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Leases
 3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases Leases
Lessor Accounting
The Company’s properties generally were leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. 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 months ended March 31, 2023 was $324.1 million. Lease income for the Company's operating leases recognized for the three months ended March 31, 2022 was $138.5 million.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2023 were as follows:
Dollars in thousandsOPERATING
2023$695,787 
2024833,006 
2025720,985 
2026620,118 
2027539,486 
2028 and thereafter1,854,402 
$5,263,784 
Lessee Accounting
As of March 31, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2023, the Company had 242 properties totaling 17.8 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 75 prepaid ground leases as of March 31, 2023. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million and $0.1 million of the Company’s rental expense for the three months ended March 31, 2023 and 2022, respectively.
The Company’s future lease payments (primarily for its 167 non-prepaid ground leases) as of March 31, 2023 were as follows:
Dollars in thousandsOPERATINGFINANCING
2023$11,188 $1,491 
202415,239 2,182 
202514,827 2,218 
202614,863 2,255 
202714,933 2,294 
2028 and thereafter939,392 396,398 
Total undiscounted lease payments1,010,442 406,838 
Discount(730,805)(333,645)
Lease liabilities$279,637 $73,193 
The following table provides details of the Company's total lease expense for the three months ended March 31, 2023 and 2022:
THREE MONTHS ENDED
March 31,
Dollars in thousands20232022
Operating lease cost
Operating lease expense$5,107 $1,215 
Variable lease expense2,136 1,024 
Finance lease cost
Amortization of right-of-use assets388 172 
Interest on lease liabilities918 287 
Total lease expense$8,549 $2,698 
Other information
Operating cash flows outflows related to operating leases$5,960 $2,797 
Operating cash flows outflows related to financing leases$553 $258 
Financing cash flows outflows related to financing leases$101 $257 
Right-of-use assets obtained in exchange for new finance lease liabilities$— $40,589 
Weighted-average years remaining lease term (excluding renewal options) - operating leases47.447.6
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.761.9
Weighted-average discount rate - operating leases5.8 %5.6 %
Weighted-average discount rate - finance leases5.0 %5.0 %
Leases Leases
Lessor Accounting
The Company’s properties generally were leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. 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 months ended March 31, 2023 was $324.1 million. Lease income for the Company's operating leases recognized for the three months ended March 31, 2022 was $138.5 million.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2023 were as follows:
Dollars in thousandsOPERATING
2023$695,787 
2024833,006 
2025720,985 
2026620,118 
2027539,486 
2028 and thereafter1,854,402 
$5,263,784 
Lessee Accounting
As of March 31, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2023, the Company had 242 properties totaling 17.8 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 75 prepaid ground leases as of March 31, 2023. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million and $0.1 million of the Company’s rental expense for the three months ended March 31, 2023 and 2022, respectively.
The Company’s future lease payments (primarily for its 167 non-prepaid ground leases) as of March 31, 2023 were as follows:
Dollars in thousandsOPERATINGFINANCING
2023$11,188 $1,491 
202415,239 2,182 
202514,827 2,218 
202614,863 2,255 
202714,933 2,294 
2028 and thereafter939,392 396,398 
Total undiscounted lease payments1,010,442 406,838 
Discount(730,805)(333,645)
Lease liabilities$279,637 $73,193 
The following table provides details of the Company's total lease expense for the three months ended March 31, 2023 and 2022:
THREE MONTHS ENDED
March 31,
Dollars in thousands20232022
Operating lease cost
Operating lease expense$5,107 $1,215 
Variable lease expense2,136 1,024 
Finance lease cost
Amortization of right-of-use assets388 172 
Interest on lease liabilities918 287 
Total lease expense$8,549 $2,698 
Other information
Operating cash flows outflows related to operating leases$5,960 $2,797 
Operating cash flows outflows related to financing leases$553 $258 
Financing cash flows outflows related to financing leases$101 $257 
Right-of-use assets obtained in exchange for new finance lease liabilities$— $40,589 
Weighted-average years remaining lease term (excluding renewal options) - operating leases47.447.6
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.761.9
Weighted-average discount rate - operating leases5.8 %5.6 %
Weighted-average discount rate - finance leases5.0 %5.0 %