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Leases, Codification Topic 842

6 Months Ended

Jun. 30, 2023

Operating LeasesThe Company’s real estate investments are leased under operating leases. In addition to its lessor arrangements on its real estate investments, as of June 30, 2023 and December 31, 2022, the Company was lessee in 51 and 52 operating ground leases, respectively. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. As of June 30, 2023, rental revenue from several of the Company's tenants, who are also sub-tenants under the ground leases, is being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases, however, two of these properties do not currently have sub-tenants. In the event the tenant fails to pay the ground lease rent or if the property does not have sub-tenants, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. The Company is also the lessee in an operating lease of its executive office.

The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three and six months ended June 30, 2023 and 2022 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,
	Classification	2023		2022		2023		2022
Operating leases	Rental revenue	$	145,531	$	136,918	$	290,766	$	270,746
Sublease income - operating ground leases	Rental revenue	6,339		5,957		12,695		11,732

Lease costs
Operating ground lease cost	Property operating expense	$	6,563	$	6,136	$	13,163	$	12,105
Operating office lease cost	General and administrative expense	224		226		448		452