Operating Leases (Tables)

12 Months Ended

Dec. 31, 2022

The Company’s real estate investments are leased under operating leases with remaining terms ranging from one year to 27 years. The Company adopted Topic 842 on January 1, 2019 and elected to not reassess its prior conclusions about lease classification. Accordingly, these 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 December 31, 2022 and 2021 (in thousands):


	December 31, 2022							December 31, 2021
	Operating leases		Sub-lessor operating ground leases					Operating leases		Sub-lessor operating ground leases
	Amount (1) (2)		Amount (1) (2)		Total			Amount (1) (2)		Amount (1) (2)		Total
Year:							Year:
2023	$	534,742	$	24,795	$	559,537	2022	$	487,344	$	23,232	$	510,576
2024	519,773		25,981		545,754		2023	487,624		22,915		510,539
2025	513,408		26,118		539,526		2024	485,383		22,415		507,798
2026	510,542		24,253		534,795		2025	480,161		22,552		502,713
2027	480,005		23,493		503,498		2026	477,702		20,687		498,389
Thereafter	3,485,821		220,365		3,706,186		Thereafter	3,687,535		185,964		3,873,499
Total	$	6,044,291	$	345,005	$	6,389,296	Total	$	6,105,749	$	297,765	$	6,403,514

(1) Amounts presented above are based on contractual obligations and exclude the impact of COVID-19 deferred rent payments. As of December 31, 2022, receivables from tenants included fixed rent payments of approximately $2.1 million that were deferred due to the COVID-19 pandemic and determined to be collectible. The Company is currently scheduled to collect approximately $1.6 million in 2023 and $0.5 million in 2024.

(2) Included in rental revenue.

Lessee, Operating Lease, Liability, Maturity

The following table summarizes the future minimum lease payments under the ground lease obligations and the office lease at December 31, 2022 and 2021, 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):


	December 31, 2022					December 31, 2021
	Ground Leases (1)		Office lease (2)			Ground Leases (1)		Office lease (2)
Year:					Year:
2023	$	26,317	$	958	2022	$	24,753	$	967
2024	27,504		958		2023	24,440		967
2025	27,622		958		2024	23,939		967
2026	25,796		717		2025	24,058		967
2027	24,235		—		2026	22,232		724
Thereafter	235,792		—		Thereafter	202,135		—
Total lease payments	$	367,266	$	3,591		$	321,557	$	4,592
Less: imputed interest	129,066		384			106,878		476
Present value of lease liabilities	$	238,200	$	3,207		$	214,679	$	4,116

(1) Included in property operating expense.

(2) Included in general and administrative expense.

Lessee, Operating Leases [Text Block]

In addition to its lessor arrangements on its real estate investments, as of December 31, 2022 and 2021, the Company was lessee in 52 and 51 operating ground leases, respectively, 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. As of December 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, however, 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. As of December 31, 2022, the ground lease arrangements have remaining terms ranging from two years to 44 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 December 31, 2022, 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 in determining the present value of lease payments. The incremental borrowing rate was adjusted for collateral based on the information available at adoption or the commencement date. Inputs to the calculation of the Company's incremental borrowing rate include its senior notes and their option adjusted credit spreads over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification.


	December 31, 2022					December 31, 2021
	Ground Leases (1)		Office lease (2)			Ground Leases (1)		Office lease (2)
Year:					Year:
2023	$	26,317	$	958	2022	$	24,753	$	967
2024	27,504		958		2023	24,440		967
2025	27,622		958		2024	23,939		967
2026	25,796		717		2025	24,058		967
2027	24,235		—		2026	22,232		724
Thereafter	235,792		—		Thereafter	202,135		—
Total lease payments	$	367,266	$	3,591		$	321,557	$	4,592
Less: imputed interest	129,066		384			106,878		476
Present value of lease liabilities	$	238,200	$	3,207		$	214,679	$	4,116

(1) Included in property operating expense.

