7. Leases As part of the Transaction the Company assumed certain lease agreements and recorded the leases at fair value at acquisition date. The assumed leases were corporate offices, a distribution center, billboards and certain equipment. The Company’s only significant lease is for its REMAX corporate headquarters office building (the “REMAX Headquarters Lease”) which expires in 2028. The Company pays an annual base rent that escalates 3% each year and the REMAX Headquarters Lease has two 10-year optional renewal periods at the Company’s discretion, which is not reasonably certain to be exercised in 2028. The Company also acts as the lessor for six sublease agreements on the REMAX Headquarters Lease, each of which include a renewal option for the lessee to extend the length of the lease, with varying options to renew. The Company does not recognize leases for any offices used by the Company’s franchisees as all franchisees are independently owned and operated. A summary of the Company’s lease cost is as follows (in thousands, except for weighted-averages): | | | | | | | | | | Nine Months Ended | | | | September 30, | | | | 2026 | | 2025 | | Lease Cost | | | | | | | | Operating lease cost (a) | | $ | 1,337 | | $ | — | | Sublease income | | | (319) | | | — | | Short-term lease cost (b) | | | 584 | | | 467 | | Total lease cost | | $ | 1,602 | | $ | 467 | | Other information | | | | | | | | Cash paid for amounts included in the measurement of lease liabilities | | | | | | | | Operating cash outflows from operating leases | | $ | 872 | | | — | | Weighted-average remaining lease term in years - operating leases | | | 1.8 | | | — | | Weighted-average discount rate - operating leases | | | 5.7 | % | | — | % |
| (a) | Includes approximately $0.3 million of taxes, insurance and maintenance. |
| (b) | Includes expenses associated with short-term leases of billboard advertisements and is included in “Marketing Funds expenses” on the Consolidated Statements of Comprehensive Income (Loss) for the period. In addition, includes short-term lease of office space prior to the Transaction and is included in “General and administrative expenses” on the Consolidated Statements of Comprehensive Income (Loss) for both periods. |
Maturities under non-cancellable leases were as follows (in thousands): | | | | | | | | | | | | Rent Payments | | Sublease Receipts | | Total Cash Outflows | Remainder of 2026 | | $ | 2,614 | | $ | (576) | | $ | 2,038 | 2027 | | | 10,671 | | | (2,328) | | | 8,343 | 2028 | | | 3,783 | | | (781) | | | 3,002 | 2029 | | | 351 | | | — | | | 351 | 2030 | | | 361 | | | — | | | 361 | Thereafter | | | 114 | | | — | | | 114 | Total lease payments | | $ | 17,894 | | $ | (3,685) | | $ | 14,209 | Less: imputed interest | | | (850) | | | | | | | Present value of lease liabilities | | $ | 17,044 | | | | | | |
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