Annual report pursuant to Section 13 and 15(d)

VEREIT Office Assets, Leases

v3.22.1
VEREIT Office Assets, Leases
 12 Months Ended
Dec. 31, 2021
Entity Information [Line Items]  
Leases
Note 11 – Leases
Lessor
As of December 31, 2021, the Company is the lessor for its 92 office properties. The Company’s operating leases have non-cancelable lease terms ranging from 0.08 years to 16.26 years as of December 31, 2021 and 0.30 years to 13.12 years as of December 31, 2020, respectively. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR).
The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter as of December 31, 2021 (in thousands).
Future Minimum
Operating Lease Payments
2022 $ 153,592 
2023 128,580 
2024 96,850 
2025 64,544 
2026 61,916 
Thereafter 239,317 
Total $ 744,799 
Lessee
The Company is the lessee under operating lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of December 31, 2021, the Company’s operating leases had remaining lease terms ranging from 0.9 years to 63 years, which includes options to extend. Under the ground lease arrangements, the Company pays variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.14% as of December 31, 2021. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments.
Operating lease costs for the year ended December 31, 2021 were $0.3 million. Operating lease costs for each of the years ended December 31, 2020 and 2019 were $0.1 million. No cash paid for operating lease liabilities was capitalized.
The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of December 31, 2021 (in thousands).
Future Minimum Lease Payments
2022 1,008 
2023 778 
2024 452 
2025 442 
2026 442 
Thereafter 13,383 
Total 16,505 
Less: imputed interest 6,248 
Total $ 10,257 
The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground lease obligations as of December 31, 2020 (in thousands).
Future Minimum Lease Payments
2021 107 
2022 111 
2023 113 
2024 113 
2025 113 
Thereafter 3,432 
Total 3,989 
Less: imputed interest 1,887 
Total $ 2,102 
Leases
Note 11 – Leases
Lessor
As of December 31, 2021, the Company is the lessor for its 92 office properties. The Company’s operating leases have non-cancelable lease terms ranging from 0.08 years to 16.26 years as of December 31, 2021 and 0.30 years to 13.12 years as of December 31, 2020, respectively. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR).
The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter as of December 31, 2021 (in thousands).
Future Minimum
Operating Lease Payments
2022 $ 153,592 
2023 128,580 
2024 96,850 
2025 64,544 
2026 61,916 
Thereafter 239,317 
Total $ 744,799 
Lessee
The Company is the lessee under operating lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of December 31, 2021, the Company’s operating leases had remaining lease terms ranging from 0.9 years to 63 years, which includes options to extend. Under the ground lease arrangements, the Company pays variable costs, including property operating expenses and common area maintenance. The weighted-average discount rate used to measure the lease liability for the Company’s operating leases was 3.14% as of December 31, 2021. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the lease guidance adoption date or the Merger Effective Time, as applicable, in determining the present value of lease payments.
Operating lease costs for the year ended December 31, 2021 were $0.3 million. Operating lease costs for each of the years ended December 31, 2020 and 2019 were $0.1 million. No cash paid for operating lease liabilities was capitalized.
The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground and corporate office lease obligations as of December 31, 2021 (in thousands).
Future Minimum Lease Payments
2022 1,008 
2023 778 
2024 452 
2025 442 
2026 442 
Thereafter 13,383 
Total 16,505 
Less: imputed interest 6,248 
Total $ 10,257 
The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground lease obligations as of December 31, 2020 (in thousands).
Future Minimum Lease Payments
2021 107 
2022 111 
2023 113 
2024 113 
2025 113 
Thereafter 3,432 
Total 3,989 
Less: imputed interest 1,887 
Total $ 2,102 
VEREIT Office Assets  
Entity Information [Line Items]  
Leases
Note 5 – Leases
Lessor
As of October 31, 2021, VEREIT Office Assets is the lessor for its 52 office properties. VEREIT Office Assets’ operating leases have non-cancelable lease terms ranging from 0.17 years to 11.59 years as of October 31, 2021. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). VEREIT Office Assets believes the residual value risk is not a primary risk because of the long-lived nature of the assets.
The components of rental revenue from VEREIT Office Assets’ operating leases were as follows (in thousands):
Ten Months Ended Year Ended December 31,
2021 2020 2019
Fixed:
Cash rent $ 109,582  $ 132,402  $ 141,541 
Straight-line rent (4,889) (869) (42)
Lease intangible amortization
 (29) (67) 231 
Property operating cost reimbursements
 3,270  3,794  3,690 
Total fixed
 107,934  135,260  145,420 
Variable (1)
26,806  35,044  36,649 
Total rental revenue $ 134,740  $ 170,304  $ 182,069 
____________________________________
(1)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent.
