v3.24.2
Leases
 6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Leases Leases
Lessor Leases

The Company has operating leases in which it is the lessor for its rental property. Certain leases contain variable lease payments based upon changes in the Consumer Price Index (“CPI”). Billings for real estate taxes and other expenses are also considered to be variable lease payments. Certain leases contain options to renew or terminate the lease, and options for the lessee to purchase the rental property, all of which are predominately at the sole discretion of the lessee.

The following table summarizes the components of rental income included in the accompanying Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023.

 Three months ended June 30,Six months ended June 30,
Rental Income (in thousands)2024202320242023
Fixed lease payments$144,278 $133,164   $286,389 $264,250 
Variable lease payments38,218 33,723 80,407 70,669 
Straight-line rental income4,811 4,495 7,616 9,607 
Net increase (decrease) to rental income related to above and below market lease amortization(840)57 (543)181 
Total rental income$186,467 $171,439 $373,869 $344,707 

As of June 30, 2024 and December 31, 2023, the Company had accrued rental income of approximately $112.0 million and $105.9 million, respectively, included in tenant accounts receivable on the accompanying Consolidated Balance Sheets.

As of June 30, 2024 and December 31, 2023, the Company’s total liability associated with lease security deposits was approximately $22.2 million and $21.8 million, respectively, which is included in tenant prepaid rent and security deposits on the accompanying Consolidated Balance Sheets.

The following table summarizes the maturity of fixed lease payments under the Company’s leases as of June 30, 2024.

YearMaturity of Fixed Lease Payments (in thousands)
Remainder of 2024$294,666 
2025$563,989 
2026$487,155 
2027$399,884 
2028$328,734 
Thereafter$788,004 

Lessee Leases

The Company has operating leases in which it is the lessee for its ground leases and corporate office leases. These leases have remaining lease terms of approximately 1.8 years to 46.2 years. Certain ground leases contain options to extend the leases for ten years to 20 years, all of which are reasonably certain to be exercised, and are included in the computation of the Company’s right-of-use assets and operating lease liabilities.

The following table summarizes supplemental information related to operating lease right-of-use assets and operating lease liabilities recognized in the Company’s Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023.

Operating Lease Term and Discount RateJune 30, 2024December 31, 2023
Weighted average remaining lease term (years)31.931.6
Weighted average discount rate6.8 %6.8 %
The following table summarizes the operating lease cost included in the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023.

 Three months ended June 30,Six months ended June 30,
Operating Lease Cost (in thousands)2024202320242023
Operating lease cost included in property expense attributable to ground leases$616 $618 $1,232 $1,236 
Operating lease cost included in general and administrative expense attributable to corporate office leases431 434 861 871 
Total operating lease cost$1,047 $1,052 $2,093 $2,107 

The following table summarizes supplemental cash flow information related to operating leases in the Company’s Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023.

 Six months ended June 30,
Operating Leases (in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities (operating cash flows)$1,978 $1,933 
Right-of-use assets obtained in exchange for new lease liabilities$— $141 

The following table summarizes the maturity of operating lease liabilities under the Company’s ground leases and corporate office leases as of June 30, 2024.

Year
Maturity of Operating Lease Liabilities(1) (in thousands)
Remainder of 2024$1,997 
20254,022 
20263,014 
20272,023 
20282,064 
Thereafter79,898 
Total lease payments93,018 
Less: Imputed interest(60,335)
Present value of operating lease liabilities$32,683 
(1)Operating lease liabilities do not include estimates of CPI rent changes required by certain ground lease agreements. Therefore, actual payments may differ from those presented.
Leases Leases
Lessor Leases

The Company has operating leases in which it is the lessor for its rental property. Certain leases contain variable lease payments based upon changes in the Consumer Price Index (“CPI”). Billings for real estate taxes and other expenses are also considered to be variable lease payments. Certain leases contain options to renew or terminate the lease, and options for the lessee to purchase the rental property, all of which are predominately at the sole discretion of the lessee.

The following table summarizes the components of rental income included in the accompanying Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023.

 Three months ended June 30,Six months ended June 30,
Rental Income (in thousands)2024202320242023
Fixed lease payments$144,278 $133,164   $286,389 $264,250 
Variable lease payments38,218 33,723 80,407 70,669 
Straight-line rental income4,811 4,495 7,616 9,607 
Net increase (decrease) to rental income related to above and below market lease amortization(840)57 (543)181 
Total rental income$186,467 $171,439 $373,869 $344,707 

As of June 30, 2024 and December 31, 2023, the Company had accrued rental income of approximately $112.0 million and $105.9 million, respectively, included in tenant accounts receivable on the accompanying Consolidated Balance Sheets.

As of June 30, 2024 and December 31, 2023, the Company’s total liability associated with lease security deposits was approximately $22.2 million and $21.8 million, respectively, which is included in tenant prepaid rent and security deposits on the accompanying Consolidated Balance Sheets.

The following table summarizes the maturity of fixed lease payments under the Company’s leases as of June 30, 2024.

YearMaturity of Fixed Lease Payments (in thousands)
Remainder of 2024$294,666 
2025$563,989 
2026$487,155 
2027$399,884 
2028$328,734 
Thereafter$788,004 

Lessee Leases

The Company has operating leases in which it is the lessee for its ground leases and corporate office leases. These leases have remaining lease terms of approximately 1.8 years to 46.2 years. Certain ground leases contain options to extend the leases for ten years to 20 years, all of which are reasonably certain to be exercised, and are included in the computation of the Company’s right-of-use assets and operating lease liabilities.

The following table summarizes supplemental information related to operating lease right-of-use assets and operating lease liabilities recognized in the Company’s Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023.

Operating Lease Term and Discount RateJune 30, 2024December 31, 2023
Weighted average remaining lease term (years)31.931.6
Weighted average discount rate6.8 %6.8 %
The following table summarizes the operating lease cost included in the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023.

 Three months ended June 30,Six months ended June 30,
Operating Lease Cost (in thousands)2024202320242023
Operating lease cost included in property expense attributable to ground leases$616 $618 $1,232 $1,236 
Operating lease cost included in general and administrative expense attributable to corporate office leases431 434 861 871 
Total operating lease cost$1,047 $1,052 $2,093 $2,107 

The following table summarizes supplemental cash flow information related to operating leases in the Company’s Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023.

 Six months ended June 30,
Operating Leases (in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities (operating cash flows)$1,978 $1,933 
Right-of-use assets obtained in exchange for new lease liabilities$— $141 

The following table summarizes the maturity of operating lease liabilities under the Company’s ground leases and corporate office leases as of June 30, 2024.

Year
Maturity of Operating Lease Liabilities(1) (in thousands)
Remainder of 2024$1,997 
20254,022 
20263,014 
20272,023 
20282,064 
Thereafter79,898 
Total lease payments93,018 
Less: Imputed interest(60,335)
Present value of operating lease liabilities$32,683 
(1)Operating lease liabilities do not include estimates of CPI rent changes required by certain ground lease agreements. Therefore, actual payments may differ from those presented.