Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

As of September 30, 2019, the Company and the Operating Partnership were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined could have a material adverse impact on us.

Environmental Matters

Our management believes that the properties are in compliance in all material respects with applicable Federal, state and local ordinances and regulations regarding environmental issues. Management is not aware of any environmental liability that it believes would have a materially adverse impact on our financial position, results of operations or cash flows. Management is unaware of any instances in which it would incur significant environmental cost if any of our properties were sold.

Ground Lease Arrangements

We are a tenant under ground leases for certain properties. These leases have expirations from 2022 to 2114, or 2043 to 2114 as fully extended. Certain leases offer extension options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and right of use asset.

The following is a schedule of future minimum lease payments under financing leases and operating leases with initial terms in excess of one year as of September 30, 2019 (in thousands):



	Financing leases			Operating leases ⁽¹⁾
Remaining 2019	$	621		$	7,797
2020	2,619			31,508
2021	2,794			31,702
2022	2,794			29,548
2023	2,794			27,243
2024	2,819			27,263
Thereafter	814,283			649,289
Total minimum lease payments	$	828,724		$	804,350
Amount representing interest	(784,473		)
Amount discounted using incremental borrowing rate				(419,689		)
Lease liabilities	$	44,251		$	384,661


(1)	As of September 30, 2019, the total minimum sublease rentals to be received in the future under non-cancelable subleases is $1.7 billion.

During the nine months ended September 30, 2019, we recognized $3.3 million of financing lease costs, of which $2.4 million represented interest and $0.9 million represented amortization of the right-of-use assets. These amounts are included in interest expense, net of interest income and depreciation and amortization in our consolidated statements of operations, respectively. During the nine months ended September 30, 2019, we recognized $24.9 million of operating lease costs, which is calculated on a straight-line basis over the remaining lease terms. This amount is included in operating lease rent in our consolidated statements of operations. As of September 30, 2019, the weighted-average discount rate used to calculate the lease liabilities was 8.47%. As of September 30, 2019, the weighted-average remaining lease term was 67 years.