Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

The components of lease expense were as follows for the period presented (in thousands):

		Six Months Ended
	Classification	June 30, 2020		June 30, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	12,516	$	14,679
Non-real estate investment lease expense	General and administrative expenses	2,549		770
Finance lease cost:
Amortization of leased assets	Property operating expenses	4,043		4,245
Interest on lease liabilities	Interest expense	2,695		2,169
Sublease income	Rental income	(2,087)		(2,087)
Total		$	19,716	$	19,776

⁽¹⁾ Includes short-term leases which are immaterial.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Classification	June 30, 2020		December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	344,011	$	374,217
Finance leases - real estate	Right of use assets, net	158,593		162,216
Real estate right of use assets, net		502,604		536,433
Operating leases - non-real estate investments	Receivables and other assets	11,063		12,474
Total right of use assets, net		$	513,667	$	548,907
Lease liabilities:
Operating leases		$	339,589	$	364,803
Financing leases		107,835		108,890
Total		$	447,424	$	473,693

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the three months ended March 31, 2020, we wrote off straight-line receivables of $32,268,000 in conjunction with the execution of a lease amendment. Additionally, during the three months ended June 30, 2020, we recorded a reserve of $1,842,000 on straight-line receivable balances deemed uncollectible.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the six months ended June 30, 2020, we recognized $786,265,000 of rental income related to operating leases, of which $104,605,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the six months ended June 30, 2019, we recognized $766,670,000 of rental income related to operating leases, of which $94,017,000 was for variable lease payments.

Leases

Leases

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

The components of lease expense were as follows for the period presented (in thousands):

		Six Months Ended
	Classification	June 30, 2020		June 30, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	12,516	$	14,679
Non-real estate investment lease expense	General and administrative expenses	2,549		770
Finance lease cost:
Amortization of leased assets	Property operating expenses	4,043		4,245
Interest on lease liabilities	Interest expense	2,695		2,169
Sublease income	Rental income	(2,087)		(2,087)
Total		$	19,716	$	19,776

⁽¹⁾ Includes short-term leases which are immaterial.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Classification	June 30, 2020		December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	344,011	$	374,217
Finance leases - real estate	Right of use assets, net	158,593		162,216
Real estate right of use assets, net		502,604		536,433
Operating leases - non-real estate investments	Receivables and other assets	11,063		12,474
Total right of use assets, net		$	513,667	$	548,907
Lease liabilities:
Operating leases		$	339,589	$	364,803
Financing leases		107,835		108,890
Total		$	447,424	$	473,693

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the three months ended March 31, 2020, we wrote off straight-line receivables of $32,268,000 in conjunction with the execution of a lease amendment. Additionally, during the three months ended June 30, 2020, we recorded a reserve of $1,842,000 on straight-line receivable balances deemed uncollectible.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the six months ended June 30, 2020, we recognized $786,265,000 of rental income related to operating leases, of which $104,605,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the six months ended June 30, 2019, we recognized $766,670,000 of rental income related to operating leases, of which $94,017,000 was for variable lease payments.

Leases

Leases

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

The components of lease expense were as follows for the period presented (in thousands):

		Six Months Ended
	Classification	June 30, 2020		June 30, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	12,516	$	14,679
Non-real estate investment lease expense	General and administrative expenses	2,549		770
Finance lease cost:
Amortization of leased assets	Property operating expenses	4,043		4,245
Interest on lease liabilities	Interest expense	2,695		2,169
Sublease income	Rental income	(2,087)		(2,087)
Total		$	19,716	$	19,776

⁽¹⁾ Includes short-term leases which are immaterial.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Classification	June 30, 2020		December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	344,011	$	374,217
Finance leases - real estate	Right of use assets, net	158,593		162,216
Real estate right of use assets, net		502,604		536,433
Operating leases - non-real estate investments	Receivables and other assets	11,063		12,474
Total right of use assets, net		$	513,667	$	548,907
Lease liabilities:
Operating leases		$	339,589	$	364,803
Financing leases		107,835		108,890
Total		$	447,424	$	473,693

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the three months ended March 31, 2020, we wrote off straight-line receivables of $32,268,000 in conjunction with the execution of a lease amendment. Additionally, during the three months ended June 30, 2020, we recorded a reserve of $1,842,000 on straight-line receivable balances deemed uncollectible.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the six months ended June 30, 2020, we recognized $786,265,000 of rental income related to operating leases, of which $104,605,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the six months ended June 30, 2019, we recognized $766,670,000 of rental income related to operating leases, of which $94,017,000 was for variable lease payments.