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Note 13 - Leases

12 Months Ended

Dec. 31, 2021

Leases of Lessee and Lessor Disclosure [Text Block]

(a)

Lessee leases:

The Company has operating leases for office space that include fixed base rent payments, as well as variable rent payments to reimburse the landlord for operating expenses and taxes. The Company’s variable lease payments do not depend on a published index or rate, and therefore, are expensed as incurred. The Company includes only fixed payments for lease components in the measurement of the right-of-use asset and lease liability. There are no residual value guarantees.

Operating lease costs and variable lease costs included in selling and administrative costs for the year ended December 31, 2021 were $1.0 million and $0.1 million, respectively.

The annual maturities of lease liabilities as of December 31, 2021 were as follows:

(in thousands)	Lease Commitments
2022	$	982
2023		638
2024		550
2025		381
2026		165
2027 and thereafter		—
Total undiscounted lease payments		2,716
Imputed interest		237
Total lease liabilities	$	2,479

The weighted-average remaining lease term for operating leases was 3.68 years as of December 31, 2021. The weighted average discount rate of operating leases was 5.14% as of December 31, 2021. Cash paid for amounts included in the measurement of lease liabilities was $1.0 million and $0.7 million for the years ended December 31, 2021 and December 31, 2020, respectively.

Supplemental non-cash information related to leases for the year ended December 31, 2021 includes right-of-use assets of $0.1 million acquired in exchange for $0.1 million of lease obligations.

(b)

Lessor leases:

The Company owns the Real Property that is subject to a long-term triple net lease agreement with an unrelated third-party. The lease provides for future rent escalations and renewal options. The initial lease term ends in May 2034. The lessee bears the cost of maintenance and property taxes. Rental income from operating leases is recognized on a straight-line basis, based on contractual lease terms with fixed and determinable increases over the non-cancellable term of the related lease when collectability is reasonably assured. Rental revenue includes amortization of below-market lease liabilities related to the Real Property of $0.1 million and $0.1 million for the years ended December 31, 2021 and December 31, 2020, respectively. The estimated aggregate future amortization of below-market lease liabilities is $0.1 million for 2022, $0.1 million for 2023, $0.1 million for 2024, $0.1 million for 2025 and $0.1 million for 2026. Realization of the residual values of the assets under lease is dependent on the future ability to market the assets under prevailing market conditions. The lease is classified as an operating lease and the underlying leased assets are included in property and equipment in the consolidated balance sheets. Refer to Note 10, "Property and Equipment".

The Company acquired the LA Property on December 30, 2021. The LA Real Property is subject to a long-term lease agreement with an unrelated third-party. The lease provides for future rent decreases. The initial lease term ends in March 2035. The lessee bears the cost of maintenance and property taxes. Rental income from operating leases is recognized on a straight-line basis, based on contractual lease terms with fixed and determinable increases over the non-cancellable term of the related lease when collectability is reasonably assured. Rental revenue does not include any amortization of above-market lease asset related to the LA Property for the year ended December 31, 2021 due to RoeCo being acquired on December 30, 2021. The estimated aggregate future amortization of above-market lease asset is $0.1 million for 2022, $0.1 million for 2023, $0.1 million for 2024, $0.1 million for 2025 and $0.1 million for 2026. Realization of the residual values of the assets under lease is dependent on the future ability to market the assets under prevailing market conditions. The lease is classified as an operating lease and the underlying leased assets are included in property and equipment in the consolidated balance sheets. Refer to Note 10, "Property and Equipment".

Lease revenue related to operating leases was $13.4 million for each of the years ended December 31, 2021 and December 31, 2020.

The following table provides the net book value of operating lease property included in property and equipment in the consolidated balance sheets:

(in thousands)	December 31, 2021			December 31, 2020

Land	$	25,623		$	21,120
Site and tenant improvements		92,047			91,308
Buildings		11,805			580
Gross property and equipment leased		129,475			113,008
Accumulation depreciation		(21,989	)		(18,493	)
Net property and equipment leased	$	107,486		$	94,515

As of December 31, 2021, future undiscounted cash flows to be received in each of the next five years and thereafter, on non-cancelable operating leases are as follows:

(in thousands)
2022	$	13,912
2023		14,190
2024		14,475
2025		14,766
2026		14,883
Thereafter		119,590