Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties with initial terms that ranged from 5 to 61 years and options to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Six of these leases have been classified as operating leases and two of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2020, 2019, and 2018 were as follows (in thousands):

	Years Ended December 31,
	2020		2019		2018 (b)
Operating lease cost	$	1,660	$	2,700	$	2,962
Finance lease cost:
Amortization of right-of-use assets (a)	586		369		—
Interest on lease liabilities	915		568		—

________________________________________

(a) Includes amortization of below-market ground lease intangible assets.

(b) All of the Company's leases were classified as operating leases prior to 2019.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in thousands):

	Years Ended December 31,
	2020		2019		2018 (a)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,113	$	1,969	$	2,354
Operating cash flows from finance leases	864		533		—

________________________________________

(a) All of the Company's leases were classified as operating leases prior to 2019.

Additional information related to leases as of December 31, 2020 and 2019 were as follows:

	December 31,
	2020		2019
Weighted Average Remaining Lease Term (years)
Operating leases	44.5		45.4
Finance leases	40.2		41.2
Weighted Average Discount Rate
Operating leases	5.4	%	5.4	%
Finance leases	5.2	%	5.2	%

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.

Year Ending December 31,	Operating Leases		Finance Leases
	(in thousands)
2021	$	2,158	$	864
2022	2,361		868
2023	2,400		873
2024	2,436		888
2025	2,452		925
Thereafter	101,072		42,089
Total undiscounted cash flows	112,879		46,507
Present value discount	(71,220)		(28,553)
Discounted cash flows	$	41,659	$	17,954

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

Rental revenue for the years ended December 31, 2020, 2019, and 2018 comprised the following (in thousands):

	Years Ended December 31,
	2020		2019		2018
Base rent and tenant charges	$	159,747	$	147,309	$	114,012
Accrued straight-line rental adjustment	5,927		3,402		2,731
Lease incentive amortization	(693)		(739)		(732)
Below/(above) market lease amortization	1,507		1,367		947
Total rental revenue	$	166,488	$	151,339	$	116,958

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):

Year Ending December 31,	Operating Leases
2021	$	90,693
2022	88,270
2023	81,767
2024	73,029
2025	60,588
Thereafter	307,377
Total	$	701,724

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties with initial terms that ranged from 5 to 61 years and options to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Six of these leases have been classified as operating leases and two of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2020, 2019, and 2018 were as follows (in thousands):

	Years Ended December 31,
	2020		2019		2018 (b)
Operating lease cost	$	1,660	$	2,700	$	2,962
Finance lease cost:
Amortization of right-of-use assets (a)	586		369		—
Interest on lease liabilities	915		568		—

________________________________________

(a) Includes amortization of below-market ground lease intangible assets.

(b) All of the Company's leases were classified as operating leases prior to 2019.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in thousands):

	Years Ended December 31,
	2020		2019		2018 (a)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,113	$	1,969	$	2,354
Operating cash flows from finance leases	864		533		—

________________________________________

(a) All of the Company's leases were classified as operating leases prior to 2019.

Additional information related to leases as of December 31, 2020 and 2019 were as follows:

	December 31,
	2020		2019
Weighted Average Remaining Lease Term (years)
Operating leases	44.5		45.4
Finance leases	40.2		41.2
Weighted Average Discount Rate
Operating leases	5.4	%	5.4	%
Finance leases	5.2	%	5.2	%

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.

Year Ending December 31,	Operating Leases		Finance Leases
	(in thousands)
2021	$	2,158	$	864
2022	2,361		868
2023	2,400		873
2024	2,436		888
2025	2,452		925
Thereafter	101,072		42,089
Total undiscounted cash flows	112,879		46,507
Present value discount	(71,220)		(28,553)
Discounted cash flows	$	41,659	$	17,954

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

Rental revenue for the years ended December 31, 2020, 2019, and 2018 comprised the following (in thousands):

	Years Ended December 31,
	2020		2019		2018
Base rent and tenant charges	$	159,747	$	147,309	$	114,012
Accrued straight-line rental adjustment	5,927		3,402		2,731
Lease incentive amortization	(693)		(739)		(732)
Below/(above) market lease amortization	1,507		1,367		947
Total rental revenue	$	166,488	$	151,339	$	116,958

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):

Year Ending December 31,	Operating Leases
2021	$	90,693
2022	88,270
2023	81,767
2024	73,029
2025	60,588
Thereafter	307,377
Total	$	701,724

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties with initial terms that ranged from 5 to 61 years and options to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Six of these leases have been classified as operating leases and two of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2020, 2019, and 2018 were as follows (in thousands):

	Years Ended December 31,
	2020		2019		2018 (b)
Operating lease cost	$	1,660	$	2,700	$	2,962
Finance lease cost:
Amortization of right-of-use assets (a)	586		369		—
Interest on lease liabilities	915		568		—

________________________________________

(a) Includes amortization of below-market ground lease intangible assets.

(b) All of the Company's leases were classified as operating leases prior to 2019.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in thousands):

	Years Ended December 31,
	2020		2019		2018 (a)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,113	$	1,969	$	2,354
Operating cash flows from finance leases	864		533		—

________________________________________

(a) All of the Company's leases were classified as operating leases prior to 2019.

Additional information related to leases as of December 31, 2020 and 2019 were as follows:

	December 31,
	2020		2019
Weighted Average Remaining Lease Term (years)
Operating leases	44.5		45.4
Finance leases	40.2		41.2
Weighted Average Discount Rate
Operating leases	5.4	%	5.4	%
Finance leases	5.2	%	5.2	%

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.

Year Ending December 31,	Operating Leases		Finance Leases
	(in thousands)
2021	$	2,158	$	864
2022	2,361		868
2023	2,400		873
2024	2,436		888
2025	2,452		925
Thereafter	101,072		42,089
Total undiscounted cash flows	112,879		46,507
Present value discount	(71,220)		(28,553)
Discounted cash flows	$	41,659	$	17,954

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

Rental revenue for the years ended December 31, 2020, 2019, and 2018 comprised the following (in thousands):

	Years Ended December 31,
	2020		2019		2018
Base rent and tenant charges	$	159,747	$	147,309	$	114,012
Accrued straight-line rental adjustment	5,927		3,402		2,731
Lease incentive amortization	(693)		(739)		(732)
Below/(above) market lease amortization	1,507		1,367		947
Total rental revenue	$	166,488	$	151,339	$	116,958

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):

Year Ending December 31,	Operating Leases
2021	$	90,693
2022	88,270
2023	81,767
2024	73,029
2025	60,588
Thereafter	307,377
Total	$	701,724