LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

6. LEASES

Lessor Accounting

The Company leases properties to tenants under operating leases with various expiration dates. Future contractual lease payments under operating leases at December 31, 2023 are as follows (in thousands):

Year
2024	$	348,890
2025	344,575
2026	329,584
2027	294,997
2028	262,816
Thereafter	944,863

Lessee Accounting

As of December 31, 2023, the Company is the lessee under six long-term ground leases classified as “operating leases” in the consolidated balance sheets. Certain of the Company’s ground leases contain extension options and the Company considered all relevant factors in determining if it was reasonably certain that it would exercise such extension options. The Company concluded that it was not reasonably certain that it would exercise the extension options and, therefore, has not included the extension period in the remaining lease terms. With the exception of certain ground leases that are subject to rent increases periodically based on the CPI index, all lease payments under the ground lease are fixed.

The table below summarizes the Company’s operating lease cost (in thousands) recognized through “Property operating expenses” on the consolidated statements of operations (in thousands):

	Year Ended December 31,
Lease Cost	2023			2022
Fixed lease cost	$	2,100		$	2,100
Variable lease cost	57			67
Total	$	2,157		$	2,167
Weighted-average remaining lease term (years)	54.0			54.6
Weighted-average discount rate	6.3		%	6.3		%

Lease payments by the Company under the terms of all noncancellable ground leases of land are expensed on a straight-line basis regardless of when payments are due. The Company’s ground leases, excluding prepaid ground leases, have remaining lease terms ranging from 6 to 61 years. Lease payments on noncancellable leases at December 31, 2023 are as follows (in thousands):

Year	Minimum Rent
2024	$	1,305
2025	1,321
2026	1,338
2027	1,355
2028	1,373
Thereafter	105,065
Total lease payments	$	111,757
Less: Imputed interest	88,388
Present value of operating lease liabilities	$	23,369

The Company obtained ground tenancy rights related to three properties in Philadelphia, Pennsylvania, which provide for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the properties after certain returns are achieved by the Company. Such amounts, if any, will be reflected as contingent rent when incurred. The ground leases also provide for payment by the Company of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments does not include any contingent rent amounts or any reimbursed expenses.

LEASES

6. LEASES

Lessor Accounting

The Company leases properties to tenants under operating leases with various expiration dates. Future contractual lease payments under operating leases at December 31, 2023 are as follows (in thousands):

Year
2024	$	348,890
2025	344,575
2026	329,584
2027	294,997
2028	262,816
Thereafter	944,863

Lessee Accounting

As of December 31, 2023, the Company is the lessee under six long-term ground leases classified as “operating leases” in the consolidated balance sheets. Certain of the Company’s ground leases contain extension options and the Company considered all relevant factors in determining if it was reasonably certain that it would exercise such extension options. The Company concluded that it was not reasonably certain that it would exercise the extension options and, therefore, has not included the extension period in the remaining lease terms. With the exception of certain ground leases that are subject to rent increases periodically based on the CPI index, all lease payments under the ground lease are fixed.

The table below summarizes the Company’s operating lease cost (in thousands) recognized through “Property operating expenses” on the consolidated statements of operations (in thousands):

	Year Ended December 31,
Lease Cost	2023			2022
Fixed lease cost	$	2,100		$	2,100
Variable lease cost	57			67
Total	$	2,157		$	2,167
Weighted-average remaining lease term (years)	54.0			54.6
Weighted-average discount rate	6.3		%	6.3		%

Lease payments by the Company under the terms of all noncancellable ground leases of land are expensed on a straight-line basis regardless of when payments are due. The Company’s ground leases, excluding prepaid ground leases, have remaining lease terms ranging from 6 to 61 years. Lease payments on noncancellable leases at December 31, 2023 are as follows (in thousands):

Year	Minimum Rent
2024	$	1,305
2025	1,321
2026	1,338
2027	1,355
2028	1,373
Thereafter	105,065
Total lease payments	$	111,757
Less: Imputed interest	88,388
Present value of operating lease liabilities	$	23,369

The Company obtained ground tenancy rights related to three properties in Philadelphia, Pennsylvania, which provide for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the properties after certain returns are achieved by the Company. Such amounts, if any, will be reflected as contingent rent when incurred. The ground leases also provide for payment by the Company of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments does not include any contingent rent amounts or any reimbursed expenses.