7. Leases

As lessor, all of Griffin’s leases with its tenants were classified as operating leases under previous guidance and remained operating leases upon the adoption of ASC 842, therefore, as a lessor there was no significant impact upon adoption. Griffin’s rental revenue reflects the leasing of industrial/warehouse and, to a lesser extent, office/flex space and certain land parcels. Griffin does not have any variable payment leases with its tenants.

The future minimum rental payments, including expected tenant reimbursements, to be received under noncancelable operating leases as of May 31, 2020 are as follows:


Balance of fiscal 2020	$	17,430
2021		33,916
2022		27,769
2023		22,684
2024		19,665
Later years		45,374
	$	166,838

Griffin currently leases an entire 165,000 square foot industrial/warehouse building (“1985 Blue Hills”) in Windsor, Connecticut to a single tenant under a lease that expires on March 31, 2024. Such lease contains an option whereby the tenant could purchase 1985 Blue Hills at a purchase price equal to the greater of $11,500 or fair market value as determined under the terms of the lease. The tenant did not exercise its purchase option before it expired on June 1, 2020.

In fiscal 2016, Griffin entered into a ten-year sublease (the “New York Office Lease”) for approximately 1,920 square feet in New York City for its executive offices. The sublease is with Bloomingdale Properties, Inc., an entity that is controlled by certain members of the Cullman and Ernst Group, which is considered a related party to Griffin.

Upon adoption of ASC 842 on December 1, 2019, Griffin, as lessee, recognized two ROU assets aggregating $858 and lease liabilities aggregating $858 for operating leases it had previously entered into, the New York Office Lease and a lease for office equipment. Griffin adopted the practical expedient for not separating lease components from non-lease components. ROU assets and lease liabilities are included in other assets and other liabilities, respectively, on Griffin’s consolidated balance sheet. ROU assets are evaluated for impairment in a manner consistent with the treatment of other long-lived assets. These lease agreements do not provide a readily determinable implicit rate nor is it available to Griffin from its lessors, therefore, Griffin utilized its incremental borrowing rate of 3.5% at the time of adoption in order to discount lease payments to present value. These lease agreements do not contain any significant residual value guarantees or restrictive covenants. The lease costs are allocated over the remaining lease terms on a straight-line basis. Expense related to operating leases was $69 in the 2020 six month period. The weighted average remaining lease term for Griffin’s operating leases as of May 31, 2020, was 6.4 years.

Maturities of lease liabilities as of May 31, 2020 are as follows:


Balance of Fiscal 2020	$	68
Fiscal 2021		136
Fiscal 2022		143
Fiscal 2023		141
Fiscal 2024		140
Thereafter		269
Total undiscounted payments	$	897
Less: imputed interest		(95)
Present value of minimum lease payments	$	802