The following table presents future minimum operating lease payments due to VEREIT Office Assets over the next five years and thereafter as of October 31, 2021 (in thousands).
Future Minimum
Operating Lease Payments
November 1, 2021 - December 31, 2021 $ 15,683 
2022 110,872 
2023 95,130 
2024 72,361 
2025 38,980 
2026 29,951 
Thereafter 34,357 
Total $ 397,334 
Lessee
VEREIT Office Assets is the lessee under one ground lease arrangement, which meets the criteria of an operating lease. As of October 31, 2021, VEREIT Office Assets’ lease has a remaining lease term of 35.8 years, which includes options to extend. Under the ground lease arrangement, VEREIT Office Assets pays variable costs, including property operating expenses and common area maintenance. The discount rate for VEREIT Office Assets’ operating lease was 5.17% as of October 31, 2021. As VEREIT Office Assets’ lease does not provide an implicit rate, VEREIT Office Assets used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.
Operating lease costs for the ten months ended October 31, 2021 was $246,000. Operating lease costs for each of the years ended December 31, 2020 and 2019 was $328,000. No cash paid for operating lease liabilities was capitalized.
The following table reflects the maturity analysis of payments due from VEREIT Office Assets over the next five years and thereafter for ground lease obligations as of October 31, 2021 (in thousands).
Future Minimum Lease Payments
November 1, 2021 - December 31, 2021 $ 55 
2022 329 
2023 329 
2024 329 
2025 329 
2026 329 
Thereafter 10,062 
Total 11,762 
Less: imputed interest 6,403 
Total $ 5,359 
Leases
Note 5 – Leases
Lessor
As of October 31, 2021, VEREIT Office Assets is the lessor for its 52 office properties. VEREIT Office Assets’ operating leases have non-cancelable lease terms ranging from 0.17 years to 11.59 years as of October 31, 2021. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying assets. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index or LIBOR). VEREIT Office Assets believes the residual value risk is not a primary risk because of the long-lived nature of the assets.
The components of rental revenue from VEREIT Office Assets’ operating leases were as follows (in thousands):
Ten Months Ended Year Ended December 31,
2021 2020 2019
Fixed:
Cash rent $ 109,582  $ 132,402  $ 141,541 
Straight-line rent (4,889) (869) (42)
Lease intangible amortization
 (29) (67) 231 
Property operating cost reimbursements
 3,270  3,794  3,690 
Total fixed
 107,934  135,260  145,420 
Variable (1)
26,806  35,044  36,649 
Total rental revenue $ 134,740  $ 170,304  $ 182,069 
____________________________________
(1)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent.
The following table presents future minimum operating lease payments due to VEREIT Office Assets over the next five years and thereafter as of October 31, 2021 (in thousands).
Future Minimum
Operating Lease Payments
November 1, 2021 - December 31, 2021 $ 15,683 
2022 110,872 
2023 95,130 
2024 72,361 
2025 38,980 
2026 29,951 
Thereafter 34,357 
Total $ 397,334 
Lessee
VEREIT Office Assets is the lessee under one ground lease arrangement, which meets the criteria of an operating lease. As of October 31, 2021, VEREIT Office Assets’ lease has a remaining lease term of 35.8 years, which includes options to extend. Under the ground lease arrangement, VEREIT Office Assets pays variable costs, including property operating expenses and common area maintenance. The discount rate for VEREIT Office Assets’ operating lease was 5.17% as of October 31, 2021. As VEREIT Office Assets’ lease does not provide an implicit rate, VEREIT Office Assets used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.
Operating lease costs for the ten months ended October 31, 2021 was $246,000. Operating lease costs for each of the years ended December 31, 2020 and 2019 was $328,000. No cash paid for operating lease liabilities was capitalized.
The following table reflects the maturity analysis of payments due from VEREIT Office Assets over the next five years and thereafter for ground lease obligations as of October 31, 2021 (in thousands).
Future Minimum Lease Payments
November 1, 2021 - December 31, 2021 $ 55 
2022 329 
2023 329 
2024 329 
2025 329 
2026 329 
Thereafter 10,062 
Total 11,762 
Less: imputed interest 6,403 
Total $ 5,359