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Real Estate, net and Real Estate Held for Sale
 6 Months Ended
Jun. 30, 2020
Real Estate [Abstract]  
Real Estate, net and Real Estate Held for Sale Real Estate, net and Real Estate Held for Sale
The following table presents the Company’s net lease portfolio, net, as of June 30, 2020, and December 31, 2019 (dollars in thousands):
June 30, 2020December 31, 2019
Land and improvements$127,483  $209,693  
Buildings, building leaseholds, and improvements474,402  899,889  
Tenant improvements13,366  25,077  
Construction-in-progress3,144  415  
Subtotal$618,395  $1,135,074  
Less: Accumulated depreciation(35,567) (63,995) 
Less: Impairment(1)
—  (23,911) 
Net lease portfolio, net$582,828  $1,047,168  
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(1)See Note 14, “Fair Value,” for discussion of impairment of real estate.
The following table presents the Company’s portfolio of real estate included in its Legacy, Non-Strategic Portfolio, including foreclosed properties, as of June 30, 2020 and December 31, 2019 (dollars in thousands):
June 30, 2020December 31, 2019
Land and improvements$63,234  $91,997  
Buildings, building leaseholds, and improvements341,168  536,046  
Tenant improvements25,470  38,230  
Furniture, fixtures and equipment3,782  3,183  
Construction-in-progress1,013  6,325  
Subtotal$434,667  $675,781  
Less: Accumulated depreciation(33,633) (46,079) 
Less: Impairment(1)
(160,331) (192,074) 
Other portfolio, net$240,703  $437,628  
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(1)See Note 14, “Fair Value,” for discussion of impairment of real estate.
For the six months ended June 30, 2020, the Company had no single property with rental and other income equal to or greater than 10.0% of total revenue.
At June 30, 2020 and December 31, 2019, the Company held foreclosed properties which are included in real estate, net with a carrying value of $26.1 million and $50.7 million, respectively. At June 30, 2020 and December 31, 2019, the Company held foreclosed properties in assets held for sale of $55.4 million and $57.9 million, respectively.
Depreciation Expense
Depreciation expense on real estate was $9.4 million and $20.7 million for the three months ended June 30, 2020 and June 30, 2019, respectively. Depreciation expense on real estate was $21.4 million and $40.6 million for the six months ended June 30, 2020 and 2019, respectively.
Property Operating Income
For the six months ended June 30, 2020 and 2019, the components of property operating income were as follows (dollars in thousands):
Three Months Ended 
 June 30, 2020		Six Months Ended 
 June 30,
2020201920202019
Lease revenues(1)
Minimum lease revenue$37,204  $45,115  $79,162  $89,643  
Variable lease revenue6,041  5,518  12,690  12,174  
$43,245  $50,633  $91,852  $101,817  
Hotel operating income317  13,188  3,818  24,522  
$43,562  $63,821  $95,670  $126,339  
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(1)Excludes net amortization income related to above and below-market leases of $0.2 million and $0.6 million for the three and six months ended June 30, 2020, respectively.
Minimum Future Rents
Minimum rental amounts due under leases are generally either subject to scheduled fixed increases or adjustments. The following table presents approximate future minimum rental income under noncancellable operating leases, excluding variable lease revenue of tenant reimbursements, to be received over the next five years and thereafter as of June 30, 2020 (dollars in thousands):
Remainder of 2020$39,129  
202176,450  
202271,920  
202363,830  
202458,500  
2025 and thereafter435,117  
Total(1)
$744,946  
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(1)Excludes minimum future rents for real estate that is classified as held for sale totaling $199.7 million through 2050.
The following table presents approximate future minimum rental income under noncancellable operating leases to be received over the next five years and thereafter as of December 31, 2019 (dollars in thousands):
2020$120,967  
2021113,170  
2022102,314  
202385,367  
202471,714  
2025 and thereafter448,812  
Total$942,344  
The rental properties owned at June 30, 2020 are leased under noncancellable operating leases with current expirations ranging from 2020 to 2038, with certain tenant renewal rights. For certain properties, the tenants pay the Company, in addition to the contractual base rent, their pro rata share of real estate taxes and operating expenses. Certain lease agreements provide for periodic rental increases and others provide for increases based on the consumer price index.
