Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lending Commitments

The Company has lending commitments to borrowers pursuant to certain loan agreements in which the borrower may submit a request for funding contingent on achieving certain criteria, which must be approved by the Company as lender, such as leasing, performance of capital expenditures and construction in progress with an approved budget. At June 30, 2020, assuming the terms to qualify for future fundings, if any, have been met, total unfunded lending commitments for loans and preferred equity held for investment was $164.2 million for senior loans, $12.4 million for securitized loans, $0.1 million for corporate term loans, $28.4 million for mezzanine loans and $1.4 million for loans held for sale. Total unfunded commitments for equity method investments was $39.3 million.

Ground Lease Obligation

The Company’s operating leases are ground leases acquired with real estate.

At June 30, 2020, the weighted average remaining lease terms were 14.5 years for ground leases.

The following table presents lease expense, included in property operating expense, for the three and six months ended June 30, 2020 (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease expense:
Minimum lease expense	$	797	$	735	$	1,601	$	1,544
Variable lease expense	—		—		—		—
	$	797	$	735	$	1,601	$	1,544

The operating lease liability was determined using a weighted average discount rate of 5.2%. The following table presents future minimum rental payments, excluding contingent rents, on noncancellable ground leases on real estate as of June 30, 2020 (dollars in thousands):

Remainder of 2020	$	1,593
2021	3,171
2022	3,199
2023	3,229
2024	2,338
2025 and thereafter	21,725
Total lease payments	35,255
Less: Present value discount	11,445
Operating lease liability (Note 8)	$	23,810

The following table presents future minimum rental payments, excluding contingent rents, on noncancellable ground leases on real estate as of December 31, 2019 (dollars in thousands):

2020	$	3,232
2021	3,216
2022	3,244
2023	3,274
2024	2,383
2025 and thereafter	23,079
Total lease payments	38,428
Less: Present value discount	12,933
Operating lease liability (Note 8)	$	25,495

Litigation and Claims

The Company may be involved in litigation and claims in the ordinary course of the business. As of June 30, 2020, the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.