(2) Included in general and administrative expense.

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of December 31, 2022 and 2021 (in thousands):


		As of December 31,
	Classification	2022		2021
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	198,009	$	176,984
Office lease asset	Operating lease right-of-use assets	2,976		3,824
Total operating lease right-of-use assets		$	200,985	$	180,808
Sub-lessor straight-line rent receivable	Accounts receivable	14,586		12,894
Total leased assets		$	215,571	$	193,702
Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	238,200	$	214,679
Office lease liability	Operating lease liabilities	3,207		4,116
Total lease liabilities		$	241,407	$	218,795

The following table summarizes rental revenue, including sublease arrangements and lease costs, including impairment charges on operating lease right-of-use assets for the years ended December 31, 2022, 2021 and 2020 (in thousands):


		Year ended December 31,
	Classification	2022		2021		2020
Rental revenue
Operating leases (1)	Rental revenue	$	551,383	$	457,063	$	361,393
Sublease income - operating ground leases (2)	Rental revenue	24,218		21,819		10,783
Lease costs
Operating ground lease cost	Property operating expense	$	25,167	$	22,863	$	24,386
Operating office lease cost	General and administrative expense	904		905		905
Operating lease right-of-use asset impairment charges (3)	Impairment charges	1,968		—		15,009

(1) During the year ended December 31, 2020, the Company wrote-off straight-line rent receivables totaling $26.5 million, to straight-line rental revenue classified in rental revenue in the accompanying consolidated statements of income (loss) and comprehensive income (loss). Additionally, during the year ended December 31, 2020, the Company wrote-off lease receivables from tenants totaling $25.7 million, to minimum rent, tenant reimbursements and percentage rent classified in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) related to tenants being recognized on a cash basis.

(2) During the year ended December 31, 2020, the Company wrote-off sub-lessor ground lease straight-line rent receivables totaling $11.5 million, to straight-line rental revenue classified in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss). Additionally, during the year ended December 31, 2020, the Company wrote-off sub-lessor ground lease receivables from tenants totaling $1.4 million to minimum rent classified in "Rental revenue" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) related to tenants being recognized on a cash basis.

(3) During the years ended December 31, 2022 and 2020, the Company recognized impairment charges of $2.0 million and $15.0 million, respectively. See Note 4 for the details on these impairments.

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for arrangements where the Company is the lessee as of December 31, 2022 and 2021:


	As of December 31,
	2022		2021
Weighted-average remaining lease term in years
Operating ground leases	15.1		15.0
Operating office lease	3.8		4.8
Weighted-average discount rate
Operating ground leases	5.31	%	4.97	%
Operating office lease	6.04	%	4.62	%

Lease, Cost [Table Text Block]

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of December 31, 2022 and 2021 (in thousands):


		As of December 31,
	Classification	2022		2021
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	198,009	$	176,984
Office lease asset	Operating lease right-of-use assets	2,976		3,824
Total operating lease right-of-use assets		$	200,985	$	180,808
Sub-lessor straight-line rent receivable	Accounts receivable	14,586		12,894
Total leased assets		$	215,571	$	193,702
Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	238,200	$	214,679
Office lease liability	Operating lease liabilities	3,207		4,116
Total lease liabilities		$	241,407	$	218,795


		Year ended December 31,
	Classification	2022		2021		2020
Rental revenue
Operating leases (1)	Rental revenue	$	551,383	$	457,063	$	361,393
Sublease income - operating ground leases (2)	Rental revenue	24,218		21,819		10,783
Lease costs
Operating ground lease cost	Property operating expense	$	25,167	$	22,863	$	24,386
Operating office lease cost	General and administrative expense	904		905		905
Operating lease right-of-use asset impairment charges (3)	Impairment charges	1,968		—		15,009

(3) During the years ended December 31, 2022 and 2020, the Company recognized impairment charges of $2.0 million and $15.0 million, respectively. See Note 4 for the details on these impairments.