We are the lessor under certain agreements for gathering, transportation, storage, terminalling, and offloading with Delek Holdings. Revenue from these leases are recorded in affiliate revenue in the accompanying condensed consolidated statements of income and comprehensive income. We elected the practical expedient to carry forward historical lease classification conclusions until a modification of an existing agreement occurs. Once a modification occurs, the amended agreement is required to be assessed under ASC 842, to determine whether a reclassification of the lease is required.

The net investment in sales-type leases is recorded utilizing the estimated fair value of the underlying leased assets at contract modification date and are nonrecurring fair value measurements. The leased assets were valued using a cost method valuation approach which utilizes Level 3 inputs.

We recognized any billings in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues.

Lease income included in the accompanying condensed consolidated statements of income and comprehensive income were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
(in thousands)	2025		2025
Operating leases:
Lease revenue	$	50,717	$	99,316
Sales-type leases:
Interest income (Sales-type rental revenue-fixed minimum)	23,533		46,080
Lease revenue (Revenue from variable lease payments)	4,317		7,357
Sales-type lease income	$	27,850	$	53,437

We recorded $81.9 million and $163.0 million in operating lease revenue for the three and six months ended June 30, 2024, respectively. There were no sales-type leases during the three and six months ended June 30, 2024.