| Leases | 6 Months Ended |
| Jun. 30, 2024 |
| Leases [Abstract] | |
| Leases | Refer to “ Lease accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). Leases in which we are the lessor As of June 30, 2024 , we had 408 properties aggregating 42.1 million operating RSF in key cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus on developing Class A/A+ properties in AAA innovation cluster locations that offer the scale and strategic design integral to our mega campus strategy. Strategically located near top academic medical institutions and equipped with curated amenities, services, and transit access, our mega campuses are designed to support our tenants in attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties. As of June 30, 2024 , all leases in which we are the lessor were classified as operating leases, with the exception of one direct financing lease . Our leases are described below. Operating leases As of June 30, 2024 , our 408 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The remaining lease term related to each of the two land parcel s is 68.4 years . Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of June 30, 2024 are outlined in the table below (in thousands): Year Amount 2024 $ 973,926 2025 1,911,248 2026 1,852,109 2027 1,769,872 2028 1,631,328 Thereafter 11,045,840 Total $ 19,184,323 Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of June 30, 2024 , we had one direct financing lease agreemen t, with a net investment balance of $40.5 million , for a parking structure with a remaining lease term of 68.4 years . The lessee has an option to purchase the underlying asset at fair market value during each of the 30 -day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The components of our aggregate net investment in our direct financing lease as of June 30, 2024 and December 31, 2023 are summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Gross investment in direct financing lease $ 252,368 $ 253,324 Less: unearned income on direct financing lease (209,067) (210,388) Less: allowance for credit losses (2,839) (2,839) Net investment in direct financing lease $ 40,462 $ 40,097 As of June 30, 2024 , our estimated credit loss related to our direct financing lease was $2.8 million . No adjustment to the estimated credit loss balance was required during the six months ended June 30, 2024 . For further details, refer to “ Allowance for credit losses ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Future lease payments to be received under the terms of our direct financing lease as of June 30, 2024 are outlined in the table below (in thousands): Year Total 2024 $ 963 2025 1,976 2026 2,036 2027 2,097 2028 2,160 Thereafter 243,136 Total $ 252,368 Income from rentals Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 745,626 $ 695,019 $ 1,491,687 $ 1,372,441 Direct financing leases 662 650 1,321 1,298 Revenues subject to the lease accounting standard 746,288 695,669 1,493,008 1,373,739 Revenues subject to the revenue recognition accounting standard 8,874 8,670 17,705 18,549 Income from rentals $ 755,162 $ 704,339 $ 1,510,713 $ 1,392,288 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to “ Revenues ” and “ Recognition of revenue arising from contracts with customers ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “ Lessee accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. As of June 30, 2024 , the present value of the remaining contractual payments aggregating $837.1 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $379.2 million . Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $510.1 million . As of June 30, 2024 , the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 41 years , including extension options that we are reasonably certain to exercise, and the weighted-average discount rate was 4.6% . The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of June 30, 2024 included leases for 36 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $5.8 million as of June 30, 2024 , our ground lease obligations have remaining lease terms ranging from approximately 30 to 98 years , including extension options that we are reasonably certain to exercise. The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating lease liability reflected in our unaudited consolidated balance sheet as of June 30, 2024 is presented in the table below (in thousands): Year Total 2024 $ 10,819 2025 22,671 2026 22,865 2027 21,946 2028 21,614 Thereafter 737,191 Total future payments under our operating leases in which we are the lessee 837,106 Effect of discounting (457,883) Operating lease liability $ 379,223 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 12 years , exclusive of extension options. For the three and six months ended June 30, 2024 and 2023 , our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross operating lease costs $ 9,930 $ 11,815 $ 19,141 $ 21,272 Capitalized lease costs (518) (3,297) (1,046) (4,218) Expenses for operating leases in which we are the lessee $ 9,412 $ 8,518 $ 18,095 $ 17,054 For the six months ended June 30, 2024 and 2023 , amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which we are the lessee aggregated $16.4 million and $18.0 million , respectively. |
