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Leases
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases
8.
Leases

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard.

The Company generates the majority of its lease revenue 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 rent, storage rent 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.

The Company also generates lease revenue from 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, 2022 and 2021 (amounts in thousands):

 

 

 

Nine Months Ended September 30, 2022

 

 

Nine Months Ended September 30, 2021

 

Income Type

 

Residential
Leases

 

 

Non-Residential
Leases

 

 

Total

 

 

Residential
Leases

 

 

Non-Residential
Leases

 

 

Total

 

Residential and non-residential rent

 

$

1,812,928

 

 

$

48,279

 

 

$

1,861,207

 

 

$

1,629,778

 

 

$

45,680

 

 

$

1,675,458

 

Utility recoveries (RUBS income) (1)

 

 

59,826

 

 

 

596

 

 

 

60,422

 

 

 

55,331

 

 

 

519

 

 

 

55,850

 

Parking rent

 

 

32,546

 

 

 

322

 

 

 

32,868

 

 

 

30,403

 

 

 

465

 

 

 

30,868

 

Other lease revenue (2)

 

 

(4,016

)

 

 

(568

)

 

 

(4,584

)

 

 

(19,442

)

 

 

2,914

 

 

 

(16,528

)

Total lease revenue

 

$

1,901,284

 

 

$

48,629

 

 

 

1,949,913

 

 

$

1,696,070

 

 

$

49,578

 

 

 

1,745,648

 

Parking revenue

 

 

 

 

 

 

 

 

27,701

 

 

 

 

 

 

 

 

 

18,455

 

Other revenue

 

 

 

 

 

 

 

 

57,863

 

 

 

 

 

 

 

 

 

54,764

 

Total other rental income (3)

 

 

 

 

 

 

 

 

85,564

 

 

 

 

 

 

 

 

 

73,219

 

Rental income

 

 

 

 

 

 

 

$

2,035,477

 

 

 

 

 

 

 

 

$

1,818,867

 
(1)
RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.
(2)
Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue.
(3)
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, 2022 and 2021 (amounts in thousands):

 

 

 

Quarter Ended September 30, 2022

 

 

Quarter Ended September 30, 2021

 

Income Type

 

Residential
Leases

 

 

Non-Residential
Leases

 

 

Total

 

 

Residential
Leases

 

 

Non-Residential
Leases

 

 

Total

 

Residential and non-residential rent

 

$

620,880

 

 

$

16,184

 

 

$

637,064

 

 

$

551,474

 

 

$

14,443

 

 

$

565,917

 

Utility recoveries (RUBS income) (1)

 

 

20,243

 

 

 

227

 

 

 

20,470

 

 

 

18,798

 

 

 

189

 

 

 

18,987

 

Parking rent

 

 

10,840

 

 

 

120

 

 

 

10,960

 

 

 

10,513

 

 

 

103

 

 

 

10,616

 

Other lease revenue (2)

 

 

(3,127

)

 

 

(371

)

 

 

(3,498

)

 

 

(472

)

 

 

1,776

 

 

 

1,304

 

Total lease revenue

 

$

648,836

 

 

$

16,160

 

 

 

664,996

 

 

$

580,313

 

 

$

16,511

 

 

 

596,824

 

Parking revenue

 

 

 

 

 

 

 

 

9,270

 

 

 

 

 

 

 

 

 

6,883

 

Other revenue

 

 

 

 

 

 

 

 

20,833

 

 

 

 

 

 

 

 

 

19,499

 

Total other rental income (3)

 

 

 

 

 

 

 

 

30,103

 

 

 

 

 

 

 

 

 

26,382

 

Rental income

 

 

 

 

 

 

 

$

695,099

 

 

 

 

 

 

 

 

$

623,206

 
(1)
RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.
(2)
Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue.
(3)
Other rental income is accounted for under the revenue recognition standard.

The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of September 30, 2022 and December 31, 2021 (amounts in thousands):

 

 

 

Residential

 

 

Non-Residential

 

Balance Sheet (Other assets):

 

September 30, 2022

 

 

December 31, 2021

 

 

September 30, 2022

 

 

December 31, 2021

 

Resident/tenant accounts receivable balances

 

$

34,939

 

 

$

37,959

 

 

$

3,951

 

 

$

3,218

 

Allowance for doubtful accounts

 

 

(30,543

)

 

 

(33,121

)

 

 

(2,767

)

 

 

(2,365

)

Net receivable balances

 

$

4,396

 

(1)

$

4,838

 

 

$

1,184

 

 

$

853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line receivable balances

 

$

3,466

 

 

$

7,460

 

 

$

13,792

 

 

$

13,021

 
(1)
The Company held residential security deposits approximating 53.9% of the net residential receivable balance at September 30, 2022.

The following table presents residential bad debt for the Company’s properties for the nine months and quarters ended September 30, 2022 and 2021 (amounts in thousands):

 

 

 

Nine Months Ended September 30,

 

 

Quarter Ended September 30,

 

Income Statement (Rental income):

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Bad debt, net (1)

 

$

14,854

 

 

$

29,751

 

 

$

6,707

 

 

$

3,979

 

% of rental income

 

 

0.8

%

 

 

1.7

%

 

 

1.0

%

 

 

0.7

%
(1)
Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $32.5 million and $18.5 million for the nine months ended September 30, 2022 and 2021, respectively, and $8.0 million and $13.5 million for the quarters ended September 30, 2022 and 2021, respectively. The resident payments from governmental rental assistance decreased in the third quarter of 2022 as compared to the prior year period as these programs wind down.