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Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Lessor, Operating Leases

7.

Leases

Lessor Accounting

All of the Company’s leases are classified as operating leases.  The Company's Lease income is comprised of both fixed and variable income.  Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance. Income for these amounts is recognized on a straight-line basis.

Variable lease income includes the following two main items in the lease contracts:

 

(i)

Recoveries from tenants represents amounts which tenants are contractually obligated to reimburse the Company for the tenants’ portion of actual Recoverable Costs incurred.  Generally the Company’s leases provide for the tenants to

 

reimburse the Company based on the tenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.

 

(ii)

Percentage rent represents amounts billable to tenants based on the tenants' actual sales volume in excess of levels specified in the lease contract.

The following table provides a disaggregation of lease income recognized as either fixed or variable lease income based on the criteria specified in ASC Topic 842:

 

(in thousands)

 

December 31, 2020

 

 

December 31, 2019

 

Operating lease income

 

 

 

 

 

 

 

 

Fixed and in-substance fixed lease income

 

$

807,603

 

 

 

813,444

 

Variable lease income

 

 

247,384

 

 

 

247,861

 

Other lease related income, net:

 

 

 

 

 

 

 

 

Above/below market rent and tenant rent inducement amortization, net

 

 

42,219

 

 

 

45,392

 

Uncollectible straight line rent

 

 

(34,673

)

 

 

(7,002

)

Uncollectible amounts billable in lease income

 

 

(82,367

)

 

 

(5,394

)

Total lease income

 

$

980,166

 

 

 

1,094,301

 

During the year ended December 31, 2020, the Company experienced a higher rate of uncollectible lease income driven by changes in expectations of collectibility of both past due rents and recoveries and future rent steps given the impact of the pandemic on our tenants.

Future minimum rents under non-cancelable operating leases, excluding variable lease payments, are as follows:

 

(in thousands)

 

 

 

 

For the year ended December 31,

 

December 31, 2020

 

2021

 

$

754,396

 

2022

 

 

676,083

 

2023

 

 

578,023

 

2024

 

 

480,768

 

2025

 

 

372,377

 

Thereafter

 

 

1,329,274

 

Total

 

$

4,190,921

 

Lessee Accounting

The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party owns the underlying land and has leased the land to the Company to construct and/or operate a shopping center.

The Company has 22 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties.  Accordingly, the Company owns only a long-term leasehold or similar interest in these properties.  These ground leases expire through the year 2101, and in most cases, provide for renewal options.

In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business.  Office leases expire through the year 2029, and in many cases, provide for renewal options.

The ground and office lease expense is recognized on a straight-line basis over the term of the leases, including management's estimate of expected option renewal periods.  Operating lease expense under the Company's ground and office leases was as follows, including straight-line rent expense and variable lease expenses such as CPI increases, percentage rent and reimbursements of landlord costs:

 

(in thousands)

 

December 31, 2020

 

 

December 31, 2019

 

Fixed operating lease expense

 

 

 

 

 

 

 

 

Ground leases

 

$

13,716

 

 

 

13,982

 

Office leases

 

 

4,334

 

 

 

4,229

 

Total fixed operating lease expense

 

 

18,050

 

 

 

18,211

 

Variable lease expense

 

 

 

 

 

 

 

 

Ground leases

 

 

1,044

 

 

 

1,693

 

Office leases

 

 

585

 

 

 

552

 

Total variable lease expense

 

 

1,629

 

 

 

2,245

 

Total lease expense

 

$

19,679

 

 

 

20,456

 

Cash paid for amounts included in the measurement of operating lease liabilities

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

15,003

 

 

 

14,815

 

Operating lease expense under the Company's ground and office leases was $19.7 million, $20.5 million and $19.1 million for the years ended December 31, 2020, 2019, and 2018 respectively, which includes fixed and variable rent expense.

The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities under ground and office leases as of December 31, 2020, and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets:

 

(in thousands)

 

Lease Liabilities

 

For the year ended December 31,

 

Ground Leases

 

 

Office Leases

 

 

Total

 

2021

 

$

10,778

 

 

 

4,654

 

 

 

15,432

 

2022

 

 

10,837

 

 

 

3,379

 

 

 

14,216

 

2023

 

 

11,054

 

 

 

2,580

 

 

 

13,634

 

2024

 

 

11,103

 

 

 

2,114

 

 

 

13,217

 

2025

 

 

11,106

 

 

 

1,961

 

 

 

13,067

 

Thereafter

 

 

542,184

 

 

 

2,777

 

 

 

544,961

 

Total undiscounted lease liabilities

 

$

597,062

 

 

 

17,465

 

 

 

614,527

 

Present value discount

 

 

(392,848

)

 

 

(1,289

)

 

 

(394,137

)

Lease liabilities

 

$

204,214

 

 

 

16,176

 

 

 

220,390

 

Weighted average discount rate

 

 

5.2

%

 

 

3.8

%

 

 

 

 

Weighted average remaining term (in years)

 

 

48.1

 

 

 

5.0