LEASES (UNITED DOMINION REALTY, L.P.) (Tables)

9 Months Ended

Sep. 30, 2020

Lease

Lessee - Future minimum lease payments and total operating lease liabilities

Future minimum lease payments and total operating lease liabilities from our ground leases as of September 30, 2020 are as follows (dollars in thousands):

	Ground Leases
2020	$	3,109
2021		12,442
2022		12,442
2023		12,442
2024		12,442
Thereafter		455,221
Total future minimum lease payments (undiscounted)		508,098
Difference between future undiscounted cash flows and discounted cash flows		(311,752)
Total operating lease liabilities (discounted)	$	196,346

Lessee - components of operating lease expenses

The components of operating lease expenses were as follows (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Lease expense:
Contractual lease expense	$	3,217	$	1,954	$	9,603	$	6,232
Variable lease expense (a)		33		187		120		469
Total operating lease expense (b)(c)	$	3,250	$	2,141	$	9,723	$	6,701

(a) Variable lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Lease expense is reported within the line item Other operating expenses on the Consolidated Statements of Operations.

(c) For the nine months ended September 30, 2020, Operating lease right-of-use assets and Operating lease liabilities amortized by $2.5 million and $2.2 million, respectively, and for the nine months ended September 30, 2019 Operating lease right-of-use assets and Operating lease liabilities amortized by $0.6 million and $0.3 million, respectively. Due to the net impact of the amortization, the Company recorded $0.1 million and $0.1 million of total operating lease expense during the three months ended September 30, 2020 and 2019, respectively, and $0.3 million and $0.3 million of total operating lease expense during the nine months ended September 30, 2020 and 2019, respectively. 

Lessor - Future minimum lease payments

Future minimum lease payments from our retail and commercial leases as of September 30, 2020 are as follows (dollars in thousands):

	Retail and Commercial Leases
2020	$	5,275
2021		22,533
2022		20,692
2023		19,257
2024		17,528
Thereafter		81,856
Total future minimum lease payments (a)	$	167,141

(a)We have excluded our apartment home leases from this table as our apartment home leases generally have initial terms of 12 months or less.

United Dominion Realty L.P.

Lease

Lessee - Future minimum lease payments and total operating lease liabilities

Future minimum lease payments and total operating lease liabilities from our ground and equipment leases as of September 30, 2020 are as follows (dollars in thousands):

	Ground Leases		Equipment Leases		Total
2020	$	3,109	$	41	$	3,150
2021		12,442		164		12,606
2022		12,442		167		12,609
2023		12,442		171		12,613
2024		12,442		174		12,616
Thereafter		455,221		901		456,122
Total future minimum lease payments (undiscounted)		508,098		1,618		509,716
Difference between future undiscounted cash flows and discounted cash flows		(311,752)		(193)		(311,945)
Total operating lease liabilities (discounted)	$	196,346	$	1,425	$	197,771

Lessee - components of operating lease expenses

The components of operating lease expenses from our ground and equipment leases were as follows (dollars in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Ground lease expense:
Contractual ground lease rent expense	$	3,217	$	1,954	$	9,603	$	6,232
Variable ground lease expense (a)		33		187		120		469
Total ground lease expense (b)		3,250		2,141		9,723		6,701
Contractual equipment lease expense (b)		39		-		113		-
Total operating lease expense (c)	$	3,289	$	2,141	$	9,836	$	6,701

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease and equipment lease expense are reported within the line item Other operating expenses on the Consolidated Statements of Operations.

(c) For the nine months ended September 30, 2020, Operating lease right-of-use assets and Operating lease liabilities amortized by $2.5 million and $2.2 million, respectively. Due to the net impact of the amortization, the Operating Partnership recorded $0.1 million and $0.1 million of total operating lease expense during the three months ended September 30, 2020 and 2019, respectively, and $0.3 million and $0.3 million of total operating lease expense during the nine months ended September 30, 2020 and 2019, respectively. 

Lessor - Future minimum lease payments

Future minimum lease payments from our retail and commercial leases as of September 30, 2020 are as follows (dollars in thousands):

	Retail and Commercial Leases
2020	$	1,747
2021		6,993
2022		6,365
2023		6,068
2024		5,358
Thereafter		14,047
Total future minimum lease payments (a)	$	40,578

(a) We have excluded our apartment home leases from this table as our apartment home leases generally have initial terms of 12 months of less.