v3.25.2
Leases
 6 Months Ended
Jun. 30, 2025
Leases [Abstract]  
Leases Leases
As Lessor
The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more tenant renewal options. The Company’s leases provide for annual base rental payments (generally payable in monthly installments) and generally provide for increases in rent based on fixed contractual terms or as a result of increases in the Consumer Price Index.
Substantially all of the leases are triple-net, which means that the lessees are responsible for paying all property operating expenses, including maintenance, insurance, utilities, property taxes and, if applicable, ground rent expense; therefore, the Company is generally not responsible for repairs or other capital expenditures related to the properties while the triple-net leases are in effect and, at the end of the lease term, the lessees are responsible for returning the property to the Company in a substantially similar condition as when they took possession. Some of the Company’s leases provide that in the event the Company wishes to sell the property
subject to that lease, it first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which it intends to accept for the sale of the property.
Scheduled future minimum base rental and interest payments due to be received under the remaining non-cancelable term of operating leases and direct financing lease receivables in place as of June 30, 2025, and due to be received under loans receivable through the scheduled maturity dates as of June 30, 2025 were as follows:
(in thousands)
Operating LeasesLoans and Direct Financing LeasesTotal Future Minimum Receipts
July 1 - December 31, 2025$239,593 $15,502 $255,095 
2026484,069 31,240 515,309 
2027488,855 30,604 519,459 
2028493,029 30,753 523,782 
2029496,970 31,125 528,095 
Thereafter
5,838,480 332,015 6,170,495 
Total$8,040,996 $471,239 $8,512,235 
Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum base rental payments to be received during the initial non-cancelable lease term only. In addition, the future minimum lease payments exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to gross sales thresholds and exclude increases in annual rent based on future changes in the Consumer Price Index, among other items.
The fixed and variable components of lease revenues for the three and six months ended June 30, 2025 and 2024 were as follows:
Three months ended June 30,Six months ended June 30,
(in thousands)2025202420252024
Fixed lease revenues$128,413 $103,521 $250,318 $201,527 
Variable lease revenues (1)
1,189 709 2,925 1,495 
Total lease revenues (2)
$129,602 $104,230 $253,243 $203,022 
_____________________________________
(1)Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants.
(2)Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit.
As Lessee
The Company has a number of ground leases, office leases and equipment leases which are classified as operating leases. As of June 30, 2025, the Company’s right of use ("ROU") assets and lease liabilities were $9.0 million and $9.2 million, respectively. As of December 31, 2024, the Company’s ROU assets and lease liabilities were $8.8 million and $9.5 million, respectively. These amounts are included in rent receivables, prepaid expenses and other assets, net and accrued liabilities and other payables on the Company's consolidated balance sheets.
The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate ("IBR"). The Company considers the general economic environment and its historical borrowing activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply hindsight, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. Certain of the Company’s ground leases offer renewal options which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that the Company is reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset.
The following table sets forth information related to the measurement of the Company’s lease liabilities as of the dates presented:
June 30, 2025December 31, 2024
Weighted average remaining lease term (in years)23.923.3
Weighted average discount rate6.86%6.83%
The following table sets forth the details of rent expense for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
(in thousands)2025202420252024
Fixed rent expense - ground leases$171 $177 $343 $422 
Fixed rent expense - office and equipment leases180 179 359 314 
Variable rent expense— — — — 
Total rent expense$351 $356 $702 $736 
As of June 30, 2025, future lease payments under ground, office and equipment operating leases to be paid by the Company directly and future lease payments under ground leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows:
(in thousands)Office and Equipment LeasesGround LeasesTotal Future Minimum Base Rental Payments
July 1 - December 31, 2025$363 $348 $711 
2026226 697 923 
2027227 705 932 
2028233 729 962 
202961 743 804 
Thereafter— 18,014 18,014 
Total$1,110 $21,236 22,346 
Present value discount(13,134)
Lease liabilities$9,212 
The Company has adopted the short-term lease policy election and accordingly, the table above excludes future minimum base cash rental payments by the Company or its tenants on leases that have a term of less than 12 months at lease inception. The total of such future obligations is not material.
Leases Leases
As Lessor
The Company’s investment properties are leased to tenants under long-term operating leases that typically include one or more tenant renewal options. The Company’s leases provide for annual base rental payments (generally payable in monthly installments) and generally provide for increases in rent based on fixed contractual terms or as a result of increases in the Consumer Price Index.
