ACADIA REALTY TRUST Leases Disclosure
11. Leases
Operating Leases
As Lessor
The Company is engaged in the operation of shopping centers and other retail properties that are either owned or, with respect to certain shopping centers, operated under long-term ground leases (see below) that expire at various dates through June 20, 2066, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to sixty years and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volumes. During the years ended December 31, 2022 and 2021, the Company earned $59.3 million and $58.3 million, respectively, in variable lease revenues, primarily for real estate taxes and common area maintenance charges, which are included in rental income in the consolidated statements of operations.
Reserve Analysis
The activity for the reserves related to billed rents and straight-line rents (including those under specific operating leases where the collection of rents is assessed not to be probable) is as follows:
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Year Ended December 31, 2022 |
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Specific Allowance |
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Balance at |
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Provision (Recovery), Net |
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Write-Offs |
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General Allowance |
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Balance at |
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Allowance for credit loss - billed rents |
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$ |
23,586 |
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|
$ |
(102 |
) |
|
$ |
(4,656 |
) |
|
$ |
- |
|
|
$ |
18,828 |
|
Straight-line rent reserves |
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|
14,885 |
|
|
|
(1,742 |
) |
|
|
(1,348 |
) |
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|
1,450 |
|
|
|
13,245 |
|
Total - credit losses and reserves |
|
$ |
38,471 |
|
|
$ |
(1,844 |
) |
|
$ |
(6,004 |
) |
|
$ |
1,450 |
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|
$ |
32,073 |
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|
Year Ended December 31, 2021 |
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Specific Allowance |
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Balance at |
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Provision (Recovery), Net |
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Write-Offs |
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General Allowance |
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Balance at |
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Allowance for credit loss - billed rents |
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$ |
30,170 |
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|
$ |
(2,796 |
) |
|
$ |
(3,788 |
) |
|
$ |
— |
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|
$ |
23,586 |
|
Straight-line rent reserves |
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|
14,839 |
|
|
|
807 |
|
|
|
(2,636 |
) |
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|
1,875 |
|
|
|
14,885 |
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Total - credit losses and reserves |
|
$ |
45,009 |
|
|
$ |
(1,989 |
) |
|
$ |
(6,424 |
) |
|
$ |
1,875 |
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|
$ |
38,471 |
|
Tenant Settlement
On September 24, 2021, the Company entered into a conditional settlement agreement with its former tenant ("Former Tenant") and lease guarantor at one of its Core properties for the payment by Former Tenant and guarantor of a minimum of $5.4 million in accordance with a payment schedule set forth and subject to the terms in the conditional settlement agreement. The payments relate to judgments entered in favor of the Company totaling $8.6 million, plus interest, for the Former Tenant’s default under the lease and its subsequent termination by the Company. Given the inherent uncertainties involving collectability, the Company has deferred any amounts not received in its consolidated financial statements and such amounts will be recognized when realized. Through December 31, 2022 the Company had received a total of $2.7 million, of which $2.4 million was recognized as Other revenues on the statement of operations for the year ended December 31, 2022.
As Lessee
During the year ended December 31, 2022, there were no leasing transactions where the Company acted as lessee.
During the year ended December 31, 2021, the Company:
Additional disclosures regarding the Company’s leases as lessee are as follows:
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Year Ended December 31, |
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2022 |
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2021 |
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Lease Cost |
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Finance lease cost: |
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Amortization of right-of-use assets |
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$ |
903 |
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$ |
903 |
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Interest on lease liabilities |
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|
410 |
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|
388 |
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Subtotal |
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1,313 |
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1,291 |
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Operating lease cost |
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5,338 |
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|
7,184 |
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Variable lease cost |
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|
80 |
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|
84 |
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Total lease cost |
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$ |
6,731 |
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$ |
8,559 |
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Other Information |
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Weighted-average remaining lease term - finance leases (years) |
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31.9 |
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32.6 |
|
Weighted-average remaining lease term - operating leases (years) |
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13.5 |
|
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|
14.1 |
|
Weighted-average discount rate - finance leases |
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6.3 |
% |
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|
6.3 |
% |
Weighted-average discount rate - operating leases |
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5.1 |
% |
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|
5.1 |
% |
Right-of-use assets – finance leases are included in Operating real estate (Note 2) in the consolidated balance sheet. Lease liabilities – finance leases are included in Accounts payable and other liabilities in the consolidated balance sheet (Note 5). Operating lease cost comprises amortization of right-of-use assets for operating properties (related to ground rents) or amortization of right-of-use assets for office and corporate assets and is included in Property operating expense or General and administrative expense, respectively, in the consolidated statements of
operations. Finance lease cost comprises amortization of right-of-use assets for certain ground leases, which is included in Property operating expense, as well as interest on lease liabilities, which is included in Interest expense in the consolidated statements of operations.
Lease Obligations
The scheduled future minimum (i) rental revenues from rental properties under the terms of non-cancelable tenant leases greater than one year (assuming no new or renegotiated leases or option extensions for such premises) and (ii) rental payments under the terms of all non-cancelable operating and finance leases in which the Company is the lessee, principally for office space, land, and equipment, as of December 31, 2022, are summarized as follows (in thousands):
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Minimum Rental Payments |
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Year Ending December 31, |
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Minimum Rental |
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Operating Leases (b) |
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Finance |
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2023 |
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$ |
229,366 |
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$ |
5,389 |
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$ |
— |
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2024 |
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223,138 |
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|
5,414 |
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|
|
— |
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2025 |
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193,277 |
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|
5,329 |
|
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|
— |
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2026 |
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|
166,582 |
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|
5,173 |
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|
|
— |
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2027 |
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|
143,435 |
|
|
|
4,373 |
|
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— |
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Thereafter |
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608,168 |
|
|
|
20,065 |
|
|
|
12,549 |
|
|
|
|
1,563,966 |
|
|
|
45,743 |
|
|
|
12,549 |
|
Interest |
|
|
— |
|
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|
(10,472 |
) |
|
|
(5,527 |
) |
Total |
|
$ |
1,563,966 |
|
|
$ |
35,271 |
|
|
$ |
7,022 |
|
During the years ended December 31, 2022, 2021 and 2020, no single tenant or property collectively comprised more than 10% of the Company’s consolidated total revenues.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 1, 2023 | Showing above |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.