Annual report pursuant to Section 13 and 15(d)

Leases

v3.20.4
Leases
 12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases Leases
Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. As of December 31, 2020, these leases, which may encompass all, or a portion of, a property, had remaining terms spanning from one month to 18 years and averaging approximately 5.4 years.
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 the lease. 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 2020 2019
Fixed $ 425,593  $ 412,342 
Variable 110,534  110,130 
$ 536,127  $ 522,472 
A significant concentration of our lease revenue in 2020 and 2019 was earned from our largest tenant, the USG, including 35% and 34% of our total lease revenue, respectively, and 25% of our fixed lease revenue in each of those years. Our lease revenue from the USG in 2020 and 2019 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT reportable sub-segments (see Note 17).

Fixed contractual payments due under our property leases were as follows (in thousands):
As of December 31, 2020
Year Ending December 31, Operating leases Sales-type leases
2021 $ 424,585  $ 871 
2022 378,573  949 
2023 324,917  949 
2024 276,488  949 
2025 197,677  949 
Thereafter 745,303  4,464 
Total contractual payments $ 2,347,543  9,131 
Less: Amount representing interest (2,558)
Net investment in sales-type leases $ 6,573 

Lessee Arrangements

As of December 31, 2020, our balance sheet included $81.0 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating or developing. The land leases have long durations with remaining terms ranging from 28 years (excluding extension options) to 95 years. As of December 31, 2020, our right-of-use assets included:

•$37.8 million for land on which we are developing an office property in Washington, D.C. through our Stevens Investors, LLC joint venture, virtually all of the rent on which was previously paid. This lease has a 95-year remaining term, and we possess a bargain purchase option that we expect to exercise in 2021;
•$11.3 million for land in a business park in Huntsville, Alabama under 15 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 42 to 51 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;
•$10.1 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 79 years;
•$6.6 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 62 to 73 years;
•$6.5 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 28 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;
•$6.5 million for data center space in Phoenix, Arizona with a remaining term of 4 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
•$2.2 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 47 years, all of the rent on which was previously paid.
Our property right-of-use assets consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Right-of-use assets
Operating leases - Property Property - operating right-of-use assets $ 40,570  $ 27,864 
Finance leases - Property Property - finance right-of-use assets 40,425  40,458 
Total right-of-use assets $ 80,995  $ 68,322 

Property lease liabilities consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Lease liabilities
Operating leases - Property Property - operating lease liabilities $ 30,746  $ 17,317 
Finance leases - Property Other liabilities 28  702 
Total lease liabilities $ 30,774  $ 18,019 

The table below sets forth the weighted average terms and discount rates of our property leases as of December 31, 2020:
Weighted average remaining lease term
Operating leases 50 years
Finance leases
< 1 year
Weighted average discount rate
Operating leases 7.21  %
Finance leases 3.62  %

The table below presents our total property lease cost (in thousands):
For the Years Ended December 31,
Lease cost Statement of Operations Location 2020 2019
Operating lease cost
Property leases - fixed Property operating expenses $ 2,413  $ 1,664 
Property leases - variable Property operating expenses 127  4 
Finance lease cost
Amortization of property right-of-use assets Property operating expenses 34  30 
$ 2,574  $ 1,698 

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 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 1,694  $ 1,004 
Financing cash flows for financing leases $ 674  $ 14 
Payments on property leases were due as follows (in thousands):
As of December 31, 2020
As of December 31, 2019
Year Ending December 31,  Operating
leases		 Finance
leases		 Total Operating
leases		 Finance
leases		 Total
2020 N/A N/A N/A $ 1,092  $ 674  $ 1,766 
2021 $ 3,211  $ 14  $ 3,225  1,138  14  1,152 
2022 3,332  14  3,346  1,162  14  1,176 
2023 3,382  —  3,382  1,167  —  1,167 
2024 3,434  —  3,434  1,173  —  1,173 
2025 1,780  —  1,780  N/A N/A N/A
Thereafter 126,350  —  126,350  100,609  —  100,609 
Total lease payments 141,489  28  141,517  106,341  702  107,043 
Less: Amount representing interest (110,743) —  (110,743) (89,024) —  (89,024)
Lease liability $ 30,746  $ 28  $ 30,774  $ 17,317  $ 702  $ 18,019 
Leases Leases
Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. As of December 31, 2020, these leases, which may encompass all, or a portion of, a property, had remaining terms spanning from one month to 18 years and averaging approximately 5.4 years.
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 the lease. 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 2020 2019
Fixed $ 425,593  $ 412,342 
Variable 110,534  110,130 
$ 536,127  $ 522,472 
A significant concentration of our lease revenue in 2020 and 2019 was earned from our largest tenant, the USG, including 35% and 34% of our total lease revenue, respectively, and 25% of our fixed lease revenue in each of those years. Our lease revenue from the USG in 2020 and 2019 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT reportable sub-segments (see Note 17).

