Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

As of September 30, 2020, the Company and the Operating Partnership were not involved in any material litigation nor, to management's knowledge, was any material litigation threatened against us or our portfolio which if adversely determined could have a material adverse impact on us.

Environmental Matters

Our management believes that the properties are in compliance in all material respects with applicable Federal, state and local ordinances and regulations regarding environmental issues. Management is not aware of any environmental liability that it believes would have a materially adverse impact on our financial position, results of operations or cash flows. Management is unaware of any instances in which it would incur significant environmental cost if any of our properties were sold.

Ground Lease Arrangements

We are a tenant under ground leases for certain properties. These leases have expirations from 2022 to 2119, or 2043 to 2119 as fully extended. Certain leases offer extension options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and right of use asset.

Certain of our ground leases are subject to rent resets, generally based on a percentage of the then fair market value, a fixed amount, or a percentage of the preceding rent at specified future dates. Rent resets will be recognized in the periods in which they are incurred.

The table below summarizes our current ground lease arrangements as of September 30, 2020:


Property (1)	Year of Current Expiration	Year of Final Expiration (2)
1185 Avenue of the Americas	2043	2043
625 Madison Avenue	2022	2054
420 Lexington Avenue	2050	2080
711 Third Avenue (3)	2033	2083
461 Fifth Avenue (4)	2027	2084
1055 Washington Blvd, Stamford, Connecticut	2090	2090
1080 Amsterdam Avenue (5)	2111	2111
30 East 40th Street (5)	2114	2114
126 Nassau Street (4)(6)	2119	2119
Other	Various	Various

(1)All leases are classified as operating leases unless otherwise specified.

(2)Reflects exercise of all available renewal options.

(3)The Company owns 50% of the fee interest.

(4)The Company has an option to purchase the ground lease for a fixed price on a specific date. The lease is classified as a financing lease.

(5)A portion of the lease is classified as a financing lease.

(6)In August 2020, the Company entered into a long-term sublease with an unconsolidated joint venture as part of the capitalization of the 126 Nassau Street development project. See Note 6, "Investments in Unconsolidated Joint Ventures."

The following is a schedule of future minimum lease payments as evaluated in accordance with ASC 842 for our financing leases and operating leases with initial terms in excess of one year as of September 30, 2020 (in thousands):


	Financing leases		Operating leases (1)
Remaining 2020	$	1,974	$	7,363
2021	34,885		29,452
2022	5,881		27,148
2023	5,927		24,844
2024	5,999		24,863
2025	6,266		24,962
Thereafter	1,018,013		618,326
Total minimum lease payments	$	1,078,945	$	756,958
Amount representing interest	(903,962)
Amount discounted using incremental borrowing rate			(398,539)

Lease liabilities	$	174,983	$	358,419

(1)As of September 30, 2020, the total future minimum payments to be received under non-cancelable subleases is $1.7 billion.

The following table provides lease cost information for the Company's operating and financing leases for the three and nine months ended September 30, 2020 and 2019 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating Lease Costs
Operating lease costs before capitalized operating lease costs	$	7,751	$	8,315	$	24,486	$	24,918
Operating lease costs capitalized	(778)		(20)		(2,315)		(27)
Operating lease costs, net (1)	6,973		8,295		22,171		24,891

Financing Lease Costs
Interest on financing leases before capitalized interest	2,198		813		6,010		2,425
Interest on financing leases capitalized	(588)		—		(2,378)		—
Interest on financing leases, net (2)	1,610		813		3,632		2,425
Amortization of right-of-use assets (3)	304		304		914		914


Financing lease costs, net	1,914		1,117		4,546		3,339

(1)This amount is included in operating lease rent in our consolidated statements of operations.

(2)These amounts are included in interest expense, net of interest income in our consolidated statements of operations.

(3)These amounts are included in depreciation and amortization in our consolidated statements of operations.

As of September 30, 2020, the weighted-average discount rate used to calculate the lease liabilities was 7.98%. As of September 30, 2020, the weighted-average remaining lease term was 32 years, inclusive of purchase options expected to be exercised