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Leases | 9 Months Ended
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Sep. 30, 2025
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. 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 (“AR PENN Percentage Rent”). The land and building components contained within the AR PENN Master Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. As a result of the annual escalator, effective November 1, 2025, for the lease year ending October 31, 2025, the fixed component of rent increased by $4.3 million. The next AR PENN Percentage Rent reset is scheduled to occur on November 1, 2028. 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. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) 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 the relocation of our 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 the development projects with respect to Joliet (the “Joliet Project”), M Resort (the “M Resort Project”), and Columbus (the “Columbus Project” and together with the Joliet Project and M Resort Project, the “Other Development Projects,” and together with the Aurora Project, referred to as the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon our request, up to $130.0 million for the Joliet Project, up to $150.0 million for the M Resort Project, and up to $70.0 million for the Columbus Project, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026, provided that (i) for the Columbus Project, if the Company provides notice to GLPI by December 31, 2025 that the Company is electing to receive GLPI funding, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 2026 and (ii) for the Aurora Project, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 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 and will continue to increase annually thereafter. 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. On August 1, 2025, the Company received the full $130.0 million in committed funding from GLPI for the Joliet Project which opened on August 11, 2025, and on November 3, 2025, the Company received the full $150.0 million in committed funding from GLPI for the M Resort Project, of which the new hotel tower is expected to open on December 1, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project or Columbus Project. Effective August 1, 2025, we determined that the sale-and-lease back of real estate assets related to the new Joliet facility to GLPI for $130.0 million constituted a lease modification under ASC Topic 842, “Leases,” (“ASC 842”). In connection with the August 1, 2025 lease modification, the Company reassessed the land and building components and remeasured the related lease liabilities. The assessment and remeasurement included the following elements: (i) the removal of the previously leased Joliet facility assets; (ii) the addition of the newly leased Joliet facility assets; and (iii) a $10.1 million increase in annual rent, which is specific to the lease back of the real estate assets related to the new Joliet facility, subject to annual escalation in accordance with the 2023 Master Lease. The modification did not result in a change to the lease classification, and all lease components continue to be accounted for as operating leases. Remeasurement of the related operating lease liabilities resulted in a $3.3 million gain, recognized in “Gain on REIT transaction, net” in the unaudited Consolidated Statements of Operations. As of the modification date, the Company recognized $166.3 million in ROU assets and $163.0 million in corresponding lease liabilities in the unaudited Consolidated Balance Sheets. We concluded that the lease term will continue to end on the current lease expiration date of October 31, 2033, and that the three optional five-year renewal terms are not included in the lease term. As the Company continues to transition from a leading retail gaming operator to a diversified provider of integrated entertainment, sports content, and casino gaming experiences, the execution of its omni-channel strategy has diversified earnings streams and does not provide reasonable assurance that the renewal options will be exercised. Subsequent to quarter end, we also determined that the sale-and-lease back of real estate assets related to the new M Resort hotel tower to GLPI for $150.0 million constituted a lease modification under ASC 842, effective November 3, 2025. This sale-and-leaseback transaction resulted in a $11.7 million increase in annual rent, subject to annual escalation in accordance with the 2023 Master Lease. We are in the process of reassessing and remeasuring the lease components and quantifying the impact of this transaction on the Consolidated Financial Statements, which may be material. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc. 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”). The Pinnacle Master Lease contains land and building components that are classified as finance leases and financing obligations. Lease components classified as a finance lease are recorded to “Depreciation and amortization” and “Interest expense, net” within the unaudited Consolidated Statements of Operations. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. We did not incur an annual escalator for the lease year ended April 30, 2025. The next annual escalator test date and Pinnacle Percentage Rent reset are both scheduled to occur on May 1, 2026. 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 in rent credits. 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 Topic 470, “Debt,” (“ASC 470”) and continue to recognize the underlying land asset in “Property and equipment, net” within the 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”). As a result of the annual escalator test, effective as of February 1 for the lease year ended January 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Annual escalator | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 2.5 |
The Margaritaville Percentage Rent reset on February 1, 2025 and will be effective until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2027. As a result of the Margaritaville Percentage Rent reset for the lease year ended January 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Decrease to the performance-based component of rent | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
