Quarterly report pursuant to Section 13 or 15(d)

VEREIT Office Assets, Leases

v3.22.1
VEREIT Office Assets, Leases
 3 Months Ended
Mar. 31, 2022
Entity Information [Line Items]  
Leases
Note 11 – Leases
Lessor
As of March 31, 2022, the Company is the lessor for its 92 office properties. The Company’s operating leases have non-cancelable lease terms ranging from 0.3 to 16.0 years as of March 31, 2022. 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 March 31, 2022 (in thousands).
Future Minimum
Operating Lease Payments
April 1, 2022 - December 31, 2022 $ 113,038 
2023 130,444 
2024 99,069 
2025 66,974 
2026 64,401 
2027 45,012 
Thereafter 200,614 
Total $ 719,552 
Lessee
The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of March 31, 2022, the Company’s operating leases had remaining lease terms ranging from 0.6 years to 62.8 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay 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 3.16% as of March 31, 2022. 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 were $0.3 million and less than $0.1 million for the three months ended March 31, 2022 and March 31, 2021, respectively. 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 March 31, 2022 (in thousands).
Future Minimum Lease Payments
April 1, 2022 - December 31, 2022 750 
2023 778 
2024 452 
2025 442 
2026 442 
2027 445 
Thereafter 12,939 
Total 16,248 
Less: imputed interest 6,170 
Total $ 10,078 
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 
Leases
Note 11 – Leases
Lessor
As of March 31, 2022, the Company is the lessor for its 92 office properties. The Company’s operating leases have non-cancelable lease terms ranging from 0.3 to 16.0 years as of March 31, 2022. 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 March 31, 2022 (in thousands).
Future Minimum
Operating Lease Payments
April 1, 2022 - December 31, 2022 $ 113,038 
2023 130,444 
2024 99,069 
2025 66,974 
2026 64,401 
2027 45,012 
Thereafter 200,614 
Total $ 719,552 
Lessee
The Company is the lessee under ground lease arrangements and corporate office leases, which meet the criteria under U.S. GAAP for an operating lease. As of March 31, 2022, the Company’s operating leases had remaining lease terms ranging from 0.6 years to 62.8 years, which includes options to extend. Under the operating leases, the Company pays rent and may also pay 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 3.16% as of March 31, 2022. 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 were $0.3 million and less than $0.1 million for the three months ended March 31, 2022 and March 31, 2021, respectively. 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 March 31, 2022 (in thousands).
Future Minimum Lease Payments
April 1, 2022 - December 31, 2022 750 
2023 778 
2024 452 
2025 442 
2026 442 
2027 445 
Thereafter 12,939 
Total 16,248 
Less: imputed interest 6,170 
Total $ 10,078 
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 
VEREIT Office Assets  
Entity Information [Line Items]  
Leases
Note 4 – Leases
Lessor
As of March 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 0.03 years to 12.18 years as of March 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):
Three Months Ended March 31,
2021
Fixed:
Cash rent $ 32,146 
Straight-line rent (765)
Lease intangible amortization
 (31)
Property operating cost reimbursements
 948 
Total fixed
 32,298 
Variable (1)
7,484 
Total rental revenue $ 39,782 
____________________________________
(1)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent.
Lessee
VEREIT Office Assets is the lessee under one ground lease arrangement, which meets the criteria of an operating lease. As of March 31, 2021, VEREIT Office Assets’ lease has a remaining lease term of 36.4 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 March 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 three months ended March 31, 2021 were $82,000. No cash paid for operating lease liabilities was capitalized.
Leases
Note 4 – Leases
Lessor
As of March 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 0.03 years to 12.18 years as of March 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):
Three Months Ended March 31,
2021
Fixed:
Cash rent $ 32,146 
Straight-line rent (765)
Lease intangible amortization
 (31)
Property operating cost reimbursements
 948 
Total fixed
 32,298 
Variable (1)
7,484 
Total rental revenue $ 39,782 
____________________________________
(1)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent.
Lessee
VEREIT Office Assets is the lessee under one ground lease arrangement, which meets the criteria of an operating lease. As of March 31, 2021, VEREIT Office Assets’ lease has a remaining lease term of 36.4 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 March 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 three months ended March 31, 2021 were $82,000. No cash paid for operating lease liabilities was capitalized.