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Leases
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases Leases
As lessor
We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rent payable monthly in advance. Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Certain leases also require additional variable rent payments based on a percentage of the tenants’ sales. Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.
As of December 31, 2021, future undiscounted cash flows under non-cancelable operating leases were as follows:
(Amounts in thousands)As of December 31, 2021
For the year ended December 31, 
2022$1,313,854 
20231,266,425 
20241,132,125 
20251,021,434 
2026977,834 
Thereafter7,068,874 
As lessee
We have a number of ground leases which are classified as operating leases. As of December 31, 2021, our ROU assets and lease liabilities were $337,197,000 and $370,206,000, respectively. As of December 31, 2020, our ROU assets and lease liabilities were $367,365,000 and $401,008,000, respectively.
The discount rate applied to measure each ROU asset and lease liability is based on our incremental borrowing rate ("IBR"). We consider the general economic environment and our credit rating and factor in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. Certain of our ground leases offer renewal options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of the lease liability and corresponding ROU asset.
Certain of our ground leases are subject to fair market rent resets based on a percentage of the appraised value of the underlying assets at specified future dates. Fair market rent resets occurring during the lease term do not give rise to remeasurement of the related ROU assets and lease liabilities. Fair market rent resets occurring during the lease term, which may be material, will be recognized in the periods in which they are incurred as variable rent expense.
    The following table sets forth information related to the measurement of our lease liabilities as of December 31, 2021, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,
202120202019
Weighted average remaining lease term (in years)44.444.840.2
Weighted average discount rate4.85 %4.91 %4.84 %
Cash paid for operating leases$22,382 $23,932 $27,817 
We recognize rent expense as a component of "operating" expenses on our consolidated statements of income. Rent expense is comprised of fixed and variable lease payments. The following table sets forth the details of rent expense for the years ended December 31, 2021, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,
202120202019
Fixed rent expense$24,901 $28,503 $33,738 
Variable rent expense13,078 1,178 1,978 
Rent expense$37,979 $29,681 $35,716 
19. Leases - continued
As lessee - continued
As of December 31, 2021, future lease payments under operating ground leases were as follows:
(Amounts in thousands)As of December 31, 2021
For the year ended December 31,
2022$21,080 
202322,802 
202423,154 
202523,522 
202623,911 
Thereafter833,728 
Total undiscounted cash flows948,197 
Present value discount(577,991)
Lease liabilities
$370,206 
Farley Office and Retail
The future lease payments detailed above exclude the ground and building lease at Farley Office and Retail. Our 95% consolidated joint venture has a 99-year triple-net lease with Empire State Development ("ESD") for 845,000 rentable square feet of commercial space at the property, comprised of approximately 730,000 square feet of office space and approximately 115,000 square feet of restaurant and retail space. Our lease of the commercial space at the property is accounted for as a “failed sale-leaseback” as a result of us being deemed the "accounting owner" during development of the property in accordance with ASC 842-40-55 and the lease subsequently meeting "finance lease" classification pursuant to ASC 842-40-25 upon substantial completion. The lease calls for annual rent payments and fixed payments in lieu of real estate taxes ("PILOT") through June 2030. Following the fixed PILOT payment period, the PILOT is calculated in a manner consistent with buildings subject to New York City real estate taxes and assessments. As of December 31, 2021, future rent and fixed PILOT payments are $542,631,000.
Leases Leases
As lessor
We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rent payable monthly in advance. Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Certain leases also require additional variable rent payments based on a percentage of the tenants’ sales. Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.
As of December 31, 2021, future undiscounted cash flows under non-cancelable operating leases were as follows:
(Amounts in thousands)As of December 31, 2021
For the year ended December 31, 
2022$1,313,854 
20231,266,425 
20241,132,125 
20251,021,434 
2026977,834 
Thereafter7,068,874 
As lessee
We have a number of ground leases which are classified as operating leases. As of December 31, 2021, our ROU assets and lease liabilities were $337,197,000 and $370,206,000, respectively. As of December 31, 2020, our ROU assets and lease liabilities were $367,365,000 and $401,008,000, respectively.
The discount rate applied to measure each ROU asset and lease liability is based on our incremental borrowing rate ("IBR"). We consider the general economic environment and our credit rating and factor in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. Certain of our ground leases offer renewal options which we assess against relevant economic factors to determine whether we are reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of the lease liability and corresponding ROU asset.
Certain of our ground leases are subject to fair market rent resets based on a percentage of the appraised value of the underlying assets at specified future dates. Fair market rent resets occurring during the lease term do not give rise to remeasurement of the related ROU assets and lease liabilities. Fair market rent resets occurring during the lease term, which may be material, will be recognized in the periods in which they are incurred as variable rent expense.
    The following table sets forth information related to the measurement of our lease liabilities as of December 31, 2021, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,
202120202019
Weighted average remaining lease term (in years)44.444.840.2
Weighted average discount rate4.85 %4.91 %4.84 %
Cash paid for operating leases$22,382 $23,932 $27,817 
We recognize rent expense as a component of "operating" expenses on our consolidated statements of income. Rent expense is comprised of fixed and variable lease payments. The following table sets forth the details of rent expense for the years ended December 31, 2021, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,
202120202019
Fixed rent expense$24,901 $28,503 $33,738 
Variable rent expense13,078 1,178 1,978 
Rent expense$37,979 $29,681 $35,716 
19. Leases - continued
As lessee - continued
As of December 31, 2021, future lease payments under operating ground leases were as follows:
(Amounts in thousands)As of December 31, 2021
For the year ended December 31,
2022$21,080 
202322,802 
202423,154 
202523,522 
202623,911 
Thereafter833,728 
Total undiscounted cash flows948,197 
Present value discount(577,991)
Lease liabilities
$370,206 
Farley Office and Retail
The future lease payments detailed above exclude the ground and building lease at Farley Office and Retail. Our 95% consolidated joint venture has a 99-year triple-net lease with Empire State Development ("ESD") for 845,000 rentable square feet of commercial space at the property, comprised of approximately 730,000 square feet of office space and approximately 115,000 square feet of restaurant and retail space. Our lease of the commercial space at the property is accounted for as a “failed sale-leaseback” as a result of us being deemed the "accounting owner" during development of the property in accordance with ASC 842-40-55 and the lease subsequently meeting "finance lease" classification pursuant to ASC 842-40-25 upon substantial completion. The lease calls for annual rent payments and fixed payments in lieu of real estate taxes ("PILOT") through June 2030. Following the fixed PILOT payment period, the PILOT is calculated in a manner consistent with buildings subject to New York City real estate taxes and assessments. As of December 31, 2021, future rent and fixed PILOT payments are $542,631,000.