Note 10 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

10.  Leases

The Company adopted Topic 842, on January 1, 2019, and as a result, recorded a ROU asset of $106.0 million and a corresponding lease liability of $98.7 million (see Footnote 1 to the Company’s Consolidated Financial Statements for further discussion on the adoption of Topic 842). As the lessee, the Company currently leases real estate space under noncancelable operating lease agreements for ground leases and administrative office leases. The Company’s leases have remaining lease terms ranging from less than one year to 52 years, some of which include options to extend the terms for up to an additional 75 years. The Company does not include any of its renewal options in its lease terms for calculating its lease liability as the renewal options allow the Company to maintain operational flexibility, and the Company is not reasonably certain it will exercise these renewal options at this time. The weighted-average remaining non-cancelable lease term for the Company’s operating leases was 21.1 years at December 31, 2019. The Company’s operating lease liabilities are determined based on the estimated present value of the Company’s minimum lease payments under its lease agreements. The discount rate used to determine the lease liabilities is based on the estimated incremental borrowing rate on a lease by lease basis. When calculating the incremental borrowing rates, the Company utilized data from (i) its recent debt issuances, (ii) publicly available data for instruments with similar characteristics, (iii) observable mortgage rates and (iv) unlevered property yields and discount rates. The Company then applied adjustments to account for considerations related to term and security that may not be fully incorporated by the data sets. The weighted-average discount rate was 6.65% at December 31, 2019.

The components of the Company’s lease expense, which are included in rent expense and general and administrative expense on the Company’s Consolidated Statements of Income, were as follows (in thousands):

	As of December 31, 2019
Lease cost:
Operating lease cost	$	12,630
Variable lease cost		2,038
Total lease cost	$	14,668

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheets (in thousands):

Year Ending December 31,
2020	$	10,715
2021		10,499
2022		9,906
2023		9,918
2024		9,016
Thereafter		128,589
Total minimum lease payments	$	178,643
Less imputed interest		(85,932	)
Total operating lease liabilities	$	92,711

       The future minimum lease payments to be paid by the Company under noncancelable operating leases as of December 31, 2018, as reported in the 2018 Annual Report on Form 10-K for the year ended December 31, 2018, are as follows (in thousands):

Year Ending December 31,
2019	$	12,206
2020		9,901
2021		9,716
2022		9,236
2023		8,936
Thereafter		115,788
Total minimum lease payments	$	165,783