Table Text Block]

The following table summarizes the lease costs and sublease income for the three and nine months ended September 30, 2019 (in thousands):



	Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Lease Cost
Operating ground lease cost	Property operating expense	$	6,407		$	18,410
Operating office lease cost	General and administrative expense	226			682

Sublease income	Rental revenue	(5,931		)	(17,489		)
Net lease cost		$	702		$	1,603

Lessee, Operating Lease, Disclosure [Table Text Block]

Operating Leases

The Company’s real estate investments are leased under operating leases with remaining terms ranging from one year to 30 years. As described in Note 2, the Company adopted Topic 842 on January 1, 2019 and elected to not reassess its prior conclusions about lease classification. Accordingly, these lease arrangements continue to be classified as operating leases.

The following table summarizes the future minimum rentals on the Company's lessor and sub-lessor arrangements at September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019						December 31, 2018 ⁽²⁾
	Operating leases		Sub-lessor operating ground leases				Operating leases
	Amount ⁽¹⁾		Amount ⁽¹⁾		Total		Amount ⁽¹⁾
Year:
2019	$	141,626	$	6,139	$	147,765	$	520,139
2020	556,890		23,975		580,865		503,344
2021	546,544		24,371		570,915		492,165
2022	533,426		23,798		557,224		477,671
2023	506,118		23,138		529,256		449,686
Thereafter	4,641,759		253,977		4,895,736		3,953,717
Total	$	6,926,363	$	355,398	$	7,281,761	$	6,396,722

⁽¹⁾ Included in rental revenue.

⁽²⁾ Balances as of December 31, 2018 are prior to the adoption of Topic 842.

In addition to its lessor arrangements on its real estate investments, as of September 30, 2019 and December 31, 2018, the Company was lessee in 58 operating ground leases as well as lessee in an operating lease of its executive office. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. In the event the tenant fails to pay the ground lease rent, the Company would be primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. As of September 30, 2019, the ground lease arrangements have remaining terms ranging from two years to 47 years. Most of these leases include one or more options to renew. The Company assesses these options using a threshold of reasonably certain, which also includes an assessment of the term of the Company's tenants' leases. For leases where renewal is reasonably certain, those option periods are included within the lease term and also the measurement of the operating lease right-of-use asset and liability. The ground lease arrangements do not contain any residual value guarantees or any material restrictions. As of September 30, 2019, the Company does not have any leases that have not commenced but that create significant rights and obligations.

The Company determines whether an arrangement is or includes a lease at contract inception. Operating lease right-of-use assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate adjusted for related collateral based on the information available at adoption or the commencement date in determining the present value of lease payments.



	September 30, 2019				December 31, 2018 ⁽³⁾
	Ground Leases ⁽¹⁾		Office lease ⁽²⁾		Ground Leases		Office lease ⁽²⁾
Year:
2019	$	6,345	$	214	$	22,867	$	856
2020	24,592		856		23,236		856
2021	25,036		884		23,600		884
2022	24,468		967		22,996		967
2023	23,812		967		22,303		967
Thereafter	271,911		2,658		257,446		2,658
Total lease payments	$	376,164	$	6,546	$	372,448	$	7,188
Less: imputed interest	137,368		984
Present value of lease liabilities	$	238,796	$	5,562

⁽¹⁾Included in property operating expense.

⁽²⁾Included in general and administrative expense.

⁽³⁾Balances as of December 31, 2018 are prior to the adoption of Topic 842.

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of September 30, 2019 (in thousands):



		As of
	Classification	September 30, 2019
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	214,106
Office lease asset	Operating lease right-of-use assets	5,353
Total operating lease right-of-use assets		$	219,459

Sub-lessor straight-line rent receivable	Accounts receivable	25,183
Total leased assets		$	244,642

Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	238,796
Office lease liability	Operating lease liabilities	5,562
Total lease liabilities		$	244,358

The following table summarizes the lease costs and sublease income for the three and nine months ended September 30, 2019 (in thousands):



	Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Lease Cost
Operating ground lease cost	Property operating expense	$	6,407		$	18,410
Operating office lease cost	General and administrative expense	226			682

Sublease income	Rental revenue	(5,931		)	(17,489		)
Net lease cost		$	702		$	1,603

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate as of September 30, 2019:



	As of
	September 30, 2019
Weighted-average remaining lease term in years
Operating ground leases	16.8
Operating office lease	7.0

Weighted-average discount rate
Operating ground leases	4.95	%
Operating office lease	4.62	%

Lessee, Operating Leases [Text Block]

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of September 30, 2019 (in thousands):



		As of
	Classification	September 30, 2019
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	214,106
Office lease asset	Operating lease right-of-use assets	5,353
Total operating lease right-of-use assets		$	219,459

Sub-lessor straight-line rent receivable	Accounts receivable	25,183
Total leased assets		$	244,642

Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	238,796
Office lease liability	Operating lease liabilities	5,562
Total lease liabilities		$	244,358