Leases

9 Months Ended

Sep. 30, 2021

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):

		Nine Months Ended
	Classification	September 30, 2021		September 30, 2020
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	16,430	$	17,397
Non-real estate investment lease expense	General and administrative expenses	3,461		3,673
Finance lease cost:
Amortization of leased assets	Property operating expenses	6,120		6,229
Interest on lease liabilities	Interest expense	4,950		4,693
Sublease income	Rental income	(5,972)		(3,130)
Total		$	24,989	$	28,862

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

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

	Classification	September 30, 2021		December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	371,034	$	310,017
Finance leases - real estate	Right of use assets, net	155,580		155,849
Real estate right of use assets, net		526,614		465,866
Operating leases - non-real estate investments	Receivables and other assets	6,686		9,624
Total right of use assets, net		$	533,300	$	475,490
Lease liabilities:
Operating leases		$	434,303	$	311,164
Financing leases		110,244		107,102
Total		$	544,547	$	418,266

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 nine months ended September 30, 2021 and 2020, we reserved for previously recognized straight-line rent receivable balances of $49,241,000 and $146,508,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in the 2020 amount was $91,025,000 related to Genesis Healthcare, whom noted substantial doubt as to their ability to continue as a going concern.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the nine months ended September 30, 2021, we recognized $1,015,550,000 of rental income related to operating leases, of which $134,632,000 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 nine months ended September 30, 2020, we recognized $1,061,311,000 of rental income related to operating leases, of which $153,217,000 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):

		Nine Months Ended
	Classification	September 30, 2021		September 30, 2020
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	16,430	$	17,397
Non-real estate investment lease expense	General and administrative expenses	3,461		3,673
Finance lease cost:
Amortization of leased assets	Property operating expenses	6,120		6,229
Interest on lease liabilities	Interest expense	4,950		4,693
Sublease income	Rental income	(5,972)		(3,130)
Total		$	24,989	$	28,862

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

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

	Classification	September 30, 2021		December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	371,034	$	310,017
Finance leases - real estate	Right of use assets, net	155,580		155,849
Real estate right of use assets, net		526,614		465,866
Operating leases - non-real estate investments	Receivables and other assets	6,686		9,624
Total right of use assets, net		$	533,300	$	475,490
Lease liabilities:
Operating leases		$	434,303	$	311,164
Financing leases		110,244		107,102
Total		$	544,547	$	418,266

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 nine months ended September 30, 2021 and 2020, we reserved for previously recognized straight-line rent receivable balances of $49,241,000 and $146,508,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in the 2020 amount was $91,025,000 related to Genesis Healthcare, whom noted substantial doubt as to their ability to continue as a going concern.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the nine months ended September 30, 2021, we recognized $1,015,550,000 of rental income related to operating leases, of which $134,632,000 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 nine months ended September 30, 2020, we recognized $1,061,311,000 of rental income related to operating leases, of which $153,217,000 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):

		Nine Months Ended
	Classification	September 30, 2021		September 30, 2020
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	16,430	$	17,397
Non-real estate investment lease expense	General and administrative expenses	3,461		3,673
Finance lease cost:
Amortization of leased assets	Property operating expenses	6,120		6,229
Interest on lease liabilities	Interest expense	4,950		4,693
Sublease income	Rental income	(5,972)		(3,130)
Total		$	24,989	$	28,862

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

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

	Classification	September 30, 2021		December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	371,034	$	310,017
Finance leases - real estate	Right of use assets, net	155,580		155,849
Real estate right of use assets, net		526,614		465,866
Operating leases - non-real estate investments	Receivables and other assets	6,686		9,624
Total right of use assets, net		$	533,300	$	475,490
Lease liabilities:
Operating leases		$	434,303	$	311,164
Financing leases		110,244		107,102
Total		$	544,547	$	418,266

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 nine months ended September 30, 2021 and 2020, we reserved for previously recognized straight-line rent receivable balances of $49,241,000 and $146,508,000 through rental income, relating to leases for which collection of substantially all contractual lease payments was no longer deemed probable. Included in the 2020 amount was $91,025,000 related to Genesis Healthcare, whom noted substantial doubt as to their ability to continue as a going concern.

Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the nine months ended September 30, 2021, we recognized $1,015,550,000 of rental income related to operating leases, of which $134,632,000 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 nine months ended September 30, 2020, we recognized $1,061,311,000 of rental income related to operating leases, of which $153,217,000 was for variable lease payments.