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| Leases | Leases As Lessor The Company's properties are leased to single tenants on a long-term, triple-net basis, which obligates the tenant to be responsible for the ongoing expenses of a property, in addition to its rent obligations. Under certain circumstances the Company will pay for certain expenses on behalf of the tenant and the tenant is required to reimburse the Company. The presentation in the statements of operations for these expenses are gross where the Company records revenue and a corresponding reimbursable expense. Expenses paid directly by a tenant are not reimbursable and therefore are not reflected in the statements of operations. The expense and reimbursable amounts may differ due to timing, since the revenue is recorded on a cash basis. The revenues associated with the reimbursable expenses were classified in "Fees and Reimbursables" in the accompanying consolidated statements of operations. For the three months ended March 31, 2025 and 2024, the reimbursable revenues were $0.4 million and $0.3 million, respectively. Reimbursable expenses are classified as "Property Expenses" in the accompanying consolidated statements of operations. The Company's tenants operate in the cannabis industry. All of the Company's leases generally contain annual increases in rent (typically between 2% and 3%) over the expiring rental rate at the time of expiration. Certain leases of the Company also contain an improvement allowance, which is generally available to be funded between 12 and 18 months. In some leases, the tenant becomes liable to pay rent as if all the improvement allowance has been funded, even if there are still unfunded commitments. Improvement allowances also contain annual increases which generally increase at the same rate as base rent, per the lease agreement. Certain of the Company's leases provide the lessee with a right of first refusal or right of first offer in the event the Company markets the leased property for sale. As of March 31, 2025, the Company had two leases that granted the lessee an option to purchase the leased property at its fair market value at the end of the initial lease term in December 2029, subject to the satisfaction of certain conditions. As of March 31, 2025, the Company's gross investment in these two properties was approximately $6.3 million. Lease Income The following table presents the future contractual minimum rent under the Company’s operating leases as of March 31, 2025 (in thousands):
(1) The table only includes three months of 50% of the contractual rent from Revolutionary Clinics. Although the Company has preserved all its rights under the lease agreement, the tenant is currently in receivership, and a court-appointed receiver is overseeing the process of liquidation. The Company has entered into a stipulation agreement with the receiver and anticipates collecting 50% of the contractual rent monthly through June 2025. For more information about this tenant, refer to the section below titled "Condition of our Tenants". Credit Risk and Geographic Concentration The ability of any of the Company’s tenants to honor the terms of its lease are dependent upon the economic, regulatory, competitive, natural and social factors affecting the community in which that tenant operates. As of March 31, 2025 and December 31, 2024, the Company owned 33 and 32 properties, respectively, leased to 12 and 13 tenants, respectively across 12 states including Arizona, Arkansas, California, Connecticut, Florida, Illinois, Massachusetts, Missouri, Nevada, North Dakota, Ohio, and Pennsylvania. The following table presents the tenants in the Company's portfolio that represented the largest percentage of the Company's total rental income and fees, excluding revenue reimbursables, for each of the periods presented:
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables. (2) This tenant was formerly known as Columbia Care. The following table presents the states in the Company’s portfolio that represented the largest percentage of the Company’s total rental income and fees, excluding revenue reimbursable, for each of the periods presented:
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables. Condition of Our Tenants During the fourth quarter of 2023, the Company amended its leases with: a) Revolutionary Clinics, Inc. ("Revolutionary Clinics") as part of a restructuring of their business, their receipt of new third-party capital and new management, and b) Calypso Enterprises ("Calypso") in connection with their sale to Canvas Acquisition Corporation. Both tenants experienced operating challenges impacting their ability to pay rent as described below. Revolutionary Clinics From June 2024 through March 2025, Revolutionary Clinics paid approximately 50% of its contractual rent. On December 13, 2024, Revolutionary Clinics entered into receivership. In the first quarter of 2025, the Company entered into a stipulation agreement with the court appointed receiver to receive 50% of contractual rent paid weekly, along with weekly payments for the reimbursement of certain delinquent real estate taxes and utilities that were paid by the Company. The receiver is working to either liquidate or sell the tenant's business. The Company has reserved all of its rights under the lease agreement. Calypso Enterprises From September 2024 through February 2025, Calypso did not pay the