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Leases
6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Leases

Note 5 – Leases

Lessor Disclosures

Future minimum rental receipts, excluding variable payments and tenant reimbursements of expenses, under non-cancelable operating leases executed as of June 30, 2023 are approximately as follows:

 

(in thousands)

 

June 30, 2023

 

Remainder of 2023

 

$

12,720

 

2024

 

 

26,593

 

2025

 

 

26,793

 

2026

 

 

24,538

 

2027

 

 

23,116

 

2028

 

 

20,077

 

Thereafter

 

 

61,717

 

Total

 

$

195,554

 

The components of lease revenues for the three and six months ended June 30, 2023 and 2022 were as follows:

 

(in thousands)

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Fixed rental income

 

$

7,902

 

 

$

21,341

 

 

$

20,056

 

 

$

45,119

 

Variable rental income

 

 

1,404

 

 

 

4,482

 

 

 

508

 

 

 

9,083

 

Total rental income

 

$

9,306

 

 

$

25,823

 

 

$

20,564

 

 

$

54,202

 

 

Lessee Disclosures

The Company has one ground lease and one corporate office lease which are classified as operating leases. As of June 30, 2023, and December 31, 2022, the outstanding amount of right-of-use, or ROU, assets were $14.9 million and $16.2 million, respectively, which is included in prepaid expenses, deferred expenses and other assets, net on the condensed consolidated balance sheets. During the three months ended June 30, 2023, the Company entered into a sublease agreement to sublease a portion of its corporate office. As a result, this triggered the need for an ROU impairment assessment and the Company determined that the ROU asset was impaired. The Company recorded impairment of $0.8 million which is included in impairment of real estate assets on the condensed consolidated statements of operations.

The Company recorded rent expense related to leased corporate office space of $0.3 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively and $0.5 million for the six months ended June 30, 2023 and 2022, respectively. Such rent expense is classified within general and administrative expenses in the condensed consolidated statements of operations.

In addition, the Company recorded ground rent expense of approximately $0.1 million for the three and six months ended June 30, 2023 and 2022. Such ground rent expense is classified within property operating expenses in the condensed consolidated statements of operations. The ground lease requires the Company to make fixed annual rental payments and expires in 2073 assuming all extension options are exercised.

The Company expects to make cash payments on operating leases of $0.6 million for the remainder of 2023, $1.2 million in 2024, $1.2 million in 2025, $1.2 million in 2026, $1.2 million in 2027 and $2.9 million for the periods thereafter. The present value discount is ($3.5) million.

The following table sets forth information related to the measurement of our lease liabilities as of June 30, 2023:

 

 

June 30, 2023

 

Weighted average remaining lease term (in years)

 

 

11.0

 

Weighted average discount rate

 

 

6.75

%

Cash paid for operating leases (in thousands)

 

$

1,161