Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):

	Year Ended December 31,
	2022		2021		2020
Fixed income from operating leases	$	1,182,463	$	1,087,683	$	943,638
Variable income from operating leases	359,312		290,701		238,470
Interest income from direct financing leases	1,168		8,702		9,720

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a DFL for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net.

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

Net investment in DFLs consists of the following (in thousands):

	December 31,
	2022		2021
Present value of minimum lease payments receivable	$	—	$	1,220
Present value of estimated residual value	—		44,706
Less deferred selling profits	—		(1,220)
Net investment in direct financing leases	$	—	$	44,706

Direct Financing Lease Internal Ratings

At December 31, 2022, the Company had no leases classified as a DFL. At December 31, 2021, the Company had one hospital lease classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received from tenants under non-cancelable operating leases as of December 31, 2022 (in thousands):

Year	Amount
2023	$	1,132,120
2024	1,106,555
2025	1,025,557
2026	917,925
2027	828,431
Thereafter	3,100,427
	$	8,111,015

Tenant Purchase Options

Certain leases contain purchase options whereby the tenant may elect to acquire the underlying real estate. Annualized base rent from leases subject to purchase options, summarized by the year the purchase options are exercisable are as follows (dollars in thousands):

Year	Annualized Base Rent(1)		Number of Properties
2023	$	5,779	7
2024	7,446		3
2025	13,772		16
2026	5,594		3
2027	7,704		5
Thereafter	14,816		4
	$	55,111	38

_______________________________________

(1)Represents the most recent month’s base rent including additional rent floors annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases, excluding lease costs related to assets classified as discontinued operations (dollars in thousands):

	Year Ended December 31,
Lease Expense Information:	2022		2021		2020
Total lease expense	$	16,689	$	14,442	$	13,601

Weighted Average Lease Term and Discount Rate:	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases(1)	51		52
Weighted average discount rate:
Operating leases	4.20	%	4.14	%

_______________________________________

(1)As of December 31, 2022 and 2021, the weighted average remaining lease term including the Company’s options to extend its operating leases is 67 years and 68 years, respectively.

The following table summarizes future minimum lease payments under non-cancelable ground and other operating leases included in the Company’s lease liability as of December 31, 2022 (in thousands):

Year	Amount
2023	$	17,146
2024	13,126
2025	11,946
2026	11,875
2027	11,941
Thereafter	484,897
Undiscounted minimum lease payments included in the lease liability	550,931
Less: imputed interest	(342,416)
Present value of lease liability	$	208,515

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases, in certain situations, the Company owns and operates certain property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s Consolidated Balance Sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s Consolidated Statements of Operations. Included within other assets, net as of December 31, 2022 and 2021 is $10 million and $7 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the years ended December 31, 2022, 2021, and 2020 is $3 million, $2 million, and $2 million, respectively, of depreciation expense related to corporate assets.

Denver Corporate Headquarters

During the year ended December 31, 2022, the Company recognized $7 million of charges in connection with the downsizing of the Company’s corporate headquarters in Denver, Colorado. These charges are included in general and administrative expenses on the Consolidated Statements of Operations.

Covid Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in its life science and medical office segments that were impacted by Covid, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through December 31, 2020, approximately $6 million of rent was deferred for the medical office segment, all of which had been collected as of December 31, 2020. Additionally, through December 31, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment that were impacted by Covid, all of which had been collected as of December 31, 2020.

No such deferrals were granted during the years ended December 31, 2022 and 2021.

The rent deferrals granted do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):

	Year Ended December 31,
	2022		2021		2020
Fixed income from operating leases	$	1,182,463	$	1,087,683	$	943,638
Variable income from operating leases	359,312		290,701		238,470
Interest income from direct financing leases	1,168		8,702		9,720

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a DFL for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net.

