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Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

												For the Years Ended December 31,
Lease revenue (1)												2022						2021						2020
Fixed												$	453,907					$	436,768					$	404,244
Variable												126,262						116,900						104,870
												$	580,169					$	553,668					$	509,114

(1)Excludes lease revenue from discontinued operations of which $1.5 million, $22.3 million and $21.3 million was fixed and $527,000, $8.2 million and $5.7 million was variable for 2022, 2021 and 2020, respectively.

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2022, 36% in 2021 and 37% in 2020 of our total lease revenue, and 27% in 2022, 26% in 2021 and 27% in 2020 of our fixed lease revenue. Our lease revenue from the USG in 2022, 2021 and 2020 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 15).

Fixed contractual payments due under our property leases were as follows (in thousands):

						As of December 31, 2022
Year Ending December 31,						Operating leases						Sales-type leases
2023						$	443,092					$	960
2024						415,914						960
2025						336,522						960
2026						269,778						960
2027						236,079						960
Thereafter						1,114,240						2,596
Total contractual payments						$	2,815,625					7,396
Less: Amount representing interest												(1,730)
Net investment in sales-type leases												$	5,666

Lessee Arrangements

As of December 31, 2022, our balance sheet included $39.2 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating. The land leases have long durations with remaining terms ranging from 26 years to 78 years (excluding extension options). As of December 31, 2022, our right-of-use assets included:

•$11.4 million for land in a business park in Huntsville, Alabama under 17 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 40 to 49 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

•$9.7 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 77 years;

•$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 26 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

•$6.0 million for land in a research park in College Park, Maryland under four leases through our M Square Associates, LLC joint venture, all of the rent on which was previously paid. These leases had remaining terms ranging from 60 to 71 years;

•$3.6 million for data center space in Phoenix, Arizona with a remaining term of two years and an option to renew for an additional five years that were not included in the term used in determining the asset balance; and

•$2.1 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 45 years, all of the rent on which was previously paid.

The table below sets forth our property right-of-use assets and property lease liabilities on our consolidated balance sheets (in thousands):

												As of December 31,
Leases						Balance Sheet Location						2022						2021
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	37,020					$	38,361
Finance leases - Property						Prepaid expenses and other assets, net						2,207						2,238
Total right-of-use assets												$	39,227					$	40,599
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	28,759					$	29,342

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 53 years and a weighted average discount rate of 7.19%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2022						2021						2020
Operating lease cost
Property leases - fixed						Property operating expenses												$	4,114					$	4,011					$	2,413
Property leases - variable						Property operating expenses												65						45						127
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												31						31						34
																		$	4,210					$	4,087					$	2,574

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

									For the Years Ended December 31,
Supplemental cash flow information									2022						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	3,355					$	3,206					$	1,694
Financing cash flows for financing leases									$	—					$	14					$	674

Payments on property operating leases were due as follows (in thousands):

Year Ending December 31,						December 31, 2022
2023						$	3,399
2024						3,451
2025						1,797
2026						1,578
2027						1,593
Thereafter						124,341
Total lease payments						136,159
Less: Amount representing interest						(107,400)
Lease liability						$	28,759

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

												For the Years Ended December 31,
Lease revenue (1)												2022						2021						2020
Fixed												$	453,907					$	436,768					$	404,244
Variable												126,262						116,900						104,870
												$	580,169					$	553,668					$	509,114

(1)Excludes lease revenue from discontinued operations of which $1.5 million, $22.3 million and $21.3 million was fixed and $527,000, $8.2 million and $5.7 million was variable for 2022, 2021 and 2020, respectively.

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2022, 36% in 2021 and 37% in 2020 of our total lease revenue, and 27% in 2022, 26% in 2021 and 27% in 2020 of our fixed lease revenue. Our lease revenue from the USG in 2022, 2021 and 2020 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 15).

