Note 3 - Leases

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Lessee and Lessor, Operating Leases [Text Block]

3.  LEASES 

As a Lessor. All leases on our properties are classified as noncancelable operating leases, and the related rental income is recognized on a straight-line basis over the terms of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are capitalized or charged, as applicable, to accrued rents and accounts receivable. Percentage rents are recognized as rental income when the thresholds upon which they are based have been met.  Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenues in the period the corresponding costs are incurred. We combine lease and nonlease components in lease contracts, which includes combining base rent, recoveries, and percentage rents into a single line item, Rental, within the consolidated statements of operations and comprehensive income (loss).

A summary of minimum future rents to be received (exclusive of renewals, tenant reimbursements, contingent rents, and collectability adjustments under Topic 842) under noncancelable operating leases in existence as of September 30, 2024 is as follows (in thousands):

Years Ended December 31,	Minimum Future Rents
2024 (remaining)	$	25,841
2025		97,335
2026		82,891
2027		69,491
2028		55,006
Thereafter		155,061
Total	$	485,625

As a Lessee. We have office space, automobile, and office machine leases, which qualify as operating leases, with remaining lease terms of one to five years.  As of September 30, 2024, the Company had one ground lease and one office machine lease that were classified as finance leases. The ground lease provides for variable rental payments based on CPI adjustment. 

The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by our weighted average incremental borrowing rates to calculate the lease liabilities for our operating leases in which we are the lessee (in thousands):

Years Ended December 31,	Operating Leases		Finance Leases
2024 (remaining)	$	9	$	21
2025		30		82
2026		24		83
2027		7		85
2028		1		86
Thereafter		—		2,723
Total undiscounted rental payments		71		3,080
Less imputed interest		4		2,291
Total lease liabilities	$	67	$	789

For the three months ended September 30, 2024 and 2023, the total lease costs for operating leases were $ 6,000 and $ 23,000, respectively, and for the finance leases were $ 27,000 and $ 21,000, respectively. For the nine months ended September 30, 2024 and 2023, the total lease costs for operating leases were $ 35,000 and $ 64,000 respectively, and for the finance leases were $ 70,000 and $ 72,000, respectively.

The weighted average remaining lease term for our operating leases and our finance leases was two and 94 years, respectively, at September 30, 2024. We do not include renewal options in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The weighted average incremental borrowing rate was 4.5% for our operating leases and 6.1% for our finance leases at September 30, 2024.