Leases

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

Leases

Leases

Lessee Disclosures

As a lessee, the Company has nine ground leases on nine properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Five of these leases have been classified as operating leases and four of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands):

	Years Ended December 31,
	2024		2023		2022
Operating lease cost (a)	$	1,978	$	1,969	$	1,969
Finance lease cost:
Amortization of right-of-use assets (a)	1,578		1,349		1,110
Interest on lease liabilities	4,475		3,636		2,573

________________________________________

(a) Includes amortization of above & below-market ground lease intangible assets.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2024, 2023, and 2022 (in thousands):

	Years Ended December 31,
	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,898	$	1,852	$	1,797
Operating cash flows from finance leases	3,624		2,876		2,256

Additional information related to leases as of December 31, 2024 and 2023 were as follows:

	December 31,
	2024		2023
Weighted Average Remaining Lease Term (years)
Operating leases	33.9		34.8
Finance leases	76.1		76.9
Weighted Average Discount Rate
Operating leases	5.5	%	5.5	%
Finance leases	4.5	%	4.5	%

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below (in thousands). The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.

Year Ending December 31,	Operating Leases		Finance Leases
2025	$	1,897	$	3,575
2026	1,882		3,580
2027	1,890		3,602
2028	1,930		3,697
2029	1,969		3,817
Thereafter	62,596		370,654
Total lease liabilities	72,164		388,925
Less imputed interest	(40,799)		(296,279)
Present value of lease liabilities	$	31,365	$	92,646

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 25 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

Rental revenue for the years ended December 31, 2024, 2023, and 2022 comprised the following (in thousands):

	Years Ended December 31,
	2024		2023		2022
Base rent and tenant charges	$	246,797	$	230,379	$	212,046
Accrued straight-line rental adjustment	8,254		6,355		6,178
Lease incentive amortization	(435)		(557)		(684)
(Above) below market lease amortization, net	2,081		2,747		1,754
Total rental revenue	$	256,697	$	238,924	$	219,294

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):

Year Ending December 31,	Operating Leases
2025	$	136,031
2026	135,952
2027	127,901
2028	117,542
2029	103,965
Thereafter	484,623
Total	$	1,106,014

Leases

Leases

Lessee Disclosures

As a lessee, the Company has nine ground leases on nine properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Five of these leases have been classified as operating leases and four of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands):

	Years Ended December 31,
	2024		2023		2022
Operating lease cost (a)	$	1,978	$	1,969	$	1,969
Finance lease cost:
Amortization of right-of-use assets (a)	1,578		1,349		1,110
Interest on lease liabilities	4,475		3,636		2,573

________________________________________

(a) Includes amortization of above & below-market ground lease intangible assets.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2024, 2023, and 2022 (in thousands):

	Years Ended December 31,
	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,898	$	1,852	$	1,797
Operating cash flows from finance leases	3,624		2,876		2,256

Additional information related to leases as of December 31, 2024 and 2023 were as follows:

	December 31,
	2024		2023
Weighted Average Remaining Lease Term (years)
Operating leases	33.9		34.8
Finance leases	76.1		76.9
Weighted Average Discount Rate
Operating leases	5.5	%	5.5	%
Finance leases	4.5	%	4.5	%

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below (in thousands). The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.

Year Ending December 31,	Operating Leases		Finance Leases
2025	$	1,897	$	3,575
2026	1,882		3,580
2027	1,890		3,602
2028	1,930		3,697
2029	1,969		3,817
Thereafter	62,596		370,654
Total lease liabilities	72,164		388,925
Less imputed interest	(40,799)		(296,279)
Present value of lease liabilities	$	31,365	$	92,646

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 25 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

Rental revenue for the years ended December 31, 2024, 2023, and 2022 comprised the following (in thousands):

	Years Ended December 31,
	2024		2023		2022
Base rent and tenant charges	$	246,797	$	230,379	$	212,046
Accrued straight-line rental adjustment	8,254		6,355		6,178
Lease incentive amortization	(435)		(557)		(684)
(Above) below market lease amortization, net	2,081		2,747		1,754
Total rental revenue	$	256,697	$	238,924	$	219,294

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):

Year Ending December 31,	Operating Leases
2025	$	136,031
2026	135,952
2027	127,901
2028	117,542
2029	103,965
Thereafter	484,623
Total	$	1,106,014