Fixed contractual payments due under our property leases were as follows (in thousands):

						As of December 31, 2022
Year Ending December 31,						Operating leases						Sales-type leases
2023						$	443,092					$	960
2024						415,914						960
2025						336,522						960
2026						269,778						960
2027						236,079						960
Thereafter						1,114,240						2,596
Total contractual payments						$	2,815,625					7,396
Less: Amount representing interest												(1,730)
Net investment in sales-type leases												$	5,666

Lessee Arrangements

As of December 31, 2022, our balance sheet included $39.2 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating. The land leases have long durations with remaining terms ranging from 26 years to 78 years (excluding extension options). As of December 31, 2022, our right-of-use assets included:

•$11.4 million for land in a business park in Huntsville, Alabama under 17 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 40 to 49 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

•$9.7 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 77 years;

•$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 26 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

•$6.0 million for land in a research park in College Park, Maryland under four leases through our M Square Associates, LLC joint venture, all of the rent on which was previously paid. These leases had remaining terms ranging from 60 to 71 years;

•$3.6 million for data center space in Phoenix, Arizona with a remaining term of two years and an option to renew for an additional five years that were not included in the term used in determining the asset balance; and

•$2.1 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 45 years, all of the rent on which was previously paid.

The table below sets forth our property right-of-use assets and property lease liabilities on our consolidated balance sheets (in thousands):

												As of December 31,
Leases						Balance Sheet Location						2022						2021
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	37,020					$	38,361
Finance leases - Property						Prepaid expenses and other assets, net						2,207						2,238
Total right-of-use assets												$	39,227					$	40,599
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	28,759					$	29,342

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 53 years and a weighted average discount rate of 7.19%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2022						2021						2020
Operating lease cost
Property leases - fixed						Property operating expenses												$	4,114					$	4,011					$	2,413
Property leases - variable						Property operating expenses												65						45						127
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												31						31						34
																		$	4,210					$	4,087					$	2,574

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

									For the Years Ended December 31,
Supplemental cash flow information									2022						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	3,355					$	3,206					$	1,694
Financing cash flows for financing leases									$	—					$	14					$	674

Payments on property operating leases were due as follows (in thousands):

Year Ending December 31,						December 31, 2022
2023						$	3,399
2024						3,451
2025						1,797
2026						1,578
2027						1,593
Thereafter						124,341
Total lease payments						136,159
Less: Amount representing interest						(107,400)
Lease liability						$	28,759

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

												For the Years Ended December 31,
Lease revenue (1)												2022						2021						2020
Fixed												$	453,907					$	436,768					$	404,244
Variable												126,262						116,900						104,870
												$	580,169					$	553,668					$	509,114

(1)Excludes lease revenue from discontinued operations of which $1.5 million, $22.3 million and $21.3 million was fixed and $527,000, $8.2 million and $5.7 million was variable for 2022, 2021 and 2020, respectively.

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2022, 36% in 2021 and 37% in 2020 of our total lease revenue, and 27% in 2022, 26% in 2021 and 27% in 2020 of our fixed lease revenue. Our lease revenue from the USG in 2022, 2021 and 2020 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 15).

Fixed contractual payments due under our property leases were as follows (in thousands):

						As of December 31, 2022
Year Ending December 31,						Operating leases						Sales-type leases
2023						$	443,092					$	960
2024						415,914						960
2025						336,522						960
2026						269,778						960
2027						236,079						960
Thereafter						1,114,240						2,596
Total contractual payments						$	2,815,625					7,396
Less: Amount representing interest												(1,730)
Net investment in sales-type leases												$	5,666

Lessee Arrangements

As of December 31, 2022, our balance sheet included $39.2 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating. The land leases have long durations with remaining terms ranging from 26 years to 78 years (excluding extension options). As of December 31, 2022, our right-of-use assets included:

•$11.4 million for land in a business park in Huntsville, Alabama under 17 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 40 to 49 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

•$9.7 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 77 years;

•$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 26 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

•$6.0 million for land in a research park in College Park, Maryland under four leases through our M Square Associates, LLC joint venture, all of the rent on which was previously paid. These leases had remaining terms ranging from 60 to 71 years;

•$3.6 million for data center space in Phoenix, Arizona with a remaining term of two years and an option to renew for an additional five years that were not included in the term used in determining the asset balance; and

•$2.1 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 45 years, all of the rent on which was previously paid.

