Leases

12 Months Ended

Dec. 31, 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. As most of our leases do not provide a rate implicit in the lease agreement, we generally use our incremental borrowing rate available at lease commencement, underlying collateral for the lease and the ability to borrow against that collateral on a secured basis 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 a long-term/ post-acute care operator.

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

		Year Ended December 31,
	Classification	2021		2020		2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	22,642	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,596		4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,105		8,203		7,795
Interest on lease liabilities	Interest expense	6,574		6,411		4,748
Sublease income	Rental income	(8,687)		(4,173)		(4,173)
Total		$	33,230	$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2021 are as follows (in thousands):

	Operating Leases		Finance Leases
2022	$	45,151	$	8,698
2023	45,994		69,774
2024	45,856		1,860
2025	43,612		1,658
2026	43,689		1,696
Thereafter	1,159,048		127,171
Total lease payments	1,383,350		210,857
Less: Imputed interest	(949,089)		(99,174)
Total present value of lease liabilities	$	434,261	$	111,683

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, 2021			December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	367,068		$	310,017
Finance leases - real estate	Right of use assets, net	155,728			155,849
Real estate right of use assets, net		522,796			465,866
Operating leases - non-real estate investments	Receivables and other assets	9,627			9,624
Total right of use assets, net		$	532,423		$	475,490
Lease liabilities:
Operating leases		$	434,261		$	311,164
Finance leases		111,683			107,102
Total lease liabilities		$	545,944		$	418,266
Weighted average remaining lease term (years):
Operating leases		36.6			46.9
Finance leases		19.8			17.7
Weighted average discount rate:
Operating leases		9.72		%	5.02		%
Finance leases		5.06		%	5.16		%

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

		Year Ended December 31,
	Classification	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,081	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(6,008)		(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,336		8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,578)		(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 years ended December 31, 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 ("Genesis") 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. Rental income related to operating leases and the corresponding 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 periods indicated were as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Fixed income from operating leases	$	1,193,837	$	1,240,012	$	1,387,836
Variable lease payments	180,858		203,348		200,564

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2021 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2022	$	1,136,024
2023	1,132,184
2024	1,117,953
2025	1,109,530
2026	1,097,517
Thereafter	6,701,274
Totals	$	12,294,482

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 generally use our incremental borrowing rate available at lease commencement, underlying collateral for the lease and the ability to borrow against that collateral on a secured basis 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 a long-term/ post-acute care operator.

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

		Year Ended December 31,
	Classification	2021		2020		2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	22,642	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,596		4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,105		8,203		7,795
Interest on lease liabilities	Interest expense	6,574		6,411		4,748
Sublease income	Rental income	(8,687)		(4,173)		(4,173)
Total		$	33,230	$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2021 are as follows (in thousands):

	Operating Leases		Finance Leases
2022	$	45,151	$	8,698
2023	45,994		69,774
2024	45,856		1,860
2025	43,612		1,658
2026	43,689		1,696
Thereafter	1,159,048		127,171
Total lease payments	1,383,350		210,857
Less: Imputed interest	(949,089)		(99,174)
Total present value of lease liabilities	$	434,261	$	111,683

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, 2021			December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	367,068		$	310,017
Finance leases - real estate	Right of use assets, net	155,728			155,849
Real estate right of use assets, net		522,796			465,866
Operating leases - non-real estate investments	Receivables and other assets	9,627			9,624
Total right of use assets, net		$	532,423		$	475,490
Lease liabilities:
Operating leases		$	434,261		$	311,164
Finance leases		111,683			107,102
Total lease liabilities		$	545,944		$	418,266
Weighted average remaining lease term (years):
Operating leases		36.6			46.9
Finance leases		19.8			17.7
Weighted average discount rate:
Operating leases		9.72		%	5.02		%
Finance leases		5.06		%	5.16		%

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

		Year Ended December 31,
	Classification	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,081	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(6,008)		(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,336		8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,578)		(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 years ended December 31, 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 ("Genesis") 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. Rental income related to operating leases and the corresponding 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 periods indicated were as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Fixed income from operating leases	$	1,193,837	$	1,240,012	$	1,387,836
Variable lease payments	180,858		203,348		200,564

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2021 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2022	$	1,136,024
2023	1,132,184
2024	1,117,953
2025	1,109,530
2026	1,097,517
Thereafter	6,701,274
Totals	$	12,294,482

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 generally use our incremental borrowing rate available at lease commencement, underlying collateral for the lease and the ability to borrow against that collateral on a secured basis 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 a long-term/ post-acute care operator.

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

		Year Ended December 31,
	Classification	2021		2020		2019
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	22,642	$	23,472	$	25,166
Non-real estate investment lease expense	General and administrative expenses	4,596		4,745		1,654
Finance lease cost:
Amortization of leased assets	Property operating expenses	8,105		8,203		7,795
Interest on lease liabilities	Interest expense	6,574		6,411		4,748
Sublease income	Rental income	(8,687)		(4,173)		(4,173)
Total		$	33,230	$	38,658	$	35,190

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

Maturities of lease liabilities as of December 31, 2021 are as follows (in thousands):

	Operating Leases		Finance Leases
2022	$	45,151	$	8,698
2023	45,994		69,774
2024	45,856		1,860
2025	43,612		1,658
2026	43,689		1,696
Thereafter	1,159,048		127,171
Total lease payments	1,383,350		210,857
Less: Imputed interest	(949,089)		(99,174)
Total present value of lease liabilities	$	434,261	$	111,683

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, 2021			December 31, 2020
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	367,068		$	310,017
Finance leases - real estate	Right of use assets, net	155,728			155,849
Real estate right of use assets, net		522,796			465,866
Operating leases - non-real estate investments	Receivables and other assets	9,627			9,624
Total right of use assets, net		$	532,423		$	475,490
Lease liabilities:
Operating leases		$	434,261		$	311,164
Finance leases		111,683			107,102
Total lease liabilities		$	545,944		$	418,266
Weighted average remaining lease term (years):
Operating leases		36.6			46.9
Finance leases		19.8			17.7
Weighted average discount rate:
Operating leases		9.72		%	5.02		%
Finance leases		5.06		%	5.16		%

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

		Year Ended December 31,
	Classification	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	9,081	$	9,323	$	6,397
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(6,008)		(3,918)		(5,489)
Operating cash flows from finance leases	Decrease (increase) in receivables and other assets	8,336		8,263		10,732
Financing cash flows from finance leases	Other financing activities	(3,578)		(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 years ended December 31, 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 ("Genesis") 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. Rental income related to operating leases and the corresponding 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 periods indicated were as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Fixed income from operating leases	$	1,193,837	$	1,240,012	$	1,387,836
Variable lease payments	180,858		203,348		200,564

The following table sets forth the future minimum lease payments receivable for leases in effect at December 31, 2021 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):

2022	$	1,136,024
2023	1,132,184
2024	1,117,953
2025	1,109,530
2026	1,097,517
Thereafter	6,701,274
Totals	$	12,294,482