Leases

6 Months Ended

Jun. 30, 2022

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard.

For the six months ended June 30, 2022, approximately 97% of the Company’s total lease revenue is generated from residential apartment leases that are generally twelve months or less in length. The residential apartment leases may include lease income related to such items as utility recoveries, parking rent, storage rent and pet rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Residential leases are renewable upon consent of both parties on an annual or monthly basis.

For the six months ended June 30, 2022, approximately 3% of the Company’s total lease revenue is generated by non-residential leases that are generally for terms ranging between five to ten years. The non-residential leases generally consist of ground floor retail spaces and master-leased parking garages that serve as additional amenities for our residents. The non-residential leases may include lease income related to such items as utility recoveries, parking rent and storage rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Non-residential leases are renewable with market-based renewal options.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the six months ended June 30, 2022 and 2021 (amounts in thousands):

	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
Income Type	Residential Leases			Non-Residential Leases			Total			Residential Leases			Non-Residential Leases		Total
Residential and non-residential rent	$	1,192,048		$	32,095		$	1,224,143		$	1,078,304		$	31,237	$	1,109,541
Utility recoveries (RUBS income) (1)		39,583			369			39,952			36,533			330		36,863
Parking rent		21,706			202			21,908			19,890			362		20,252
Other lease revenue (2)		(889	)		(197	)		(1,086	)		(18,970	)		1,138		(17,832	)
Total lease revenue	$	1,252,448		$	32,469			1,284,917		$	1,115,757		$	33,067		1,148,824
Parking revenue								18,431								11,572
Other revenue								37,030								35,265
Total other rental income (3)								55,461								46,837
Rental income							$	1,340,378							$	1,195,661

(1)	RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)	Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue.

(3)	Other rental income is accounted for under the revenue recognition standard.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended June 30, 2022 and 2021 (amounts in thousands):

	Quarter Ended June 30, 2022							Quarter Ended June 30, 2021
Income Type	Residential Leases		Non-Residential Leases			Total		Residential Leases			Non-Residential Leases		Total
Residential and non-residential rent	$	605,158	$	16,221		$	621,379	$	538,649		$	15,398	$	554,047
Utility recoveries (RUBS income) (1)		19,985		188			20,173		18,579			152		18,731
Parking rent		10,923		104			11,027		10,156			95		10,251
Other lease revenue (2)		5,412		(154	)		5,258		(8,708	)		529		(8,179	)
Total lease revenue	$	641,478	$	16,359			657,837	$	558,676		$	16,174		574,850
Parking revenue							9,623							6,139
Other revenue							19,570							17,070
Total other rental income (3)							29,193							23,209
Rental income						$	687,030						$	598,059

(1)	RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)	Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue.

(3)	Other rental income is accounted for under the revenue recognition standard.

The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of June 30, 2022 and December 31, 2021 (amounts in thousands):

	Residential							Non-Residential
Balance Sheet (Other assets):	June 30, 2022				December 31, 2021			June 30, 2022			December 31, 2021
Resident/tenant accounts receivable balances	$	36,068			$	37,959		$	3,444		$	3,218
Allowance for doubtful accounts		(32,358	)			(33,121	)		(2,553	)		(2,365	)
Net receivable balances	$	3,710		(1)	$	4,838		$	891		$	853

Straight-line receivable balances	$	4,757			$	7,460		$	13,551		$	13,021

(1)	The Company held residential security deposits approximating 62.6% of the net residential receivable balance at June 30, 2022.

The following table presents residential bad debt for the Company’s properties for the six months and quarters ended June 30, 2022 and 2021 (amounts in thousands):

	Six Months Ended June 30,						Quarter Ended June 30,
Income Statement (Rental income):		2022			2021			2022			2021
Bad debt, net (1)	$	8,147		$	25,772		$	(1,748	)	$	12,079
% of rental income		0.6	%		2.2	%		(0.3	%)		2.1	%

(1)	Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $24.6 million and $14.8 million for the six months and quarter ended June 30, 2022, respectively.