COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
				2024		2023		2024		2023
				(Dollars in Thousands)				(Dollars in Thousands)



BLVD 401 (a)	Jersey City, NJ	Multifamily	4/2026	$	528	$	446	$	1,671	$	1,310
RiverHouse 11 at Port Imperial (b)	Weehawken, NJ	Multifamily	7/2033	482		388		1,431		1,167
Port Imperial 4/5 Hotel (c)	Weehawken, NJ	Hotel	12/2033	—		—		—		224
RiverHouse 9 at Port Imperial (d)	Weehawken, NJ	Multifamily	6/2046	434		422		1,292		1,176
Haus25 (e)	Jersey City, NJ	Mixed-Use	3/2047	907		670		2,321		1,817
The James (f)	Park Ridge, NJ	Multifamily	6/2051	206		143		622		430

Total PILOT taxes				$	2,557	$	2,069	$	7,337	$	6,124

(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 September 30, 2024 and December 31, 2023, are as follows (dollars in thousands):


Year	As of September 30, 2024 Amount
October 1 through December 31, 2024	$	318
2025	1,279
2026	1,279
2027	1,280
2028	494
2029 through 2101	31,447
Total lease payments	36,097
Less: imputed interest	(29,347)

Total	$	6,750


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 $670 thousand and $599 thousand for the three months ended September 30, 2024 and 2023, respectively and $1.9 million and $1.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company had capitalized operating leases for one office and two ground leases, which had balances of $3.4 million and $2.0 million, respectively, at September 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 3.5 years and 76.8 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 nine months ended September 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 Property management expenses, respectively, on the Company's Consolidated Statements of Operations during the nine months ended September 30, 2024.