Leases

12 Months Ended

Dec. 31, 2023

Lessor Accounting

Substantially all of the Company's leases are classified as operating leases. The Company's Lease income is comprised of both fixed and variable income. Fixed and in-substance fixed lease income includes stated amounts per lease contracts, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance ("Recoverable Costs"). Income for these amounts is recognized on a straight-line basis.

Variable lease income includes the following two main items in the lease contracts:

(i)

Recoveries from tenants represent the tenants' contractual obligations to reimburse the Company for their portion of recoverable costs incurred. Generally, the Company's leases provide for the tenants to reimburse the Company based on the tenants' share of the actual costs incurred in proportion to the tenants' share of leased space in the property.

(ii)

Percentage rent represents amounts billable to tenants based on the tenants' actual sales volume in excess of levels specified in the lease contract.

The following table provides a disaggregation of lease income recognized as either fixed or variable lease income based on the criteria specified in Topic 842:


(in thousands)	December 31, 2023			December 31, 2022		December 31, 2021
Operating lease income
Fixed and in-substance fixed lease income	$	928,364			851,409		797,502
Variable lease income		324,037			287,149		262,619
Other lease related income, net:
Above/below market rent and tenant rent inducement amortization, net		30,826			22,543		24,539
Uncollectible straight-line rent		1,261			12,510		5,227
Uncollectible amounts billable in lease income		(549	)		13,841		23,481
Total lease income	$	1,283,939			1,187,452		1,113,368

Future minimum rents under non-cancelable operating leases, excluding variable lease payments, are as follows:


(in thousands)
For the year ended December 31,	December 31, 2023
2024	$	972,980
2025		872,330
2026		757,633
2027		633,290
2028		480,640
Thereafter		1,740,783
Total	$	5,457,656

At December 31, 2023, the Company had one lease classified as a sales-type lease, with lease income recorded over the lease term in the form of variable interest income representing the constant periodic rate of return on the Company’s net investment in the lease, and fixed contractual obligations.

Lessee Accounting

The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party owns the underlying land and has leased the land to the Company to construct and/or operate a shopping center.

The Company has 21 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. These ground leases expire through the year 2121, and in most cases, provide for renewal options.

In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business. Office leases expire through the year 2029, and in many cases, provide for renewal options.

The ground and office lease expenses are recognized on a straight-line basis over the term of the leases, including management's estimate of expected optional renewal periods, with ground lease expense presented within Property operating expense, and office lease expense presented within General and administrative in the accompanying Consolidated Statements of Operations.

Operating lease expense under the Company's ground and office leases were as follows, including straight-line rent expense and variable lease expenses such as CPI increases, percentage rent and reimbursements of landlord costs:


(in thousands)	December 31, 2023		December 31, 2022		December 31, 2021
Fixed operating lease expense
Ground leases	$	14,727		13,759		13,862
Office leases		4,103		4,162		4,309
Total fixed operating lease expense		18,830		17,921		18,171
Variable lease expense
Ground leases		1,586		1,591		1,032
Office leases		729		611		615
Total variable lease expense		2,315		2,202		1,647
Total lease expense	$	21,145		20,123		19,818
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows for operating leases	$	15,823		14,656		15,165

The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities for ground and office leases as of December 31, 2023, and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets:


(in thousands)	Lease Liabilities
For the year ended December 31,	Ground Leases			Office Leases			Total
2024	$	12,955			3,082			16,037
2025		12,962			3,464			16,426
2026		12,883			3,331			16,214
2027		12,909			2,151			15,060
2028		13,051			1,305			14,356
Thereafter		702,602			312			702,914
Total undiscounted lease liabilities	$	767,362			13,645			781,007
Present value discount		(533,777	)		(1,167	)		(534,944	)
Lease liabilities	$	233,585			12,478			246,063
Weighted average discount rate		5.5	%		3.7	%
Weighted average remaining term (in years)		49.4			4.1