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LEASES | 6 Months Ended
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Jun. 30, 2022
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 2022 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. The components of lease revenues are as follows (amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended
​ | ​ | June 30, | ​ | June 30,
​ |  | 2022 |  | 2021 |  | 2022 |  | 2021
Fixed lease revenues | ​ | $ | 18,405 | ​ | $ | 17,435 | ​ | $ | 36,746 | ​ | $ | 34,900
Variable lease revenues | ​ | ​ | 2,860 | ​ | ​ | 2,662 | ​ | ​ | 5,861 | ​ | ​ | 5,649
Lease revenues (a) | ​ | $ | 21,265 | ​ | $ | 20,097 | ​ | $ | 42,607 | ​ | $ | 40,549
(a) | Excludes amortization related to lease intangible assets and liabilities of $207 and $396 for the three and six months ended June 30, 2022, respectively, and $208 and $440 for the three and six months ended June 30, 2021, 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. 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. The Company has assessed the collectability of all recorded lease revenues as probable as of June 30, 2022. Impact of COVID-19 During 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, excluding amounts related to Regal Cinemas as described below. Through June 30, 2022, the Company collected an aggregate of $3,261,000, or 97.1%, of such deferred rents. The balance of deferred rents deemed collectible, or $88,000, is expected to be repaid during the remainder of 2022 through January 2023. In 2021, the Company executed lease amendments with Regal Cinemas, a tenant at two properties, which was adversely affected by the pandemic. Pursuant to these lease amendments, the Company agreed, among other things, to defer an aggregate of $1,449,000 of rent which was originally payable from September 2020 through August 2021 and that such deferred amounts would be repaid beginning in 2022 (the deferred amounts were not accrued as collections were deemed less than probable). Through June 30, 2022, the tenant is current on all lease payments in accordance with these lease amendments and the Company collected an aggregate of $483,000, or 33.3%, of such deferred rents. The $966,000 balance of deferred rents is to be collected in equal monthly installments during the remainder of 2022 through June 2023. NOTE 3 – LEASES (CONTINUED) Minimum Future Rents As of June 30, 2022, 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, (iii) $966,000 of COVID-19 lease deferral repayments due from Regal Cinemas which were not accrued to rental income and (iv) variable lease payments as described above. ​
​ | ​ | ​ | ​
From July 1 – December 31, 2022 | ​ | $ | 35,498
For the year ending December 31, | ​ | ​ | ​
2023 | ​ | ​ | 70,042
2024 | ​ | ​ | 61,917
2025 | ​ | ​ | 57,631
2026 | ​ | ​ | 53,345
2027 | ​ | ​ | 45,033
Thereafter | ​ | ​ | 159,107
Total | ​ | $ | 482,573
​ Lease Termination Fees In January 2022, the Company received $25,000 as a lease termination fee from a retail tenant which was recognized during the six months ended June 30, 2022. In January 2021, the Company received $350,000 as a lease termination fee from a retail tenant, of which $88,000 and $175,000 were recognized during the three and six months ended June 30, 2021, respectively. In December 2020, the Company received $88,000 as a lease termination fee from an industrial tenant, of which $29,000 and $74,000 were recognized during the three months and six months ended June 30, 2021, respectively. 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 June 30, 2022, the remaining lease term, including renewal options deemed exercised, is 12.7 years. The Company recognized lease expense related to this ground lease of $150,000 and $300,000 for both the three and six months ended June 30, 2022 and 2021, 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 for a five-year renewal option. As of June 30, 2022, the remaining lease term, including the renewal option deemed exercised, is 14.5 years. The Company recognized lease expense related to this office lease of $14,000 and $28,000 for both the three and six months ended June 30, 2022 and 2021, respectively, which is included in General and administrative expenses on the consolidated statements of income. NOTE 3 – LEASES (CONTINUED) Minimum Future Lease Payments As of June 30, 2022, the minimum future lease payments related to the operating ground and office leases are as follows (amounts in thousands):
​ | ​ | ​ | ​
From July 1 – December 31, 2022 | ​ | $ | 253
For the year ending December 31, | ​ | ​ | ​
2023 | ​ | ​ | 507
2024 | ​ |  | 557
2025 | ​ |  | 626
2026 | ​ |  | 627
2027 | ​ |  | 629
Thereafter | ​ |  | 5,591
Total undiscounted cash flows | ​ | $ | 8,790
Present value discount | ​ |  | (1,722)
Lease liability | ​ | $ | 7,068
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