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Leases
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leases

9. Leases

Lessor

The Company leases commercial space to the U.S. Government through the GSA or other federal agencies or nongovernmental tenants. These leases may contain extension options that are predominately at the sole discretion of the tenant. Certain of our leases contain a “soft-term” period of the lease, meaning that the U.S. Government tenant agency has the right to terminate the lease prior to its stated lease end date. While certain of our leases are contractually subject to early termination, we do not believe that our tenant agencies are likely to terminate these leases early given the build-to-suit features at the properties subject to the leases, the weighted average age of these properties based on the date the property was built or renovated-to-suit, where applicable (approximately 15.1 years as of March 31, 2020), the mission-critical focus of the properties subject to the leases and the current level of operations at such properties. Certain lease agreements include variable lease payments that, in the future, will vary based on changes in inflationary measures, real estate tax rates, usage, or share of expenditures of the leased premises.

On January 15, 2020, in connection with the FDA-Lenexa development project, the U.S. Government paid a $20.5 million lump sum reimbursement to the Company which was a progress payment for landlord improvements in excess of the U.S. Government’s tenant improvement allowance. The Company recorded the payment as Deferred revenue on the Consolidated Balance Sheet and will begin amortizing the amount over the life of the lease through Rental income upon lease commencement.

The following table summarizes the maturity of fixed lease payments under the Company’s leases as of March 31, 2020 (amounts in thousands):

 

 

Payments due by period

 

 

 

Total

 

 

2020

 

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

Thereafter

 

Fixed lease payments

 

$

1,517,197

 

 

 

138,823

 

 

 

163,340

 

 

 

146,119

 

 

 

136,885

 

 

 

124,139

 

 

 

807,891

 

Lessee

In October 2015, we entered into a sublease agreement for office space in Washington, D.C. with a commencement date of March 2016 and an expiration date of June 2021. We also lease office space in San Diego, CA under an operating lease that commenced in February 2015 and expires in April 2022.

Neither of the leases contain extension options, however they do include variable lease payments that, in the future, will vary based on changes in real estate tax rates, usage, or share of expenditures of the leased premises. The Company has elected not to separate lease and nonlease components for both corporate office leases.

As of March 31, 2020, the unamortized balance associated with the Company’s right-of-use operating lease asset and operating lease liability for the Company’s two office leases was $0.7 million. The Company used its incremental borrowing rate, which was arrived at utilizing prevailing market rates and the spread on our revolving credit facility, in order to determine the net present value of the minimum lease payments.  

The following table provides quantitative information for the Company’s operating leases for the three months ended March 31, 2020 and 2019 (amounts in thousands):

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating leases costs

 

$

115

 

 

$

116

 

 

In addition, the maturity of fixed lease payments under the Company’s corporate office leases as of March 31, 2020 is summarized in the table below (amounts in thousands):

 

 

Payments due by period

 

 

 

Total

 

 

2020

 

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

Thereafter

 

Fixed lease payments

 

$

792

 

 

 

375

 

 

 

352

 

 

 

65