LEASES |
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| LEASES | NOTE 6 – LEASES Lease Income The following table summarizes the Company’s rental income:
Our variable lease income primarily represents the reimbursement of real estate taxes by operators that Omega pays directly. Lessor – Operating Leases The following amounts reflect the future minimum lease payments due to us for the remainder of the initial terms of our operating leases as of December 31, 2025:
Lessor – Direct Financing Leases During the first quarter of 2025, we terminated our one direct financing lease, along with several operating leases with the same operator, and entered into a new consolidated operating lease for all facilities leased to the operator. In connection with the termination of the direct financing lease, we reclassified $9.4 million from investment in direct financing lease to real estate assets. In connection with the execution of the new consolidated lease agreement, we paid $10.0 million to the operator, which was treated as lease inducement. As this operator is on a cash basis of revenue recognition, the inducement was immediately expensed and was recorded as a reduction to the rental income recognized for the year ended December 31, 2025. See additional discussion within Note 5 – Contractual Receivables and Other Receivables and Lease Inducements. Lessee – Operating Leases As of December 31, 2025, the Company is a lessee under ground leases and/or facility leases related to 10 SNFs, four ALFs, one specialty facility and our headquarters. For the years ended December 31, 2025, 2024 and 2023, the expenses associated with these operating leases were $3.3 million, $3.2 million and $2.8 million, respectively, and are included within general and administrative expense on the Statements of Operations. In connection with a 6-facility asset acquisition in the first quarter of 2023, the Company recorded $9.9 million of right-of-use assets and lease associated with ground leases assumed in the acquisition. The following table summarizes the balance sheet information related to leases where the Company is a lessee:
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