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Note 11 - Leases | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] | 11. Leases Lessor Leases The Company’s primary source of revenues is derived from lease agreements, which includes rental income and expense reimbursement. The Company’s lease income is comprised of minimum base rent, expense reimbursements, percentage rent, lease termination fee income, ancillary income, amortization of above-market and below-market rent adjustments and straight-line rent adjustments. The disaggregation of the Company’s lease income, which is included in Revenue from rental properties on the Company’s Consolidated Statements of Operations, as either fixed or variable lease income based on the criteria specified in ASC 842, for the years ended December 31, 2020 and 2019, is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Lease income: |  |  |  |  |  |  |  |
Fixed lease income (1) |  | $ | 804,107 |  |  | $ | 880,214 |
Variable lease income (2) |  |  | 218,266 |  |  |  | 242,110 |
Above-market and below-market leases amortization, net |  |  | 22,515 |  |  |  | 20,010 |
Total lease income (3) |  | $ | 1,044,888 |  |  | $ | 1,142,334 |
| (1) | Includes minimum base rents, expense reimbursements, ancillary income and straight-line rent adjustments.
| (2) | Includes minimum base rents, expense reimbursements, percentage rent, lease termination fee income and ancillary income.
| (3) | During 2020, the Company’s revenue was reduced by $81.0 million associated with potentially uncollectible revenues, including revenues from tenants that are being accounted for on a cash basis, and disputed amounts, which includes $15.2 million for straight-line rent receivables, primarily attributable to the COVID-19 pandemic.
Base rental revenues from rental properties are recognized on a straight-line basis over the terms of the related leases. The difference between the amount of rental income contracted through leases and rental income recognized on a straight-line basis for the years ended December 31, 2020, 2019 and 2018 was ($6.9) million, $17.2 million and $13.6 million, respectively. The Company is primarily engaged in the operation of shopping centers that are either owned or held under long-term leases that expire at various dates through 2072. The Company, in turn, leases premises in these centers to tenants pursuant to lease agreements which provide for terms ranging generally from five to 25 years and for annual minimum rentals plus incremental rents based on operating expense levels and tenants' sales volumes. Annual minimum rentals plus incremental rents based on operating expense levels and percentage rents comprised 98% of total revenues from rental properties for each of the three years ended December 31, 2020, 2019 and 2018. The minimum revenues expected to be received by the Company from rental properties under the terms of all non-cancelable tenant leases for future years, assuming no new or renegotiated leases are executed for such premises, are as follows (in millions):
|  | 202 1 |  |  | 202 2 |  |  | 202 3 |  |  | 202 4 |  |  | 202 5 |  |  | Thereafter |
Minimum revenues |  | $ | 848.8 |  |  | $ | 741.0 |  |  | $ | 645.3 |  |  | $ | 549.9 |  |  | $ | 457.8 |  |  | $ | 2,403.3 |
Lessee Leases The Company adopted Topic 842, on January 1, 2019, and, as a result, recorded a ROU asset of $106.0 million and a corresponding lease liability of $98.7 million (see Footnote 1 to the Company’s Consolidated Financial Statements for further discussion on the adoption of Topic 842). As the lessee, the Company currently leases real estate space under noncancelable operating lease agreements for ground leases and administrative office leases. The Company’s leases have remaining lease terms ranging from less than one to 51 years, some of which include options to extend the terms for up to an additional 75 years. The Company does not include any of its renewal options in its lease terms for calculating its lease liability as the renewal options allow the Company to maintain operational flexibility, and the Company is not reasonably certain it will exercise these renewal options at this time. The weighted-average remaining non-cancelable lease term for the Company’s operating leases was 20.3 years at December 31, 2020. The Company’s operating lease liabilities are determined based on the estimated present value of the Company’s minimum lease payments under its lease agreements. The discount rate used to determine the lease liabilities is based on the estimated incremental borrowing rate on a lease by lease basis. When calculating the incremental borrowing rates, the Company utilized data from (i) its recent debt issuances, (ii) publicly available data for instruments with similar characteristics, (iii) observable mortgage rates and (iv) unlevered property yields and discount rates. The Company then applied adjustments to account for considerations related to term and security that may not be fully incorporated by the data sets. At December 31, 2020, the weighted-average discount rate was 6.53%. During the year ended December 31, 2020, the Company obtained $8.9 million of right-use-assets in exchange for new operating lease liabilities related to a new ground lease. The components of the Company’s lease expense, which are included in rent expense and general and administrative expense on the Company’s Consolidated Statements of Income, were as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Lease cost: |  |  |  |  |  |  |  |
Operating lease cost |  | $ | 10,371 |  |  |  | 12,630 |
Variable lease cost |  |  | 2,852 |  |  |  | 2,038 |
Total lease cost |  | $ | 13,223 |  |  |  | 14,668 |
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities (in thousands):
Year Ending December 31, |
2021 |  | $ | 11,209 |
2022 |  |  | 10,596 |
2023 |  |  | 10,623 |
2024 |  |  | 9,801 |
2025 |  |  | 9,285 |
Thereafter |  |  | 128,795 |
Total minimum lease payments |  | $ | 180,309 |
Less imputed interest |  |  | (83,690 | )
Total operating lease liabilities |  | $ | 96,619 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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