Leases - The Company as Lessor

6 Months Ended

Jun. 30, 2020

LEASES - THE COMPANY AS LESSOR

The Company leases land and buildings to third parties under operating leases. Such activity is primarily composed of operating leases within its CRE segment.

During the quarter ended June 30, 2020, the Company agreed to rent relief arrangements with certain of its tenants due to the disruption from COVID-19 in the form of rent deferrals. Consistent with lease accounting guidance and recent interpretations provided by the FASB in the Lease Modification Q&A, the Company elected to treat such eligible lease concessions (i.e., such rent deferrals that do not result in a substantial increase in the rights of the lessor or obligations of the lessee) outside of the lease accounting modification framework. Consistent with an acceptable method described in the Lease Modification Q&A, under these rent deferrals, the Company accounts for the event as if no changes to the lease contract were made and continues to record lease receivables and recognize income during the deferral period (if collectability on such amounts is assessed as probable).

Additionally, during the three months ended June 30, 2020, the Company projected a higher amount of uncollectable tenant billings due to COVID-19. As a result, the Company recorded reductions in revenue of $6.0 million related to CRE receivables and unbilled straight-line assets for which the Company assessed that the tenant's future payment of amounts due under leases was not probable and $2.8 million related to the allowance for doubtful accounts for other impacted operating lease receivables.

As a result of COVID-19, certain tenants experiencing economic difficulties have sought and may continue to seek current and future rent relief, which may be provided in the form of additional rent deferrals or rent abatement, among other possible agreements. The Company is evaluating each request on a case-by-case basis and will apply lease accounting guidance (including the Lease Modification Q&A) consistently to leases with similar characteristics and similar circumstances. The future impact of any potential rent concessions in the context of lease accounting guidance and the Lease Modification Q&A is dependent upon the extent of relief granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such agreements.

The historical cost of, and accumulated depreciation on, leased property as of June 30, 2020 and December 31, 2019 were as follows (in millions):


	June 30, 2020		December 31, 2019
Leased property - real estate	$	1,513.8	$	1,511.3
Less: Accumulated depreciation	(139.0)		(125.0)
Property under operating leases, net	$	1,374.8	$	1,386.3

Total rental income under these operating leases were as follows (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Lease payments	$	21.5	$	27.7	$	50.9	$	52.4
Variable lease payments	13.3		11.4		28.0		23.5
Total	$	34.8	$	39.1	$	78.9	$	75.9

Future lease payments to be received on non-cancelable operating leases as of June 30, 2020 were as follows (in millions):


	June 30, 2020
2020	$	60.0
2021	113.0
2022	101.1
2023	90.3
2024	78.4
2025	66.4
Thereafter	480.5
Total future lease payments to be received	$	989.7