contractual rent due under its lease agreement. The Company held an escrow deposit equivalent to approximately six months of rent and a security deposit of approximately $43 thousand. From September 2024 through December 2024, the Company applied four months of escrow deposits to satisfy contractual rent. At December 31, 2024, the Company held the remaining escrow and security deposits of approximately $490 thousand, which were applied to satisfy contractual rent due for January 2025 and a portion of February 2025. At March 31, 2025 there were no remaining escrow or security deposits. In connection with a financial restructuring of Calypso to raise new third-party capital, the Company received the remaining outstanding rent for the first quarter of 2025. This payment received during the first quarter covered the remaining portion of February and March contractual rent, resulting in the collection of all rent due for the three months ended March 31, 2025. Additionally, as of September 2024, in accordance with the lease agreement, the Company suspended our obligation to fund the remaining improvement allowance of approximately $987 thousand until all outstanding rent is paid and the escrow deposit is replenished. As Lessee Commencing on June 1, 2022, the Company entered into a four year lease agreement to rent its office space, subject to annual escalations, which includes the option to extend the lease for a single three year period. The annual rent payments range from approximately $72.0 thousand in year one to approximately $85.0 thousand in year four. This one office lease qualifies under the right-of-use ("ROU") model. Upon entering into the lease in June 2022, the Company recorded a ROU asset of $273 thousand which is classified in “” and a lease liability, which is classified in " in the accompanying consolidated balance sheets. The ROU balance as of March 31, 2025 and December 31, 2024, were approximately $92.2 thousand and $110.0 thousand, respectively. The ROU asset is amortized over the remaining lease term. The amortization is made up of the principal amortization under the lease liability plus or minus the straight-line adjustment of the operating lease rent. The following table presents the future contractual rent obligations as lessee as of March 31, 2025 (in thousands):
(1) The lease is scheduled to expire on August 31, 2026. The lease allows for one renewal option of 3 years commencing immediately upon the expiration of the initial term. As of March 31, 2025, the weighted-average discount rate used to calculate the lease liability was 5.65% and the remaining lease term was 1.42 years.
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| Leases | Leases As Lessor The Company's properties are leased to single tenants on a long-term, triple-net basis, which obligates the tenant to be responsible for the ongoing expenses of a property, in addition to its rent obligations. Under certain circumstances the Company will pay for certain expenses on behalf of the tenant and the tenant is required to reimburse the Company. The presentation in the statements of operations for these expenses are gross where the Company records revenue and a corresponding reimbursable expense. Expenses paid directly by a tenant are not reimbursable and therefore are not reflected in the statements of operations. The expense and reimbursable amounts may differ due to timing, since the revenue is recorded on a cash basis. The revenues associated with the reimbursable expenses were classified in "Fees and Reimbursables" in the accompanying consolidated statements of operations. For the three months ended March 31, 2025 and 2024, the reimbursable revenues were $0.4 million and $0.3 million, respectively. Reimbursable expenses are classified as "Property Expenses" in the accompanying consolidated statements of operations. The Company's tenants operate in the cannabis industry. All of the Company's leases generally contain annual increases in rent (typically between 2% and 3%) over the expiring rental rate at the time of expiration. Certain leases of the Company also contain an improvement allowance, which is generally available to be funded between 12 and 18 months. In some leases, the tenant becomes liable to pay rent as if all the improvement allowance has been funded, even if there are still unfunded commitments. Improvement allowances also contain annual increases which generally increase at the same rate as base rent, per the lease agreement. Certain of the Company's leases provide the lessee with a right of first refusal or right of first offer in the event the Company markets the leased property for sale. As of March 31, 2025, the Company had two leases that granted the lessee an option to purchase the leased property at its fair market value at the end of the initial lease term in December 2029, subject to the satisfaction of certain conditions. As of March 31, 2025, the Company's gross investment in these two properties was approximately $6.3 million. Lease Income The following table presents the future contractual minimum rent under the Company’s operating leases as of March 31, 2025 (in thousands):