Fixed contractual payments due under our property leases were as follows (in thousands):
As of December 31, 2020
Year Ending December 31, Operating leases Sales-type leases
2021 $ 424,585  $ 871 
2022 378,573  949 
2023 324,917  949 
2024 276,488  949 
2025 197,677  949 
Thereafter 745,303  4,464 
Total contractual payments $ 2,347,543  9,131 
Less: Amount representing interest (2,558)
Net investment in sales-type leases $ 6,573 

Lessee Arrangements

As of December 31, 2020, our balance sheet included $81.0 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating or developing. The land leases have long durations with remaining terms ranging from 28 years (excluding extension options) to 95 years. As of December 31, 2020, our right-of-use assets included:

•$37.8 million for land on which we are developing an office property in Washington, D.C. through our Stevens Investors, LLC joint venture, virtually all of the rent on which was previously paid. This lease has a 95-year remaining term, and we possess a bargain purchase option that we expect to exercise in 2021;
•$11.3 million for land in a business park in Huntsville, Alabama under 15 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 42 to 51 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;
•$10.1 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 79 years;
•$6.6 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 62 to 73 years;
•$6.5 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 28 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;
•$6.5 million for data center space in Phoenix, Arizona with a remaining term of 4 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
•$2.2 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 47 years, all of the rent on which was previously paid.
Our property right-of-use assets consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Right-of-use assets
Operating leases - Property Property - operating right-of-use assets $ 40,570  $ 27,864 
Finance leases - Property Property - finance right-of-use assets 40,425  40,458 
Total right-of-use assets $ 80,995  $ 68,322 

Property lease liabilities consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Lease liabilities
Operating leases - Property Property - operating lease liabilities $ 30,746  $ 17,317 
Finance leases - Property Other liabilities 28  702 
Total lease liabilities $ 30,774  $ 18,019 

The table below sets forth the weighted average terms and discount rates of our property leases as of December 31, 2020:
Weighted average remaining lease term
Operating leases 50 years
Finance leases
< 1 year
Weighted average discount rate
Operating leases 7.21  %
Finance leases 3.62  %

The table below presents our total property lease cost (in thousands):
For the Years Ended December 31,
Lease cost Statement of Operations Location 2020 2019
Operating lease cost
Property leases - fixed Property operating expenses $ 2,413  $ 1,664 
Property leases - variable Property operating expenses 127  4 
Finance lease cost
Amortization of property right-of-use assets Property operating expenses 34  30 
$ 2,574  $ 1,698 

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 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 1,694  $ 1,004 
Financing cash flows for financing leases $ 674  $ 14 
Payments on property leases were due as follows (in thousands):
As of December 31, 2020
As of December 31, 2019
Year Ending December 31,  Operating
leases		 Finance
leases		 Total Operating
leases		 Finance
leases		 Total
2020 N/A N/A N/A $ 1,092  $ 674  $ 1,766 
2021 $ 3,211  $ 14  $ 3,225  1,138  14  1,152 
2022 3,332  14  3,346  1,162  14  1,176 
2023 3,382  —  3,382  1,167  —  1,167 
2024 3,434  —  3,434  1,173  —  1,173 
2025 1,780  —  1,780  N/A N/A N/A
Thereafter 126,350  —  126,350  100,609  —  100,609 
Total lease payments 141,489  28  141,517  106,341  702  107,043 
Less: Amount representing interest (110,743) —  (110,743) (89,024) —  (89,024)
Lease liability $ 30,746  $ 28  $ 30,774  $ 17,317  $ 702  $ 18,019 
Leases Leases
Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. As of December 31, 2020, these leases, which may encompass all, or a portion of, a property, had remaining terms spanning from one month to 18 years and averaging approximately 5.4 years.
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 the lease. 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 2020 2019
Fixed $ 425,593  $ 412,342 
Variable 110,534  110,130 
$ 536,127  $ 522,472 
A significant concentration of our lease revenue in 2020 and 2019 was earned from our largest tenant, the USG, including 35% and 34% of our total lease revenue, respectively, and 25% of our fixed lease revenue in each of those years. Our lease revenue from the USG in 2020 and 2019 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT reportable sub-segments (see Note 17).

