Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Lessee Arrangements

As of June 30, 2024, the Company leases land under 17 ground leases associated with certain properties and also has two operating leases for office space. The aggregate durations for the ground leases and operating leases range from 6 to 120 years years as of June 30, 2024. The Company did not enter into any new ground or operating leases during the first six months of 2024.

As of June 30, 2024 and December 31, 2023, the Company’s balance sheets include ROU assets of $76.7 million and $77.0 million, respectively, and operating lease liabilities of $49.6 million and $48.4 million, respectively. In determining the operating ROU assets and lease liabilities for the Company’s operating leases in accordance with lease accounting rules, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.

As of June 30, 2024, the Company’s ground leases and operating leases have a weighted-average remaining lease term of approximately 25.2 years and a weighted-average discount rate of 6.11%. For the three and six months ended June 30, 2024, the Company paid cash of approximately $0.9 million and $1.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $0.4 million and $0.7 million, respectively, on a straight-line basis in accordance with the standard.

For the three and six months ended June 30, 2023, the Company paid cash of approximately $0.3 million and $0.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $0.4 million and $0.7 million, respectively, on a straight-line basis in accordance with the standard.

The following table reflects the base cash rental payments due from the Company as of June 30, 2024:


(In thousands)	Future Base Rent Payments (1)
2024 (remainder)	$	2,124
2025	3,800
2026	3,943
2027	4,025
2028	4,051

Thereafter	79,777
Total minimum lease payments (2)	97,720
Less: Effects of discounting	(48,145)
Total present value of lease payments	$	49,575

________

(1)Assumes exchange rates of £1.00 to $1.26 for GBP and €1.00 to $1.07 for EUR as of June 30, 2024 for illustrative purposes, as applicable.

(2)Ground lease rental payments due for the Company’s ING Amsterdam lease are not included in the table above as the Company’s ground rent for this property is prepaid through 2050.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of June 30, 2024, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.