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Leases
 9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases Leases
Lessor Accounting
The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2040. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.
The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as
reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases recognized for the three and nine months ended September 30, 2021 was $131.7 million and $388.6 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements, as of September 30, 2021 were as follows:
In thousandsOPERATING
2021$102,435 
2022385,734 
2023336,473 
2024266,722 
2025215,350 
2026 and thereafter598,757 
$1,905,471 
Lessee Accounting
As of September 30, 2021, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of September 30, 2021, the Company had 110 properties totaling 9.2 million square feet that were held under ground leases. Some of the ground lease renewal terms are based on fixed rent renewal terms and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119. Any rental increases related to the Company’s ground leases are generally either stated or based on CPI. The Company had 43 prepaid ground leases as of September 30, 2021. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.1 million and $0.1 million of the Company’s rental expense for the three months ended September 30, 2021 and 2020, respectively, and $0.4 million and $0.5 million for the nine months ended September 30, 2021 and 2020, respectively.
The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of September 30, 2021 were as follows:
In thousandsOPERATINGFINANCING
2021$1,051 $180 
20225,030 838 
20235,071 848 
20245,130 871 
20255,174 886 
2026 and thereafter312,163 92,689 
Total undiscounted lease payments333,619 96,312 
Discount(237,706)(75,852)
Lease liabilities$95,913 $20,460 
The following table provides details of the Company's total lease expense for the three and nine months ended September 30, 2021 and 2020:
THREE MONTHS ENDED
September 30,		NINE MONTHS ENDED
September 30,
In thousands2021202020212020
Operating lease cost
Operating lease expense$1,196 $1,180 $3,555 $3,529 
Variable lease expense1,016 1,066 2,883 2,669 
Finance lease cost
Amortization of right-of-use assets90 88 267 236 
Interest on lease liabilities255 245 748 722 
Total lease expense$2,557 $2,579 $7,453 $7,156 
Other information
Operating cash flows outflows related to operating leases$1,424$1,440 $5,855 $5,412 
Operating cash flows outflows related to financing leases$151$151 $678 $616 
Financing cash flows outflows related to financing leases$6$143 $162 $3,310 
Right-of-use assets obtained in exchange for new finance lease liabilities$1,420$— $1,420 $7,212 
Right-of-use assets obtained in exchange for new operating lease liabilities$8,298$— $8,298 $— 
Weighted-average remaining lease term (excluding renewal options) - operating leases47.848.9
Weighted-average remaining lease term (excluding renewal options) - finance leases63.264.7
Weighted-average discount rate - operating leases5.6 %5.7 %
Weighted-average discount rate - finance leases5.4 %5.4 %
Leases Leases
Lessor Accounting
The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2040. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.
The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as
reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases recognized for the three and nine months ended September 30, 2021 was $131.7 million and $388.6 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements, as of September 30, 2021 were as follows:
In thousandsOPERATING
2021$102,435 
2022385,734 
2023336,473 
2024266,722 
2025215,350 
2026 and thereafter598,757 
$1,905,471 
Lessee Accounting
As of September 30, 2021, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of September 30, 2021, the Company had 110 properties totaling 9.2 million square feet that were held under ground leases. Some of the ground lease renewal terms are based on fixed rent renewal terms and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119. Any rental increases related to the Company’s ground leases are generally either stated or based on CPI. The Company had 43 prepaid ground leases as of September 30, 2021. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.1 million and $0.1 million of the Company’s rental expense for the three months ended September 30, 2021 and 2020, respectively, and $0.4 million and $0.5 million for the nine months ended September 30, 2021 and 2020, respectively.
The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of September 30, 2021 were as follows:
In thousandsOPERATINGFINANCING
2021$1,051 $180 
20225,030 838 
20235,071 848 
20245,130 871 
20255,174 886 
2026 and thereafter312,163 92,689 
Total undiscounted lease payments333,619 96,312 
Discount(237,706)(75,852)
Lease liabilities$95,913 $20,460 
The following table provides details of the Company's total lease expense for the three and nine months ended September 30, 2021 and 2020:
THREE MONTHS ENDED
September 30,		NINE MONTHS ENDED
September 30,
In thousands2021202020212020
Operating lease cost
Operating lease expense$1,196 $1,180 $3,555 $3,529 
Variable lease expense1,016 1,066 2,883 2,669 
Finance lease cost
Amortization of right-of-use assets90 88 267 236 
Interest on lease liabilities255 245 748 722 
Total lease expense$2,557 $2,579 $7,453 $7,156 
Other information
Operating cash flows outflows related to operating leases$1,424$1,440 $5,855 $5,412 
Operating cash flows outflows related to financing leases$151$151 $678 $616 
Financing cash flows outflows related to financing leases$6$143 $162 $3,310 
Right-of-use assets obtained in exchange for new finance lease liabilities$1,420$— $1,420 $7,212 
Right-of-use assets obtained in exchange for new operating lease liabilities$8,298$— $8,298 $— 
Weighted-average remaining lease term (excluding renewal options) - operating leases47.848.9
Weighted-average remaining lease term (excluding renewal options) - finance leases63.264.7
Weighted-average discount rate - operating leases5.6 %5.7 %
Weighted-average discount rate - finance leases5.4 %5.4 %