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Leases | 6 Months Ended
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Jun. 30, 2024
Leases [Abstract] |
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments that are not fixed within the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the right-of-use (“ROU”) assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. AR PENN Master Lease On February 21, 2023, the Company and GLPI entered into an agreement to amend and restate the triple net master lease dated November 1, 2013 (the “AR PENN Master Lease”), effective January 1, 2023, to (i) remove the land and buildings for Hollywood Casino Aurora (“Aurora”), Hollywood Casino Joliet (“Joliet”), Hollywood Casino Columbus (“Columbus”), Hollywood Casino Toledo (“Toledo”) and the M Resort Spa Casino (“M Resort”), and (ii) make associated adjustments to the rent after which the initial rent in the AR PENN Master Lease was reset to $284.1 million, consisting of $208.2 million of building base rent, $43.0 million of land base rent, and $32.9 million of percentage rent (as such terms are defined in the AR PENN Master Lease). Subsequent to the execution of the AR PENN Master Lease, the lease contains real estate assets associated with 14 of the Company’s gaming facilities used in its operations. The current term of the AR PENN Master Lease expires on October 31, 2033 and thereafter contains three renewal terms of five years each on the same terms and conditions, exercisable at the Company’s option. The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. The payment structure under the AR PENN Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the AR PENN Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted every five years by an amount equal to 4% of the average change in net revenues of all properties associated with the AR PENN Master Lease compared to a contractual baseline during the preceding five years (“PENN Percentage Rent”). As a result of the annual escalator, effective November 1, 2023, the fixed component of rent increased by $4.2 million. The next annual escalator test date is scheduled to occur on November 1, 2024. The November 1, 2023 PENN Percentage Rent reset resulted in an annual rent reduction of $4.4 million, which will be in effect until the next PENN Percentage Rent reset, scheduled to occur on November 1, 2028. As a result of the January 1, 2023 lease modification event, we concluded (i) the land components contained within the AR PENN Master Lease, which were previously primarily classified as finance leases, to be classified as operating leases, and (ii) control of the building assets have transferred from the Company to the lessor allowing for sale recognition in accordance with ASC Topic 842, “Leases,” (“ASC 842”) which results in the building components to be classified as operating leases. Prior to the January 1, 2023 lease modification event, control of substantially all of the building components were concluded not to have passed from the Company to the lessor in accordance with ASC 842 which required recognition of a financing obligation in accordance with ASC Topic 470, “Debt,” (“ASC 470”), and continued recognition of the underlying asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. In conjunction with the sale recognition on the building components, we (i) derecognized $1.6 billion of financing obligations within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Statements of Operations; and (ii) derecognized $1.1 billion of “Property and equipment, net” associated with the building assets within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. As a result of our measurement of the associated operating lease liabilities, we recognized a reduction of the ROU assets and corresponding lease liabilities of $1.2 billion within our unaudited Consolidated Balance Sheets as of January 1, 2023. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. 2023 Master Lease Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new triple net master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Hollywood Casino at The Meadows (“Meadows”), and Hollywood Casino Perryville (“Perryville”) and a master development agreement (the “Master Development Agreement”). The 2023 Master Lease has an initial term through October 31, 2033 with three subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. As a result of our lease classification assessment, we concluded all land and building components contained within the 2023 Master Lease to be operating leases. As a result of our measurement of the operating lease liabilities, we recognized ROU assets and corresponding lease liabilities of $1.8 billion. Additionally, the 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville, as such we (i) derecognized $171.9 million in ROU assets within our unaudited Consolidated Balance Sheets; (ii) derecognized $165.5 million in lease liabilities within our unaudited Consolidated Balance Sheets; and (iii) recognized a $6.5 million loss on the termination which is recorded in “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of PENN’s riverboat casino and related developments with respect to Aurora (the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Joliet, Columbus and M Resort (the “Other Development Projects” and together with the Aurora Project, the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $350.0 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026. The 2023 Master Lease Rent will be subject to a one-time increase of $1.4 million, effective November 1, 2027. The 2023 Master Lease Rent is subject to an annual fixed escalator rent increase of 1.5% which began on November 1, 2023. The Master Development Agreement