Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

As of December 31, 2023, 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.

Employment Agreements

We have entered into employment agreements with certain executives, which expire between January 2025 and January 2026. The minimum cash-based compensation associated with these employment agreements, which is comprised only of base salary, totals $2.4 million for 2024.

Insurance

We maintain “all-risk” property and rental value coverage (including coverage regarding the perils of flood, earthquake and terrorism, excluding nuclear, biological, chemical, and radiological terrorism ("NBCR"), within two property insurance programs and liability insurance. Separate property and liability coverage may be purchased on a stand-alone basis for certain assets, such as development projects. Additionally, one of our captive insurance companies, Belmont Insurance Company, or Belmont, provides coverage for NBCR terrorist acts above a specified trigger. Belmont's retention is reinsured by our other captive insurance company, Ticonderoga Insurance Company ("Ticonderoga"). If Belmont or Ticonderoga are required to pay a claim under our insurance policies, we would ultimately record the loss to the extent of required payments. However, there is no assurance that in the future we will be able to procure coverage at a reasonable cost. Further, if we experience losses that are uninsured or that exceed policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. Additionally, our debt instruments contain customary covenants requiring us to maintain insurance and we could default under our debt instruments if the cost and/or availability of certain types of insurance make it impractical or impossible to comply with such covenants relating to insurance. Belmont and Ticonderoga provide coverage solely on properties owned by the Company or its affiliates.

Furthermore, with respect to certain of our properties, including properties held by joint ventures or subject to triple net leases, insurance coverage is obtained by a third-party and we do not control the coverage. While we may have agreements with such third parties to maintain adequate coverage and we monitor these policies, such coverage ultimately may not be maintained or adequately cover our risk of loss.

Belmont had loss reserves of $3.3 million and $3.1 million as of December 31, 2023 and 2022, respectively. Ticonderoga had no loss reserves as of December 31, 2023 and 2022.

Lease Arrangements

We are a tenant under leases for certain properties, including ground leases. These leases have expirations from 2033 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 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. Additionally, certain of our leases are subject to percentage rent arrangements based on thresholds established in the lease agreement, such as percentage of sales at the property. Percentage rents will be recognized in the periods in which they are incurred.

The table below summarizes our current lease arrangements as of December 31, 2023:


Property (1)	Year of Current Expiration	Year of Final Expiration (2)
711 Third Avenue (3)	2033	2083
1185 Avenue of the Americas	2043	2043
SL Green Headquarters at One Vanderbilt Avenue (4)	2043	2048
420 Lexington Avenue	2050	2080
SUMMIT One Vanderbilt	2058	2070
15 Beekman (5)(6)	2119	2119

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

(2)Reflects exercise of all available extension options.

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

(4)In March 2021, the Company commenced its lease for its corporate headquarters at One Vanderbilt Avenue. See note 10, "Related Party Transactions."

(5)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.

(6)In August 2020, the Company entered into a long-term sublease with an unconsolidated joint venture as part of the capitalization of the 15 Beekman 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 December 31, 2023 (in thousands):


	Financing leases		Operating leases
2024	$	3,180	$	53,455
2025	3,228		53,595
2026	3,276		53,734
2027	3,325		53,746
2028	3,375		54,211
Thereafter	196,794		1,208,864
Total minimum lease payments	$	213,178	$	1,477,605
Amount representing interest	(107,647)		—
Amount discounted using incremental borrowing rate	—		(649,913)
Total lease liabilities excluding liabilities related to assets held for sale	$	105,531	$	827,692

Total lease liabilities	$	105,531	$	827,692

The following table provides lease cost information for the Company's operating leases for the years ended December 31, 2023, 2022 and 2021 (in thousands):


	Year Ended December 31,
Operating Lease Costs	2023		2022		2021
Operating lease costs before capitalized operating lease costs	$	29,637	$	33,773	$	30,270
Operating lease costs capitalized	(2,345)		(6,830)		(3,716)
Operating lease costs, net (1)	$	27,292	$	26,943	$	26,554

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

The following table provides lease cost information for the Company's financing leases for the years ended December 31, 2023, 2022 and 2021 (in thousands):


	Year Ended December 31,
Financing Lease Costs	2023		2022		2021
Interest on financing leases before capitalized interest	$	4,446	$	4,555	$	5,448
Interest on financing leases capitalized	—		—		—
Interest on financing leases, net (1)	4,446		4,555		5,448
Amortization of right-of-use assets (2)	—		—		660


Financing lease costs, net	$	4,446	$	4,555	$	6,108

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

(2)These amounts are included in Depreciation and amortization in our consolidated statements of operations.

As of December 31, 2023, the weighted-average discount rate used to calculate the lease liabilities was 4.46%. As of December 31, 2023, the weighted-average remaining lease term was 28 years, inclusive of purchase options expected to be exercised.