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Leases

12 Months Ended

Dec. 31, 2023

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)												2023						2022						2021
Fixed												$	478,585					$	453,907					$	436,768
Variable												141,262						126,262						116,900
												$	619,847					$	580,169					$	553,668

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

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2023 and 2022 and 36% in 2021 of our total lease revenue, and 27% in 2023 and 2022 and 26% in 2021 of our fixed-lease revenue. Our lease revenue from the USG in 2023, 2022 and 2021 was earned primarily from properties in the Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”), Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 13).

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

						As of December 31, 2023
Year Ending December 31,						Operating leases						Sales-type leases
2024						$	466,559					$	960
2025						404,835						960
2026						341,126						960
2027						305,907						960
2028						252,628						961
Thereafter						1,100,744						1,635
Total contractual payments						$	2,871,799					6,436
Less: Amount representing interest												(1,338)
Net investment in sales-type leases (1)												$	5,098

(1) Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

Lessee Arrangements

As of December 31, 2023, our balance sheet included $43.9 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 25 to 77 years (excluding extension options). As of December 31, 2023, our right-of-use assets included:

>$14.5 million for land in a business park in Huntsville, Alabama under 20 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 39 to 50 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

>$9.5 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 76 years;

>$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 25 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

>$5.9 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 59 to 70 years;

>$5.1 million for data center space in Phoenix, Arizona with a remaining term of one year 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 44 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						2023						2022
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	41,296					$	37,020
Finance leases - Property						Prepaid expenses and other assets, net						2,565						2,207
Total right-of-use assets												$	43,861					$	39,227
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	33,931					$	28,759
Finance leases - Property						Other liabilities						415						—
Total lease liabilities												$	34,346					$	28,759

As of December 31, 2023, our operating leases had a weighted average remaining lease term of 49 years and a weighted average discount rate of 7.31%, while our finance leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 9.14%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2023						2022						2021
Operating lease cost
Property leases - fixed						Property operating expenses												$	6,955					$	4,114					$	4,011
Property leases - variable						Property operating expenses												66						65						45
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												76						31						31
Interest on lease liabilities						Interest expense												42						—						—
																		$	7,139					$	4,210					$	4,087

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									2023						2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	6,056					$	3,355					$	3,206
Operating cash flows for financing leases									$	42					$	—					$	—
Financing cash flows for financing leases									$	20					$	—					$	14

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

						December 31, 2023
Year Ending December 31,						Operating Leases						Finance Leases
2024						$	6,763					$	61
2025						2,380						63
2026						1,791						65
2027						1,807						66
2028						1,823						69
Thereafter						138,189						297
Total lease payments						152,753						621
Less: Amount representing interest						(118,822)						(206)
Lease liability						$	33,931					$	415

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)												2023						2022						2021
Fixed												$	478,585					$	453,907					$	436,768
Variable												141,262						126,262						116,900
												$	619,847					$	580,169					$	553,668

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

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2023 and 2022 and 36% in 2021 of our total lease revenue, and 27% in 2023 and 2022 and 26% in 2021 of our fixed-lease revenue. Our lease revenue from the USG in 2023, 2022 and 2021 was earned primarily from properties in the Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”), Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 13).

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

						As of December 31, 2023
Year Ending December 31,						Operating leases						Sales-type leases
2024						$	466,559					$	960
2025						404,835						960
2026						341,126						960
2027						305,907						960
2028						252,628						961
Thereafter						1,100,744						1,635
Total contractual payments						$	2,871,799					6,436
Less: Amount representing interest												(1,338)
Net investment in sales-type leases (1)												$	5,098

(1) Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

Lessee Arrangements

As of December 31, 2023, our balance sheet included $43.9 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 25 to 77 years (excluding extension options). As of December 31, 2023, our right-of-use assets included:

>$14.5 million for land in a business park in Huntsville, Alabama under 20 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 39 to 50 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

