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Note 15 - Leases

12 Months Ended

Dec. 31, 2020

NOTE 15.

LEASES

We enter into operating lease contracts primarily for land and office space. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases include land lease contracts and contracts for the use of office space. In accordance with the transition guidance of ASC 842, such arrangements are included in our balance sheet as of January 1, 2019.

Right of use assets, which we refer to as “ROU assets,” represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

Certain of our operating lease agreements include rental payments based on a percentage of revenue and others include rental payments adjusted periodically for inflationary changes. Percentage rent contracts, in which lease expense is calculated as a percentage of advertising revenue, and payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense.

Many of our leases entered into in connection with land provide options to extend the terms of the agreements. Generally, renewal periods are included in minimum lease payments when calculating the lease liabilities as, for most leases, we consider exercise of such options to be reasonably certain. As a result, optional terms and payments are included within the lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The implicit rate within our lease agreements is generally not determinable. As such, we use the incremental borrowing rate, which we refer to as "IBR," to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

Operating Lease Cost

Operating lease cost for the year ended December 31, 2020 is as follows:

	Year Ended		Year Ended
	Ended		Ended
	December 31, 2020		December 31, 2019		Statement of Operations Classification

Lease cost	$	6,328,994	$	5,989,314	Cost of billboard revenues and general and administrative
Variable and short-term lease cost		467,797		1,019,486	Cost of billboard revenues and general and administrative

Total Lease Cost	$	6,796,791	$	7,008,800

Supplemental cash flow information related to operating leases was as follows:

	Year Ended		Year Ended
	Ended		Ended
	December 31, 2020		December 31, 2019

Cash payments for operating leases	$	6,211,256	$	5,776,931
New operating lease assets obtained in exchange for operating lease liabilities	$	881,610	$	6,551,279

Operating Lease Assets and Liabilities

December 31, 2020

December 31, 2019

Balance Sheet Classification

Lease assets
$ 52,849,492 $ 53,249,985
Other Assets: Right of use assets

Current lease liabilities
$ 4,354,664 $ 3,801,727
Current Liabilities: Lease liabilities

Noncurrent lease liabilities
47,581,933 48,199,652
Long-term Liabilities: Lease liabilities

Total Lease Liabilities
$ 51,936,597 $ 52,001,379

Maturity of Operating Lease Liabilities

December 31, 2020

2021
$ 6,553,589

2022
6,058,577

2023
5,682,235

2024
5,197,230

2025
4,909,502

Thereafter
49,903,069

Total lease payments
78,304,202

Less imputed interest
(26,367,605 )

Present Value of Lease Liabilities
$ 51,936,597

As of December 31, 2020 our operating leases have a weighted-average remaining lease term of 17.64 years and a weighted-average discount rate of 4.84%.