Leases

12 Months Ended

Dec. 31, 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. As most of our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates).

We sublease certain real estate to a third party. Our sublease portfolio consists of a finance lease for seven buildings which are subleased to Genesis Healthcare.

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

		Year Ended
	Classification	December 31, 2020		December 31, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,203		7,795
Interest on lease liabilities	Interest expense	6,411		4,748
Sublease income	Rental income	(4,173)		(4,173)
Total		$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	20,316	$	8,777
2022	19,051		8,587
2023	19,082		69,439
2024	18,380		1,491
2025	15,575		1,459
Thereafter	910,134		107,674
Total lease payments	1,002,538		197,427
Less: Imputed interest	(691,374)		(90,325)
Total present value of lease liabilities	$	311,164	$	107,102

Supplemental balance sheet information related to leases was as follows for the periods presented (in thousands, except lease terms and discount rate):

	Classification	December 31, 2020			December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	310,017		$	374,217
Finance leases - real estate	Right of use assets, net	155,849			162,216
Real estate right of use assets, net		465,866			536,433
Operating leases - non-real estate investments	Receivables and other assets	9,624			12,474
Total right of use assets, net		$	475,490		$	548,907
Lease liabilities:
Operating leases		$	311,164		$	364,803
Financing leases		107,102			108,890
Total lease liabilities		$	418,266		$	473,693
Weighted average remaining lease term (years):
Operating leases		46.9			46.0
Finance leases		17.7			15.9
Weighted average discount rate:
Operating leases		5.02		%	5.00		%
Finance leases		5.16		%	5.18		%

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):

		Year Ended
Cash Paid for Amounts Included in the Measurement of Lease Liabilities	Classification	December 31, 2020		December 31, 2019
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,568)		(3,401)

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 year ended December 31, 2020, we wrote off straight-line recent receivable balances of $146,508,000 relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in such amounts was $91,025,000 relating to Genesis Healthcare whom noted substantial doubt as to their ability to continue as a going concern in August.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the year ended December 31, 2020, we recognized $1,443,360,000 of rental income related to operating leases, of which $203,348,000 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 year ended December 31, 2019, we recognized $1,588,400,000 of rental income related to operating leases, of which $200,564,000 was for variable lease payments.

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2020 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2021	$	1,405,428
2022	1,390,915
2023	1,332,520
2024	1,306,595
2025	1,236,338
Thereafter	7,957,714
Totals	$	14,629,510

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. As most of our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates).

We sublease certain real estate to a third party. Our sublease portfolio consists of a finance lease for seven buildings which are subleased to Genesis Healthcare.

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

		Year Ended
	Classification	December 31, 2020		December 31, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,203		7,795
Interest on lease liabilities	Interest expense	6,411		4,748
Sublease income	Rental income	(4,173)		(4,173)
Total		$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	20,316	$	8,777
2022	19,051		8,587
2023	19,082		69,439
2024	18,380		1,491
2025	15,575		1,459
Thereafter	910,134		107,674
Total lease payments	1,002,538		197,427
Less: Imputed interest	(691,374)		(90,325)
Total present value of lease liabilities	$	311,164	$	107,102

Supplemental balance sheet information related to leases was as follows for the periods presented (in thousands, except lease terms and discount rate):

	Classification	December 31, 2020			December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	310,017		$	374,217
Finance leases - real estate	Right of use assets, net	155,849			162,216
Real estate right of use assets, net		465,866			536,433
Operating leases - non-real estate investments	Receivables and other assets	9,624			12,474
Total right of use assets, net		$	475,490		$	548,907
Lease liabilities:
Operating leases		$	311,164		$	364,803
Financing leases		107,102			108,890
Total lease liabilities		$	418,266		$	473,693
Weighted average remaining lease term (years):
Operating leases		46.9			46.0
Finance leases		17.7			15.9
Weighted average discount rate:
Operating leases		5.02		%	5.00		%
Finance leases		5.16		%	5.18		%

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):

		Year Ended
Cash Paid for Amounts Included in the Measurement of Lease Liabilities	Classification	December 31, 2020		December 31, 2019
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,568)		(3,401)

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 year ended December 31, 2020, we wrote off straight-line recent receivable balances of $146,508,000 relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in such amounts was $91,025,000 relating to Genesis Healthcare whom noted substantial doubt as to their ability to continue as a going concern in August.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the year ended December 31, 2020, we recognized $1,443,360,000 of rental income related to operating leases, of which $203,348,000 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 year ended December 31, 2019, we recognized $1,588,400,000 of rental income related to operating leases, of which $200,564,000 was for variable lease payments.

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2020 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2021	$	1,405,428
2022	1,390,915
2023	1,332,520
2024	1,306,595
2025	1,236,338
Thereafter	7,957,714
Totals	$	14,629,510

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. As most of our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates).

We sublease certain real estate to a third party. Our sublease portfolio consists of a finance lease for seven buildings which are subleased to Genesis Healthcare.

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

		Year Ended
	Classification	December 31, 2020		December 31, 2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,203		7,795
Interest on lease liabilities	Interest expense	6,411		4,748
Sublease income	Rental income	(4,173)		(4,173)
Total		$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	20,316	$	8,777
2022	19,051		8,587
2023	19,082		69,439
2024	18,380		1,491
2025	15,575		1,459
Thereafter	910,134		107,674
Total lease payments	1,002,538		197,427
Less: Imputed interest	(691,374)		(90,325)
Total present value of lease liabilities	$	311,164	$	107,102

Supplemental balance sheet information related to leases was as follows for the periods presented (in thousands, except lease terms and discount rate):

	Classification	December 31, 2020			December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	310,017		$	374,217
Finance leases - real estate	Right of use assets, net	155,849			162,216
Real estate right of use assets, net		465,866			536,433
Operating leases - non-real estate investments	Receivables and other assets	9,624			12,474
Total right of use assets, net		$	475,490		$	548,907
Lease liabilities:
Operating leases		$	311,164		$	364,803
Financing leases		107,102			108,890
Total lease liabilities		$	418,266		$	473,693
Weighted average remaining lease term (years):
Operating leases		46.9			46.0
Finance leases		17.7			15.9
Weighted average discount rate:
Operating leases		5.02		%	5.00		%
Finance leases		5.16		%	5.18		%

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):

		Year Ended
Cash Paid for Amounts Included in the Measurement of Lease Liabilities	Classification	December 31, 2020		December 31, 2019
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,568)		(3,401)

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 year ended December 31, 2020, we wrote off straight-line recent receivable balances of $146,508,000 relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in such amounts was $91,025,000 relating to Genesis Healthcare whom noted substantial doubt as to their ability to continue as a going concern in August.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the year ended December 31, 2020, we recognized $1,443,360,000 of rental income related to operating leases, of which $203,348,000 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 year ended December 31, 2019, we recognized $1,588,400,000 of rental income related to operating leases, of which $200,564,000 was for variable lease payments.

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2020 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2021	$	1,405,428
2022	1,390,915
2023	1,332,520
2024	1,306,595
2025	1,236,338
Thereafter	7,957,714
Totals	$	14,629,510