Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. 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. Five of these leases have been classified as operating leases and three 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, 2022, 2021, and 2020 were as follows (in thousands):

	Years Ended December 31,
	2022		2021		2020
Operating lease cost (a)	$	1,969	$	2,448	$	2,626
Finance lease cost:
Amortization of right-of-use assets (a)	1,110		1,022		586
Interest on lease liabilities	2,573		2,251		915

________________________________________

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

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2022, 2021, and 2020 (in thousands):

	Years Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,797	$	2,085	$	2,113
Operating cash flows from finance leases	2,256		1,986		864

Additional information related to leases as of December 31, 2022 and 2021 were as follows:

	December 31,
	2022		2021
Weighted Average Remaining Lease Term (years)
Operating leases	35.8		36.7
Finance leases	42.7		43.7
Weighted Average Discount Rate
Operating leases	5.5	%	5.5	%
Finance leases	5.7	%	5.7	%

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)
2023	$	1,845	$	2,311
2024	1,881		2,326
2025	1,897		2,363
2026	1,882		2,368
2027	1,890		2,391
Thereafter	66,495		124,293
Total undiscounted cash flows	75,890		136,052
Present value discount	(44,213)		(89,575)
Discounted cash flows	$	31,677	$	46,477

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, 2022, 2021, and 2020 comprised the following (in thousands):

	Years Ended December 31,
	2022		2021		2020
Base rent and tenant charges	$	212,046	$	186,137	$	159,747
Accrued straight-line rental adjustment	6,178		4,938		5,927
Lease incentive amortization	(684)		(660)		(693)
Below/(above) market lease amortization	1,754		1,725		1,507
Total rental revenue	$	219,294	$	192,140	$	166,488

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
2023	$	124,838
2024	120,659
2025	110,981
2026	102,996
2027	91,857
Thereafter	541,166
Total	$	1,092,497

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. 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. Five of these leases have been classified as operating leases and three 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, 2022, 2021, and 2020 were as follows (in thousands):

	Years Ended December 31,
	2022		2021		2020
Operating lease cost (a)	$	1,969	$	2,448	$	2,626
Finance lease cost:
Amortization of right-of-use assets (a)	1,110		1,022		586
Interest on lease liabilities	2,573		2,251		915

________________________________________

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

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2022, 2021, and 2020 (in thousands):

	Years Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,797	$	2,085	$	2,113
Operating cash flows from finance leases	2,256		1,986		864

Additional information related to leases as of December 31, 2022 and 2021 were as follows:

	December 31,
	2022		2021
Weighted Average Remaining Lease Term (years)
Operating leases	35.8		36.7
Finance leases	42.7		43.7
Weighted Average Discount Rate
Operating leases	5.5	%	5.5	%
Finance leases	5.7	%	5.7	%

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)
2023	$	1,845	$	2,311
2024	1,881		2,326
2025	1,897		2,363
2026	1,882		2,368
2027	1,890		2,391
Thereafter	66,495		124,293
Total undiscounted cash flows	75,890		136,052
Present value discount	(44,213)		(89,575)
Discounted cash flows	$	31,677	$	46,477

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, 2022, 2021, and 2020 comprised the following (in thousands):

	Years Ended December 31,
	2022		2021		2020
Base rent and tenant charges	$	212,046	$	186,137	$	159,747
Accrued straight-line rental adjustment	6,178		4,938		5,927
Lease incentive amortization	(684)		(660)		(693)
Below/(above) market lease amortization	1,754		1,725		1,507
Total rental revenue	$	219,294	$	192,140	$	166,488

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
2023	$	124,838
2024	120,659
2025	110,981
2026	102,996
2027	91,857
Thereafter	541,166
Total	$	1,092,497

Leases

Leases

Lessee Disclosures

As a lessee, the Company has eight ground leases on seven properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. 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. Five of these leases have been classified as operating leases and three 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, 2022, 2021, and 2020 were as follows (in thousands):

	Years Ended December 31,
	2022		2021		2020
Operating lease cost (a)	$	1,969	$	2,448	$	2,626
Finance lease cost:
Amortization of right-of-use assets (a)	1,110		1,022		586
Interest on lease liabilities	2,573		2,251		915

________________________________________

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

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2022, 2021, and 2020 (in thousands):

	Years Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,797	$	2,085	$	2,113
Operating cash flows from finance leases	2,256		1,986		864

Additional information related to leases as of December 31, 2022 and 2021 were as follows:

	December 31,
	2022		2021
Weighted Average Remaining Lease Term (years)
Operating leases	35.8		36.7
Finance leases	42.7		43.7
Weighted Average Discount Rate
Operating leases	5.5	%	5.5	%
Finance leases	5.7	%	5.7	%

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)
2023	$	1,845	$	2,311
2024	1,881		2,326
2025	1,897		2,363
2026	1,882		2,368
2027	1,890		2,391
Thereafter	66,495		124,293
Total undiscounted cash flows	75,890		136,052
Present value discount	(44,213)		(89,575)
Discounted cash flows	$	31,677	$	46,477

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, 2022, 2021, and 2020 comprised the following (in thousands):

	Years Ended December 31,
	2022		2021		2020
Base rent and tenant charges	$	212,046	$	186,137	$	159,747
Accrued straight-line rental adjustment	6,178		4,938		5,927
Lease incentive amortization	(684)		(660)		(693)
Below/(above) market lease amortization	1,754		1,725		1,507
Total rental revenue	$	219,294	$	192,140	$	166,488

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
2023	$	124,838
2024	120,659
2025	110,981
2026	102,996
2027	91,857
Thereafter	541,166
Total	$	1,092,497