Fixed contractual payments due under our property leases were as follows (in thousands):
As of December 31, 2020
Year Ending December 31, Operating leases Sales-type leases
2021 $ 424,585  $ 871 
2022 378,573  949 
2023 324,917  949 
2024 276,488  949 
2025 197,677  949 
Thereafter 745,303  4,464 
Total contractual payments $ 2,347,543  9,131 
Less: Amount representing interest (2,558)
Net investment in sales-type leases $ 6,573 

Lessee Arrangements

As of December 31, 2020, our balance sheet included $81.0 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating or developing. The land leases have long durations with remaining terms ranging from 28 years (excluding extension options) to 95 years. As of December 31, 2020, our right-of-use assets included:

•$37.8 million for land on which we are developing an office property in Washington, D.C. through our Stevens Investors, LLC joint venture, virtually all of the rent on which was previously paid. This lease has a 95-year remaining term, and we possess a bargain purchase option that we expect to exercise in 2021;
•$11.3 million for land in a business park in Huntsville, Alabama under 15 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 42 to 51 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;
•$10.1 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 79 years;
•$6.6 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 62 to 73 years;
•$6.5 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 28 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;
•$6.5 million for data center space in Phoenix, Arizona with a remaining term of 4 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
•$2.2 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 47 years, all of the rent on which was previously paid.
Our property right-of-use assets consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Right-of-use assets
Operating leases - Property Property - operating right-of-use assets $ 40,570  $ 27,864 
Finance leases - Property Property - finance right-of-use assets 40,425  40,458 
Total right-of-use assets $ 80,995  $ 68,322 

Property lease liabilities consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Lease liabilities
Operating leases - Property Property - operating lease liabilities $ 30,746  $ 17,317 
Finance leases - Property Other liabilities 28  702 
Total lease liabilities $ 30,774  $ 18,019 

The table below sets forth the weighted average terms and discount rates of our property leases as of December 31, 2020:
Weighted average remaining lease term
Operating leases 50 years
Finance leases
< 1 year
Weighted average discount rate
Operating leases 7.21  %
Finance leases 3.62  %

The table below presents our total property lease cost (in thousands):
For the Years Ended December 31,
Lease cost Statement of Operations Location 2020 2019
Operating lease cost
Property leases - fixed Property operating expenses $ 2,413  $ 1,664 
Property leases - variable Property operating expenses 127  4 
Finance lease cost
Amortization of property right-of-use assets Property operating expenses 34  30 
$ 2,574  $ 1,698 

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 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 1,694  $ 1,004 
Financing cash flows for financing leases $ 674  $ 14 
Payments on property leases were due as follows (in thousands):
As of December 31, 2020
As of December 31, 2019
Year Ending December 31,  Operating
leases		 Finance
leases		 Total Operating
leases		 Finance
leases		 Total
2020 N/A N/A N/A $ 1,092  $ 674  $ 1,766 
2021 $ 3,211  $ 14  $ 3,225  1,138  14  1,152 
2022 3,332  14  3,346  1,162  14  1,176 
2023 3,382  —  3,382  1,167  —  1,167 
2024 3,434  —  3,434  1,173  —  1,173 
2025 1,780  —  1,780  N/A N/A N/A
Thereafter 126,350  —  126,350  100,609  —  100,609 
Total lease payments 141,489  28  141,517  106,341  702  107,043 
Less: Amount representing interest (110,743) —  (110,743) (89,024) —  (89,024)
Lease liability $ 30,746  $ 28  $ 30,774  $ 17,317  $ 702  $ 18,019 
Leases Leases
Lessor Arrangements

We lease real estate properties, comprised primarily of office properties and data center shells, to third parties. As of December 31, 2020, these leases, which may encompass all, or a portion of, a property, had remaining terms spanning from one month to 18 years and averaging approximately 5.4 years.
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 the lease. 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 2020 2019
Fixed $ 425,593  $ 412,342 
Variable 110,534  110,130 
$ 536,127  $ 522,472 
A significant concentration of our lease revenue in 2020 and 2019 was earned from our largest tenant, the USG, including 35% and 34% of our total lease revenue, respectively, and 25% of our fixed lease revenue in each of those years. Our lease revenue from the USG in 2020 and 2019 was earned primarily from properties in the Fort Meade/BW Corridor, Lackland Air Force Base and Northern Virginia Defense/IT reportable sub-segments (see Note 17).

