Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Leases

Lease Income

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

	Three Months Ended March 31,
	2023		2022
Fixed income from operating leases	$	296,217	$	287,292
Variable income from operating leases	96,214		82,858
Interest income from direct financing leases	—		1,168

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a direct financing lease (“DFL”) for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net. Therefore, at March 31, 2023 and December 31, 2022, the Company had no leases classified as a DFL.

Straight-Line Rents

For operating leases with minimum scheduled rent increases, the Company recognizes income on a straight-line basis over the lease term when collectibility of future minimum lease payments is probable. If the Company determines that collectibility of future minimum lease payments is not probable, the straight-line rent receivable balance is written off and recognized as a decrease in revenue in that period and future revenue recognition is limited to amounts contractually owed and paid. The Company does not resume recognition of income on a straight-line basis unless it determines that collectibility of future payments related to these leases is probable.

During the three months ended March 31, 2023, the Company wrote off $9 million of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code during the period. This write-off was recognized as a reduction in rental and related revenues on the Consolidated Statements of Operations and future revenue related to this tenant will be recognized on a cash basis.

Leases

Leases

Lease Income

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

	Three Months Ended March 31,
	2023		2022
Fixed income from operating leases	$	296,217	$	287,292
Variable income from operating leases	96,214		82,858
Interest income from direct financing leases	—		1,168

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a direct financing lease (“DFL”) for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net. Therefore, at March 31, 2023 and December 31, 2022, the Company had no leases classified as a DFL.

Straight-Line Rents

For operating leases with minimum scheduled rent increases, the Company recognizes income on a straight-line basis over the lease term when collectibility of future minimum lease payments is probable. If the Company determines that collectibility of future minimum lease payments is not probable, the straight-line rent receivable balance is written off and recognized as a decrease in revenue in that period and future revenue recognition is limited to amounts contractually owed and paid. The Company does not resume recognition of income on a straight-line basis unless it determines that collectibility of future payments related to these leases is probable.

During the three months ended March 31, 2023, the Company wrote off $9 million of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code during the period. This write-off was recognized as a reduction in rental and related revenues on the Consolidated Statements of Operations and future revenue related to this tenant will be recognized on a cash basis.

Lessee

Leases

Lease Income

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

	Three Months Ended March 31,
	2023		2022
Fixed income from operating leases	$	296,217	$	287,292
Variable income from operating leases	96,214		82,858
Interest income from direct financing leases	—		1,168

Direct Financing Leases

2022 Direct Financing Lease Sale

During the first quarter of 2022, the Company sold its remaining hospital under a direct financing lease (“DFL”) for $68 million and recognized a gain on sale of $23 million, which is included in other income (expense), net. Therefore, at March 31, 2023 and December 31, 2022, the Company had no leases classified as a DFL.

Straight-Line Rents

For operating leases with minimum scheduled rent increases, the Company recognizes income on a straight-line basis over the lease term when collectibility of future minimum lease payments is probable. If the Company determines that collectibility of future minimum lease payments is not probable, the straight-line rent receivable balance is written off and recognized as a decrease in revenue in that period and future revenue recognition is limited to amounts contractually owed and paid. The Company does not resume recognition of income on a straight-line basis unless it determines that collectibility of future payments related to these leases is probable.

During the three months ended March 31, 2023, the Company wrote off $9 million of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code during the period. This write-off was recognized as a reduction in rental and related revenues on the Consolidated Statements of Operations and future revenue related to this tenant will be recognized on a cash basis.