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

Net investment in DFLs consists of the following (in thousands):

	December 31,
	2022		2021
Present value of minimum lease payments receivable	$	—	$	1,220
Present value of estimated residual value	—		44,706
Less deferred selling profits	—		(1,220)
Net investment in direct financing leases	$	—	$	44,706

Direct Financing Lease Internal Ratings

At December 31, 2022, the Company had no leases classified as a DFL. At December 31, 2021, the Company had one hospital lease classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received from tenants under non-cancelable operating leases as of December 31, 2022 (in thousands):

Year	Amount
2023	$	1,132,120
2024	1,106,555
2025	1,025,557
2026	917,925
2027	828,431
Thereafter	3,100,427
	$	8,111,015

Tenant Purchase Options

Certain leases contain purchase options whereby the tenant may elect to acquire the underlying real estate. Annualized base rent from leases subject to purchase options, summarized by the year the purchase options are exercisable are as follows (dollars in thousands):

Year	Annualized Base Rent(1)		Number of Properties
2023	$	5,779	7
2024	7,446		3
2025	13,772		16
2026	5,594		3
2027	7,704		5
Thereafter	14,816		4
	$	55,111	38

_______________________________________

(1)Represents the most recent month’s base rent including additional rent floors annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases, excluding lease costs related to assets classified as discontinued operations (dollars in thousands):

	Year Ended December 31,
Lease Expense Information:	2022		2021		2020
Total lease expense	$	16,689	$	14,442	$	13,601

Weighted Average Lease Term and Discount Rate:	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases(1)	51		52
Weighted average discount rate:
Operating leases	4.20	%	4.14	%

_______________________________________

(1)As of December 31, 2022 and 2021, the weighted average remaining lease term including the Company’s options to extend its operating leases is 67 years and 68 years, respectively.

The following table summarizes future minimum lease payments under non-cancelable ground and other operating leases included in the Company’s lease liability as of December 31, 2022 (in thousands):

Year	Amount
2023	$	17,146
2024	13,126
2025	11,946
2026	11,875
2027	11,941
Thereafter	484,897
Undiscounted minimum lease payments included in the lease liability	550,931
Less: imputed interest	(342,416)
Present value of lease liability	$	208,515

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases, in certain situations, the Company owns and operates certain property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s Consolidated Balance Sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s Consolidated Statements of Operations. Included within other assets, net as of December 31, 2022 and 2021 is $10 million and $7 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the years ended December 31, 2022, 2021, and 2020 is $3 million, $2 million, and $2 million, respectively, of depreciation expense related to corporate assets.

Denver Corporate Headquarters

During the year ended December 31, 2022, the Company recognized $7 million of charges in connection with the downsizing of the Company’s corporate headquarters in Denver, Colorado. These charges are included in general and administrative expenses on the Consolidated Statements of Operations.

Covid Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in its life science and medical office segments that were impacted by Covid, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through December 31, 2020, approximately $6 million of rent was deferred for the medical office segment, all of which had been collected as of December 31, 2020. Additionally, through December 31, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment that were impacted by Covid, all of which had been collected as of December 31, 2020.

No such deferrals were granted during the years ended December 31, 2022 and 2021.

The rent deferrals granted do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).

Leases

Leases

Lease Income

The following table summarizes the Company’s lease income, excluding discontinued operations (in thousands):

	Year Ended December 31,
	2022		2021		2020
Fixed income from operating leases	$	1,182,463	$	1,087,683	$	943,638
Variable income from operating leases	359,312		290,701		238,470
Interest income from direct financing leases	1,168		8,702		9,720

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a DFL for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net.

2020 Direct Financing Lease Sale

During the first quarter of 2020, the Company sold a hospital under a DFL for $82 million and recognized a gain on sale of $42 million, which is included in other income (expense), net.

