Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

As Lessor

We lease space to tenants under operating leases in an office building and in retail centers.  The rental terms range from approximately 5 to 25 years.  The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs.  Retail leases may also provide for the payment by the lessee of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1 or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements of income.

Future undiscounted cash flows under our non-cancelable operating leases are as follows:

	Under ASC 842
(Amounts in thousands)	As of June 30, 2019
For the remainder of 2019	$	69,688
For the year ending December 31,
2020	135,749
2021	126,736
2022	119,393
2023	120,756
2024	128,928
Thereafter	586,226

 

	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	138,784
2020	131,647
2021	120,450
2022	111,532
2023	111,962
Thereafter	671,111

These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.

12. Leases - continued

As Lessee

We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has one 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground lease equal to the present value of the remaining minimum lease payments. As of June 30, 2019, the right-of-use asset of $4,796,000 and the lease liability of $5,139,000, are included in “other assets” and “other liabilities,” respectively, on our consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.20%. We initially consider the general economic environment and factor in various financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our lease liability recorded under ASC 842.

Future lease payments under this operating lease, excluding the extension option, are as follows:

	Under ASC 842
(Amounts in thousands)	As of June 30, 2019
For the remainder of 2019	$	400
For the year ending December 31,
2020	800
2021	800
2022	800
2023	800
2024	800
Thereafter	1,600
Total undiscounted cash flows	6,000
Present value discount	(861		)
Lease liability as of June 30, 2019	$	5,139

	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	800
2020	800
2021	800
2022	800
2023	800
Thereafter	2,467

We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis. Rent expense was $187,000 and $373,000 in each three and six month period ended June 30, 2019 and 2018, respectively. Cash paid for rent expense was $200,000 and $400,000 in each three and six month period ended June 30, 2019 and 2018, respectively.

Leases

Leases

As Lessor

We lease space to tenants under operating leases in an office building and in retail centers.  The rental terms range from approximately 5 to 25 years.  The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs.  Retail leases may also provide for the payment by the lessee of additional rents based on a percentage of their sales. We also lease residential space at The Alexander apartment tower with 1 or 2 year lease terms. We have elected to account for lease revenues (including fixed and variable rent) and the reimbursement of common area maintenance expenses as a single lease component presented as “rental revenues” in our consolidated statements of income.

Future undiscounted cash flows under our non-cancelable operating leases are as follows:

	Under ASC 842
(Amounts in thousands)	As of June 30, 2019
For the remainder of 2019	$	69,688
For the year ending December 31,
2020	135,749
2021	126,736
2022	119,393
2023	120,756
2024	128,928
Thereafter	586,226

 

	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	138,784
2020	131,647
2021	120,450
2022	111,532
2023	111,962
Thereafter	671,111

These amounts do not include reimbursements or additional rents based on a percentage of retail tenants’ sales.

12. Leases - continued

As Lessee

We are the lessee under a ground lease at our Flushing property, classified as an operating lease, which expires in 2027 and has one 10-year extension option. On January 1, 2019, we recorded a right-of-use asset and lease liability related to this ground lease equal to the present value of the remaining minimum lease payments. As of June 30, 2019, the right-of-use asset of $4,796,000 and the lease liability of $5,139,000, are included in “other assets” and “other liabilities,” respectively, on our consolidated balance sheet. The discount rate applied to measure the right-of-use asset and lease liability is based on the incremental borrowing rate (“IBR”) for the property of 4.20%. We initially consider the general economic environment and factor in various financing and asset specific adjustments so that the IBR is appropriate to the intended use of the underlying lease. As we did not elect to apply hindsight, the lease term assumption determined under ASC 840 was carried forward and applied in calculating our lease liability recorded under ASC 842.

Future lease payments under this operating lease, excluding the extension option, are as follows:

	Under ASC 842
(Amounts in thousands)	As of June 30, 2019
For the remainder of 2019	$	400
For the year ending December 31,
2020	800
2021	800
2022	800
2023	800
2024	800
Thereafter	1,600
Total undiscounted cash flows	6,000
Present value discount	(861		)
Lease liability as of June 30, 2019	$	5,139

	Under ASC 840
(Amounts in thousands)	As of December 31, 2018
For the year ending December 31,
2019	$	800
2020	800
2021	800
2022	800
2023	800
Thereafter	2,467

We recognize rent expense as a component of “operating” expenses on our consolidated statements of income on a straight-line basis. Rent expense was $187,000 and $373,000 in each three and six month period ended June 30, 2019 and 2018, respectively. Cash paid for rent expense was $200,000 and $400,000 in each three and six month period ended June 30, 2019 and 2018, respectively.