Fixed contractual payments due under our property leases were as follows (in thousands):
As of December 31, 2020
Year Ending December 31, Operating leases Sales-type leases
2021 $ 424,585  $ 871 
2022 378,573  949 
2023 324,917  949 
2024 276,488  949 
2025 197,677  949 
Thereafter 745,303  4,464 
Total contractual payments $ 2,347,543  9,131 
Less: Amount representing interest (2,558)
Net investment in sales-type leases $ 6,573 

Lessee Arrangements

As of December 31, 2020, our balance sheet included $81.0 million in right-of-use assets associated primarily with land leased from third parties underlying certain properties that we are operating or developing. The land leases have long durations with remaining terms ranging from 28 years (excluding extension options) to 95 years. As of December 31, 2020, our right-of-use assets included:

•$37.8 million for land on which we are developing an office property in Washington, D.C. through our Stevens Investors, LLC joint venture, virtually all of the rent on which was previously paid. This lease has a 95-year remaining term, and we possess a bargain purchase option that we expect to exercise in 2021;
•$11.3 million for land in a business park in Huntsville, Alabama under 15 leases through our LW Redstone Company, LLC joint venture, with remaining terms ranging from 42 to 51 years and options to renew for an additional 25 years that were not included in the term used in determining the asset balance;
•$10.1 million for land underlying operating office properties in Washington, D.C. under two leases with remaining terms of approximately 79 years;
•$6.6 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 62 to 73 years;
•$6.5 million for land underlying a parking garage in Baltimore, Maryland under a lease with a remaining term of 28 years and an option to renew for an additional 49 years that was included in the term used in determining the asset balance;
•$6.5 million for data center space in Phoenix, Arizona with a remaining term of 4 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
•$2.2 million for other land underlying operating properties in our Fort Meade/BW Corridor sub-segment under two leases with remaining terms of approximately 47 years, all of the rent on which was previously paid.
Our property right-of-use assets consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Right-of-use assets
Operating leases - Property Property - operating right-of-use assets $ 40,570  $ 27,864 
Finance leases - Property Property - finance right-of-use assets 40,425  40,458 
Total right-of-use assets $ 80,995  $ 68,322 

Property lease liabilities consisted of the following (in thousands):
As of December 31,
Leases Balance Sheet Location 2020 2019
Lease liabilities
Operating leases - Property Property - operating lease liabilities $ 30,746  $ 17,317 
Finance leases - Property Other liabilities 28  702 
Total lease liabilities $ 30,774  $ 18,019 

The table below sets forth the weighted average terms and discount rates of our property leases as of December 31, 2020:
Weighted average remaining lease term
Operating leases 50 years
Finance leases
< 1 year
Weighted average discount rate
Operating leases 7.21  %
Finance leases 3.62  %

The table below presents our total property lease cost (in thousands):
For the Years Ended December 31,
Lease cost Statement of Operations Location 2020 2019
Operating lease cost
Property leases - fixed Property operating expenses $ 2,413  $ 1,664 
Property leases - variable Property operating expenses 127  4 
Finance lease cost
Amortization of property right-of-use assets Property operating expenses 34  30 
$ 2,574  $ 1,698 

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 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 1,694  $ 1,004 
Financing cash flows for financing leases $ 674  $ 14 
Payments on property leases were due as follows (in thousands):
As of December 31, 2020
As of December 31, 2019
Year Ending December 31,  Operating
leases		 Finance
leases		 Total Operating
leases		 Finance
leases		 Total
2020 N/A N/A N/A $ 1,092  $ 674  $ 1,766 
2021 $ 3,211  $ 14  $ 3,225  1,138  14  1,152 
2022 3,332  14  3,346  1,162  14  1,176 
2023 3,382  —  3,382  1,167  —  1,167 
2024 3,434  —  3,434  1,173  —  1,173 
2025 1,780  —  1,780  N/A N/A N/A
Thereafter 126,350  —  126,350  100,609  —  100,609 
Total lease payments 141,489  28  141,517  106,341  702  107,043 
Less: Amount representing interest (110,743) —  (110,743) (89,024) —  (89,024)
Lease liability $ 30,746  $ 28  $ 30,774  $ 17,317  $ 702  $ 18,019