Leases

12 Months Ended

Dec. 31, 2024

14.

Leases

The Company leases office space and equipment under various operating lease arrangements. The Company’s leases have remaining lease terms ranging from 22 months to 8 years. In December 2024, the Company entered into a new lease at its principal location in Bala Cynwyd, Pennsylvania through December 31, 2032. The principal changes in terms include less square footage, lower cost per square foot, and enhanced services provided by the building manager. The ROU asset and lease liability associated with the Bala Cynwyd lease were revalued as of the effective date of the lease, resulting in a $0.9 million adjustment which reduced acquisition costs and other underwriting expenses on the Company's Consolidated Statements of Operations during the year ended December 31, 2024.

There were no impairment losses related to lease ROU assets for the years ended December 31, 2024 and 2023. The Company recognized the following impairment losses related to its lease ROU assets for the year ended December 31, 2022:


(Dollars in thousands)	Consolidated Statements of Operations Line	Impairment Loss
Scottsdale, Arizona (1)	Acquisition costs and other underwriting expenses		681
Omaha, Nebraska (2)	Acquisition costs and other underwriting expenses		488
Cavan, Ireland (3)	Acquisition costs and other underwriting expenses		168
Total lease impairment		$	1,337

(1) Impairment was in connection with the sale of the Company's manufactured and dwelling homes business renewal rights.

(2) Impairment was in connection with the sale of the Company's Farm, Ranch & Stable renewal rights.

(3) Terminated lease due to employees in Ireland working remotely.

See Note 2 of the notes to the consolidated financial statements in Item 8 of Part II of this report for additional information on the sale of the renewal rights related to the Company’s Farm, Ranch & Stable business and Note 2 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2023 Annual Report on Form 10-K for more information on the sale of renewal rights related to the Company's manufactured and dwelling homes business.

The components of lease expenses were as follows:


	Years Ended December 31,
(Dollars in thousands)	2024			2023			2022
Operating lease expenses	$	2,032		$	2,052		$	2,372
Short-term lease expenses		32			12			15
Sublease income (1)		(331	)		(331	)		(331	)
Total lease expenses	$	1,733		$	1,733		$	2,056

(1) In connection with the sale of the renewal rights related to the Company's manufactured and dwelling homes business in 2021, K2 is subleasing approximately one third of the Company's Scottsdale, Arizona office. The Company intends to exercise its early termination clause in the Scottsdale, Arizona lease and expects to receive $1.6 million in sublease payments between October 2021 through October 2026.

Supplemental cash flow information related to leases was as follows:


	Years Ended December 31,
(Dollars in thousands)	2024		2023		2022
Cash paid for amounts included in the measurement of liabilities:
Operating leases	$	1,733	$	1,852	$	2,056
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	158	$	—	$	—

Supplemental balance sheet information related to leases was as follows:

The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheets.


		December 31,
(Dollars in thousands)	Classification on the consolidated balance sheets	2024			2023
Assets:
Operating lease assets	Lease right of use assets	$	9,295		$	9,715

Liabilities:
Operating lease liabilities	Lease liabilities	$	10,371		$	12,733

Weighted-average remaining lease term
Operating leases		4.3 years			5.0 years

Weighted-average discount rate
Operating leases (1)			4.2	%		0.8	%

(1) Represents the Company’s incremental borrowing rate at the time the leases were contracted.

At December 31, 2024, future minimum lease payments under non-cancelable operating leases were as follows:


(Dollars in thousands)	Operating Leases (1)		Expected Sublease Income
2025	$	2,890	$	388
2026		1,700		342
2027		1,216		—
2028		1,225		—
2029		1,248		—
Thereafter		3,886		—
Total future minimum lease payments		12,165		730
Less: amount representing interest		1,794		—
Present value of minimum lease payments	$	10,371	$	730

(1)

Includes future minimum lease payments of $2.2 million on leases that have been impaired because the property is no longer in use.