Leases, Codification Topic 842

3 Months Ended

Mar. 31, 2022

Operating Leases

The Company’s real estate investments are leased under operating leases. In addition to its lessor arrangements on its real estate investments, as of both March 31, 2022 and December 31, 2021, the Company was lessee in 51 operating ground leases. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. As of March 31, 2022, rental revenue from several of the Company's tenants, who are also sub-tenants under the ground leases, is being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases. In addition, two of these properties do not currently have sub-tenants. In the event the tenant fails to pay the ground lease rent or if the property does not have sub-tenants, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. The Company is also the lessee in an operating lease of its executive office.

The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three months ended March 31, 2022 and 2021 (in thousands):


		Three Months Ended March 31,
	Classification	2022		2021
Operating leases	Rental revenue	$	133,828	$	97,672
Sublease income - operating ground leases	Rental revenue	5,775		4,942

Lease costs
Operating ground lease cost	Property operating expense	$	5,969	$	5,413
Operating office lease cost	General and administrative expense	226		226