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Leases
 9 Months Ended
Sep. 30, 2024
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 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 non-lease 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 non-lease 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, 2024 was $306.5 million and $932.7 million, respectively. Lease income for the Company's operating leases, recognized for the three and nine months ended September 30, 2023 was $333.3 million and $987.1 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sales-type lease, as of September 30, 2024, were as follows:
Dollars in thousandsOPERATING
2024$218,129 
2025836,208 
2026748,331 
2027629,408 
2028513,690 
2029 and thereafter1,683,468 
$4,629,234 
Lessee Accounting
The Company is obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of September 30, 2024, the Company had 217 properties totaling 16.3 million square feet that were held under ground leases. Some of the Company's 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 stated in the lease or based on CPI. The Company had 73 prepaid ground leases as of September 30, 2024. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million and $0.3 million of the Company's rental expense for the three months ended September 30, 2024 and 2023, respectively, and $1.0 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.
The Company’s future lease payments (primarily for its 144 non-prepaid ground leases) as of September 30, 2024, were as follows:
Dollars in thousandsOPERATINGFINANCING
2024$2,930 $816 
202512,769 2,070 
202612,900 2,106 
202713,103 2,145 
202813,239 2,177 
2029 and thereafter688,868 385,382 
Total undiscounted lease payments743,809 394,696 
Discount(513,884)(322,809)
Lease liabilities$229,925 $71,887 
The following table provides details of the Company's total lease expense for the three and nine months ended September 30, 2024 and 2023:
THREE MONTHS ENDED
September 30,		NINE MONTHS ENDED
September 30,
Dollars in thousands2024202320242023
Operating lease cost
Operating lease expense$4,484 $5,312 $13,549 $15,748 
Variable lease expense1,240 2,417 3,782 6,788 
Finance lease cost
Amortization of right-of-use assets383 387 1,162 1,161 
Interest on lease liabilities934 928 2,814 2,770 
Total lease expense$7,041 $9,044 $21,307 $26,467 
Other information
Operating cash flows outflows related to operating leases$3,513 $5,281 $12,441 $16,475 
Operating cash flows outflows related to financing leases$504 $524 $1,658 $1,592 
Financing cash flows outflows related to financing leases$4 $7 $13 $12 
Right-of-use assets obtained in exchange for new operating lease liabilities$1,294 $— $3,855 $— 
Weighted-average years remaining lease term (excluding renewal options) - operating leases44.547.5
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.058.2
Weighted-average discount rate - operating leases5.7 %5.8 %
Weighted-average discount rate - finance leases5.0 %5.0 %
Leases Leases
Lessor Accounting
The Company’s properties generally are 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 non-lease 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 non-lease 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, 2024 was $306.5 million and $932.7 million, respectively. Lease income for the Company's operating leases, recognized for the three and nine months ended September 30, 2023 was $333.3 million and $987.1 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sales-type lease, as of September 30, 2024, were as follows:
Dollars in thousandsOPERATING
2024$218,129 
2025836,208 
2026748,331 
2027629,408 
2028513,690 
2029 and thereafter1,683,468 
$4,629,234 
Lessee Accounting
The Company is obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of September 30, 2024, the Company had 217 properties totaling 16.3 million square feet that were held under ground leases. Some of the Company's 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 stated in the lease or based on CPI. The Company had 73 prepaid ground leases as of September 30, 2024. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million and $0.3 million of the Company's rental expense for the three months ended September 30, 2024 and 2023, respectively, and $1.0 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.
The Company’s future lease payments (primarily for its 144 non-prepaid ground leases) as of September 30, 2024, were as follows:
Dollars in thousandsOPERATINGFINANCING
2024$2,930 $816 
202512,769 2,070 
202612,900 2,106 
202713,103 2,145 
202813,239 2,177 
2029 and thereafter688,868 385,382 
Total undiscounted lease payments743,809 394,696 
Discount(513,884)(322,809)
Lease liabilities$229,925 $71,887 
The following table provides details of the Company's total lease expense for the three and nine months ended September 30, 2024 and 2023:
THREE MONTHS ENDED
September 30,		NINE MONTHS ENDED
September 30,
Dollars in thousands2024202320242023
Operating lease cost
Operating lease expense$4,484 $5,312 $13,549 $15,748 
Variable lease expense1,240 2,417 3,782 6,788 
Finance lease cost
Amortization of right-of-use assets383 387 1,162 1,161 
Interest on lease liabilities934 928 2,814 2,770 
Total lease expense$7,041 $9,044 $21,307 $26,467 
Other information
Operating cash flows outflows related to operating leases$3,513 $5,281 $12,441 $16,475 
Operating cash flows outflows related to financing leases$504 $524 $1,658 $1,592 
Financing cash flows outflows related to financing leases$4 $7 $13 $12 
Right-of-use assets obtained in exchange for new operating lease liabilities$1,294 $— $3,855 $— 
Weighted-average years remaining lease term (excluding renewal options) - operating leases44.547.5
Weighted-average years remaining lease term (excluding renewal options) - finance leases58.058.2
Weighted-average discount rate - operating leases5.7 %5.8 %
Weighted-average discount rate - finance leases5.0 %5.0 %