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Note K - Right of Use Asset and Lease Liability

6 Months Ended

Jun. 30, 2024

Right of Use Asset and Lease Liability [Text Block]

Note K — Right of Use Asset and Lease Liability

We are the lessee in a ground lease for additional space at one location with a commencement date of January 1, 2024. The lease has a fourteen-year term, including extension options, with an annual payment of $40,457 per annum for the first year and increased each year by the lesser of 3.5% and the Consumer Price Index. The lease is accounted for as an operating lease under ASU 2016-02, Leases – (Topic 842). We recognized a Right of Use (“ROU”) Leased Asset and a ROU Lease Liability on the lease commencement date which is included in Land and Improvements and Accounts Payable and Accrued Expenses, respectively, on the Consolidated Balance Sheets. Through the discounting of the remaining lease payments at our incremental borrowing rate of 8.42%, the value of both the ROU asset and ROU liability recognized at commencement date was approximately $0.3 million. We recognized approximately $11,000 and $20,000 of operating lease expense during the three and six months ended June 30, 2024, respectively. This expense is included in Property Operating Expense on the Consolidated Statements of Operations. Changes in the lease liability and lease asset amortization expense were not material in the Statement of Cash Flows.

As of June 30, 2024, future lease payments are as follows (dollars in thousands):

		*As of June 30, 2024*
2024 (remainder)		20
2025		40
2026		40
2027		40
2028		40
Thereafter		366
Total lease payments		546
Less amount representing interest		(220)
Total	$	326