Lessee Accounting

9 Months Ended

Sep. 30, 2022

Note 6 – Lessee Accounting

The Company acquired one property on March 9, 2022 that is subject to a non-cancelable, long-term ground lease where a third party owns the underlying land and has leased the land to the Company. Accordingly, the Company owns only a long-term leasehold in this property. This ground lease expires in 2084 including those options the Company deems probable of exercising. The ground lease expense is recognized on a straight-line basis over the term of the lease, including management's estimate of expected option renewal periods. Operating lease expense was approximately $218,777 for the nine months ended September 30, 2022. There are no variable lease expenses required to be paid by the Company as lessee per the lease terms. Cash paid for amounts included in the measurement of the Lease liability, net was $130,738 for the nine months ended September 30, 2022.

The following table summarizes the undiscounted future cash flows for subsequent years ending December 31 attributable to the lease Liability as of September 30, 2022 and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets as of September 30, 2022.


	As of September 30,
	2022
2022 (3 months remaining)	$	58,175
2023		232,701
2024		244,077
2025		245,111
2026		245,111
Thereafter		22,065,755
Total undiscounted liability	$	23,090,930
Present value discount		(16,787,698	)
Lease liability	$	6,303,232
Discount rate		4.58	%
Term	62 years