The Company generally leases its investment rental property to established tenants in the industrial, healthcare, restaurant, retail, and office property types. At September 30, 2021, the Company had 681 real estate properties which were leased under leases that have been classified as operating leases, 10 that have been classified as direct financing leases, and one that has been classified as a sales-type lease. Of the 10 leases classified as direct financing leases, three include land portions which are accounted for as operating leases. The sales-type lease includes a land portion which is accounted for as an operating lease. Substantially all leases have initial terms of 10 to 20 years. The Company’s leases generally provide for limited increases in rent as a result of fixed increases, increases in the CPI, or increases in the tenant’s sales volume. Generally, tenants are also required to pay all property taxes and assessments, substantially maintain the interior and exterior of the building, and maintain property and liability insurance coverage. The leases also typically provide for one or more multiple year renewal options, at the election of the tenant, and are subject to generally the same terms and conditions as the initial lease.

Investment in Rental Property – Accounted for Using the Operating Method

Rental property subject to non-cancelable operating leases with tenants was as follows:


(in thousands)	September 30, 2021			December 31, 2020
Land	$	616,917		$	555,748
Land improvements		291,045			279,360
Buildings and improvements		3,161,728			2,857,510
Equipment		11,870			11,870
		4,081,560			3,704,488
Less accumulated depreciation		(407,354	)		(349,977	)
	$	3,674,206		$	3,354,511

Depreciation expense on investment in rental property was as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Depreciation	$	25,232	$	23,317	$	73,119	$	70,392

Estimated lease payments to be received under non-cancelable operating leases with tenants at September 30, 2021 are as follows:


(in thousands)
Remainder of 2021	$	80,375
2022		323,733
2023		327,663
2024		324,289
2025		317,470
Thereafter		2,467,607
	$	3,841,137

Since lease renewal periods are exercisable at the option of the tenant, the above amounts only include future lease payments due during the initial lease terms. Such amounts exclude any potential variable rent increases that are based on changes in the CPI or future variable rents which may be received under the leases based on a percentage of the tenant’s gross sales. Additionally, certain of our leases provide tenants with the option to terminate their leases in exchange for termination penalties, or that are contingent upon the occurrence of a future event. Future lease payments within the table above have not been adjusted for these termination rights.

The Company’s net investment in direct financing leases was comprised of the following:


(in thousands)	September 30, 2021			December 31, 2020
Undiscounted estimated lease payments to be received	$	43,397		$	45,782
Estimated unguaranteed residual values		15,203			15,203
Unearned revenue		(29,605	)		(31,753	)
Reserve for credit losses		(165	)		(166	)
Net investment in direct financing leases	$	28,830		$	29,066

Undiscounted estimated lease payments to be received under non-cancelable direct financing leases with tenants at September 30, 2021 are as follows:


(in thousands)
Remainder of 2021	$	795
2022		3,241
2023		3,304
2024		3,361
2025		3,475
Thereafter		29,221
	$	43,397

The above rental receipts do not include future lease payments for renewal periods, potential variable CPI rent increases, or variable percentage rent payments that may become due in future periods.

The following table summarizes amounts reported as Lease revenues, net on the Condensed Consolidated Statements of Income and Comprehensive Income (Loss):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2021		2020		2021			2020
Contractual rental amounts billed for operating leases	$	78,886	$	69,270	$	227,142		$	209,440
Adjustment to recognize contractual operating lease billings on a straight-line basis		4,942		6,768		14,033			16,709
Variable rental amounts earned		130		234		335			308
Earned income from direct financing leases		726		757		2,184			2,599
Interest income from sales-type leases		14		—		43			—
Operating expenses billed to tenants		4,414		3,389		12,998			11,456
Other income from real estate transactions (a)		33,515		64		33,548			795
Adjustment to revenue recognized for uncollectible rental amounts billed, net		150		262		(49	)		(1,961	)
Total Lease revenues, net	$	122,777	$	80,744	$	290,234		$	239,346

(a)

Refer to the Company's policy footnote on Long-lived Asset Impairment in Note 2 for further discussion of lease termination income recognized through Other income from real estate transactions during the three and nine months ended September 30, 2021.