provides that PENN may elect not to proceed with a development project prior to GLPI’s commencement of any equity or debt offering or credit facility draw intended to fund such a project or after such time in certain instances, provided that GLPI will be reimbursed for all costs and expenses incurred in connection with such discontinued project. The PENN Development Projects are all subject to necessary regulatory and other government approvals. Pinnacle Master Lease In connection with the acquisition of Pinnacle on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on performance of the properties, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). As a result of the annual escalator, effective May 1, 2024 for the lease year ended April 30, 2024, the fixed component of rent increased by $4.8 million and an additional ROU asset and corresponding lease liability of $33.4 million were recognized associated with the finance lease components. The next annual escalator test date is scheduled to occur on May 1, 2025. Additionally, on May 1, 2024, the Pinnacle Percentage Rent reset resulted in an annual rent increase of $3.8 million which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2026. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2024, we recognized an additional ROU asset and corresponding lease liability of $29.6 million associated with the finance lease components. Other Triple Net Leases with REIT Landlords Morgantown Lease On October 1, 2020, the Company entered into an individual triple net lease with a subsidiary of GLPI for the land underlying our development project in Morgantown, Pennsylvania (“Morgantown Lease”) in exchange for $30.0 million. The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option. Initial annual rent under the Morgantown Lease is $3.0 million, subject to a 1.50% fixed annual escalation in each of the first three years subsequent to the facility opening, which occurred on December 22, 2021. Thereafter, the lease will be subject to an annual escalator consisting of either (i) 1.25%, if the consumer price index increase is greater than 0.50%, or (ii) zero, if the consumer price index increase is less than 0.50%. All improvements made on the land, including the constructed building, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI. We concluded control of the land underlying the Morgantown facility was not passed from the Company to the lessor in accordance with ASC 842. As such we recognized a financing obligation in accordance with ASC 470 and continue to recognize the underlying land asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. Margaritaville Lease On January 1, 2019, the Company entered into an individual triple net lease with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino (the “Margaritaville Lease”). The Margaritaville Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Margaritaville Lease includes a fixed component, a portion that is subject to an annual escalator of up to 2% depending on a minimum coverage floor ratio of Net Revenue to Rent of 6.1:1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Margaritaville Percentage Rent”). On February 1, 2024, the Margaritaville Lease annual escalator test resulted in an annual rent increase of $0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $2.7 million. The next annual escalator test date and the next Margaritaville Percentage Rent reset are both scheduled to occur on February 1, 2025. The land and building components contained within the Margaritaville Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Greektown Lease On May 23, 2019, the Company entered into an individual triple net lease with VICI for the real estate assets used in the operations of Hollywood Casino at Greektown (the “Greektown Lease”). The Greektown Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2% initially determined based on an Adjusted Revenue to Rent ratio, as defined in the Greektown Lease, and subsequently amended to be determined based on an agreed upon minimum coverage floor ratio of Net Revenue to Rent, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”). In April 2024, the lease was amended to provide for a Net Revenue to Rent minimum coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year (June 1, 2027). We did not incur an annual escalator for the lease year ended May 31, 2024. The next annual escalator test date and Greektown Percentage Rent reset are both scheduled to occur on June 1, 2025. The land and building components contained within the Greektown Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Non-REIT Operating Leases In addition to any operating lease components contained within the Master Leases, Margaritaville Lease, and Greektown Lease (collectively referred to as “triple net operating leases”), the Company’s operating leases consist of (i) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (ii) buildings and equipment not associated with our REIT Landlords. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of June 30, 2024:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2024 (excluding the six months ended June 30, 2024) | $ | 309.6 |  |  | $ | 81.3 |  |  | $ | 83.2 |
2025 | 611.8 |  |  | 162.6 |  |  | 166.5 |
2026 | 612.3 |  |  | 152.2 |  |  | 166.6 |
2027 | 615.0 |  |  | 146.9 |  |  | 166.5 |
2028 | 614.0 |  |  | 146.9 |  |  | 166.6 |
Thereafter | 3,320.5 |  |  | 3,273.9 |  |  | 3,829.5 |
Total lease payments | 6,083.2 |  |  | 3,963.8 |  |  | 4,578.9 |
Less: Imputed interest | (1,980.3) |  |  | (1,822.8) |  |  | (2,171.6) |
Present value of future lease payments | 4,102.9 |  |  | 2,141.0 |  |  | 2,407.3 |
Less: Current portion of lease obligations | (311.6) |  |  | (51.8) |  |  | (42.4) |
