Leases

9 Months Ended

Sep. 30, 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. 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.

The components of lease expense were as follows:


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2022		2021		2022		2021
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	8	$	12	$	30	$	37
Interest on lease liabilities		1		1		2		4
Operating lease cost		8,160		8,591		24,475		25,151
Variable lease cost		181		(2,064)		270		(4,751)
Total lease cost	$	8,350	$	6,540	$	24,777	$	20,441

Supplemental cash flow information related to leases is as follows:


	Nine Months Ended
	September 30,
(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	$	33	$	40
Operating cash flows for operating leases		26,034		16,666
Right-of-use assets obtained in exchange for new operating lease liabilities		6,720		32,956

Supplemental balance sheet information related to leases is as follows:


	September 30,		December 31,
(Dollars in thousands)	2022		2021
Operating leases
Operating lease right-of-use assets	$	200,396	$	227,367
Operating lease liabilities - current portion		22,950		23,737
Operating lease liabilities - non-current portion		200,855		223,364
Total operating lease liabilities	$	223,805	$	247,101
Finance leases
Property plant and equipment, gross		352		374
Accumulated depreciation		(320)		(311)
Property plant and equipment, net	$	32	$	63
Other current liabilities		33		40
Other long-term liabilities		3		28
Total finance lease liabilities	$	36	$	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		5.21%		5.24%
Weighted-average discount rate - operating leases		4.56%		4.47%

The maturities of our leases were as follows:


(Dollars in thousands)	Operating ‎leases		Finance ‎leases
2022	$	7,932	$	9
2023		32,915		28
2024		31,544		—
2025		29,579		—
2026		27,702		—
Thereafter		159,221		—
Total lease payments	$	288,893	$	37
Less imputed interest		(65,088)		(1)
Total	$	223,805	$	36

As of September 30, 2022, we have an additional cinema operating lease that has not yet commenced operations of approximately $6.8 million. It is anticipated that this operating lease will commence in 2023 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.

Lease income relating to operating lease payments was as follows:


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2022		2021		2022		2021
Components of lease income
Lease payments	$	2,046		2,230	$	6,065	$	7,601
Variable lease payments		333		273		598		642
Total lease income	$	2,379	$	2,503	$	6,663	$	8,243

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


	September 30,		December 31,
(Dollars in thousands)	2022		2021
Building and improvements
Gross balance	$	133,488	$	140,028
Accumulated depreciation		(23,862)		(23,923)
Net Book Value	$	109,626	$	116,105

The Maturity of our leases were as follows:


(Dollars in thousands)	Operating ‎leases
2022	$	1,683
2023		6,427
2024		5,786
2025		4,989
2026		2,548
Thereafter		2,757
Total	$	24,190