Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Our revenues primarily consist of rental revenues and fee and other income. We operate in two reportable segments: New York and Other, with a significant portion of our revenues included in the New York segment. We have the following revenue sources and revenue recognition policies:


•	Rental revenues include revenues from the leasing of space at our properties to tenants, lease termination income, revenues from the Hotel Pennsylvania, trade shows and tenant services.

◦

Revenues from the leasing of space at our properties to tenants include (i) lease components, including fixed and variable lease payments, and nonlease components which include reimbursement of common area maintenance expenses, and (ii) reimbursement of real estate taxes and insurance expenses. As lessor, we have elected to combine the lease and nonlease components of our operating lease agreements and account for the components as a single lease component in accordance with ASC 842.

◦

Lease revenues and reimbursement of common area maintenance, real estate taxes and insurance are presented in the following tables as "property rentals." Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable period of the lease, together with renewal options that are reasonably certain of being exercised. We commence rental revenue recognition when the underlying asset is available for use by the lessee. Revenue derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses are generally recognized in the same period as the related expenses are incurred.


◦	Lease termination income is recognized immediately if a tenant vacates or is recognized on a straight-line basis over the shortened remaining lease term in accordance with ASC 842.


◦	Hotel revenue arising from the operation of the Hotel Pennsylvania consists of room revenue, food and beverage revenue, and banquet revenue. Room revenue is recognized when the rooms are made available for the guest, in accordance with ASC 842.


◦	Trade shows revenue arising from the operation of trade shows is primarily booth rentals. This revenue is recognized upon the occurrence of the trade shows when the trade show booths are made available for use by the exhibitors, in accordance with ASC 842.


◦	Tenant services revenue arises from sub-metered electric, elevator, trash removal and other services provided to tenants at their request. This revenue is recognized as the services are transferred in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").


•	Fee and other income includes management, leasing and other revenue arising from contractual agreements with third parties or with partially owned entities and includes Building Maintenance Services LLC ("BMS") cleaning, engineering and security services. This revenue is recognized as the services are transferred in accordance with ASC 606.

Under ASC 842, we must assess on an individual lease basis whether it is probable that we will collect the future lease payments. We consider the tenant's payment history and current credit status when assessing collectability. When collectability is not deemed probable we write-off the tenant's receivables, including straight-line rent receivable, and limit lease income to cash received. Changes to the collectability of our operating leases are recorded as adjustments to "rental revenues" on our consolidated statements of income, which resulted in a decrease in income of $1,044,000 and $890,000 for the three months ended March 31, 2020 and 2019, respectively.


5.	Revenue Recognition - continued

Below is a summary of our revenues by segment. Additional financial information related to these reportable segments for the three months ended March 31, 2020 and 2019 is set forth in Note 21 - Segment Information.



(Amounts in thousands)	For the Three Months Ended March 31, 2020
	Total		New York		Other
Property rentals	$	371,174	$	298,612	$	72,562
Hotel Pennsylvania	8,741		8,741		—
Trade shows	11,303		—		11,303
Lease revenues⁽¹⁾	391,218		307,353		83,865
Tenant services	10,056		7,380		2,676
Rental revenues	401,274		314,733		86,541
BMS cleaning fees	32,466		34,429		(1,963		)	⁽²⁾
Management and leasing fees	2,867		2,874		(7		)
Other income	7,925		3,579		4,346
Fee and other income	43,258		40,882		2,376
Total revenues	$	444,532	$	355,615	$	88,917

____________________

See notes below.



(Amounts in thousands)	For the Three Months Ended March 31, 2019
	Total		New York		Other
Property rentals	$	457,741	$	385,803	$	71,938
Hotel Pennsylvania	12,609		12,609		—
Trade shows	16,956		—		16,956
Lease revenues⁽¹⁾	487,306		398,412		88,894
Tenant services	12,571		9,225		3,346
Rental revenues	499,877		407,637		92,240
BMS cleaning fees	29,785		31,757		(1,972		)	⁽²⁾
Management and leasing fees	2,237		2,251		(14		)
Other income	2,769		1,640		1,129
Fee and other income	34,791		35,648		(857		)
Total revenues	$	534,668	$	443,285	$	91,383

____________________

(1) The components of lease revenues were as follows:



	For the Three Months Ended March 31,
	2020		2019
Fixed lease revenues	$	337,046	$	414,877
Variable lease revenues	54,172		72,429
Lease revenues	$	391,218	$	487,306

(2)

Represents the elimination of theMART and 555 California Street BMS cleaning fees which are included as income in the New York segment.