COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

PILOT AGREEMENTS

Pursuant to agreements with certain municipalities, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties as follows:


				PILOT Payments				PILOT Payments
Property Name	Location	Asset Type	PILOT Expiration Dates	Three Months Ended June 30,				Six Months Ended June 30,
				2024		2023		2024		2023
				(Dollars in Thousands)				(Dollars in Thousands)



BLVD 401 (a)	Jersey City, NJ	Multifamily	4/2026	$	701	$	461	$	1,143	$	864
RiverHouse 11 at Port Imperial (b)	Weehawken, NJ	Multifamily	7/2033	492		405		949		779
Port Imperial 4/5 Hotel (c)	Weehawken, NJ	Hotel	12/2033	—		—		—		224
RiverHouse 9 at Port Imperial (d)	Weehawken, NJ	Multifamily	6/2046	451		372		858		754
Haus25 (e)	Jersey City, NJ	Mixed-Use	3/2047	717		573		1,414		1,147
The James (f)	Park Ridge, NJ	Multifamily	6/2051	210		144		416		287

Total PILOT taxes				$	2,571	$	1,955	$	4,780	$	4,055

(a)The annual PILOT is equal to 10 percent percent of Gross Revenues for years 1-4, 12 percent for years 5-8 and 14 percent for years 9-10, as defined.

(b)The annual PILOT is equal to 12 percent of Gross Revenues for years 1-5, 13 percent for years 6-10 and 14 percent for years 11-15, as defined.

(c)The annual PILOT is equal to two percent of Total Project Costs, as defined. The property was disposed of during the first quarter of 2023.

(d)The annual PILOT is equal to 11 percent of Gross Revenues for years 1-10, 12.5 percent for years 11-18 and 14 percent for years 19-25, as defined.

(e)The annual PILOT is equal to seven percent of Gross Revenues, as defined, for a term of 25 years.

(f)The annual PILOT is equal to 10 percent of Gross Revenues for years 1-10, 11.5 percent for years 11-21 and 12.5 percent for years 22-30, as defined.

At the conclusion of the above-referenced agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

LITIGATION

The Company is a defendant in litigation arising in the normal course of its business activities. Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company’s financial condition taken as whole.

OFFICE AND GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable office and ground leases under which the Company is the lessee, as of June 30, 2024 and December 31, 2023, are as follows (dollars in thousands):


Year	As of June 30, 2024 Amount
July 1 through December 31, 2024	$	636
2025	1,279
2026	1,279
2027	1,280
2028	494
2029 through 2101	31,447
Total lease payments	36,415
Less: imputed interest	(29,461)

Total	$	6,954


Year	As of December 31, 2023 Amount
2024	$	1,272
2025	1,279
2026	1,279
2027	1,280
2028	494
2029 through 2101	31,447
Total lease payments	37,051
Less: imputed interest	(29,700)

Total	$	7,351

Office and ground lease expenses incurred by the Company amounted to $629 thousand and $582 thousand for the three months ended June 30, 2024 and 2023, respectively and $1.3 million and $847 thousand for the six months ended June 30, 2024 and 2023, respectively.

The Company had capitalized operating leases for one office and two ground leases, which had balances of $3.6 million and $2.0 million, respectively, at June 30, 2024. Such amounts represent the net present value (“NPV”) of future payments detailed above. The one office and two ground leases used incremental borrowing rates of 6.0 percent and 7.6 percent, respectively, to arrive at the NPV and have weighted average remaining lease terms of 3.8 years and 77.1 years, respectively. These rates were arrived at by adjusting the fixed rates of the Company’s mortgage debt with debt having

terms approximating the remaining lease term of the Company’s office and ground leases and calculating notional rates for fully-collateralized loans.

The initial recognition of a lease liability and right-of-use asset for the office lease of $4.7 million is a noncash activity during the six months ended June 30, 2023.

OTHER

During the first quarter of 2024, the Company determined that the applicable conditions required to earn the stay-on award agreements with 20 employees were satisfied, and as a result, the corresponding cash and stock awards were deemed earned and payable. The total cost of such awards was approximately $2.6 million, including the issuance of 42,095 shares of the Company’s common stock, of which $1.3 million and $1.3 million was recorded in General and administrative and Real estate services expenses, respectively, on the Company's Consolidated Statements of Operations during the six months ended June 30, 2024.