Net investment in DFLs consists of the following (in thousands):

	December 31,
	2022		2021
Present value of minimum lease payments receivable	$	—	$	1,220
Present value of estimated residual value	—		44,706
Less deferred selling profits	—		(1,220)
Net investment in direct financing leases	$	—	$	44,706

Direct Financing Lease Internal Ratings

At December 31, 2022, the Company had no leases classified as a DFL. At December 31, 2021, the Company had one hospital lease classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”.

Operating Leases

Future Minimum Rents

The following table summarizes future minimum lease payments to be received from tenants under non-cancelable operating leases as of December 31, 2022 (in thousands):

Year	Amount
2023	$	1,132,120
2024	1,106,555
2025	1,025,557
2026	917,925
2027	828,431
Thereafter	3,100,427
	$	8,111,015

Tenant Purchase Options

Certain leases contain purchase options whereby the tenant may elect to acquire the underlying real estate. Annualized base rent from leases subject to purchase options, summarized by the year the purchase options are exercisable are as follows (dollars in thousands):

Year	Annualized Base Rent(1)		Number of Properties
2023	$	5,779	7
2024	7,446		3
2025	13,772		16
2026	5,594		3
2027	7,704		5
Thereafter	14,816		4
	$	55,111	38

_______________________________________

(1)Represents the most recent month’s base rent including additional rent floors annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Lease Costs

The following tables provide information regarding the Company’s leases to which it is the lessee, such as corporate offices and ground leases, excluding lease costs related to assets classified as discontinued operations (dollars in thousands):

	Year Ended December 31,
Lease Expense Information:	2022		2021		2020
Total lease expense	$	16,689	$	14,442	$	13,601

Weighted Average Lease Term and Discount Rate:	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases(1)	51		52
Weighted average discount rate:
Operating leases	4.20	%	4.14	%

_______________________________________

(1)As of December 31, 2022 and 2021, the weighted average remaining lease term including the Company’s options to extend its operating leases is 67 years and 68 years, respectively.

The following table summarizes future minimum lease payments under non-cancelable ground and other operating leases included in the Company’s lease liability as of December 31, 2022 (in thousands):

Year	Amount
2023	$	17,146
2024	13,126
2025	11,946
2026	11,875
2027	11,941
Thereafter	484,897
Undiscounted minimum lease payments included in the lease liability	550,931
Less: imputed interest	(342,416)
Present value of lease liability	$	208,515

Depreciation Expense

While the Company leases the majority of its property, plant, and equipment to various tenants under operating leases, in certain situations, the Company owns and operates certain property, plant, and equipment for general corporate purposes. Corporate assets are recorded within other assets, net within the Company’s Consolidated Balance Sheets and depreciation expense for those assets is recorded in general and administrative expenses in the Company’s Consolidated Statements of Operations. Included within other assets, net as of December 31, 2022 and 2021 is $10 million and $7 million, respectively, of accumulated depreciation related to corporate assets. Included within general and administrative expenses for the years ended December 31, 2022, 2021, and 2020 is $3 million, $2 million, and $2 million, respectively, of depreciation expense related to corporate assets.

Denver Corporate Headquarters

During the year ended December 31, 2022, the Company recognized $7 million of charges in connection with the downsizing of the Company’s corporate headquarters in Denver, Colorado. These charges are included in general and administrative expenses on the Consolidated Statements of Operations.

Covid Rent Deferrals

During the second and third quarters of 2020, the Company agreed to defer rent from certain tenants in its life science and medical office segments that were impacted by Covid, with the requirement that all deferred rent be repaid by the end of 2020. Under this program, through December 31, 2020, approximately $6 million of rent was deferred for the medical office segment, all of which had been collected as of December 31, 2020. Additionally, through December 31, 2020, the Company granted approximately $1 million of rent deferrals to certain tenants in the life science segment that were impacted by Covid, all of which had been collected as of December 31, 2020.

No such deferrals were granted during the years ended December 31, 2022 and 2021.

The rent deferrals granted do not impact the pattern of revenue recognition or amount of revenue recognized (refer to Note 2 for additional information).