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Leases
9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Leases

8.

Leases

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases will continue to be accounted for as operating leases under the standard as described in Note 2.  

For the nine months ended September 30, 2020, approximately 98% of the Company’s total lease revenue is generated from residential apartment leases that are generally twelve months or less in length.  The residential apartment leases may include lease income related to such items as utility recoveries, parking, storage and pet rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same.  The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis.  Residential leases are renewable upon consent of both parties on an annual or monthly basis.

For the nine months ended September 30, 2020, approximately 2% of the Company’s total lease revenue is generated by non-residential leases that are generally for terms ranging between five to ten years.  The non-residential leases generally consist of ground floor retail spaces and master-leased parking garages that serve as additional amenities for our residents.  The non-residential leases may include lease income related to such items as utility recoveries, parking rent and storage rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same.  

The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis.  Non-residential leases are renewable with market-based renewal options.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the nine months ended September 30, 2020 and 2019 (amounts in thousands):

 

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

Income Type

 

Residential

Leases

 

 

Non-Residential

Leases

 

 

Total

 

 

Residential

Leases

 

 

Non-Residential

Leases

 

 

Total

 

Residential and non-residential rent

 

$

1,783,298

 

 

$

36,263

 

 

$

1,819,561

 

 

$

1,801,749

 

 

$

54,616

 

 

$

1,856,365

 

Utility recoveries (RUBS income) (1)

 

 

52,538

 

 

 

509

 

 

 

53,047

 

 

 

50,290

 

 

 

650

 

 

 

50,940

 

Parking rent

 

 

29,052

 

 

 

324

 

 

 

29,376

 

 

 

27,874

 

 

 

259

 

 

 

28,133

 

Storage rent

 

 

2,814

 

 

 

60

 

 

 

2,874

 

 

 

2,796

 

 

 

51

 

 

 

2,847

 

Pet rent

 

 

8,583

 

 

 

 

 

 

8,583

 

 

 

8,714

 

 

 

 

 

 

8,714

 

Total lease revenue

 

$

1,876,285

 

 

$

37,156

 

 

 

1,913,441

 

 

$

1,891,423

 

 

$

55,576

 

 

 

1,946,999

 

Total other rental income (2)

 

 

 

 

 

 

 

 

 

 

44,829

 

 

 

 

 

 

 

 

 

 

 

69,797

 

Rental income

 

 

 

 

 

 

 

 

 

$

1,958,270

 

 

 

 

 

 

 

 

 

 

$

2,016,796

 

 

(1)

RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)

Other rental income is accounted for under the revenue recognition standard.

 

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended September 30, 2020 and 2019 (amounts in thousands):

 

 

 

Quarter Ended September 30, 2020

 

 

Quarter Ended September 30, 2019

 

Income Type

 

Residential

Leases

 

 

Non-Residential

Leases

 

 

Total

 

 

Residential

Leases

 

 

Non-Residential

Leases

 

 

Total

 

Residential and non-residential rent

 

$

576,192

 

 

$

6,042

 

 

$

582,234

 

 

$

611,020

 

 

$

18,453

 

 

$

629,473

 

Utility recoveries (RUBS income) (1)

 

 

17,306

 

 

 

134

 

 

 

17,440

 

 

 

16,987

 

 

 

238

 

 

 

17,225

 

Parking rent

 

 

9,592

 

 

 

101

 

 

 

9,693

 

 

 

9,405

 

 

 

100

 

 

 

9,505

 

Storage rent

 

 

901

 

 

 

20

 

 

 

921

 

 

 

940

 

 

 

19

 

 

 

959

 

Pet rent

 

 

2,843

 

 

 

 

 

 

2,843

 

 

 

2,916

 

 

 

 

 

 

2,916

 

Total lease revenue

 

$

606,834

 

 

$

6,297

 

 

 

613,131

 

 

$

641,268

 

 

$

18,810

 

 

 

660,078

 

Total other rental income (2)

 

 

 

 

 

 

 

 

 

 

9,302

 

 

 

 

 

 

 

 

 

 

 

25,042

 

Rental income

 

 

 

 

 

 

 

 

 

$

622,433

 

 

 

 

 

 

 

 

 

 

$

685,120

 

 

(1)

RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)

Other rental income is accounted for under the revenue recognition standard.

 

The economic impact of the pandemic on a subset of our residents and tenants has led to elevated levels of bad debt.  We continue to work with our residents and tenants on payment plans and collections and our bad debt allowance policies remain consistent.

The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of September 30, 2020 and December 31, 2019 (amounts in thousands):

 

 

 

Residential

 

 

Non-Residential

 

Balance Sheet (Other assets):

 

September 30, 2020

 

 

December 31, 2019

 

 

September 30, 2020

 

 

December 31, 2019

 

Resident/tenant accounts receivable balances

 

$

24,298

 

 

$

4,040

 

 

$

7,839

 

 

$

1,766

 

Allowance for doubtful accounts

 

 

(16,286

)

 

 

(1,190

)

 

 

(6,595

)

 

 

(1,412

)

Net receivable balances

 

$

8,012

 

(1)

$

2,850

 

 

$

1,244

 

 

$

354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

11,618

 

 

$

1,841

 

 

$

13,816

 

 

$

26,450

 

 

(1)

The Company held residential security deposits approximating 31.3% of the net receivable balance at September 30, 2020.

 

The following table presents residential bad debt for the Company’s properties for the nine months ended September 30, 2020 and 2019 (amounts in thousands):

 

 

 

Nine Months Ended September 30,

 

Income Statement (Rental income):

 

 

2020

 

 

 

2019

 

Bad debt, net

 

$

29,419

 

 

$

9,021

 

% of rental income

 

 

1.5

%

 

 

0.5

%

 

 

Due to the impact of COVID-19 and the resulting economic impact on our non-residential tenants, we recognized a non-cash write-off of non-residential straight-line lease receivables of $12.9 million during the nine months ended September 30, 2020.  In addition, we also reduced rental revenues by $5.6 million during the nine months ended September 30, 2020 as a result of rent payment deferrals/abatements granted to our non-residential tenants.