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LEASES | 3 Months Ended
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Mar. 31, 2021
LEASES |
LEASES | NOTE 3 – LEASES Lessor Accounting The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2021 to 2055, with options to extend or terminate the lease. Revenues from such leases are reported as Rental income, net, and are comprised of (i) lease components, which includes fixed and variable lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842. Fixed lease revenues represent the base rent that each tenant is required to pay in accordance with the terms of their respective leases reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues include payments based on (i) tenant reimbursements, (ii) changes in the index or market-based indices after the inception of the lease, (iii) percentage rents or (iv) the operating performance of the property. Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred. NOTE 3 – LEASES (CONTINUED) The components of lease revenues are as follows (amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended
​ | ​ | March 31,
​ |  | 2021 |  | 2020
Fixed lease revenues | ​ | $ | 17,465 | ​ | $ | 18,067
Variable lease revenues | ​ | ​ | 2,987 | ​ | ​ | 2,982
Lease revenues (a) | ​ | $ | 20,452 | ​ | $ | 21,049
| (a) | Excludes $232 and $190 of amortization related to lease intangible assets and liabilities for the three months ended March 31, 2021 and 2020, respectively.
In many of the Company’s leases, the tenant is obligated to pay the real estate taxes, insurance, and certain other expenses directly to the vendor. These obligations, which have been assumed by the tenants, are not reflected in our consolidated financial statements. To the extent any such tenant defaults on its lease or if it is deemed probable that the tenant will fail to pay for such obligations, a liability for such obligations would be recorded. During the year ended December 31, 2020, in response to requests for rent relief from tenants impacted by the COVID-19 pandemic and the governmental and non-governmental responses thereto, the Company deferred and accrued $3,360,000 of rent payments. For 2020, the three months ended March 31, 2021 and for April 2021, the Company collected $497,000, $843,000 and $359,000, respectively, of such deferred rents. The $1,661,000 balance of deferred rents is deemed collectible and is expected to be collected from 2021 through 2023. On a quarterly basis, the Company assesses the collectability of substantially all lease payments due by reviewing the tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. In February 2021, the Company executed lease amendments with Regal Cinemas, a tenant at two properties, which was adversely affected by the pandemic. In connection with the lease amendments, the Company agreed to defer an aggregate of $1,449,000 of rent otherwise payable from September 2020 through August 2021, the tenant agreed to pay an aggregate of $441,000 of rent during that same period and the parties extended the lease for one of these properties for two years. Through April 30, 2021, the tenant is current on all lease obligations in accordance with these lease amendments. The Company did not accrue the deferred rents due from September 2020 through March 2021 as collections were deemed less than probable. The Company has assessed the collectability of all recorded lease payments as probable as of March 31, 2021. Minimum Future Rents As of March 31, 2021, the minimum future contractual rents to be received on non-cancellable operating leases are included in the table below (amounts in thousands). The minimum future contractual rents do not include (i) straight-line rent or amortization of intangibles, (ii) COVID-19 lease deferral repayments accrued to rental income in 2020 and (iii) variable lease payments as described above. ​
​ | ​ | ​ | ​
From April 1 – December 31, 2021 | ​ | $ | 52,571
For the year ended December 31, | ​ | ​ | ​
2022 | ​ | ​ | 62,646
2023 | ​ | ​ | 53,279
2024 | ​ | ​ | 44,609
2025 | ​ | ​ | 40,391
2026 | ​ | ​ | 34,860
Thereafter | ​ | ​ | 129,439
Total | ​ | $ | 417,795
​ NOTE 3 – LEASES (CONTINUED) Lease Termination Fees In January 2021, the Company received $350,000 as a lease termination fee from a retail tenant in connection with the exercise of an early lease termination option. The Company is amortizing this to revenues over the revised lease term expiring January 15, 2022. In December 2020, the Company received $88,000 as a lease termination fee from an industrial tenant in connection with the exercise of an early lease termination option. The Company is amortizing this to revenues over the revised lease term expiring May 31, 2021. Lessee Accounting Ground Lease The Company is a lessee under a ground lease in Greensboro, North Carolina, which is classified as an operating lease. The ground lease expires March 3, 2025 and provides for up to four, 5-year renewal options and one seven-month renewal option. As of March 31, 2021, the remaining lease term, including renewal options deemed exercised, is 13.9 years. The Company recognized lease expense related to this ground lease of $150,000 and $131,000 for the three months ended March 31, 2021 and 2020, respectively, which is included in Real estate expenses on the consolidated statements of income. Office Lease The Company is a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease. The lease expires on December 31, 2031 and provides a 5-year renewal option. As of March 31, 2021, the remaining lease term, including the renewal option deemed exercised, is 15.8 years. The Company recognized lease expense related to this office lease of $14,000 for both the three months ended March 31, 2021 and 2020, which is included in General and administrative expenses on the consolidated statements of income. Minimum Future Lease Payments As of March 31, 2021, the minimum future lease payments related to the operating ground and office leases are as follows (amounts in thousands): ​
​ | ​ | ​ | ​
From April 1 – December 31, 2021 | ​ | $ | 383
For the year ended December 31, | ​ | ​ | ​
2022 | ​ | ​ | 506
2023 | ​ |  | 507
2024 | ​ |  | 557
2025 | ​ |  | 626
2026 | ​ |  | 627
Thereafter | ​ |  | 6,220
Total undiscounted cash flows | ​ | $ | 9,426
Present value discount | ​ |  | (2,000)
Lease liability | ​ | $ | 7,426
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