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Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Lessor, Operating Leases

7.

Leases

Lessor Accounting

The Company's Lease income is comprised of both fixed and variable income, as follows:

Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance. 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 represents amounts which tenants are contractually obligated to reimburse the Company for the tenants’ portion of actual 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 under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC 842:

(in thousands)

 

December 31, 2019

 

Operating lease income

 

 

 

 

Fixed and in-substance fixed lease income

 

$

806,442

 

Variable lease income

 

 

247,861

 

Other lease related income, net:

 

 

 

 

Above/below market rent and tenant rent inducement amortization

 

 

45,392

 

Uncollectible amounts in lease income

 

 

(5,394

)

Total lease income

 

$

1,094,301

 

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, 2019

 

2020

 

$

775,723

 

2021

 

 

706,016

 

2022

 

 

615,224

 

2023

 

 

511,104

 

2024

 

 

411,308

 

Thereafter

 

 

1,500,745

 

Total

 

$

4,520,120

 

 

(in thousands)

 

 

 

 

For the year ended December 31,

 

December 31, 2018

 

2019

 

$

761,151

 

2020

 

 

693,848

 

2021

 

 

608,587

 

2022

 

 

516,369

 

2023

 

 

414,424

 

Thereafter

 

 

1,691,203

 

Total

 

$

4,685,582

 

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 22 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 2101, 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 expense is recognized on a straight-line basis over the term of the leases, including management's estimate of expected option renewal periods.  Operating lease expense under the Company's ground and office leases was 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, 2019

 

Fixed operating lease expense

 

 

 

 

Ground leases

 

$

13,982

 

Office leases

 

 

4,229

 

Total fixed operating lease expense

 

 

18,211

 

Vaiable lease expense

 

 

 

 

Ground leases

 

 

1,693

 

Office leases

 

 

552

 

Total variable lease expense

 

 

2,245

 

Total lease expense

 

$

20,456

 

Cash paid for amounts included in the measurement of operating lease liabilities

 

 

 

 

Operating cash flows for operating leases

 

$

14,815

 

Operating lease expense under the Company's ground and office leases was $20.5 million, $19.1 million and $18.4 million for the years ended December 31, 2019, 2018, and 2017 respectively, which includes fixed and variable rent expense.

The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities under ground and office leases as of December 31, 2019, 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

 

2020

 

$

10,697

 

 

 

5,152

 

 

 

15,849

 

2021

 

 

10,671

 

 

 

4,149

 

 

 

14,820

 

2022

 

 

10,698

 

 

 

3,188

 

 

 

13,886

 

2023

 

 

10,915

 

 

 

2,410

 

 

 

13,325

 

2024

 

 

10,964

 

 

 

1,939

 

 

 

12,903

 

Thereafter

 

 

553,116

 

 

 

4,404

 

 

 

557,520

 

Total undiscounted lease liabilities

 

$

607,061

 

 

 

21,242

 

 

 

628,303

 

Present value discount

 

 

(403,237

)

 

 

(2,148

)

 

 

(405,385

)

Lease liabilities

 

$

203,824

 

 

 

19,094

 

 

 

222,918

 

Weighted average discount rate

 

 

5.2

%

 

 

3.9

%

 

 

 

 

Weighted average remaining term (in years)

 

 

49.2

 

 

 

5.5

 

 

 

 

 

The following table summarizes the future obligations under non-cancelable operating leases, excluding unexercised renewal options, as of December 31, 2018:

 

(in thousands)

 

Future Lease Obligations

 

For the year ended December 31,

 

Ground Leases

 

 

Office Leases

 

 

Total

 

2019

 

$

10,672

 

 

 

4,405

 

 

 

15,077

 

2020

 

 

10,439

 

 

 

4,294

 

 

 

14,733

 

2021

 

 

10,344

 

 

 

3,549

 

 

 

13,893

 

2022

 

 

10,258

 

 

 

2,893

 

 

 

13,151

 

2023

 

 

10,369

 

 

 

2,189

 

 

 

12,558

 

Thereafter

 

 

461,762

 

 

 

5,944

 

 

 

467,706

 

Total

 

$

513,844

 

 

 

23,274

 

 

 

537,118