Long-term portion of lease obligations | $ | 3,791.3 |  |  | $ | 2,089.2 |  |  | $ | 2,364.9 |
The Company modified the presentation of its December 31, 2023 balance sheet to separately reflect assets and liabilities associated with our operating and finance leases. Total payments made under the Triple Net Leases were as follows:
| For the three months ended June 30, |  | For the six months ended June 30,
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
AR PENN Master Lease | $ | 70.9 |  |  | $ | 70.9 |  |  | $ | 141.9 |  |  | $ | 142.0 |
2023 Master Lease | 58.9 |  |  | 58.1 |  |  | 117.8 |  |  | 116.1 |
Pinnacle Master Lease | 86.7 |  |  | 84.8 |  |  | 171.9 |  |  | 168.9 |
Margaritaville Lease | 6.7 |  |  | 6.6 |  |  | 13.4 |  |  | 13.0 |
Greektown Lease | 13.2 |  |  | 13.0 |  |  | 26.4 |  |  | 25.8 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 1.6 |  |  | 1.6 |
Total | $ | 237.2 |  |  | $ | 234.2 |  |  | $ | 473.0 |  |  | $ | 467.4 |
Information related to lease term and discount rate was as follows:
| June 30, 2024 |  | December 31, 2023
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 10.7 years |  | 11.2 years
Finance leases | 26.8 years |  | 27.3 years
Financing obligations | 27.1 years |  | 27.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.7 | % |  | 7.7 | %
Finance leases | 5.2 | % |  | 5.2 | %
Financing obligations | 5.2 | % |  | 5.2 | %
The components of lease expense were as follows:
| Location on unaudited Consolidated Statements of Operations |  | For the three months ended June 30, |  | For the six months ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 154.9 |  |  | $ | 146.4 |  |  | $ | 309.7 |  |  | $ | 292.4 |
Operating lease cost (1) | Primarily General and administrative |  | 5.0 |  |  | 6.5 |  |  | 10.3 |  |  | 11.3 |
Short-term lease cost | Primarily Gaming expenses |  | 23.0 |  |  | 19.9 |  |  | 45.8 |  |  | 38.9 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.9 |  |  | 0.9 |  |  | 1.9 |  |  | 1.9 |
Total |  |  | $ | 183.8 |  |  | $ | 173.7 |  |  | $ | 367.7 |  |  | $ | 344.5 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.6 |  |  | $ | 27.7 |  |  | $ | 55.1 |  |  | $ | 55.3 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.5 |  |  | 21.9 |  |  | 44.4 |  |  | 43.6 |
Total |  |  | $ | 50.1 |  |  | $ | 49.6 |  |  | $ | 99.5 |  |  | $ | 98.9 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 37.1 |  |  | $ | 36.8 |  |  | $ | 73.7 |  |  | $ | 73.2 |
(1) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases. (2) Pertains to finance lease components associated with the Pinnacle Master Lease (primarily land). (3) Pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease. Supplemental cash flow information related to leases was as follows:
| For the six months ended June 30,
(in millions) | 2024 |  | 2023
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 2.7 |  |  | $ | 3,673.5 |
Derecognition of operating lease liabilities | $ | — |  |  | $ | 307.7 |
Commencement of finance leases | $ | 63.0 |  |  | $ | 33.3 |
Derecognition of finance lease liabilities | $ | — |  |  | $ | 2,933.6 |
Derecognition of financing obligations | $ | — |  |  | $ | 1,567.8 |
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments that are not fixed within the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the right-of-use (“ROU”) assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. AR PENN Master Lease On February 21, 2023, the Company and GLPI entered into an agreement to amend and restate the triple net master lease dated November 1, 2013 (the “AR PENN Master Lease”), effective January 1, 2023, to (i) remove the land and buildings for Hollywood Casino Aurora (“Aurora”), Hollywood Casino Joliet (“Joliet”), Hollywood Casino Columbus (“Columbus”), Hollywood Casino Toledo (“Toledo”) and the M Resort Spa Casino (“M Resort”), and (ii) make associated adjustments to the rent after which the initial rent in the AR PENN Master Lease was reset to $284.1 million, consisting of $208.2 million of building base rent, $43.0 million of land base rent, and $32.9 million of percentage rent (as such terms are defined in the AR PENN Master Lease). Subsequent to the execution of the AR PENN Master Lease, the lease contains real estate assets associated with 14 of the Company’s gaming facilities used in its operations. The current term of the AR PENN Master Lease expires on October 31, 2033 and thereafter contains three renewal terms of five years each on the same terms and conditions, exercisable at the Company’s option. The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. The payment structure under the AR PENN Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the AR PENN Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted every five years by an amount equal to 4% of the average change in net revenues of all properties associated with the AR PENN Master Lease compared to a contractual baseline during the preceding five years (“PENN Percentage Rent”). As a result of the annual escalator, effective November 1, 2023, the fixed component of rent increased by $4.2 million. The next annual escalator test date is scheduled to occur on November 1, 2024. The November 1, 2023 PENN Percentage Rent reset resulted in an annual rent reduction of $4.4 million, which will be in effect until the next PENN Percentage Rent reset, scheduled to occur on November 1, 2028. As a result of the January 1, 2023 lease modification event, we concluded (i) the land components contained within the AR PENN Master Lease, which were previously primarily classified as finance leases, to be classified as operating leases, and (ii) control of the building assets have transferred from the Company to the lessor allowing for sale recognition in accordance with