| LEASES |
NOTE 12 – LEASES As of September 30, 2026, we derived 84.6% of our revenues from residential leases that are generally for terms of one year or less. The residential leases may include lease income related items such as parking, storage and non-refundable deposits that we treat as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore we subsequently recognize lease income over the lease term on a straight-line basis. Residential leases are renewable upon consent of both parties on an annual or monthly basis. As of September 30, 2026, we derived 15.4% of our revenues from commercial leases primarily under long-term lease agreements. Substantially all commercial leases contain fixed escalations or, in some instances, changes based on the Consumer Price Index, which occur at specified times during the term of the lease. In certain commercial leases, variable lease income, such as percentage rent, is recognized when rents are earned. We recognize rental income and rental abatements from our commercial leases on a straight-line basis over the lease term. Recognition of rental income commences when control of the leased space has been transferred to the tenant. We recognize variable income from pass-through expenses on an accrual basis over the periods in which the expenses were incurred. Pass-through expenses are comprised of real estate taxes, operating expenses and common area maintenance costs which are reimbursed by tenants in accordance with specific allowable costs per tenant lease agreements. When we pay pass-through expenses, subject to reimbursement by the tenant, they are included within operating expenses, excluding real estate taxes, and reimbursements are included within “real estate rental income” along with the associated base rent in the accompanying consolidated financial statements. Lease income related to the Company’s operating leases is comprised of the following: | | | | | | | | | | | | Three months ended September 30, 2026 | | | Residential | | Commercial | | Total | | | | (in thousands) | Lease income related to fixed lease payments | | $ | 38,999 | | $ | 3,712 | | $ | 42,711 | Lease income related to variable lease payments | | | — | | | 985 | | | 985 | Other (a) | | | (136) | | | 6 | | | (130) | Lease Income (b) | | $ | 38,863 | | $ | 4,703 | | $ | 43,566 |
| | | | | | | | | | | | Three months ended September 30, 2025 | | | Residential | | Commercial | | Total | | | | (in thousands) | Lease income related to fixed lease payments | | $ | 36,665 | | $ | 3,945 | | $ | 40,610 | Lease income related to variable lease payments | | | (1) | | | 1,091 | | | 1,090 | Other (a) | | | (721) | | | (123) | | | (844) | Lease Income (b) | | $ | 35,943 | | $ | 4,913 | | $ | 40,856 |
| (a) | For the three months ended September 30, 2026 and 2025, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. |
| (b) | Excludes other rental income for the three months ended September 30, 2026 and 2025 of $2,803 and $2,870, respectively, which is accounted for under the revenue recognition standard. |
| | | | | | | | | | | | Nine months ended September 30, 2026 | | | Residential | | Commercial | | Total | | | | (in thousands) | Lease income related to fixed lease payments | | $ | 115,164 | | $ | 11,502 | | $ | 126,666 | Lease income related to variable lease payments | | | — | | | 3,256 | | | 3,256 | Other (a) | | | (1,306) | | | (328) | | | (1,634) | Lease Income (b) | | $ | 113,858 | | $ | 14,430 | | $ | 128,288 |
| | | | | | | | | | | | Nine months ended September 30, 2025 | | | Residential | | Commercial | | Total | | | | (in thousands) | Lease income related to fixed lease payments | | $ | 107,263 | | $ | 11,822 | | $ | 119,085 | Lease income related to variable lease payments | | | — | | | 3,167 | | | 3,167 | Other (a) | | | (986) | | | (304) | | | (1,290) | Lease Income (b) | | $ | 106,277 | | $ | 14,685 | | $ | 120,962 |
| (a) | For the nine months ended September 30, 2026 and 2025, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. |
| (b) | Excludes other rental income for the nine months ended September 30, 2026 and 2025 of $8,346 and $7,944. respectively, which is accounted for under the revenue recognition standard. |
As of September 30, 2026, non-cancelable commercial operating leases provide for future minimum rental income as follows. Residential leases are not included, as the terms are generally for one year or less. | | | | Years ending December 31, | | Amount | | | (in thousands) | 2026 (October - December) | | $ | 4,331 | 2027 | | | 13,590 | 2028 | | | 12,774 | 2029 | | | 11,668 | 2030 | | | 9,698 | Thereafter | | | 18,850 | | | $ | 70,911 |
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