| Leases | Refer to “ Lease accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). Leases in which we are the lessor As of June 30, 2024 , we had 408 properties aggregating 42.1 million operating RSF in key cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus on developing Class A/A+ properties in AAA innovation cluster locations that offer the scale and strategic design integral to our mega campus strategy. Strategically located near top academic medical institutions and equipped with curated amenities, services, and transit access, our mega campuses are designed to support our tenants in attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties. As of June 30, 2024 , all leases in which we are the lessor were classified as operating leases, with the exception of one direct financing lease . Our leases are described below. Operating leases As of June 30, 2024 , our 408 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The remaining lease term related to each of the two land parcel s is 68.4 years . Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of June 30, 2024 are outlined in the table below (in thousands): Year Amount 2024 $ 973,926 2025 1,911,248 2026 1,852,109 2027 1,769,872 2028 1,631,328 Thereafter 11,045,840 Total $ 19,184,323 Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of June 30, 2024 , we had one direct financing lease agreemen t, with a net investment balance of $40.5 million , for a parking structure with a remaining lease term of 68.4 years . The lessee has an option to purchase the underlying asset at fair market value during each of the 30 -day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The components of our aggregate net investment in our direct financing lease as of June 30, 2024 and December 31, 2023 are summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Gross investment in direct financing lease $ 252,368 $ 253,324 Less: unearned income on direct financing lease (209,067) (210,388) Less: allowance for credit losses (2,839) (2,839) Net investment in direct financing lease $ 40,462 $ 40,097 As of June 30, 2024 , our estimated credit loss related to our direct financing lease was $2.8 million . No adjustment to the estimated credit loss balance was required during the six months ended June 30, 2024 . For further details, refer to “ Allowance for credit losses ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Future lease payments to be received under the terms of our direct financing lease as of June 30, 2024 are outlined in the table below (in thousands): Year Total 2024 $ 963 2025 1,976 2026 2,036 2027 2,097 2028 2,160 Thereafter 243,136 Total $ 252,368 Income from rentals Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 745,626 $ 695,019 $ 1,491,687 $ 1,372,441 Direct financing leases 662 650 1,321 1,298 Revenues subject to the lease accounting standard 746,288 695,669 1,493,008 1,373,739 Revenues subject to the revenue recognition accounting standard 8,874 8,670 17,705 18,549 Income from rentals $ 755,162 $ 704,339 $ 1,510,713 $ 1,392,288 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to “ Revenues ” and “ Recognition of revenue arising from contracts with customers ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “ Lessee accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. As of June 30, 2024 , the present value of the remaining contractual payments aggregating $837.1 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $379.2 million . Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $510.1 million . As of June 30, 2024 , the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 41 years , including extension options that we are reasonably certain to exercise, and the weighted-average discount rate was 4.6% . The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of June 30, 2024 included leases for 36 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $5.8 million as of June 30, 2024 , our ground lease obligations have remaining lease terms ranging from approximately 30 to 98 years , including extension options that we are reasonably certain to exercise. The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating lease liability reflected in our unaudited consolidated balance sheet as of June 30, 2024 is presented in the table below (in thousands): Year Total 2024 $ 10,819 2025 22,671 2026 22,865 2027 21,946 2028 21,614 Thereafter 737,191 Total future payments under our operating leases in which we are the lessee 837,106 Effect of discounting (457,883) Operating lease liability $ 379,223 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 12 years , exclusive of extension options. For the three and six months ended June 30, 2024 and 2023 , our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross operating lease costs $ 9,930 $ 11,815 $ 19,141 $ 21,272 Capitalized lease costs (518) (3,297) (1,046) (4,218) Expenses for operating leases in which we are the lessee $ 9,412 $ 8,518 $ 18,095 $ 17,054 For the six months ended June 30, 2024 and 2023 , amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which we are the lessee aggregated $16.4 million and $18.0 million , respectively. |