Substantially all of the leases are triple-net, which means that the lessees are responsible for paying all property operating expenses, including maintenance, insurance, utilities, property taxes and, if applicable, ground rent expense; therefore, the Company is generally not responsible for repairs or other capital expenditures related to the properties while the triple-net leases are in effect and, at the end of the lease term, the lessees are responsible for returning the property to the Company in a substantially similar condition as when they took possession. Some of the Company’s leases provide that in the event the Company wishes to sell the property
subject to that lease, it first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which it intends to accept for the sale of the property.
Scheduled future minimum base rental and interest payments due to be received under the remaining non-cancelable term of operating leases and direct financing lease receivables in place as of June 30, 2025, and due to be received under loans receivable through the scheduled maturity dates as of June 30, 2025 were as follows:
(in thousands)
Operating LeasesLoans and Direct Financing LeasesTotal Future Minimum Receipts
July 1 - December 31, 2025$239,593 $15,502 $255,095 
2026484,069 31,240 515,309 
2027488,855 30,604 519,459 
2028493,029 30,753 523,782 
2029496,970 31,125 528,095 
Thereafter
5,838,480 332,015 6,170,495 
Total$8,040,996 $471,239 $8,512,235 
Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum base rental payments to be received during the initial non-cancelable lease term only. In addition, the future minimum lease payments exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to gross sales thresholds and exclude increases in annual rent based on future changes in the Consumer Price Index, among other items.
The fixed and variable components of lease revenues for the three and six months ended June 30, 2025 and 2024 were as follows:
Three months ended June 30,Six months ended June 30,
(in thousands)2025202420252024
Fixed lease revenues$128,413 $103,521 $250,318 $201,527 
Variable lease revenues (1)
1,189 709 2,925 1,495 
Total lease revenues (2)
$129,602 $104,230 $253,243 $203,022 
_____________________________________
(1)Includes contingent rent based on a percentage of the tenant’s gross sales and costs paid by the Company for which it is reimbursed by its tenants.
(2)Excludes the amortization and accretion of above- and below-market lease intangible assets and liabilities and lease incentives and the adjustment to rental revenue for tenant credit.
As Lessee
The Company has a number of ground leases, office leases and equipment leases which are classified as operating leases. As of June 30, 2025, the Company’s right of use ("ROU") assets and lease liabilities were $9.0 million and $9.2 million, respectively. As of December 31, 2024, the Company’s ROU assets and lease liabilities were $8.8 million and $9.5 million, respectively. These amounts are included in rent receivables, prepaid expenses and other assets, net and accrued liabilities and other payables on the Company's consolidated balance sheets.
The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental borrowing rate ("IBR"). The Company considers the general economic environment and its historical borrowing activity and factors in various financing and asset specific adjustments to ensure the IBR is appropriate to the intended use of the underlying lease. As the Company did not elect to apply hindsight, lease term assumptions determined under ASC 840 were carried forward and applied in calculating the lease liabilities recorded under ASC 842. Certain of the Company’s ground leases offer renewal options which it assesses against relevant economic factors to determine whether it is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods that the Company is reasonably certain will be exercised, if any, are included in the measurement of the corresponding lease liability and ROU asset.
The following table sets forth information related to the measurement of the Company’s lease liabilities as of the dates presented:
June 30, 2025December 31, 2024
Weighted average remaining lease term (in years)23.923.3
Weighted average discount rate6.86%6.83%
The following table sets forth the details of rent expense for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
(in thousands)2025202420252024
Fixed rent expense - ground leases$171 $177 $343 $422 
Fixed rent expense - office and equipment leases180 179 359 314 
Variable rent expense— — — — 
Total rent expense$351 $356 $702 $736 
As of June 30, 2025, future lease payments under ground, office and equipment operating leases to be paid by the Company directly and future lease payments under ground leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows:
(in thousands)Office and Equipment LeasesGround LeasesTotal Future Minimum Base Rental Payments
July 1 - December 31, 2025$363 $348 $711 
2026226 697 923 
2027227 705 932 
2028233 729 962 
202961 743 804 
Thereafter— 18,014 18,014 
Total$1,110 $21,236 22,346 
Present value discount(13,134)
Lease liabilities$9,212 
The Company has adopted the short-term lease policy election and accordingly, the table above excludes future minimum base cash rental payments by the Company or its tenants on leases that have a term of less than 12 months at lease inception. The total of such future obligations is not material.