Leases, Codification Topic 842

9 Months Ended

Sep. 30, 2025

Operating Leases

The Company’s real estate investments are leased under operating leases. In addition to its lessor arrangements on its real estate investments, as of September 30, 2025 and December 31, 2024, the Company was lessee in 50 and 51 operating ground leases, respectively, and lessee in one operating lease for its executive office. The Company's tenants, who are generally subtenants under these ground leases, are responsible for paying the rent under these ground leases. As of September 30, 2025, rental revenue from one of the Company's tenants, who is also a subtenant under certain ground leases, is being recognized on a cash basis. In addition, two of the Company's ground leases do not currently have subtenants. In the event a tenant fails to pay the ground lease rent or if the property does not have a subtenant, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property.

During the three months ended September 30, 2025, the Company exercised an early termination option of a ground lease on an eat & play property. As a result, the Company recognized a gain of $3.4 million due to the reassessment of the lease term and the corresponding remeasurement of the lease liability and right-of-use asset, which is recorded in "Gain (loss) on sale of real estate and early ground lease termination" in the accompanying consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2025.

The following table summarizes rental revenue, including sublease arrangements and lease costs, for the three and nine months ended September 30, 2025 and 2024 (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
	Classification	2025		2024		2025		2024
Lease revenue
Operating leases	Rental revenue	$	148,125	$	142,189	$	431,672	$	416,589
Sublease income - operating ground leases	Rental revenue	6,713		6,488		19,876		19,462

Lease costs
Operating ground lease cost	Property operating expense	$	6,765	$	6,531	$	20,141	$	19,617
Operating office lease cost	General and administrative expense	224		224		672		672