Operating Leases (Tables)

3 Months Ended

Mar. 31, 2019

Lessee, Lease, Description [Line Items]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The following table summarizes the future minimum lease payments under the ground lease obligations and the office lease at March 31, 2019 and December 31, 2018, excluding contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales (in thousands):



	March 31, 2019				December 31, 2018 ⁽³⁾
	Ground Leases ⁽¹⁾		Office lease ⁽²⁾		Ground Leases		Office lease ⁽²⁾
Year:
2019	$	17,125	$	642	$	22,867	$	856
2020	23,236		856		23,236		856
2021	23,600		884		23,600		884
2022	22,998		967		22,996		967
2023	22,304		967		22,303		967
Thereafter	257,454		2,658		257,446		2,658
Total lease payments	$	366,717	$	6,974	$	372,448	$	7,188
Less: imputed interest	136,962		1,117
Present value of lease liabilities	$	229,755	$	5,857

⁽¹⁾Included in property operating expense.

⁽²⁾Included in general and administrative expense.

⁽³⁾Balances as of December 31, 2018 are prior to the adoption of Topic 842.

Lease, Cost [Table Text Block]

The following table summarizes the lease costs and sublease income for the three months ended March 31, 2019 (in thousands):




	Classification	Three Months Ended March 31, 2019
Lease Cost
Operating ground lease cost	Property operating expense	$	5,938
Operating office lease cost	General and administrative expense	230

Sublease income	Rental revenue	$	(5,723	)
Net lease cost		$	445

Lessee, Operating Lease, Disclosure [Table Text Block]

Operating Leases

The Company’s rental properties are leased under operating leases with remaining terms ranging from one to 31 years. As described in Note 2, the Company adopted Topic 842 on January 1, 2019 and elected to not reassess its prior conclusions about lease classification. Accordingly, these lease arrangements continue to be classified as operating leases.

The following table summarizes the future minimum rentals on the Company's lessor and sub-lessor arrangements at March 31, 2019 and December 31, 2018 (in thousands):



	March 31, 2019						December 31, 2018 ⁽²⁾
	Operating leases		Sub-lessor operating ground leases				Operating leases
	Amount ⁽¹⁾		Amount ⁽¹⁾		Total		Amount ⁽¹⁾
Year:
2019	$	398,100	$	16,712	$	414,812	$	520,139
2020	515,418		22,620		538,038		503,344
2021	504,422		22,936		527,358		492,165
2022	489,968		22,327		512,295		477,671
2023	461,749		21,631		483,380		449,686
Thereafter	4,092,159		239,519		4,331,678		3,953,717
Total	$	6,461,816	$	345,745	$	6,807,561	$	6,396,722

⁽¹⁾ Included in rental revenue.

⁽²⁾ Balances as of December 31, 2018 are prior to the adoption of Topic 842.

In addition to its lessor arrangements on its rental properties, as of March 31, 2019 and December 31, 2018, the Company was lessee in 57 operating ground leases as well as lessee in an operating lease of its executive office. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. In the event the tenant fails to pay the ground lease rent, the Company would be primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. As of March 31, 2019, the ground lease arrangements have remaining terms ranging from two to 47 years. Most of these leases include one or more options to renew. The Company assesses these options using a threshold of reasonably certain, which also includes an assessment of the term of the Company's tenants' leases. For leases where renewal is reasonably certain, those option periods are included within the lease term and also the measurement of the operating lease right-of-use asset and liability. The ground lease arrangements do not contain any residual value guarantees or any material restrictions. As of March 31, 2019, the Company does not have any leases that have not commenced but that create significant rights and obligations.

The Company determines whether an arrangement is or includes a lease at contract inception. Operating lease right-of-use assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate adjusted for related collateral based on the information available at adoption or the commencement date in determining the present value of lease payments.



	March 31, 2019				December 31, 2018 ⁽³⁾
	Ground Leases ⁽¹⁾		Office lease ⁽²⁾		Ground Leases		Office lease ⁽²⁾
Year:
2019	$	17,125	$	642	$	22,867	$	856
2020	23,236		856		23,236		856
2021	23,600		884		23,600		884
2022	22,998		967		22,996		967
2023	22,304		967		22,303		967
Thereafter	257,454		2,658		257,446		2,658
Total lease payments	$	366,717	$	6,974	$	372,448	$	7,188
Less: imputed interest	136,962		1,117
Present value of lease liabilities	$	229,755	$	5,857

⁽¹⁾Included in property operating expense.

⁽²⁾Included in general and administrative expense.

⁽³⁾Balances as of December 31, 2018 are prior to the adoption of Topic 842.

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of March 31, 2019 (in thousands):



		As of
	Classification	March 31, 2019
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	205,626
Office lease asset	Operating lease right-of-use assets	5,673
Sub-lessor straight-line rent receivable	Accounts receivable	24,638
Total leased assets		$	235,937

Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	229,755
Office lease liability	Operating lease liabilities	5,857
Total lease liabilities		$	235,612

The following table summarizes the lease costs and sublease income for the three months ended March 31, 2019 (in thousands):




	Classification	Three Months Ended March 31, 2019
Lease Cost
Operating ground lease cost	Property operating expense	$	5,938
Operating office lease cost	General and administrative expense	230

Sublease income	Rental revenue	$	(5,723	)
Net lease cost		$	445

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate as of March 31, 2019:



	As of
	March 31, 2019
Weighted-average remaining lease term in years
Operating ground leases	17.4
Operating office lease	7.5

Weighted-average discount rate
Operating ground leases	4.91	%
Operating office lease	4.62	%

Schedule or Description of Weighted Average Discount Rate [Table Text Block]

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate as of March 31, 2019:



	As of
	March 31, 2019
Weighted-average remaining lease term in years
Operating ground leases	17.4
Operating office lease	7.5

Weighted-average discount rate
Operating ground leases	4.91	%
Operating office lease	4.62	%

Lessee, Operating Leases [Text Block]

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of March 31, 2019 (in thousands):



		As of
	Classification	March 31, 2019
Assets:
Operating ground lease assets	Operating lease right-of-use assets	$	205,626
Office lease asset	Operating lease right-of-use assets	5,673
Sub-lessor straight-line rent receivable	Accounts receivable	24,638
Total leased assets		$	235,937

Liabilities:
Operating ground lease liabilities	Operating lease liabilities	$	229,755
Office lease liability	Operating lease liabilities	5,857
Total lease liabilities		$	235,612