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Leases

12 Months Ended

Dec. 31, 2023

Note 3 – Leases

Lessor Accounting

We own rental properties which are leased to tenants under operating leases with current expirations ranging from 2024 to 2040, with options to extend or terminate the leases. Revenues from such leases are reported as Rental revenue in our consolidated statements of operations, 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. We do 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.

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 following table summarizes the components of lease revenues (amounts in thousands):

	2023		2022
	Years Ended December 31,
	2023		2022
Fixed lease revenues	$	1,019	$	878
Variable lease revenues ⁽¹⁾		415		282
Lease revenues ^{(2) (3)}	$	1,434	$	1,160

⁽¹⁾	Includes reimbursements for property taxes, insurance, and common area maintenance services.
⁽²⁾	Excludes lease intangible amortization of $0.8 million, and $0.3 million, for the years ended December 31, 2023, and 2022, respectively.
⁽³⁾	Excludes straight-line rent of less than $0.1 million for the years ended December 31, 2023, and 2022, respectively.

In certain of our 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.

We assess the collectability of substantially all lease payments due by reviewing a tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. We have assessed the collectability of all recorded lease revenues as probable as of December 31, 2023.

Minimum Future Lease Payments

The following table summarizes the minimum future contractual rents to be received (exclusive of expenses paid by tenants, and percentage of sales rents) on non-cancellable operating leases as of December 31, 2023 (amounts in thousands):

For the year ended December 31,
2024	$	931
2025		1,198
2026		1,103
2027		1,087
2028		1,108
Thereafter		11,030
Total ⁽¹⁾	$	16,457

⁽¹⁾	Excludes $0.1 million of straight-line rent and $1.3 million of lease intangible amortization.

We assess the collectability of unbilled rent receivable balances by reviewing a tenant’s payment history and financial condition. We have assessed the collectability of all unbilled rent receivable balances as probable as of December 31, 2023.

Lessee Accounting

Ground Lease

As further described in Note 5 – Real Estate, Net, on August 24, 2023, through an indirect majority-owned subsidiary of our Operating Company, we purchased land located in Sarasota, Florida, which we previously leased. Therefore, there is no longer a right of use (“ROU”) asset or lease liabilities in our consolidated balance sheets as of December 31, 2023. As of December 31, 2022, we were a lessee under the aforementioned ground lease which was classified as a financing lease. Accordingly, a finance lease liability of $5.0 million is included in Lease liabilities in our consolidated balance sheets as of December 31, 2022, which represented our obligation to make payments under this ground lease, and a ROU asset of $5.0 million is included in Other assets in our consolidated balance sheets as of December 31, 2022, which represented our right to use the underlying asset during the lease term. During the years ended December 31, 2023, and 2022 we capitalized $0.3 million and $0.3 million, respectively, of ground rent expense related to this ground lease on one of our development investments, which is included in Real estate under construction in our consolidated balance sheets.

There are no operating leases for which we are the lessee; therefore, there are no related ROU assets or lease liabilities in our consolidated balance sheets as of December 31, 2023 and 2022.