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Note 11 - Leases | 12 Months Ended
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Dec. 31, 2022
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, net on the Company’s Consolidated Statements of Income, as either fixed or variable lease income based on the criteria specified in ASC 842, for the years ended December 31, 2022, 2021 and 2020, is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Lease income: |  |  |  |  |  |  |  |  |  |  |  |
Fixed lease income (1) |  | $ | 1,353,024 |  |  | $ | 1,045,888 |  |  | $ | 871,151 |
Variable lease income (2) |  |  | 339,722 |  |  |  | 264,040 |  |  |  | 232,272 |
Above-market and below-market leases amortization, net |  |  | 13,591 |  |  |  | 14,843 |  |  |  | 22,515 |
Adjustments for potentially uncollectible revenues and disputed amounts (3) |  |  | 4,511 |  |  |  | 24,931 |  |  |  | (81,050 | )
Total lease income |  | $ | 1,710,848 |  |  | $ | 1,349,702 |  |  | $ | 1,044,888 |
| (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) | The amounts represent adjustments associated with potentially uncollectible revenues and disputed amounts.
Base rental revenues and fixed-rate expense reimbursements 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, 2022, 2021 and 2020 was $33.8 million, $22.6 million and ($5.9) 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 2121. 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, 2022, 2021 and 2020. 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):
|  | 2023 |  |  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | Thereafter |
Minimum revenues |  | $ | 1,239.4 |  |  | $ | 1,130.8 |  |  | $ | 989.9 |  |  | $ | 840.5 |  |  | $ | 674.4 |  |  | $ | 2,862.3 |
Lessee Leases The Company currently leases real estate space under non-cancelable operating lease agreements for ground leases and administrative office leases. The Company’s operating leases have remaining lease terms ranging from one to 63 years, some of which include options to extend the terms for up to an additional 75 years. In connection with the Merger, the Company obtained $32.6 million of operating right-of-use assets in exchange for new operating lease liabilities related to six properties under operating lease agreements for ground leases. In addition, the Company acquired two properties under finance leasing arrangements that consists of variable lease payments with a bargain purchase option. As a result, the Company obtained finance right-of-use assets of $23.0 million (which are included in Other assets on the Company’s Consolidated Balance Sheets) in exchange for new finance lease liabilities (which are included in Other liabilities on the Company’s Consolidated Balance Sheets). The weighted-average remaining non-cancelable lease term and weighted-average discount rates for the Company’s operating and finance leases as of December 31, 2022 were as follows:
|  | Operating Leases |  |  | Finance Leases |
Weighted-average remaining lease term (in years) |  |  | 24.4 |  |  |  | 1.0 |
Weighted-average discount rate |  |  | 6.62 | % |  |  | 4.44 | %
The components of the Company’s lease expense, which are included in interest expense, rent expense and general and administrative expense on the Company’s Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020, were as follows (in thousands):
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Lease cost: |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost |  | $ | 1,294 |  |  | $ | 569 |  |  | $ | - |
Operating lease cost |  |  | 12,994 |  |  |  | 11,637 |  |  |  | 10,371 |
Variable lease cost |  |  | 4,143 |  |  |  | 3,972 |  |  |  | 2,852 |
Total lease cost |  | $ | 18,431 |  |  | $ | 16,178 |  |  | $ | 13,223 |
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating and financing lease liabilities (in thousands):
Year Ending December 31, |
|  | Operating Leases |  |  | Financing Leases (1) |
2023 |  | $ | 12,410 |  |  | $ | 22,987 |
2024 |  |  | 11,582 |  |  |  | - |
2025 |  |  | 11,067 |  |  |  | - |
2026 |  |  | 10,402 |  |  |  | - |
2027 |  |  | 10,118 |  |  |  | - |
Thereafter |  |  | 188,952 |  |  |  | - |
Total minimum lease payments |  | $ | 244,531 |  |  | $ | 22,987 |
Less imputed interest |  |  | (130,852 | ) |  |  | (962 | )
Total lease liabilities (2) |  | $ | 113,679 |  |  | $ | 22,025 |
| (1) | Includes bargain purchase options exercisable in 2023 related to two properties.
| (2) | Operating lease liabilities are included in Operating lease liabilities and financing lease liabilities are included in Other liabilities on the Company’s Consolidated Balance Sheets.

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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 https://asc.fasb.org/subtopic&trid=77888251 + Details
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