Lease Concessions Related to COVID-19
As a result of the COVID-19 crisis, some tenants sought more flexible payment terms and the Company is currently engaged with affected tenants on a case-by-case basis to evaluate and respond to the current environment. For lease concessions resulting directly from the impact of COVID-19 that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee, for example, where total payments required by the modified contract will be substantially the same as or less than the original contract, the Company made a policy election to account for the concessions as though the enforceable rights and obligations for those concessions existed in the lease contracts, under a relief provided by the FASB. Under the relief, the concessions will not be treated as lease modifications that are accounted for over the remaining term of the respective leases, as the Company believes this would not accurately reflect the temporary economic effect of the concessions. Instead, (i) rent deferrals that meet the criteria will be treated as if no changes were made to the lease contract, with continued recognition of lease income and receivable under the original terms of the contract; and (ii) rent forgiveness that meets the criteria will be accounted for as variable lease payments in the affected periods.
Commitments and Contractual Obligations
Ground Lease Obligation
In connection with real estate acquisitions, the Company assumed certain noncancellable operating ground leases as lessee or sublessee with expiration dates through 2055. Rents on certain ground leases are paid directly by the tenants. Ground rent expense for the three and six months ended June 30, 2020 was $0.8 million and $1.6 million, respectively. Ground rent expense for the three and six months ended June 30, 2019 was $0.7 million and $1.5 million, respectively.
Refer to Note 16, “Commitments and Contingencies” for the details of future minimum rental payments on noncancellable ground lease on real estate as of June 30, 2020.
Real Estate Asset Acquisitions
The following table summarizes the Company’s real estate asset acquisitions for the year ended December 31, 2019 (dollars in thousands):
Purchase Price Allocation
Acquisition DateProperty Type and LocationNumber of Buildings
Purchase Price(1)
Land and Improvements(2)
Building and Improvements(2)
Furniture, Fixtures and Equipment
Lease Intangible Assets(2)
Other Assets Other Liabilities
Year Ended December 31, 2019
June
Retail - Massachusetts(3)
3  $21,919  $9,294  $6,598  $—  $5,256  $1,538  $(767) 
January
Various - in U.S.(3)
28  105,437  38,145  66,413  —  879  3,223  (3,223) 
$127,356  $47,439  $73,011  $—  $6,135  $4,761  $(3,990) 
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(1)Dollar amounts of purchase price and allocation to assets acquired and liabilities assumed are translated using foreign exchange rate as of the respective dates of acquisitions, where applicable.
(2)Useful life of real estate acquired is 4 to 33 years for buildings, 1 to 20 years for site improvements, 1 to 27 years for tenant improvements, 5 to 7 years for furniture, fixtures and equipment, and 1 to 27 years for lease intangibles.
(3)Represents assets acquired by the Company through foreclosure.
The Company did not have any real estate acquisitions in 2020.
Real Estate Held for Sale
The following table summarizes the Company’s assets and related liabilities held for sale related to real estate (dollars in thousands):
June 30, 2020December 31, 2019
Assets
Real estate, net$620,403  $178,564  
Deferred leasing costs and intangible assets, net23,972  5,890  
Total assets held for sale$644,375  $184,454  
Liabilities
Intangible liabilities, net$12,131  $294  
Total liabilities related to assets held for sale$12,131  $294  
During the three months ended June 30, 2020, the Company classified several properties in its Net Leased Real Estate and Legacy, Non-Strategic Portfolio as held for sale.
There were no assets held for sale that constituted discontinued operations as of June 30, 2020 and December 31, 2019.
Real Estate Sales
During the six months ended June 30, 2020, the Company completed the sale of seven properties, including four office, one hotel, one multifamily and one manufactured housing for a total gross sales price of $173.6 million and a total loss on sale of $3.6 million. All properties were included in the Company’s Legacy, Non-Strategic Portfolio.
The real estate sold during the six months ended June 30, 2020 did not constitute discontinued operations.
Refer to Note 19, “Subsequent Events” for further detail on additional real estate sales.