Operating Leases

3 Months Ended

Oct. 31, 2023

Operating Leases

Operating Leases

6. Operating Leases:

Lessor

The Company leases office and retail space to tenants under operating leases in commercial buildings. Most rental terms range from approximately 5 to 49 years. The leases provide for the payment of fixed base rent payable monthly in advance as well as reimbursements of real estate taxes and common area costs. The Company has elected to account for lease revenues and the reimbursements of common area costs as a single component included as rental income in our consolidated statements of operations.

The following table disaggregates the Company's revenues by lease and non-lease components:

	Three Months Ended October 31,
	2023		2022
Base rent - fixed	$	4,921,887	$	5,330,541
Reimbursements of common area costs		146,860		177,365
Non-lease components (real estate taxes)		255,054		261,828
Rental income	$	5,323,801	$	5,769,734

Future minimum non-cancelable rental income for leases with initial or remaining terms of one year or more is as follows:

	As of October 31, 2023
Fiscal Year	Company Owned Property		Leased Property		Total
For the remainder of 2024	$	8,752,113	$	4,291,970	$	13,044,083
2025		9,157,533		3,957,025		13,114,558
2026		8,028,846		3,620,069		11,648,915
2027		6,906,617		3,477,284		10,383,901
2028		6,069,044		3,431,411		9,500,455
2029		5,475,835		2,606,386		8,082,221
After 2029		20,359,611		3,114,274		23,473,885
Total	$	64,749,599	$	24,498,419	$	89,248,018

Lessee

The Company’s real estate operations include leased properties under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2073, including options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements.

In July 2022, the Company entered into lease agreements with its landlord for two of its properties as follows:

1) Jamaica Avenue at 169th Street, Jamaica, New York - Giving the Company four five-year option periods to extend its lease beyond May 31, 2030 for a total of twenty years through May 31, 2050. In April 2023, the Company exercised the first five-year option period, extending the lease expiration date to May 31, 2035. The effect of the lease extension on the measurement of operating right-of-use assets, liabilities, and monthly rent expense follows:

	Jamaica Avenue at 169th Street
		Increase in Operating Lease Right- of-Use Asset		Increase in Operating Lease Liability		Decrease in Monthly Rent Expense
Remeasurement change resulting from April 2023 lease extension	$	1,201,952	$	1,201,952	$	(30,563	)

As of October 31, 2023, it is not reasonably certain the remaining three options to extend the lease will be exercised by the Company.

2) 504-506 Fulton Street, Brooklyn, New York – In July, 2022 the lease agreement was modified to increase monthly lease payments from $30,188 per month to $34,716 per month commencing on May 1, 2026 through April 30, 2031. The effect of the lease modification on the measurement of operating right-of-use assets, liabilities, and monthly rent expense follows:

	504-506 Fulton Street
		Increase in Operating Lease Right- of-Use Asset		Increase in Operating Lease Liability		Increase in Monthly Rent Expense
Remeasurement change resulting from July 2022 lease modification	$	94,412	$	94,412	$	2,563

The landlord is Weinstein Enterprises, Inc., an affiliated company principally owned by the Chairman of the Board of Directors who also principally owns the Company. 

Operating lease costs for leased real property was exceeded by sublease rental income from the Company’s real estate operations as follows:

	Three Months Ended October 31,
	2023			2022
Sublease income	$	1,824,879		$	1,839,075
Operating lease cost		(748,711	)		(840,400	)
Excess of sublease income over lease cost	$	1,076,168		$	998,675

	Three Months Ended October 31,
	2023		2022
Other information:
Operating cash flows from operating leases	$	535,510	$	531,288

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of October 31, 2023:

Period Ended October 31,	Operating Leases
2024	$	2,154,504
2025		2,171,538
2026		2,272,955
2027		2,333,737
2028		2,354,249
Thereafter		23,442,909
Total undiscounted cash flows		34,729,892
Less: present value discount		(8,511,323	)
Total Lease Liabilities	$	26,218,569

As of October 31, 2023, our operating leases had a weighted average remaining lease term of 16.41 years and a weighted average discount rate of 3.71%.