ASC Topic 842, “Leases,” (“ASC 842”) which results in the building components to be classified as operating leases. Prior to the January 1, 2023 lease modification event, control of substantially all of the building components were concluded not to have passed from the Company to the lessor in accordance with ASC 842 which required recognition of a financing obligation in accordance with ASC Topic 470, “Debt,” (“ASC 470”), and continued recognition of the underlying asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. In conjunction with the sale recognition on the building components, we (i) derecognized $1.6 billion of financing obligations within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Statements of Operations; and (ii) derecognized $1.1 billion of “Property and equipment, net” associated with the building assets within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. As a result of our measurement of the associated operating lease liabilities, we recognized a reduction of the ROU assets and corresponding lease liabilities of $1.2 billion within our unaudited Consolidated Balance Sheets as of January 1, 2023. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. 2023 Master Lease Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new triple net master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Hollywood Casino at The Meadows (“Meadows”), and Hollywood Casino Perryville (“Perryville”) and a master development agreement (the “Master Development Agreement”). The 2023 Master Lease has an initial term through October 31, 2033 with three subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. As a result of our lease classification assessment, we concluded all land and building components contained within the 2023 Master Lease to be operating leases. As a result of our measurement of the operating lease liabilities, we recognized ROU assets and corresponding lease liabilities of $1.8 billion. Additionally, the 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville, as such we (i) derecognized $171.9 million in ROU assets within our unaudited Consolidated Balance Sheets; (ii) derecognized $165.5 million in lease liabilities within our unaudited Consolidated Balance Sheets; and (iii) recognized a $6.5 million loss on the termination which is recorded in “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of PENN’s riverboat casino and related developments with respect to Aurora (the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Joliet, Columbus and M Resort (the “Other Development Projects” and together with the Aurora Project, the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $350.0 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026. The 2023 Master Lease Rent will be subject to a one-time increase of $1.4 million, effective November 1, 2027. The 2023 Master Lease Rent is subject to an annual fixed escalator rent increase of 1.5% which began on November 1, 2023. The Master Development Agreement provides that PENN may elect not to proceed with a development project prior to GLPI’s commencement of any equity or debt offering or credit facility draw intended to fund such a project or after such time in certain instances, provided that GLPI will be reimbursed for all costs and expenses incurred in connection with such discontinued project. The PENN Development Projects are all subject to necessary regulatory and other government approvals. Pinnacle Master Lease In connection with the acquisition of Pinnacle on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on performance of the properties, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). As a result of the annual escalator, effective May 1, 2024 for the lease year ended April 30, 2024, the fixed component of rent increased by $4.8 million and an additional ROU asset and corresponding lease liability of $33.4 million were recognized associated with the finance lease components. The next annual escalator test date is scheduled to occur on May 1, 2025. Additionally, on May 1, 2024, the Pinnacle Percentage Rent reset resulted in an annual rent increase of $3.8 million which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2026. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2024, we recognized an additional ROU asset and corresponding lease liability of $29.6 million associated with the finance lease components. Other Triple Net Leases with REIT Landlords Morgantown Lease On October 1, 2020, the Company entered into an individual triple net lease with a subsidiary of GLPI for the land underlying our development project in Morgantown, Pennsylvania (“Morgantown Lease”) in exchange for $30.0 million. The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option. Initial annual rent under the Morgantown Lease is $3.0 million, subject to a 1.50% fixed annual escalation in each of the first three years subsequent to the facility opening, which occurred on December 22, 2021. Thereafter, the lease will be subject to an annual escalator consisting of either (i) 1.25%, if the consumer price index increase is greater than 0.50%, or (ii) zero, if the consumer price index increase is less than 0.50%. All improvements made on the land, including the constructed building, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI. We concluded control of the land underlying the Morgantown facility was not passed from the Company to the lessor in accordance with ASC 842. As such we recognized a financing obligation in accordance with ASC 470 and continue to recognize the underlying land asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. Margaritaville Lease On January 1, 2019, the Company entered into an individual triple net lease with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino (the “Margaritaville Lease”). The Margaritaville Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Margaritaville Lease includes a fixed component, a portion that is subject to an annual escalator of up to 2% depending on a minimum coverage floor ratio of Net Revenue to Rent of 6.1:1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Margaritaville Percentage Rent”). On February 1, 2024, the Margaritaville Lease annual escalator test resulted in an annual rent increase of $0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $2.7 million. The next annual escalator test date and the next Margaritaville Percentage Rent reset are both scheduled to occur on February 1, 2025. The land and building components contained within the Margaritaville Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Greektown Lease On May 23, 2019, the Company entered into an individual triple net lease with VICI for the real estate assets used in the operations of Hollywood Casino at Greektown (the “Greektown Lease”). The Greektown Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2% initially determined based on an Adjusted Revenue to Rent ratio, as defined in the Greektown Lease, and subsequently amended to be determined based on an agreed upon minimum coverage floor ratio of Net Revenue to Rent, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”). In April 2024, the lease was amended to provide for a Net Revenue to Rent minimum coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year (June 1, 2027). We did not incur an annual escalator for the lease year ended May 31, 2024. The next annual escalator test date and Greektown Percentage Rent reset are both scheduled to occur on June 1, 2025. The land and building components contained within the Greektown Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Non-REIT Operating Leases In addition to any operating lease components contained within the Master Leases, Margaritaville Lease, and Greektown Lease (collectively referred to as “triple net operating leases”), the Company’s operating leases consist of (i) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (ii) buildings and equipment not associated with our REIT Landlords. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of June 30, 2024:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2024 (excluding the six months ended June 30, 2024) | $ | 309.6 |  |  | $ | 81.3 |  |  | $ | 83.2 |
2025 | 611.8 |  |  | 162.6 |  |  | 166.5 |
2026 | 612.3 |  |  | 152.2 |  |  | 166.6 |
2027 | 615.0 |  |  | 146.9 |  |  | 166.5 |
2028 | 614.0 |  |  | 146.9 |  |  | 166.6 |
Thereafter | 3,320.5 |  |  | 3,273.9 |  |  | 3,829.5 |
Total lease payments | 6,083.2 |  |  | 3,963.8 |  |  | 4,578.9 |
Less: Imputed interest | (1,980.3) |  |  | (1,822.8) |  |  | (2,171.6) |
Present value of future lease payments | 4,102.9 |  |  | 2,141.0 |  |  | 2,407.3 |
Less: Current portion of lease obligations | (311.6) |  |  | (51.8) |  |  | (42.4) |
Long-term portion of lease obligations | $ | 3,791.3 |  |  | $ | 2,089.2 |  |  | $ | 2,364.9 |
The Company modified the presentation of its December 31, 2023 balance sheet to separately reflect assets and liabilities associated with our operating and finance leases. Total payments made under the Triple Net Leases were as follows:
| For the three months ended June 30, |  | For the six months ended June 30,
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
AR PENN Master Lease | $ | 70.9 |  |  | $ | 70.9 |  |  | $ | 141.9 |  |  | $ | 142.0 |
2023 Master Lease | 58.9 |  |  | 58.1 |  |  | 117.8 |  |  | 116.1 |
Pinnacle Master Lease | 86.7 |  |  | 84.8 |  |  | 171.9 |  |  | 168.9 |
Margaritaville Lease | 6.7 |  |  | 6.6 |  |  | 13.4 |  |  | 13.0 |
Greektown Lease | 13.2 |  |  | 13.0 |  |  | 26.4 |  |  | 25.8 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 1.6 |  |  | 1.6 |
Total | $ | 237.2 |  |  | $ | 234.2 |  |  | $ | 473.0 |  |  | $ | 467.4 |
Information related to lease term and discount rate was as follows:
| June 30, 2024 |  | December 31, 2023
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 10.7 years |  | 11.2 years
Finance leases | 26.8 years |  | 27.3 years
Financing obligations | 27.1 years |  | 27.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.7 | % |  | 7.7 | %
Finance leases | 5.2 | % |  | 5.2 | %
Financing obligations | 5.2 | % |  | 5.2 | %
The components of lease expense were as follows:
| Location on unaudited Consolidated Statements of Operations |  | For the three months ended June 30, |  | For the six months ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 154.9 |  |  | $ | 146.4 |  |  | $ | 309.7 |  |  | $ | 292.4 |
Operating lease cost (1) | Primarily General and administrative |  | 5.0 |  |  | 6.5 |  |  | 10.3 |  |  | 11.3 |
Short-term lease cost | Primarily Gaming expenses |  | 23.0 |  |  | 19.9 |  |  | 45.8 |  |  | 38.9 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.9 |  |  | 0.9 |  |  | 1.9 |  |  | 1.9 |
Total |  |  | $ | 183.8 |  |  | $ | 173.7 |  |  | $ | 367.7 |  |  | $ | 344.5 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.6 |  |  | $ | 27.7 |  |  | $ | 55.1 |  |  | $ | 55.3 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.5 |  |  | 21.9 |  |  | 44.4 |  |  | 43.6 |
Total |  |  | $ | 50.1 |  |  | $ | 49.6 |  |  | $ | 99.5 |  |  | $ | 98.9 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 37.1 |  |  | $ | 36.8 |  |  | $ | 73.7 |  |  | $ | 73.2 |
(1) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases. (2) Pertains to finance lease components associated with the Pinnacle Master Lease (primarily land). (3) Pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease. Supplemental cash flow information related to leases was as follows:
| For the six months ended June 30,