The table below sets forth our property right-of-use assets and property lease liabilities on our consolidated balance sheets (in thousands):

												As of December 31,
Leases						Balance Sheet Location						2022						2021
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	37,020					$	38,361
Finance leases - Property						Prepaid expenses and other assets, net						2,207						2,238
Total right-of-use assets												$	39,227					$	40,599
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	28,759					$	29,342

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 53 years and a weighted average discount rate of 7.19%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2022						2021						2020
Operating lease cost
Property leases - fixed						Property operating expenses												$	4,114					$	4,011					$	2,413
Property leases - variable						Property operating expenses												65						45						127
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												31						31						34
																		$	4,210					$	4,087					$	2,574

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

									For the Years Ended December 31,
Supplemental cash flow information									2022						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	3,355					$	3,206					$	1,694
Financing cash flows for financing leases									$	—					$	14					$	674

Payments on property operating leases were due as follows (in thousands):

Year Ending December 31,						December 31, 2022
2023						$	3,399
2024						3,451
2025						1,797
2026						1,578
2027						1,593
Thereafter						124,341
Total lease payments						136,159
Less: Amount representing interest						(107,400)
Lease liability						$	28,759

Leases

Leases

Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. These leases encompass all, or a portion, of properties, with various expiration dates. Our lease revenue is comprised of: fixed lease revenue, including contractual rent billings under leases recognized on a straight-line basis over lease terms and amortization of lease incentives and above- and below- market lease intangibles; and variable lease revenue, including tenant expense recoveries, lease termination revenue and other revenue from tenants that is not fixed under leases. The table below sets forth our composition of lease revenue recognized between fixed and variable lease revenue (in thousands):

												For the Years Ended December 31,
Lease revenue (1)												2022						2021						2020
Fixed												$	453,907					$	436,768					$	404,244
Variable												126,262						116,900						104,870
												$	580,169					$	553,668					$	509,114

(1)Excludes lease revenue from discontinued operations of which $1.5 million, $22.3 million and $21.3 million was fixed and $527,000, $8.2 million and $5.7 million was variable for 2022, 2021 and 2020, respectively.

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2022, 36% in 2021 and 37% in 2020 of our total lease revenue, and 27% in 2022, 26% in 2021 and 27% in 2020 of our fixed lease revenue. Our lease revenue from the USG in 2022, 2021 and 2020 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 15).

Fixed contractual payments due under our property leases were as follows (in thousands):

						As of December 31, 2022
Year Ending December 31,						Operating leases						Sales-type leases
2023						$	443,092					$	960
2024						415,914						960
2025						336,522						960
2026						269,778						960
2027						236,079						960
Thereafter						1,114,240						2,596
Total contractual payments						$	2,815,625					7,396
Less: Amount representing interest												(1,730)
Net investment in sales-type leases												$	5,666

Lessee Arrangements

As of December 31, 2022, our balance sheet included $39.2 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating. The land leases have long durations with remaining terms ranging from 26 years to 78 years (excluding extension options). As of December 31, 2022, our right-of-use assets included:

•$11.4 million for land in a business park in Huntsville, Alabama under 17 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 40 to 49 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

•$9.7 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 77 years;

•$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 26 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

•$6.0 million for land in a research park in College Park, Maryland under four leases through our M Square Associates, LLC joint venture, all of the rent on which was previously paid. These leases had remaining terms ranging from 60 to 71 years;

•$3.6 million for data center space in Phoenix, Arizona with a remaining term of two years and an option to renew for an additional five years that were not included in the term used in determining the asset balance; and

•$2.1 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 45 years, all of the rent on which was previously paid.

The table below sets forth our property right-of-use assets and property lease liabilities on our consolidated balance sheets (in thousands):

												As of December 31,
Leases						Balance Sheet Location						2022						2021
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	37,020					$	38,361
Finance leases - Property						Prepaid expenses and other assets, net						2,207						2,238
Total right-of-use assets												$	39,227					$	40,599
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	28,759					$	29,342

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 53 years and a weighted average discount rate of 7.19%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2022						2021						2020
Operating lease cost
Property leases - fixed						Property operating expenses												$	4,114					$	4,011					$	2,413
Property leases - variable						Property operating expenses												65						45						127
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												31						31						34
																		$	4,210					$	4,087					$	2,574

The table below presents the effect of property lease payments on our consolidated statements of cash flows (in thousands):

									For the Years Ended December 31,
Supplemental cash flow information									2022						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	3,355					$	3,206					$	1,694
Financing cash flows for financing leases									$	—					$	14					$	674

Payments on property operating leases were due as follows (in thousands):

Year Ending December 31,						December 31, 2022
2023						$	3,399
2024						3,451
2025						1,797
2026						1,578
2027						1,593
Thereafter						124,341
Total lease payments						136,159
Less: Amount representing interest						(107,400)
Lease liability						$	28,759

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