Leases

12 Months Ended

Dec. 31, 2023

11. Leases

As Lessor

The Company has approximately 1,000 leases in the leasing of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, leased under long-term ground leases (see below) that expire at various dates through December 31, 2121, with renewal options. Certain leases may allow for the tenants to terminate the leases before the expiration of the lease term. Space in the properties is leased to tenants pursuant to agreements that generally provide for terms ranging from one month to sixty years and for additional rents based on certain operating expenses as well as tenants’ sales volumes.

The components of rental revenue are as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Fixed lease revenue	$	269,648	$	258,472	$	227,608
Variable lease revenue		63,396		59,342		58,290
Total rental revenue	$	333,044	$	317,814	$	285,898

The scheduled future minimum rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) as of December 31, 2023, are summarized as follows (in thousands):



	Minimum Rental Revenues (a)
2024	$	249,135
2025		233,786
2026		208,935
2027		184,039
2028		153,941
Thereafter		668,128
		1,697,964
Interest		—
Total	$	1,697,964

(a)

Amount represents contractual lease maturities at December 31, 2023, including any extension options that management determined were reasonably certain of exercise, and excluding any amounts related to reimbursements of operating expenses.

During the years ended December 31, 2023, 2022 and 2021, no single tenant or property collectively comprised more than 10% of the Company’s Total revenues.

During the year ended December 31, 2023, Fund II received $2.0 million, or $1.1 million at the Company’s share, of proceeds from the Century 21 Department Stores LLC bankruptcy claim. The proceeds are recorded in Rental revenue on the Consolidated Statements of Operations.

As Lessee

The Company has properties in its portfolio that are currently owned by third parties. We also lease real estate for equipment and office space. We lease these properties pursuant to ground leases that provide us the right to operate each such property, and generally provide form terms ranging from eight months to 98 years.

The scheduled future minimum rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land, and equipment, as of December 31, 2023, are summarized as follows (in thousands):


	Minimum Rental Payments
	Operating Leases (a)			Finance Leases (a)
2024	$	5,414		$	3,925
2025		5,329			1,780
2026		5,173			1,264
2027		4,373			1,264
2028		4,157			1,310
Thereafter		15,911			154,018
		40,357			163,561
Interest		(8,777	)		(130,822	)
Total	$	31,580		$	32,739

(a)

Minimum rental payments include $8.8 million of interest related to operating leases and $130.8 million related to finance leases and exclude options or renewals not reasonably certain of exercise.

Additional disclosures regarding the Company’s leases as lessee are as follows (dollars in thousands):


	Year Ended December 31,
	2023			2022			2021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	1,244		$	903		$	903
Interest on lease liabilities		1,239			410			388
Subtotal		2,483			1,313			1,291
Operating lease cost		5,291			5,338			7,184
Variable lease cost		228			80			84
Total lease cost	$	8,002		$	6,731		$	8,559

Cash Paid
Payments of operating lease obligations - operating activities	$	5,386		$	5,364		$	7,223
Payments of interest on finance lease obligations - operating activities		1,239			410			388
Payments of finance lease obligations - financing activities		100			—			63

	As of December 31,
	2023			2022
Other Information
Weighted-average remaining lease term - finance leases (years)		58.3			31.9
Weighted-average remaining lease term - operating leases (years)		9.7			13.5
Weighted-average discount rate - finance leases		6.5	%		6.3	%
Weighted-average discount rate - operating leases		5.1	%		5.1	%

During the year ended December 31, 2023, the Company:

•

modified its master lease at 565 Broadway within the Core Portfolio and extended the lease term for 43 years until December 31, 2121, for an additional payment of $4.0 million to be paid over the lease term. As a result, the transaction was accounted for as a lease modification which resulted in a change in lease classification per ASC 842 from Right-of-use-asset – operating lease to a right-of-use-asset – finance lease. The Company recorded an additional right-of-use asset – finance lease and corresponding lease liability-finance lease of $3.8 million.

•

acquired four ground leases as part of the Fund V acquisition of Cypress Creek in July 2023 (Note 2), and recorded a right-of-use-asset – finance lease of $25.3 million and a lease liability – finance lease of $22.1 million as the present value of the sum of the lease payments exceeded substantially all of the fair value of the underlying assets.

During the year ended December 31, 2022, there were no new leases entered or modified where the Company acted as lessee.