(in millions) | 2024 |  | 2023
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 2.7 |  |  | $ | 3,673.5 |
Derecognition of operating lease liabilities | $ | — |  |  | $ | 307.7 |
Commencement of finance leases | $ | 63.0 |  |  | $ | 33.3 |
Derecognition of finance lease liabilities | $ | — |  |  | $ | 2,933.6 |
Derecognition of financing obligations | $ | — |  |  | $ | 1,567.8 |
Leases | Leases Master Leases The components contained within the Master Leases are accounted for as either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments that are not fixed within the Master Leases (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to either (i) increase both the right-of-use (“ROU”) assets and corresponding lease liabilities with respect to operating and finance leases or (ii) record the incremental variable payment associated with the financing obligation to interest expense. AR PENN Master Lease On February 21, 2023, the Company and GLPI entered into an agreement to amend and restate the triple net master lease dated November 1, 2013 (the “AR PENN Master Lease”), effective January 1, 2023, to (i) remove the land and buildings for Hollywood Casino Aurora (“Aurora”), Hollywood Casino Joliet (“Joliet”), Hollywood Casino Columbus (“Columbus”), Hollywood Casino Toledo (“Toledo”) and the M Resort Spa Casino (“M Resort”), and (ii) make associated adjustments to the rent after which the initial rent in the AR PENN Master Lease was reset to $284.1 million, consisting of $208.2 million of building base rent, $43.0 million of land base rent, and $32.9 million of percentage rent (as such terms are defined in the AR PENN Master Lease). Subsequent to the execution of the AR PENN Master Lease, the lease contains real estate assets associated with 14 of the Company’s gaming facilities used in its operations. The current term of the AR PENN Master Lease expires on October 31, 2033 and thereafter contains three renewal terms of five years each on the same terms and conditions, exercisable at the Company’s option. The AR PENN Master Lease along with the 2023 Master Lease (as defined and discussed below) are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. The payment structure under the AR PENN Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the AR PENN Master Lease) of 1.8:1, and a component that is based on performance, which is prospectively adjusted every five years by an amount equal to 4% of the average change in net revenues of all properties associated with the AR PENN Master Lease compared to a contractual baseline during the preceding five years (“PENN Percentage Rent”). As a result of the annual escalator, effective November 1, 2023, the fixed component of rent increased by $4.2 million. The next annual escalator test date is scheduled to occur on November 1, 2024. The November 1, 2023 PENN Percentage Rent reset resulted in an annual rent reduction of $4.4 million, which will be in effect until the next PENN Percentage Rent reset, scheduled to occur on November 1, 2028. As a result of the January 1, 2023 lease modification event, we concluded (i) the land components contained within the AR PENN Master Lease, which were previously primarily classified as finance leases, to be classified as operating leases, and (ii) control of the building assets have transferred from the Company to the lessor allowing for sale recognition in accordance with ASC Topic 842, “Leases,” (“ASC 842”) which results in the building components to be classified as operating leases. Prior to the January 1, 2023 lease modification event, control of substantially all of the building components were concluded not to have passed from the Company to the lessor in accordance with ASC 842 which required recognition of a financing obligation in accordance with ASC Topic 470, “Debt,” (“ASC 470”), and continued recognition of the underlying asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. In conjunction with the sale recognition on the building components, we (i) derecognized $1.6 billion of financing obligations within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Statements of Operations; and (ii) derecognized $1.1 billion of “Property and equipment, net” associated with the building assets within our unaudited Consolidated Balance Sheets, offset to “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. As a result of our measurement of the associated operating lease liabilities, we recognized a reduction of the ROU assets and corresponding lease liabilities of $1.2 billion within our unaudited Consolidated Balance Sheets as of January 1, 2023. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. 2023 Master Lease Concurrent with the execution of the AR PENN Master Lease, the Company and GLPI entered into a new triple net master lease (the “2023 Master Lease”), effective January 1, 2023, specific to the property associated with Aurora, Joliet, Columbus, Toledo, M Resort, Hollywood Casino at The Meadows (“Meadows”), and Hollywood Casino Perryville (“Perryville”) and a master development agreement (the “Master Development Agreement”). The 2023 Master Lease has an initial term through October 31, 2033 with three subsequent five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. The 2023 Master Lease and AR PENN Master Lease are cross-defaulted, cross-collateralized, and coterminous, and subject to a parent guarantee. As a result of our lease classification assessment, we concluded all land and building components contained within the 2023 Master Lease to be operating leases. As a result of our measurement of the operating lease liabilities, we recognized ROU assets and corresponding lease liabilities of $1.8 billion. Additionally, the 2023 Master Lease terminated the individual triple net leases associated with Meadows and Perryville, as such we (i) derecognized $171.9 million in ROU assets within our unaudited Consolidated Balance Sheets; (ii) derecognized $165.5 million in lease liabilities within our unaudited Consolidated Balance Sheets; and (iii) recognized a $6.5 million loss on the termination which is recorded in “Gain on REIT transactions, net” within our unaudited Consolidated Statements of Operations. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) equal to $232.2 million and the Master Development Agreement contains additional rent (together with the 2023 Master Lease Base Rent, the “2023 Master Lease Rent”) equal to (i) 7.75% of any project funding received by PENN from GLPI for an anticipated relocation of PENN’s riverboat casino and related developments with respect to Aurora (the “Aurora Project”) and (ii) a percentage, based on the then-current GLPI stock price, of any project funding received by PENN from GLPI for certain anticipated development projects with respect to Joliet, Columbus and M Resort (the “Other Development Projects” and together with the Aurora Project, the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon PENN’s request, up to $350.0 million in the aggregate for the Other Development Projects, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026. The 2023 Master Lease Rent will be subject to a one-time increase of $1.4 million, effective November 1, 2027. The 2023 Master Lease Rent is subject to an annual fixed escalator rent increase of 1.5% which began on November 1, 2023. The Master Development Agreement provides that PENN may elect not to proceed with a development project prior to GLPI’s commencement of any equity or debt offering or credit facility draw intended to fund such a project or after such time in certain instances, provided that GLPI will be reimbursed for all costs and expenses incurred in connection with such discontinued project. The PENN Development Projects are all subject to necessary regulatory and other government approvals. Pinnacle Master Lease In connection with the acquisition of Pinnacle on October 15, 2018, the Company assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years. The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8:1, and a component that is based on performance of the properties, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). As a result of the annual escalator, effective May 1, 2024 for the lease year ended April 30, 2024, the fixed component of rent increased by $4.8 million and an additional ROU asset and corresponding lease liability of $33.4 million were recognized associated with the finance lease components. The next annual escalator test date is scheduled to occur on May 1, 2025. Additionally, on May 1, 2024, the Pinnacle Percentage Rent reset resulted in an annual rent increase of $3.8 million which will be in effect until the next Pinnacle Percentage Rent reset, scheduled to occur on May 1, 2026. Upon reset of the Pinnacle Percentage Rent, effective May 1, 2024, we recognized an additional ROU asset and corresponding lease liability of $29.6 million associated with the finance lease components. Other Triple Net Leases with REIT Landlords Morgantown Lease On October 1, 2020, the Company entered into an individual triple net lease with a subsidiary of GLPI for the land underlying our development project in Morgantown, Pennsylvania (“Morgantown Lease”) in exchange for $30.0 million. The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option. Initial annual rent under the Morgantown Lease is $3.0 million, subject to a 1.50% fixed annual escalation in each of the first three years subsequent to the facility opening, which occurred on December 22, 2021. Thereafter, the lease will be subject to an annual escalator consisting of either (i) 1.25%, if the consumer price index increase is greater than 0.50%, or (ii) zero, if the consumer price index increase is less than 0.50%. All improvements made on the land, including the constructed building, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI. We concluded control of the land underlying the Morgantown facility was not passed from the Company to the lessor in accordance with ASC 842. As such we recognized a financing obligation in accordance with ASC 470 and continue to recognize the underlying land asset in “Property and equipment, net” within our unaudited Consolidated Balance Sheets. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. Margaritaville Lease On January 1, 2019, the Company entered into an individual triple net lease with VICI Properties Inc. (NYSE: VICI) (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino (the “Margaritaville Lease”). The Margaritaville Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Margaritaville Lease includes a fixed component, a portion that is subject to an annual escalator of up to 2% depending on a minimum coverage floor ratio of Net Revenue to Rent of 6.1:1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Margaritaville Percentage Rent”). On February 1, 2024, the Margaritaville Lease annual escalator test resulted in an annual rent increase of $0.4 million and the recognition of an additional operating lease ROU asset and corresponding lease liability of $2.7 million. The next annual escalator test date and the next Margaritaville Percentage Rent reset are both scheduled to occur on February 1, 2025. The land and building components contained within the Margaritaville Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Greektown Lease On May 23, 2019, the Company entered into an individual triple net lease with VICI for the real estate assets used in the operations of Hollywood Casino at