Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Lessor

Rental income derived from customers renting our Sites is accounted for in accordance with ASC 842, Leases, and is recognized over the term of the respective operating lease or the length of a customer's stay. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina Sites are leased to customers on a short-term basis. In addition, customers may lease homes that are located in our communities.

The leases entered into between the customer and us for a rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases:

 

(amounts in thousands)	As of March 31, 2020
2020	$	63,393
2021	85,220
2022	53,423
2023	20,119
2024	20,144
Thereafter	79,241
Total	$	321,540

Lessee

We lease land under non-cancelable operating leases at 13 Properties expiring at various dates through 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through 2026. For the quarters ended March 31, 2020 and 2019, total operating lease payments were $2.4 million and $2.3 million, respectively.

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of March 31, 2020:

	As of March 31, 2020
(amounts in thousands)	Ground Leases			Office and Other Leases			Total
2020	$	1,462		$	2,444		$	3,906
2021	1,949			2,602			4,551
2022	1,479			916			2,395
2023	534			687			1,221
2024	534			505			1,039
Thereafter	4,984			484			5,468
Total undiscounted rental payments	10,942			7,638			18,580
Less imputed interest	(2,300		)	(558		)	(2,858		)
Total lease liabilities	$	8,642		$	7,080		$	15,722

Right-of-use ("ROU") assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $14.7 million and $15.7 million, respectively, as of March

31, 2020. The weighted average remaining lease term for our operating leases was seven years and the weighted average incremental borrowing rate was 4.3% at March 31, 2020.

ROU assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $15.1 million and $16.2 million, respectively, as of December 31, 2019. The weighted average remaining lease term for our operating leases was seven years and the weighted average incremental borrowing rate was 4.4% at December 31, 2019.

Leases

Lessor

Rental income derived from customers renting our Sites is accounted for in accordance with ASC 842, Leases, and is recognized over the term of the respective operating lease or the length of a customer's stay. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina Sites are leased to customers on a short-term basis. In addition, customers may lease homes that are located in our communities.

The leases entered into between the customer and us for a rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases:

 

(amounts in thousands)	As of March 31, 2020
2020	$	63,393
2021	85,220
2022	53,423
2023	20,119
2024	20,144
Thereafter	79,241
Total	$	321,540

Lessee

We lease land under non-cancelable operating leases at 13 Properties expiring at various dates through 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through 2026. For the quarters ended March 31, 2020 and 2019, total operating lease payments were $2.4 million and $2.3 million, respectively.

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of March 31, 2020:

	As of March 31, 2020
(amounts in thousands)	Ground Leases			Office and Other Leases			Total
2020	$	1,462		$	2,444		$	3,906
2021	1,949			2,602			4,551
2022	1,479			916			2,395
2023	534			687			1,221
2024	534			505			1,039
Thereafter	4,984			484			5,468
Total undiscounted rental payments	10,942			7,638			18,580
Less imputed interest	(2,300		)	(558		)	(2,858		)
Total lease liabilities	$	8,642		$	7,080		$	15,722

Right-of-use ("ROU") assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $14.7 million and $15.7 million, respectively, as of March

31, 2020. The weighted average remaining lease term for our operating leases was seven years and the weighted average incremental borrowing rate was 4.3% at March 31, 2020.

ROU assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $15.1 million and $16.2 million, respectively, as of December 31, 2019. The weighted average remaining lease term for our operating leases was seven years and the weighted average incremental borrowing rate was 4.4% at December 31, 2019.