(1) The table only includes three months of 50% of the contractual rent from Revolutionary Clinics. Although the Company has preserved all its rights under the lease agreement, the tenant is currently in receivership, and a court-appointed receiver is overseeing the process of liquidation. The Company has entered into a stipulation agreement with the receiver and anticipates collecting 50% of the contractual rent monthly through June 2025. For more information about this tenant, refer to the section below titled "Condition of our Tenants". Credit Risk and Geographic Concentration The ability of any of the Company’s tenants to honor the terms of its lease are dependent upon the economic, regulatory, competitive, natural and social factors affecting the community in which that tenant operates. As of March 31, 2025 and December 31, 2024, the Company owned 33 and 32 properties, respectively, leased to 12 and 13 tenants, respectively across 12 states including Arizona, Arkansas, California, Connecticut, Florida, Illinois, Massachusetts, Missouri, Nevada, North Dakota, Ohio, and Pennsylvania. The following table presents the tenants in the Company's portfolio that represented the largest percentage of the Company's total rental income and fees, excluding revenue reimbursables, for each of the periods presented:
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables. (2) This tenant was formerly known as Columbia Care. The following table presents the states in the Company’s portfolio that represented the largest percentage of the Company’s total rental income and fees, excluding revenue reimbursable, for each of the periods presented:
(1) Calculated based on rental income received during the period. This amount includes fees, applied escrow/security deposits, if any, and excludes revenue reimbursables. Condition of Our Tenants During the fourth quarter of 2023, the Company amended its leases with: a) Revolutionary Clinics, Inc. ("Revolutionary Clinics") as part of a restructuring of their business, their receipt of new third-party capital and new management, and b) Calypso Enterprises ("Calypso") in connection with their sale to Canvas Acquisition Corporation. Both tenants experienced operating challenges impacting their ability to pay rent as described below. Revolutionary Clinics From June 2024 through March 2025, Revolutionary Clinics paid approximately 50% of its contractual rent. On December 13, 2024, Revolutionary Clinics entered into receivership. In the first quarter of 2025, the Company entered into a stipulation agreement with the court appointed receiver to receive 50% of contractual rent paid weekly, along with weekly payments for the reimbursement of certain delinquent real estate taxes and utilities that were paid by the Company. The receiver is working to either liquidate or sell the tenant's business. The Company has reserved all of its rights under the lease agreement. Calypso Enterprises From September 2024 through February 2025, Calypso did not pay the contractual rent due under its lease agreement. The Company held an escrow deposit equivalent to approximately six months of rent and a security deposit of approximately $43 thousand. From September 2024 through December 2024, the Company applied four months of escrow deposits to satisfy contractual rent. At December 31, 2024, the Company held the remaining escrow and security deposits of approximately $490 thousand, which were applied to satisfy contractual rent due for January 2025 and a portion of February 2025. At March 31, 2025 there were no remaining escrow or security deposits. In connection with a financial restructuring of Calypso to raise new third-party capital, the Company received the remaining outstanding rent for the first quarter of 2025. This payment received during the first quarter covered the remaining portion of February and March contractual rent, resulting in the collection of all rent due for the three months ended March 31, 2025. Additionally, as of September 2024, in accordance with the lease agreement, the Company suspended our obligation to fund the remaining improvement allowance of approximately $987 thousand until all outstanding rent is paid and the escrow deposit is replenished. As Lessee Commencing on June 1, 2022, the Company entered into a four year lease agreement to rent its office space, subject to annual escalations, which includes the option to extend the lease for a single three year period. The annual rent payments range from approximately $72.0 thousand in year one to approximately $85.0 thousand in year four. This one office lease qualifies under the right-of-use ("ROU") model. Upon entering into the lease in June 2022, the Company recorded a ROU asset of $273 thousand which is classified in “” and a lease liability, which is classified in " in the accompanying consolidated balance sheets. The ROU balance as of March 31, 2025 and December 31, 2024, were approximately $92.2 thousand and $110.0 thousand, respectively. The ROU asset is amortized over the remaining lease term. The amortization is made up of the principal amortization under the lease liability plus or minus the straight-line adjustment of the operating lease rent. The following table presents the future contractual rent obligations as lessee as of March 31, 2025 (in thousands):
(1) The lease is scheduled to expire on August 31, 2026. The lease allows for one renewal option of 3 years commencing immediately upon the expiration of the initial term. As of March 31, 2025, the weighted-average discount rate used to calculate the lease liability was 5.65% and the remaining lease term was 1.42 years.
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