Greektown (the “Greektown Lease”). The Greektown Lease has an initial term of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option. The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2% initially determined based on an Adjusted Revenue to Rent ratio, as defined in the Greektown Lease, and subsequently amended to be determined based on an agreed upon minimum coverage floor ratio of Net Revenue to Rent, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”). In April 2024, the lease was amended to provide for a Net Revenue to Rent minimum coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year (June 1, 2027). We did not incur an annual escalator for the lease year ended May 31, 2024. The next annual escalator test date and Greektown Percentage Rent reset are both scheduled to occur on June 1, 2025. The land and building components contained within the Greektown Lease are classified as operating leases. Lease components classified as an operating lease are recorded to “General and administrative” within our unaudited Consolidated Statements of Operations. Non-REIT Operating Leases In addition to any operating lease components contained within the Master Leases, Margaritaville Lease, and Greektown Lease (collectively referred to as “triple net operating leases”), the Company’s operating leases consist of (i) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (ii) buildings and equipment not associated with our REIT Landlords. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage. The Company’s leases include options to extend the lease terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following is a maturity analysis of our operating leases, finance leases and financing obligations as of June 30, 2024:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2024 (excluding the six months ended June 30, 2024) | $ | 309.6 |  |  | $ | 81.3 |  |  | $ | 83.2 |
2025 | 611.8 |  |  | 162.6 |  |  | 166.5 |
2026 | 612.3 |  |  | 152.2 |  |  | 166.6 |
2027 | 615.0 |  |  | 146.9 |  |  | 166.5 |
2028 | 614.0 |  |  | 146.9 |  |  | 166.6 |
Thereafter | 3,320.5 |  |  | 3,273.9 |  |  | 3,829.5 |
Total lease payments | 6,083.2 |  |  | 3,963.8 |  |  | 4,578.9 |
Less: Imputed interest | (1,980.3) |  |  | (1,822.8) |  |  | (2,171.6) |
Present value of future lease payments | 4,102.9 |  |  | 2,141.0 |  |  | 2,407.3 |
Less: Current portion of lease obligations | (311.6) |  |  | (51.8) |  |  | (42.4) |
Long-term portion of lease obligations | $ | 3,791.3 |  |  | $ | 2,089.2 |  |  | $ | 2,364.9 |
The Company modified the presentation of its December 31, 2023 balance sheet to separately reflect assets and liabilities associated with our operating and finance leases. Total payments made under the Triple Net Leases were as follows:
| For the three months ended June 30, |  | For the six months ended June 30,
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
AR PENN Master Lease | $ | 70.9 |  |  | $ | 70.9 |  |  | $ | 141.9 |  |  | $ | 142.0 |
2023 Master Lease | 58.9 |  |  | 58.1 |  |  | 117.8 |  |  | 116.1 |
Pinnacle Master Lease | 86.7 |  |  | 84.8 |  |  | 171.9 |  |  | 168.9 |
Margaritaville Lease | 6.7 |  |  | 6.6 |  |  | 13.4 |  |  | 13.0 |
Greektown Lease | 13.2 |  |  | 13.0 |  |  | 26.4 |  |  | 25.8 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 1.6 |  |  | 1.6 |
Total | $ | 237.2 |  |  | $ | 234.2 |  |  | $ | 473.0 |  |  | $ | 467.4 |
Information related to lease term and discount rate was as follows:
| June 30, 2024 |  | December 31, 2023
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 10.7 years |  | 11.2 years
Finance leases | 26.8 years |  | 27.3 years
Financing obligations | 27.1 years |  | 27.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.7 | % |  | 7.7 | %
Finance leases | 5.2 | % |  | 5.2 | %
Financing obligations | 5.2 | % |  | 5.2 | %
The components of lease expense were as follows:
| Location on unaudited Consolidated Statements of Operations |  | For the three months ended June 30, |  | For the six months ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 154.9 |  |  | $ | 146.4 |  |  | $ | 309.7 |  |  | $ | 292.4 |
Operating lease cost (1) | Primarily General and administrative |  | 5.0 |  |  | 6.5 |  |  | 10.3 |  |  | 11.3 |
Short-term lease cost | Primarily Gaming expenses |  | 23.0 |  |  | 19.9 |  |  | 45.8 |  |  | 38.9 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.9 |  |  | 0.9 |  |  | 1.9 |  |  | 1.9 |
Total |  |  | $ | 183.8 |  |  | $ | 173.7 |  |  | $ | 367.7 |  |  | $ | 344.5 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.6 |  |  | $ | 27.7 |  |  | $ | 55.1 |  |  | $ | 55.3 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.5 |  |  | 21.9 |  |  | 44.4 |  |  | 43.6 |
Total |  |  | $ | 50.1 |  |  | $ | 49.6 |  |  | $ | 99.5 |  |  | $ | 98.9 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 37.1 |  |  | $ | 36.8 |  |  | $ | 73.7 |  |  | $ | 73.2 |
(1) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases. (2) Pertains to finance lease components associated with the Pinnacle Master Lease (primarily land). (3) Pertains to the components contained within the Pinnacle Master Lease (buildings) and the Morgantown Lease. Supplemental cash flow information related to leases was as follows:
| For the six months ended June 30,
(in millions) | 2024 |  | 2023
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 2.7 |  |  | $ | 3,673.5 |
Derecognition of operating lease liabilities | $ | — |  |  | $ | 307.7 |
Commencement of finance leases | $ | 63.0 |  |  | $ | 33.3 |
Derecognition of finance lease liabilities | $ | — |  |  | $ | 2,933.6 |
Derecognition of financing obligations | $ | — |  |  | $ | 1,567.8 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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