Leases

6 Months Ended

Jun. 30, 2022


15. Leases

Lessee Arrangements The Company determines whether an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, net and Operating lease obligations on the Condensed Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimate of the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Operating lease right-of-use asset also includes any lease payments made, less any lease incentives and initial direct costs incurred. The Company does not have any finance leases as of June 30, 2022, or December 31, 2021.

The Company’s lessee agreements consist of operating leases primarily for ground leases and other real estate. The majority of the Company’s leases have remaining lease terms of approximately 25 years and one lease with a remaining lease term of 52 years, excluding extension options. Most leases include one or more options to renew, with renewal terms that can extend the lease term from two to 48 years, and some of which may include options to terminate the leases within one year. The Company considers its strategic plan and the life of associated agreements in determining when options to extend or terminate lease terms are reasonably certain of being exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain of the Company’s lease agreements include variable lease payments based on a percentage of income generated through subleases, changes in price indices and market rates, and other costs arising from operating, maintenance, and taxes. The Company’s lease agreements do not contain residual value guarantees or restrictive covenants. The Company leases certain buildings and office space constructed on its ground leases to third parties.

In June 2022, the Company sold the Outlet Collection at Riverwalk, resulting in a reduction in the Company’s operating lease right-of-use assets and obligations as well as future minimum lease payments.

The Company’s leased assets and liabilities are as follows:


thousands	June 30, 2022		December 31, 2021
Assets
Operating lease right-of-use assets, net	$	46,830	$	57,022
Liabilities
Operating lease obligations	50,199		69,363

The components of lease expense are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2022		2021		2022		2021
Operating lease cost	$	1,998	$	2,180	$	4,067	$	4,363
Variable lease costs	269		324		643		440

Net lease cost	$	2,267	$	2,504	$	4,710	$	4,803

Future minimum lease payments as of June 30, 2022, are as follows:


thousands	Operating Leases
Remainder of 2022	$	2,489
2023	4,619
2024	4,585
2025	3,195
2026	2,965
Thereafter	243,600
Total lease payments	261,453
Less: imputed interest	(211,254)
Present value of lease liabilities	$	50,199

Other information related to the Company’s lessee agreements is as follows:


Supplemental Condensed Consolidated Statements of Cash Flows Information	Six Months Ended June 30,
thousands	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows on operating leases	$	3,229	$	3,531


Other Information	June 30, 2022		June 30, 2021
Weighted-average remaining lease term (years)
Operating leases	44.7		37.3
Weighted-average discount rate
Operating leases	7.8	%	7.8	%

Lessor Arrangements The Company receives rental income from the leasing of retail, office, multi-family and other space under operating leases, as well as certain variable tenant recoveries. Such operating leases are with a variety of tenants and have a remaining average term of approximately four years. Lease terms generally vary among tenants and may include early termination options, extension options and fixed rental rate increases or rental rate increases based on an index. The minimum rentals based on operating leases of the consolidated properties held as of June 30, 2022, are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2022		2021		2022		2021
Total minimum rent payments	$	57,164	$	54,658	$	114,593	$	108,000

Total future minimum rents associated with operating leases are as follows as of June 30, 2022:


thousands	Total Minimum Rent
Remainder of 2022	$	109,105
2023	218,788
2024	213,128
2025	191,896
2026	171,623
Thereafter	792,104
Total	$	1,696,644

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assured and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues reported on the Condensed Consolidated Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.