Leases

9 Months Ended

Sep. 30, 2023

Note 7 – 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)	2023		2022		2023		2022
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	8	$	8	$	23	$	30
Interest on lease liabilities		—		1		1		2
Operating lease cost		8,076		8,160		24,287		24,475
Variable lease cost		722		181		1,377		270
Total lease cost	$	8,806	$	8,350	$	25,688	$	24,777

Supplemental cash flow information related to leases is as follows:


	Nine Months Ended
	September 30,
(Dollars in thousands)	2023		2022
Cash flows relating to lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	26	$	33
Operating cash flows for operating leases		24,944		26,034
Right-of-use assets obtained in exchange for new operating lease liabilities		1,578		6,720

Supplemental balance sheet information related to leases is as follows:


	September 30,		December 31,
(Dollars in thousands)	2023		2022
Operating leases
Operating lease right-of-use assets	$	180,718	$	200,417
Operating lease liabilities - current portion		22,977		23,971
Operating lease liabilities - non-current portion		180,002		200,037
Total operating lease liabilities	$	202,979	$	224,008
Finance leases
Property plant and equipment, gross		356		363
Accumulated depreciation		(353)		(338)
Property plant and equipment, net	$	3	$	25
Other current liabilities		3		28
Total finance lease liabilities	$	3	$	28

Other information
Weighted-average remaining lease term - finance leases		0		1
Weighted-average remaining lease term - operating leases		11		11
Weighted-average discount rate - finance leases		5.21%		5.21%
Weighted-average discount rate - operating leases		4.56%		4.55%

The maturities of our leases were as follows:


(Dollars in thousands)	Operating ‎leases		Finance ‎leases
2023	$	8,149	$	3
2024		31,198		—
2025		29,159		—
2026		27,283		—
2027		24,977		—
Thereafter		139,619		—
Total lease payments	$	260,385	$	3
Less imputed interest		(57,406)		—
Total	$	202,979	$	3

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)	2023		2022		2023		2022
Components of lease income
Lease payments	$	2,834		2,046	$	8,271	$	6,065
Variable lease payments		288		333		618		598
Total lease income	$	3,122	$	2,379	$	8,889	$	6,663

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


	September 30,		December 31,
(Dollars in thousands)	2023		2022
Building and improvements
Gross balance	$	132,000	$	136,749
Accumulated depreciation		(27,234)		(26,148)
Net Book Value	$	104,766	$	110,601

The Maturity of our leases were as follows:


(Dollars in thousands)	Operating ‎leases
2023	$	2,345
2024		9,083
2025		8,696
2026		7,225
2027		6,541
Thereafter		28,045
Total	$	61,935