Lease Accounting

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lease Accounting

LEASE ACCOUNTING

Leasing as a Lessor

    Future Minimum Rental Income

As of September 30, 2020, non-cancelable commercial operating leases provide for future minimum rental income from continuing operations as follows (in thousands). Apartment leases are not included as the terms are generally for one year or less.

2020	$	34,386
2021	135,462
2022	122,421
2023	105,347
2024	92,120
Thereafter	327,560
	$	817,296

Leasing as a Lessee

2000 M Street, an office property in Washington, DC, is subject to an operating ground lease with a remaining term of 51 years. Rental payments under this lease are subject to percentage rent variable payments, which are not included as part of our measurement of straight-line rental expense. We recognized straight-line rental expense of $0.1 million during each of the 2020 Quarter and 2019 Quarter and $0.2 million for each of the 2020 Period and 2019 Period, respectively. We recognized variable rental payments of $0.2 million during each of the 2020 Quarter and 2019 Quarter and $0.7 million during each of the 2020 Period and 2019 Period, respectively.

We recognized a right of use asset (included in Income producing property) and lease liability (included in Accounts payable and other liabilities) of $4.2 million. We used a discount rate of approximately 5.9%, which was derived from our assessment of

securitized rates for similar assets and credit quality. We recognized $0.1 million of right-of-use and lease liability amortization during each of the 2020 Quarter and 2019 Quarter and $0.2 million for each of the 2020 Period and 2019 Period, respectively.

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on our operating ground lease as of September 30, 2020 and a reconciliation of those cash flows to the operating lease liability as of September 30, 2020 (in thousands):

2020	$	65
2021	260
2022	260
2023	260
2024	260
Thereafter	11,895
	13,000
Imputed interest	(9,210)
Lease liability	$	3,790

Lease Accounting

LEASE ACCOUNTING

Leasing as a Lessor

    Future Minimum Rental Income

As of September 30, 2020, non-cancelable commercial operating leases provide for future minimum rental income from continuing operations as follows (in thousands). Apartment leases are not included as the terms are generally for one year or less.

2020	$	34,386
2021	135,462
2022	122,421
2023	105,347
2024	92,120
Thereafter	327,560
	$	817,296

Leasing as a Lessee

2000 M Street, an office property in Washington, DC, is subject to an operating ground lease with a remaining term of 51 years. Rental payments under this lease are subject to percentage rent variable payments, which are not included as part of our measurement of straight-line rental expense. We recognized straight-line rental expense of $0.1 million during each of the 2020 Quarter and 2019 Quarter and $0.2 million for each of the 2020 Period and 2019 Period, respectively. We recognized variable rental payments of $0.2 million during each of the 2020 Quarter and 2019 Quarter and $0.7 million during each of the 2020 Period and 2019 Period, respectively.

We recognized a right of use asset (included in Income producing property) and lease liability (included in Accounts payable and other liabilities) of $4.2 million. We used a discount rate of approximately 5.9%, which was derived from our assessment of

securitized rates for similar assets and credit quality. We recognized $0.1 million of right-of-use and lease liability amortization during each of the 2020 Quarter and 2019 Quarter and $0.2 million for each of the 2020 Period and 2019 Period, respectively.

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on our operating ground lease as of September 30, 2020 and a reconciliation of those cash flows to the operating lease liability as of September 30, 2020 (in thousands):

2020	$	65
2021	260
2022	260
2023	260
2024	260
Thereafter	11,895
	13,000
Imputed interest	(9,210)
Lease liability	$	3,790