Leases

12 Months Ended

Dec. 31, 2023


16. Leases

The Company has lease agreements with lease and non-lease components and has elected to aggregate these components into a single component for all classes of underlying assets. Certain of the Company’s lease agreements include non-lease components such as fixed common area maintenance charges.

Lessee Arrangements The Company determines whether an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets and Operating lease obligations on the 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.

The Company’s lessee agreements consist of operating leases primarily for ground leases and other real estate. The Company’s leases have remaining lease terms of less than 2 years to approximately 50 years, excluding extension options. 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. The Company’s operating leases primarily relate to the Seaport ground leases.

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


thousands	2023		2022
Operating lease right-of-use assets	$	44,897	$	46,926
Operating lease obligations	$	51,584	$	51,321

The components of lease cost for the years ended December 31 are as follows:


thousands	2023		2022
Operating lease cost	$	6,829	$	7,449
Variable lease cost	975		904

Total lease cost	$	7,804	$	8,353

Future minimum lease payments as of December 31, 2023, are as follows:


thousands	Operating Leases
2024	$	5,057
2025	3,668
2026	3,368
2027	3,360
2028	3,424
Thereafter	240,646
Total lease payments	259,523
Less: imputed interest	(207,939)
Present value of lease liabilities	$	51,584

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


Supplemental Consolidated Statements of Cash Flows Information	Year ended December 31,
thousands	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows on operating leases	$	4,634	$	5,718


Other Information	2023		2022
Weighted-average remaining lease term (years)
Operating leases	44.1		43.8
Weighted-average discount rate
Operating leases	7.8	%	7.7	%

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. Minimum rent revenues related to operating leases are as follows:


	Year ended December 31,
thousands	2023		2022
Total minimum rent payments	$	236,350	$	229,302

Total future minimum rents associated with operating leases are as follows:


thousands	Total Minimum Rent
2024	$	254,076
2025	245,775
2026	227,398
2027	214,671
2028	191,548
Thereafter	822,354
Total	$	1,955,822

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 Consolidated Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.