Lease Income (Notes)

3 Months Ended

Mar. 31, 2020

Lease Income

Our leases generally include scheduled rent increases, but do not include variable payments based on indexes. Our rental revenue is primarily based on fixed, non-cancelable leases. Our variable rental revenue primarily consists of amounts recovered from lessees for property tax, insurance and common area maintenance ("CAM").

All revenues related to lease and lease-related services are included in, and comprise substantially all of, the caption "Rental and Related Revenue" on the Consolidated Statements of Operations and Comprehensive Income. The components of Rental and Related Revenue are as follows (in thousands):



	Three Months Ended March 31,
	2020		2019
Rental revenue - fixed payments	$	161,608	$	156,674
Rental revenue - variable payments (1)	57,147		53,291
Rental and related revenue	$	218,755	$	209,965

(1) Primarily includes tenant recoveries for real estate taxes, insurance and CAM.

Accounting for Lease Concessions Granted in Connection with the COVID-19 Outbreak

On April 8, 2020, the Financial Accounting Standard Board ("FASB") held a public meeting and shortly afterwards issued a question-and-answer ("Q&A") document which was intended to provide accounting relief for lease concessions related to the COVID-19 pandemic. The accounting relief permits an entity to choose to forgo the evaluation of the enforceable rights and obligations of a lease contract, which is a requirement of Accounting Standards Codification Topic 842, Leases, as long as the total rent payments after the lease concessions are substantially the same, or less than, the total payments previously required by the lease. An entity may account for COVID-19 related lease concessions either (i) as if they were part of the enforceable rights and obligations of the parties under the existing lease contract; or (ii) as a lease modification. To the extent that a rent concession is granted as a deferral of payments, but the total lease payments are substantially the same, lessors are allowed to account for the concession as if no change had been made to the original lease contract.

Based on the Q&A, an entity is not required to account for all lease concessions related to the effects of the COVID-19 pandemic under one elected option, however, the entity is required to apply the elected option consistently to leases with similar characteristics and in similar circumstances. Since the COVID-19 pandemic did not start to adversely impact the economic conditions in the United States until late March 2020, we did not provide any COVID-19 related lease concessions to our tenants during the three months ended March 31, 2020.

Due to the continuing adverse economic effects caused by the COVID-19 pandemic since March 31, 2020, a substantial number of our tenants have requested rent relief, most often in the form of rent deferral. Not all tenant requests will ultimately result in modification agreements, nor do we intend to forgo our contractual rights under our lease agreements. We are evaluating each tenant's rent relief request on an individual basis, considering a number of factors. Generally, we expect the majority of rent deferral arrangements that we may ultimately grant to result in two to three months of full or partial rent relief to be paid back within a 12-month period. We have tentatively determined that we will apply the accounting relief provided by the FASB only to such short-term rent deferrals, and will account for such deferrals as if no change had been made to the original lease contract.