Leases

3 Months Ended

Mar. 31, 2022

Note 17 - Leases

In all leases, whether we are the lessor or lessee, we define lease term as the non-cancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of economic factors relevant to the lessee. The non-cancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract.

As Lessee

We have operating leases for certain cinemas, and finance leases for certain equipment assets. Our leases have remaining lease terms of 1 to 25 years, with certain leases having options to extend to up to a further 20 years.

Contracts are analyzed in accordance with the criteria set out in ASC 842 to determine if there is a lease present. For contracts that contain an operating lease, we account for the lease component and the non-lease component together as a single component. For contracts that contain a finance lease we account for the lease component and the non-lease component separately in accordance with ASC 842.

In leases where we are the lessee, we recognize a right of use asset and lease liability at lease commencement, which is measured by discounting lease payments using an incremental borrowing rate applicable to the relevant country and lease term of the lease as the discount rate. Subsequent amortization of the right of use asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the term of the lease. A finance lease right-of-use asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or the lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. Property taxes and other non-lease costs are accounted for on an accrual basis.

Lease payments for our cinema operating leases consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics.

As a result of the impacts of COVID-19, we have obtained certain concessions from our landlords. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements secured as variable lease expenses, and increasing payables for lease payment deferrals.

The components of lease expense were as follows:


	Three Months Ended
	March 31,
(Dollars in thousands)	2022		2021
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	12	$	12
Interest on lease liabilities		1		1
Operating lease cost		8,714		8,308
Variable lease cost		(88)		(1,165)
Total lease cost	$	8,639	$	7,156

Supplemental cash flow information related to leases is as follows:


	Three Months Ended
	March 31,
(Dollars in thousands)	2022		2021
Cash flows relating to lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	13	$	14
Operating cash flows for operating leases		10,141		2,507
Right-of-use assets obtained in exchange for new operating lease liabilities		66		—

Supplemental balance sheet information related to leases is as follows:


	March 31,		December 31,
(Dollars in thousands)	2022		2021
Operating leases
Operating lease right-of-use assets	$	224,754	$	227,367
Operating lease liabilities - current portion		24,397		23,737
Operating lease liabilities - non-current portion		220,215		223,364
Total operating lease liabilities	$	244,612	$	247,101
Finance leases
Property plant and equipment, gross		378		374
Accumulated depreciation		(326)		(311)
Property plant and equipment, net	$	52	$	63
Other current liabilities		37		40
Other long-term liabilities		20		28
Total finance lease liabilities	$	57	$	68

Other information
Weighted-average remaining lease term - finance leases		1		2
Weighted-average remaining lease term - operating leases		11		11
Weighted-average discount rate - finance leases		5.23%		5.24%
Weighted-average discount rate - operating leases		4.46%		4.47%

The maturities of our leases were as follows:


(Dollars in thousands)	Operating ‎leases		Finance ‎leases
2022	$	26,095	$	30
2023		34,725		29
2024		33,246		—
2025		31,258		—
2026		28,958		—
Thereafter		161,182		—
Total lease payments	$	315,464	$	59
Less imputed interest		(70,852)		(2)
Total	$	244,612	$	57

As of March 31, 2022, we have an additional cinema operating lease that has not yet commenced operations commenced operations of approximately $9.0 million. It is anticipated that this operating lease will commence in 2022 with a lease term of 15 to 20 years.

As Lessor

We have entered into various leases as a lessor for our owned real estate properties. These leases vary in length between 1 and 20 years, with certain leases containing options to extend at the behest of the applicable tenants. Lease components consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. None of our leases grant any right to the tenant to purchase the underlying asset.

We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term.

As a result of the impacts of COVID-19, we have provided certain concessions to specific tenants. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements granted as variable lease payments through revenue and increasing receivables for lease payment deferrals.

Lease income relating to operating lease payments was as follows:


	Three Months Ended
	March 31,
(Dollars in thousands)	2022		2021
Components of lease income
Lease payments	$	2,068	$	2,701
Variable lease payments		130		169
Total lease income	$	2,198	$	2,870

The book value of underlying assets under operating leases from owned assets was as follows:


	March 31,		December 31,
(Dollars in thousands)	2022		2021
Building and improvements
Gross balance	$	141,702	$	140,028
Accumulated depreciation		(24,442)		(23,923)
Net Book Value	$	117,260	$	116,105

‎

The Maturity of our leases were as follows:


(Dollars in thousands)	Operating ‎leases
2022	$	5,606
2023		6,989
2024		6,214
2025		5,288
2026		2,504
Thereafter		2,854
Total	$	29,455