7. Leases

Lessor Accounting

The Company's Lease income is comprised of both fixed and variable income, as follows:

Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance. Income for these amounts is recognized on a straight line basis.

Variable lease income includes the following two main items in the lease contracts:

Recoveries from tenants represents amounts which tenants are contractually obligated to reimburse the Company for the tenants’ portion of actual Recoverable Costs incurred. Generally the Company’s leases provide for the tenants to reimburse the Company based on the tenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.

Percentage rent represents amounts billable to tenants based on the tenants' actual sales volume in excess of levels specified in the lease contract.

The following table provides a disaggregation of lease income recognized during the three months ended March 31, 2019, under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC 842:



		Three months ended March 31,
		2019
Operating lease income
Fixed and in-substance fixed lease income	$	201,878
Variable lease income		62,835
Other lease related income, net
Above/below market rent amortization		13,454
Uncollectible amounts in lease income		(864	)
Total lease income	$	277,303

Future minimum rents under non-cancelable operating leases as of March 31, 2019 and December 31, 2018, excluding variable lease payments, are as follows:



		Future Minimum Rents as of (in thousands)
Year Ending December 31,		March 31, 2019			December 31, 2018
2019	$	578,963	⁽¹	⁾	761,151
2020		713,553			693,848
2021		629,638			608,587
2022		537,753			516,369
2023		437,109			414,424
Thereafter		1,778,839			1,691,203
Total	$	4,675,855			4,685,582
⁽¹⁾ The future minimum rental income for 2019 as of March 31, 2019 includes amounts due between April 1, 2019 and December 31, 2019.

Lessee Accounting

The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party owns the underlying land and has leased the land to the Company to construct and/or operate a shopping center.

The Company has 22 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. These ground leases expire through the year 2101, and in most cases, provide for renewal options. Buildings and improvements constructed on the leased land are capitalized as Real estate assets in the accompanying Consolidated Balance Sheets and depreciated over the shorter of the useful life of the improvements or the lease term.

In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business. Office leases expire through the year 2029, and in most cases, provide for renewal options. Leasehold improvements are capitalized as tenant improvements, included in Other assets in the Consolidated Balance Sheets, and depreciated over the shorter of the useful life of the improvements or the lease term.

The ground and office lease expense continues to be recognized on a straight line basis over the term of the leases, including management's estimate of expected option renewal periods. Operating lease expense under the Company's ground and office leases was as follows, including straight lined rent expense and variable lease expenses such as CPI increases, performance based rent and reimbursements of landlord costs:



		Three months ended March 31,
		2019
Operating lease expense
Ground leases	$	3,673
Office leases		1,042
Total fixed operating lease expense	$	4,715
Variable lease expense
Ground leases	$	428
Office leases		143
Total variable lease expense	$	571
Total Lease Expense	$	5,286
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases	$	3,692

Operating lease expense under the Company's ground and office leases was $5.3 million and $4.2 million during the three months ended March 31, 2019 and 2018, respectively, which includes fixed and variable rent expense.

The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities under ground and office leases as of March 31, 2019, and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets:



		Lease liabilities (in thousands)
Year Ending December 31,		Ground Leases		Office Leases		Total
2019 ⁽¹⁾	$	8,004		3,807		11,811
2020		10,706		4,976		15,682
2021		10,674		3,863		14,537
2022		10,698		2,893		13,591
2023		10,914		2,188		13,102
Thereafter		598,327		5,955		604,282
Total undiscounted lease liabilities	$	649,323		23,682		673,005
Present value discount		(445,324	)	(2,559	)	(447,883	)
Lease liabilities		203,999		21,123		225,122
Weighted average discount rate		5.2	%	4.0	%
Weighted average remaining term		49.9 years		5.9 years

⁽¹⁾ The undiscounted lease liability maturities shown for 2019 are as of March 31, 2019, and includes amounts due between April 1, 2019 and December 31, 2019.

The following table summarizes the future obligations under non-cancelable operating leases, excluding unexercised renewal options, as of December 31, 2018:



		Future Lease Obligations (in thousands)
Year Ending December 31,		Ground Leases	Office Leases	Total Future Lease Obligations
2019	$	10,672	4,405	15,077
2020		10,439	4,294	14,733
2021		10,344	3,549	13,893
2022		10,258	2,893	13,151
2023		10,369	2,189	12,558
Thereafter		461,762	5,944	467,706
Total	$	513,844	23,274	537,118