Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lessor, Operating Leases

16. Leases

Lessor

We have operating leases with tenants that expire at various dates through 2040. For the three months ended September 30, 2020 and 2019, we recognized $21,519,000 and $19,253,000 of real estate revenue, respectively, related to operating lease payments, of which $4,592,000 and $3,718,000, respectively, was for variable lease payments. For the nine months ended September 30, 2020 and 2019, we recognized $64,824,000 and $53,280,000 of real estate revenue, respectively, related to operating lease payments, of which $13,861,000 and $10,426,000, respectively, was for variable lease payments. As of September 30, 2020, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the three months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own:

Year	Amount
2020	$	16,049,000
2021	64,178,000
2022	61,520,000
2023	57,017,000
2024	51,410,000
Thereafter	310,613,000
Total	$	560,787,000

Lessee

We have ground lease obligations that generally require fixed annual rental payments and may also include escalation clauses and renewal options. These leases expire at various dates through 2107, excluding extension options. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may include other variable lease costs (i.e., common area maintenance, property taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For the three months ended September 30, 2020 and 2019, operating lease costs were $206,000 and $177,000, respectively, and for the nine months ended September 30, 2020 and 2019, operating lease costs were $643,000 and $478,000, respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations. Such costs also include variable lease costs, which are immaterial. Additional information related to our operating leases for the periods presented below was as follows:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term (in years)	79.7		80.4
Weighted average discount rate	5.74	%	5.74	%

	Nine Months Ended September 30,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash outflows related to operating leases	$	306,000	$	252,000
Right-of-use assets obtained in exchange for operating lease liabilities	$	—	$	4,489,000

As of September 30, 2020, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet:

Year	Amount
2020	$	212,000
2021	523,000
2022	526,000
2023	530,000
2024	534,000
Thereafter	47,103,000
Total operating lease payments	49,428,000
Less: interest	39,453,000
Present value of operating lease liabilities	$	9,975,000

Lessee, Operating Leases

16. Leases

Lessor

We have operating leases with tenants that expire at various dates through 2040. For the three months ended September 30, 2020 and 2019, we recognized $21,519,000 and $19,253,000 of real estate revenue, respectively, related to operating lease payments, of which $4,592,000 and $3,718,000, respectively, was for variable lease payments. For the nine months ended September 30, 2020 and 2019, we recognized $64,824,000 and $53,280,000 of real estate revenue, respectively, related to operating lease payments, of which $13,861,000 and $10,426,000, respectively, was for variable lease payments. As of September 30, 2020, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the three months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own:

Year	Amount
2020	$	16,049,000
2021	64,178,000
2022	61,520,000
2023	57,017,000
2024	51,410,000
Thereafter	310,613,000
Total	$	560,787,000

Lessee

We have ground lease obligations that generally require fixed annual rental payments and may also include escalation clauses and renewal options. These leases expire at various dates through 2107, excluding extension options. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may include other variable lease costs (i.e., common area maintenance, property taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For the three months ended September 30, 2020 and 2019, operating lease costs were $206,000 and $177,000, respectively, and for the nine months ended September 30, 2020 and 2019, operating lease costs were $643,000 and $478,000, respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations. Such costs also include variable lease costs, which are immaterial. Additional information related to our operating leases for the periods presented below was as follows:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term (in years)	79.7		80.4
Weighted average discount rate	5.74	%	5.74	%

	Nine Months Ended September 30,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash outflows related to operating leases	$	306,000	$	252,000
Right-of-use assets obtained in exchange for operating lease liabilities	$	—	$	4,489,000

As of September 30, 2020, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet:

Year	Amount
2020	$	212,000
2021	523,000
2022	526,000
2023	530,000
2024	534,000
Thereafter	47,103,000
Total operating lease payments	49,428,000
Less: interest	39,453,000
Present value of operating lease liabilities	$	9,975,000