| Leases | Refer to “ Lease accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). Leases in which we are the lessor As of June 30, 2024 , we had 408 properties aggregating 42.1 million operating RSF in key cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus on developing Class A/A+ properties in AAA innovation cluster locations that offer the scale and strategic design integral to our mega campus strategy. Strategically located near top academic medical institutions and equipped with curated amenities, services, and transit access, our mega campuses are designed to support our tenants in attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties. As of June 30, 2024 , all leases in which we are the lessor were classified as operating leases, with the exception of one direct financing lease . Our leases are described below. Operating leases As of June 30, 2024 , our 408 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The remaining lease term related to each of the two land parcel s is 68.4 years . Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of June 30, 2024 are outlined in the table below (in thousands): Year Amount 2024 $ 973,926 2025 1,911,248 2026 1,852,109 2027 1,769,872 2028 1,631,328 Thereafter 11,045,840 Total $ 19,184,323 Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of June 30, 2024 , we had one direct financing lease agreemen t, with a net investment balance of $40.5 million , for a parking structure with a remaining lease term of 68.4 years . The lessee has an option to purchase the underlying asset at fair market value during each of the 30 -day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The components of our aggregate net investment in our direct financing lease as of June 30, 2024 and December 31, 2023 are summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Gross investment in direct financing lease $ 252,368 $ 253,324 Less: unearned income on direct financing lease (209,067) (210,388) Less: allowance for credit losses (2,839) (2,839) Net investment in direct financing lease $ 40,462 $ 40,097 As of June 30, 2024 , our estimated credit loss related to our direct financing lease was $2.8 million . No adjustment to the estimated credit loss balance was required during the six months ended June 30, 2024 . For further details, refer to “ Allowance for credit losses ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Future lease payments to be received under the terms of our direct financing lease as of June 30, 2024 are outlined in the table below (in thousands): Year Total 2024 $ 963 2025 1,976 2026 2,036 2027 2,097 2028 2,160 Thereafter 243,136 Total $ 252,368 Income from rentals Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 745,626 $ 695,019 $ 1,491,687 $ 1,372,441 Direct financing leases 662 650 1,321 1,298 Revenues subject to the lease accounting standard 746,288 695,669 1,493,008 1,373,739 Revenues subject to the revenue recognition accounting standard 8,874 8,670 17,705 18,549 Income from rentals $ 755,162 $ 704,339 $ 1,510,713 $ 1,392,288 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to “ Revenues ” and “ Recognition of revenue arising from contracts with customers ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “ Lessee accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. As of June 30, 2024 , the present value of the remaining contractual payments aggregating $837.1 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $379.2 million . Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $510.1 million . As of June 30, 2024 , the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 41 years , including extension options that we are reasonably certain to exercise, and the weighted-average discount rate was 4.6% . The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of June 30, 2024 included leases for 36 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $5.8 million as of June 30, 2024 , our ground lease obligations have remaining lease terms ranging from approximately 30 to 98 years , including extension options that we are reasonably certain to exercise. The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating lease liability reflected in our unaudited consolidated balance sheet as of June 30, 2024 is presented in the table below (in thousands): Year Total 2024 $ 10,819 2025 22,671 2026 22,865 2027 21,946 2028 21,614 Thereafter 737,191 Total future payments under our operating leases in which we are the lessee 837,106 Effect of discounting (457,883) Operating lease liability $ 379,223 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 12 years , exclusive of extension options. For the three and six months ended June 30, 2024 and 2023 , our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross operating lease costs $ 9,930 $ 11,815 $ 19,141 $ 21,272 Capitalized lease costs (518) (3,297) (1,046) (4,218) Expenses for operating leases in which we are the lessee $ 9,412 $ 8,518 $ 18,095 $ 17,054 For the six months ended June 30, 2024 and 2023 , amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which we are the lessee aggregated $16.4 million and $18.0 million , respectively. |