>$9.5 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 76 years;

>$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 25 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

>$5.9 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 59 to 70 years;

>$5.1 million for data center space in Phoenix, Arizona with a remaining term of one year 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 44 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						2023						2022
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	41,296					$	37,020
Finance leases - Property						Prepaid expenses and other assets, net						2,565						2,207
Total right-of-use assets												$	43,861					$	39,227
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	33,931					$	28,759
Finance leases - Property						Other liabilities						415						—
Total lease liabilities												$	34,346					$	28,759

As of December 31, 2023, our operating leases had a weighted average remaining lease term of 49 years and a weighted average discount rate of 7.31%, while our finance leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 9.14%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2023						2022						2021
Operating lease cost
Property leases - fixed						Property operating expenses												$	6,955					$	4,114					$	4,011
Property leases - variable						Property operating expenses												66						65						45
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												76						31						31
Interest on lease liabilities						Interest expense												42						—						—
																		$	7,139					$	4,210					$	4,087

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									2023						2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	6,056					$	3,355					$	3,206
Operating cash flows for financing leases									$	42					$	—					$	—
Financing cash flows for financing leases									$	20					$	—					$	14

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

						December 31, 2023
Year Ending December 31,						Operating Leases						Finance Leases
2024						$	6,763					$	61
2025						2,380						63
2026						1,791						65
2027						1,807						66
2028						1,823						69
Thereafter						138,189						297
Total lease payments						152,753						621
Less: Amount representing interest						(118,822)						(206)
Lease liability						$	33,931					$	415

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)												2023						2022						2021
Fixed												$	478,585					$	453,907					$	436,768
Variable												141,262						126,262						116,900
												$	619,847					$	580,169					$	553,668

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

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2023 and 2022 and 36% in 2021 of our total lease revenue, and 27% in 2023 and 2022 and 26% in 2021 of our fixed-lease revenue. Our lease revenue from the USG in 2023, 2022 and 2021 was earned primarily from properties in the Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”), Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 13).

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

						As of December 31, 2023
Year Ending December 31,						Operating leases						Sales-type leases
2024						$	466,559					$	960
2025						404,835						960
2026						341,126						960
2027						305,907						960
2028						252,628						961
Thereafter						1,100,744						1,635
Total contractual payments						$	2,871,799					6,436
Less: Amount representing interest												(1,338)
Net investment in sales-type leases (1)												$	5,098

(1) Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

Lessee Arrangements

As of December 31, 2023, our balance sheet included $43.9 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 25 to 77 years (excluding extension options). As of December 31, 2023, our right-of-use assets included:

>$14.5 million for land in a business park in Huntsville, Alabama under 20 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 39 to 50 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

>$9.5 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 76 years;

>$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 25 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

>$5.9 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 59 to 70 years;

>$5.1 million for data center space in Phoenix, Arizona with a remaining term of one year 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 44 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						2023						2022
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	41,296					$	37,020
Finance leases - Property						Prepaid expenses and other assets, net						2,565						2,207
Total right-of-use assets												$	43,861					$	39,227
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	33,931					$	28,759
Finance leases - Property						Other liabilities						415						—
Total lease liabilities												$	34,346					$	28,759

As of December 31, 2023, our operating leases had a weighted average remaining lease term of 49 years and a weighted average discount rate of 7.31%, while our finance leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 9.14%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2023						2022						2021
Operating lease cost
Property leases - fixed						Property operating expenses												$	6,955					$	4,114					$	4,011
Property leases - variable						Property operating expenses												66						65						45
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												76						31						31
Interest on lease liabilities						Interest expense												42						—						—
																		$	7,139					$	4,210					$	4,087

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									2023						2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	6,056					$	3,355					$	3,206
Operating cash flows for financing leases									$	42					$	—					$	—
Financing cash flows for financing leases									$	20					$	—					$	14

