Operating Leases

3 Months Ended

Mar. 31, 2020

Lessor

The Company leases commercial and industrial space to tenants primarily under non-cancelable operating leases that generally contain provisions for minimum base rents plus reimbursement for certain operating expenses. Total minimum lease payments are recognized in rental income on a straight-line basis over the term of the related lease and estimated reimbursements from tenants for real estate taxes, insurance, common area maintenance and other recoverable operating expenses are recognized in rental income in the period that the expenses are incurred.

The Company recognized $76.8 million and $60.9 million of lease income related to operating lease payments for the three months ended March 31, 2020 and 2019, respectively.

The following table sets forth the undiscounted cash flows for future minimum base rents to be received under operating leases as of March 31, 2020. The Company's current leases have expirations ranging from 2020 to 2044.



	As of March 31, 2020
Remaining 2020	$	218,509
2021	303,655
2022	305,919
2023	292,030
2024	251,518
Thereafter	1,120,512
Total	$	2,492,143

The future minimum base rents in the table above excludes tenant reimbursements of operating expenses, amortization of adjustments for deferred rent receivables and the amortization of above/below-market lease intangibles.

Lessee

As of March 31, 2020, the Company leased three parcels of land located in Arizona under long-term ground leases with expiration dates of September 2102, December 2095, and September 2102 with no options to renew. The Company leases office space as part of conducting day-to-day business in Chicago. The Company's office space lease has a remaining lease term of approximately six years and no option to renew.

The Company incurred operating lease costs of approximately $0.9 million, and $0.6 million for the three months ended March 31, 2020 and 2019 respectively, which are included in "Property Operating Expense" in the accompanying consolidated statement of operations. Total cash paid for amounts included in the measurement of operating lease liabilities was $0.4 million and $0.3 million for the three months ended March 31, 2020 and 2019 respectively.



Lease Term and Discount Rate	As of March 31, 2020
Weighted-average remaining lease term in years.	80.7
Weighted-average discount rate ⁽¹⁾	4.98	%

(1) Because the rate implicit in each of the Company's leases was not readily determinable, the Company used an incremental borrowing rate. In determining the Company's incremental borrowing rate for each lease, the Company considered recent rates on secured borrowings, observable risk-free interest rates and credit spreads correlating to the Company's creditworthiness, the impact of collateralization and the term of each of the Company's lease agreements.

Maturities of lease liabilities as of March 31, 2020 were as follows:



	March 31, 2020
Remaining 2020	$	1,222
2021	1,632
2022	1,675
2023	1,741
2024	1,776
Thereafter	286,739
Total undiscounted lease payments	294,785
Less: imputed interest	(249,611		)
Total lease liabilities	$	45,174

Operating Leases

Lessor

The Company recognized $76.8 million and $60.9 million of lease income related to operating lease payments for the three months ended March 31, 2020 and 2019, respectively.



	As of March 31, 2020
Remaining 2020	$	218,509
2021	303,655
2022	305,919
2023	292,030
2024	251,518
Thereafter	1,120,512
Total	$	2,492,143

Lessee



Lease Term and Discount Rate	As of March 31, 2020
Weighted-average remaining lease term in years.	80.7
Weighted-average discount rate ⁽¹⁾	4.98	%

Maturities of lease liabilities as of March 31, 2020 were as follows:



	March 31, 2020
Remaining 2020	$	1,222
2021	1,632
2022	1,675
2023	1,741
2024	1,776
Thereafter	286,739
Total undiscounted lease payments	294,785
Less: imputed interest	(249,611		)
Total lease liabilities	$	45,174