COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Leases (Tables)

9 Months Ended

Sep. 30, 2019

The table below sets forth our allocation of lease revenue recognized between fixed contractual payments and variable lease payments (in thousands):



Lease revenue	For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
Fixed contractual payments	$	102,389	$	311,226
Variable lease payments	27,072		80,553
	$	129,461	$	391,779

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

(1) As of September 30, 2019, represents the three months ending December 31, 2019

Our right-of-use assets consisted of the following (in thousands):



Leases	Balance Sheet Location	September 30, 2019
Right-of-use assets
Operating leases - Property	Property - operating right-of-use assets	$	27,325
Finance leases
Property	Property - finance right-of-use assets	40,467
Vehicles and office equipment	Prepaid expenses and other assets, net	1,193
Total finance lease right-of-use assets		41,660

Total right-of-use assets		$	68,985

Lease liabilities consisted of the following (in thousands):



Leases	Balance Sheet Location	September 30, 2019
Lease liabilities
Operating leases - Property	Property - operating lease liabilities	$	16,686
Finance leases	Other liabilities	1,165

Total lease liabilities		$	17,851

The table below presents our total lease cost (in thousands):



Lease cost	Statement of Operations Location	For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
Operating lease cost
Property leases	Property operating expenses	$	413	$	1,239
Vehicles and office equipment	General, administrative and leasing expenses	18		53
Finance lease cost
Amortization of vehicles and office equipment right-of-use assets	General, administrative and leasing expenses	114		343
Amortization of property right-of-use assets	Property operating expenses	9		21
Interest on lease liabilities	Interest expense	3		10
		$	557	$	1,666

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



Supplemental cash flow information	For the Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	804
Operating cash flows for financing leases	$	10
Financing cash flows for financing leases	$	173

The table below sets forth the weighted average terms and discount rates of our leases as of September 30, 2019:



Weighted average remaining lease term
Operating leases	69 years
Finance leases	1 year
Weighted average discount rate
Operating leases	7.35	%
Finance leases	3.11	%

Payments on leases as of September 30, 2019 were due as follows (in thousands):



Year Ending December 31,	Operating leases			Finance leases			Total
2019 (1)	$	279		$	52		$	331
2020	1,126			862			1,988
2021	1,111			202			1,313
2022	1,129			64			1,193
2023	1,134			—			1,134
Thereafter	99,187			—			99,187
Total lease payments	103,966			1,180			105,146
Less: Amount representing interest	(87,280		)	(15		)	(87,295		)
Lease liability	$	16,686		$	1,165		$	17,851

(1) Represents the three months ending December 31, 2019.

Future minimum rental payments on leases as of December 31, 2018 were due as follows (in thousands):



Year Ending December 31,	Operating leases		Finance leases			Total
2019	$	1,101	$	219		$	1,320
2020	1,110		844			1,954
2021	1,094		184			1,278
2022	1,115		49			1,164
2023	1,119		—			1,119
Thereafter	83,373		—			83,373
Total lease payments	$	88,912	1,296			90,208
Less: Amount representing interest	N/A		(24		)	(24		)
Total	N/A		$	1,272		$	90,184