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

						December 31, 2023
Year Ending December 31,						Operating Leases						Finance Leases
2024						$	6,763					$	61
2025						2,380						63
2026						1,791						65
2027						1,807						66
2028						1,823						69
Thereafter						138,189						297
Total lease payments						152,753						621
Less: Amount representing interest						(118,822)						(206)
Lease liability						$	33,931					$	415

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)												2023						2022						2021
Fixed												$	478,585					$	453,907					$	436,768
Variable												141,262						126,262						116,900
												$	619,847					$	580,169					$	553,668

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

A significant concentration of our lease revenue from continuing operations was earned from our largest tenant, the USG, including 37% in 2023 and 2022 and 36% in 2021 of our total lease revenue, and 27% in 2023 and 2022 and 26% in 2021 of our fixed-lease revenue. Our lease revenue from the USG in 2023, 2022 and 2021 was earned primarily from properties in the Fort George G. Meade and the Baltimore/Washington Corridor (“Fort Meade/BW Corridor”), Lackland Air Force Base and Northern Virginia Defense/IT (“NoVA Defense/IT”) reportable sub-segments (see Note 13).

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

						As of December 31, 2023
Year Ending December 31,						Operating leases						Sales-type leases
2024						$	466,559					$	960
2025						404,835						960
2026						341,126						960
2027						305,907						960
2028						252,628						961
Thereafter						1,100,744						1,635
Total contractual payments						$	2,871,799					6,436
Less: Amount representing interest												(1,338)
Net investment in sales-type leases (1)												$	5,098

(1) Included in the line entitled “prepaid expenses and other assets, net” on our consolidated balance sheet.

Lessee Arrangements

As of December 31, 2023, our balance sheet included $43.9 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 25 to 77 years (excluding extension options). As of December 31, 2023, our right-of-use assets included:

>$14.5 million for land in a business park in Huntsville, Alabama under 20 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 39 to 50 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;

>$9.5 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 76 years;

>$6.4 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 25 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;

>$5.9 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 59 to 70 years;

>$5.1 million for data center space in Phoenix, Arizona with a remaining term of one year 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 44 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						2023						2022
Right-of-use assets
Operating leases - Property						Property - operating right-of-use assets						$	41,296					$	37,020
Finance leases - Property						Prepaid expenses and other assets, net						2,565						2,207
Total right-of-use assets												$	43,861					$	39,227
Lease liabilities
Operating leases - Property						Property - operating lease liabilities						$	33,931					$	28,759
Finance leases - Property						Other liabilities						415						—
Total lease liabilities												$	34,346					$	28,759

As of December 31, 2023, our operating leases had a weighted average remaining lease term of 49 years and a weighted average discount rate of 7.31%, while our finance leases had a weighted average remaining lease term of nine years and a weighted average discount rate of 9.14%. The table below presents our total property lease cost (in thousands):

						Statement of Operations Location												For the Years Ended December 31,
Lease cost																		2023						2022						2021
Operating lease cost
Property leases - fixed						Property operating expenses												$	6,955					$	4,114					$	4,011
Property leases - variable						Property operating expenses												66						65						45
Finance lease cost
Amortization of property right-of-use assets						Property operating expenses												76						31						31
Interest on lease liabilities						Interest expense												42						—						—
																		$	7,139					$	4,210					$	4,087

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									2023						2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases									$	6,056					$	3,355					$	3,206
Operating cash flows for financing leases									$	42					$	—					$	—
Financing cash flows for financing leases									$	20					$	—					$	14

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

						December 31, 2023
Year Ending December 31,						Operating Leases						Finance Leases
2024						$	6,763					$	61
2025						2,380						63
2026						1,791						65
2027						1,807						66
2028						1,823						69
Thereafter						138,189						297
Total lease payments						152,753						621
Less: Amount representing interest						(118,822)						(206)
Lease liability						$	33,931					$	415

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The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

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-Topic 842
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The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

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