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Leases
 6 Months Ended
Jun. 30, 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 tenants with fixed rent renewal terms while others have 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 six months ended June 30, 2023 was $329.7 million and $653.8 million, respectively. Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2022 was $140.6 million and $279.1 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of June 30, 2023 were as follows:
Dollars in thousandsOPERATING
2023$467,393 
2024861,323 
2025751,369 
2026648,352 
2027536,874 
2028 and thereafter1,950,019 
$5,215,330 
Lessee Accounting
As of June 30, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of June 30, 2023, the Company had 241 properties totaling 17.5 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 June 30, 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 June 30, 2023 and 2022, respectively, and $0.7 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively.
The Company’s future lease payments (primarily for its 166 non-prepaid ground leases) as of June 30, 2023 were as follows:
Dollars in thousandsOPERATINGFINANCING
2023$7,315 $992 
202415,011 2,182 
202514,597 2,218 
202614,631 2,255 
202714,701 2,294 
2028 and thereafter929,853 396,398 
Total undiscounted lease payments996,108 406,339 
Discount(717,629)(332,710)
Lease liabilities$278,479 $73,629 
The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2023 and 2022:
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
Dollars in thousands2023202220232022
Operating lease cost
Operating lease expense$5,329 $1,194 $10,436 $2,409 
Variable lease expense2,235 1,038 4,371 2,062 
Finance lease cost
Amortization of right-of-use assets387 331 774 503 
Interest on lease liabilities923 765 1,841 1,052 
Total lease expense$8,874 $3,328 $17,422 $6,026 
Other information
Operating cash flows outflows related to operating leases$5,230 $1,799 $11,190 $4,596 
Operating cash flows outflows related to financing leases$541 $509 $1,094 $767 
Financing cash flows outflows related to financing leases$6 $— $17 $51 
Right-of-use assets obtained in exchange for new finance lease liabilities$— $— $— $40,589 
Weighted-average years remaining lease term (excluding renewal options) - operating leases47.347.4
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.461.7
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 tenants with fixed rent renewal terms while others have 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 six months ended June 30, 2023 was $329.7 million and $653.8 million, respectively. Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2022 was $140.6 million and $279.1 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of June 30, 2023 were as follows:
Dollars in thousandsOPERATING
2023$467,393 
2024861,323 
2025751,369 
2026648,352 
2027536,874 
2028 and thereafter1,950,019 
$5,215,330 
Lessee Accounting
As of June 30, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of June 30, 2023, the Company had 241 properties totaling 17.5 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 June 30, 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 June 30, 2023 and 2022, respectively, and $0.7 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively.
The Company’s future lease payments (primarily for its 166 non-prepaid ground leases) as of June 30, 2023 were as follows:
Dollars in thousandsOPERATINGFINANCING
2023$7,315 $992 
202415,011 2,182 
202514,597 2,218 
202614,631 2,255 
202714,701 2,294 
2028 and thereafter929,853 396,398 
Total undiscounted lease payments996,108 406,339 
Discount(717,629)(332,710)
Lease liabilities$278,479 $73,629 
The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2023 and 2022:
THREE MONTHS ENDED
June 30,		SIX MONTHS ENDED
June 30,
Dollars in thousands2023202220232022
Operating lease cost
Operating lease expense$5,329 $1,194 $10,436 $2,409 
Variable lease expense2,235 1,038 4,371 2,062 
Finance lease cost
Amortization of right-of-use assets387 331 774 503 
Interest on lease liabilities923 765 1,841 1,052 
Total lease expense$8,874 $3,328 $17,422 $6,026 
Other information
Operating cash flows outflows related to operating leases$5,230 $1,799 $11,190 $4,596 
Operating cash flows outflows related to financing leases$541 $509 $1,094 $767 
Financing cash flows outflows related to financing leases$6 $— $17 $51 
Right-of-use assets obtained in exchange for new finance lease liabilities$— $— $— $40,589 
Weighted-average years remaining lease term (excluding renewal options) - operating leases47.347.4
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.461.7
Weighted-average discount rate - operating leases5.8 %5.6 %
Weighted-average discount rate - finance leases5.0 %5.0 %