Operating Leases

12 Months Ended

Dec. 31, 2019

Piedmont’s real estate assets are leased to tenants under operating leases for which the terms vary, including certain provisions to extend the lease term, options for early terminations subject to specified penalties, and other terms and conditions as negotiated. Piedmont retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant; however, generally they are not significant. Exposure to credit risk is limited to the extent that tenant receivables exceed this amount. Security deposits liabilities related to tenant leases are included in accounts payable, accrued expenses, and accrued capital expenditures in the accompanying consolidated balance sheets.

The future minimum rental income from Piedmont’s investment in real estate assets under non-cancelable operating leases as of December 31, 2019 is presented below (in thousands):


Years ending December 31:
2020	$	384,891
2021	378,312
2022	362,977
2023	329,490
2024	287,755
Thereafter	1,520,051
Total	$	3,263,476

Piedmont recognized the following fixed and variable lease payments, which together comprised rental and tenant reimbursement revenue in the accompanying consolidated statements of income for the years ended December 31, 2019, 2018, and 2017, respectively, as follows (in thousands):


	2019		2018		2017
Fixed payments	$	418,246	$	411,667	$	455,125
Variable payments	93,659		92,743		98,139
Total Rental and Tenant Reimbursement Revenue	$	511,905	$	504,410	$	553,264

Operating leases where Piedmont is the lessee relate primarily to office space in buildings owned by third parties. Upon adoption of ASC 842 on January 1, 2019, Piedmont recorded a right to use asset and corresponding lease liability of approximately $0.2 million using Piedmont's incremental borrowing rate as the lease discount rate. For the year ended December 31, 2019, Piedmont recognized approximately $0.1 million of operating lease costs. As of December 31, 2019, the weighted-average lease term of Piedmont's right of use assets is two years, and the weighted-average discount rate is 3.35%.