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Note 13 - Leases

3 Months Ended

Mar. 31, 2021

NOTE 13. 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.

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 three months ended March 31, 2021 and 2020 is as follows:

	Three Months		Three Months
	Ended		Ended
	March 31, 2021		March 31, 2020		Statement of Operations Classification

Lease cost	$	1,747,633	$	1,611,303	Cost of billboard revenues and general and administrative
Variable and short-term lease cost		97,046		157,246	Cost of billboard revenues and general and administrative

Total Lease Cost	$	1,844,679	$	1,768,549

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

	*Three Months*
	*Ended*
	*March 31, 2021*

Cash payments for operating leases	$	1,699,913
New operating lease assets obtained in exchange for operating lease liabilities	$	7,553,810

Operating Lease Assets and Liabilities

	*March 31, 2021*		*December 31, 2020*		*Balance Sheet Classification*

Lease assets	$	56,676,028	$	52,849,492	Other Assets: Right of use assets

Current lease liabilities	$	4,024,439	$	4,354,664	Current Liabilities: Lease liabilities
Noncurrent lease liabilities		51,659,325		47,581,933	Long-term Liabilities: Lease liabilities

Total Lease Liabilities	$	55,683,764	$	51,936,597

Maturity of Operating Lease Liabilities

	*March 31, 2021*

2021	$	6,491,462
2022		6,154,292
2023		5,840,813
2024		5,408,772
2025		5,263,616
Thereafter		55,168,967

Total lease payments		84,327,922
Less imputed interest		(28,644,158	)

Present Value of Lease Liabilities	$	55,683,764

As of March 31, 2021, our operating leases have a weighted-average remaining lease term of 17.39 years and a weighted-average discount rate of 4.74%.