| Leases | Refer to “ Lease accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). Leases in which we are the lessor As of June 30, 2024 , we had 408 properties aggregating 42.1 million operating RSF in key cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus on developing Class A/A+ properties in AAA innovation cluster locations that offer the scale and strategic design integral to our mega campus strategy. Strategically located near top academic medical institutions and equipped with curated amenities, services, and transit access, our mega campuses are designed to support our tenants in attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties. As of June 30, 2024 , all leases in which we are the lessor were classified as operating leases, with the exception of one direct financing lease . Our leases are described below. Operating leases As of June 30, 2024 , our 408 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The remaining lease term related to each of the two land parcel s is 68.4 years . Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of June 30, 2024 are outlined in the table below (in thousands): Year Amount 2024 $ 973,926 2025 1,911,248 2026 1,852,109 2027 1,769,872 2028 1,631,328 Thereafter 11,045,840 Total $ 19,184,323 Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of June 30, 2024 , we had one direct financing lease agreemen t, with a net investment balance of $40.5 million , for a parking structure with a remaining lease term of 68.4 years . The lessee has an option to purchase the underlying asset at fair market value during each of the 30 -day periods commencing on the dates that are 15 years , 30 years , and 74.5 years after the rent commencement date of October 1, 2017 . The components of our aggregate net investment in our direct financing lease as of June 30, 2024 and December 31, 2023 are summarized in the table below (in thousands): June 30, 2024 December 31, 2023 Gross investment in direct financing lease $ 252,368 $ 253,324 Less: unearned income on direct financing lease (209,067) (210,388) Less: allowance for credit losses (2,839) (2,839) Net investment in direct financing lease $ 40,462 $ 40,097 As of June 30, 2024 , our estimated credit loss related to our direct financing lease was $2.8 million . No adjustment to the estimated credit loss balance was required during the six months ended June 30, 2024 . For further details, refer to “ Allowance for credit losses ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Future lease payments to be received under the terms of our direct financing lease as of June 30, 2024 are outlined in the table below (in thousands): Year Total 2024 $ 963 2025 1,976 2026 2,036 2027 2,097 2028 2,160 Thereafter 243,136 Total $ 252,368 Income from rentals Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 745,626 $ 695,019 $ 1,491,687 $ 1,372,441 Direct financing leases 662 650 1,321 1,298 Revenues subject to the lease accounting standard 746,288 695,669 1,493,008 1,373,739 Revenues subject to the revenue recognition accounting standard 8,874 8,670 17,705 18,549 Income from rentals $ 755,162 $ 704,339 $ 1,510,713 $ 1,392,288 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to “ Revenues ” and “ Recognition of revenue arising from contracts with customers ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “ Lessee accounting ” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. As of June 30, 2024 , the present value of the remaining contractual payments aggregating $837.1 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $379.2 million . Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $510.1 million . As of June 30, 2024 , the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 41 years , including extension options that we are reasonably certain to exercise, and the weighted-average discount rate was 4.6% . The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of June 30, 2024 included leases for 36 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $5.8 million as of June 30, 2024 , our ground lease obligations have remaining lease terms ranging from approximately 30 to 98 years , including extension options that we are reasonably certain to exercise. The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating lease liability reflected in our unaudited consolidated balance sheet as of June 30, 2024 is presented in the table below (in thousands): Year Total 2024 $ 10,819 2025 22,671 2026 22,865 2027 21,946 2028 21,614 Thereafter 737,191 Total future payments under our operating leases in which we are the lessee 837,106 Effect of discounting (457,883) Operating lease liability $ 379,223 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 12 years , exclusive of extension options. For the three and six months ended June 30, 2024 and 2023 , our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross operating lease costs $ 9,930 $ 11,815 $ 19,141 $ 21,272 Capitalized lease costs (518) (3,297) (1,046) (4,218) Expenses for operating leases in which we are the lessee $ 9,412 $ 8,518 $ 18,095 $ 17,054 For the six months ended June 30, 2024 and 2023 , amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which we are the lessee aggregated $16.4 million and $18.0 million , respectively. |