The land and building components contained within the Margaritaville Lease are classified as operating leases and are recorded to “General and administrative” within the 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”). On April 1, 2024, the lease was amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year beginning on June 1, 2027. The land and building components contained within the Greektown Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. We did not incur an annual escalator for the lease year ended May 31, 2025. The next annual escalator test date is scheduled to occur on June 1, 2026. The Greektown Percentage Rent reset on June 1, 2025 and will be effective until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2027. As a result of the Greektown Percentage Rent reset for the lease year ended May 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Increase to the performance-based component of rent | $ | 1.1 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
We refer to the Master Leases, the Morgantown Lease, the Margaritaville Lease, and the Greektown Lease, collectively, as our “Triple Net Leases.” 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 September 30, 2025:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2025 (excluding the nine months ended September 30, 2025) | $ | 158.5 |  |  | $ | 40.7 |  |  | $ | 41.6 |
2026 | 637.6 |  |  | 152.5 |  |  | 166.6 |
2027 | 633.1 |  |  | 147.2 |  |  | 166.6 |
2028 | 629.4 |  |  | 147.0 |  |  | 166.6 |
2029 | 609.1 |  |  | 147.0 |  |  | 166.7 |
Thereafter | 2,786.0 |  |  | 3,127.0 |  |  | 3,663.3 |
Total lease payments | 5,453.7 |  |  | 3,761.4 |  |  | 4,371.4 |
Less: Imputed interest | (1,546.6) |  |  | (1,684.8) |  |  | (2,016.8) |
Present value of future lease payments | 3,907.1 |  |  | 2,076.6 |  |  | 2,354.6 |
Less: Current portion of lease obligations | (372.7) |  |  | (49.0) |  |  | (45.2) |
Long-term portion of lease obligations | $ | 3,534.4 |  |  | $ | 2,027.6 |  |  | $ | 2,309.4 |
Total payments made under our Triple Net Leases were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
AR PENN Master Lease | $ | 72.0 |  |  | $ | 71.0 |  |  | $ | 216.1 |  |  | $ | 212.9 |
2023 Master Lease | 61.5 |  |  | 58.9 |  |  | 181.1 |  |  | 176.7 |
Pinnacle Master Lease | 87.4 |  |  | 87.4 |  |  | 262.2 |  |  | 259.3 |
Margaritaville Lease | 6.7 |  |  | 6.7 |  |  | 20.1 |  |  | 20.1 |
Greektown Lease | 13.5 |  |  | 13.2 |  |  | 40.0 |  |  | 39.6 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 2.4 |  |  | 2.4 |
Total | $ | 241.9 |  |  | $ | 238.0 |  |  | $ | 721.9 |  |  | $ | 711.0 |
Information related to lease term and discount rate was as follows:
| September 30, 2025 |  | December 31, 2024
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 9.5 years |  | 10.2 years
Finance leases | 25.5 years |  | 26.3 years
Financing obligations | 25.9 years |  | 26.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.1 | % |  | 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 September 30, |  | For the nine months ended September 30,
(in millions) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 158.1 |  |  | $ | 154.9 |  |  | $ | 470.0 |  |  | $ | 464.6 |
Operating lease cost (1) | Primarily General and administrative |  | 4.1 |  |  | 4.5 |  |  | 12.4 |  |  | 14.8 |
Short-term lease cost | Primarily Gaming expenses |  | 26.0 |  |  | 21.9 |  |  | 75.3 |  |  | 67.7 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.8 |  |  | 0.6 |  |  | 2.3 |  |  | 2.5 |
Total |  |  | $ | 189.0 |  |  | $ | 181.9 |  |  | $ | 560.0 |  |  | $ | 549.6 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.3 |  |  | $ | 27.9 |  |  | $ | 82.4 |  |  | $ | 83.0 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.7 |  |  | 22.7 |  |  | 68.2 |  |  | 67.1 |
Total |  |  | $ | 50.0 |  |  | $ | 50.6 |  |  | $ | 150.6 |  |  | $ | 150.1 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 36.9 |  |  | $ | 37.5 |  |  | $ | 111.1 |  |  | $ | 111.2 |
(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 nine months ended September 30,
(in millions) | 2025 |  | 2024
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 306.9 |  |  | $ | 2.7 |
Derecognition of operating lease liabilities | $ | 122.2 |  |  | $ | — |
Commencement of finance leases | $ | 0.9 |  |  | $ | 63.0 |
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. 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 (“AR PENN Percentage Rent”). The land and building components contained within the AR PENN Master Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. As a result of the annual escalator, effective November 1, 2025, for the lease year ending October 31, 2025, the fixed component of rent increased by $4.3 million. The next AR PENN Percentage Rent reset is scheduled to occur on November 1, 2028. 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. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) 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 the relocation of our 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 the development projects with respect to Joliet (the “Joliet Project”), M Resort (the “M Resort Project”), and Columbus (the “Columbus Project” and together with the Joliet Project and M Resort Project, the “Other Development Projects,” and together with the Aurora Project, referred to as the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon our request, up to $130.0 million for the Joliet Project, up to $150.0 million for the M Resort Project, and up to $70.0 million for the Columbus Project, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026, provided that (i) for the Columbus Project, if the Company provides notice to GLPI by December 31, 2025 that the Company is electing to receive GLPI funding, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 2026 and (ii) for the Aurora Project, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 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 and will continue to increase annually thereafter. 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. On August 1, 2025, the Company received the full $130.0 million in committed funding from GLPI for the Joliet Project which opened on August 11, 2025, and on November 3, 2025, the Company received the full $150.0 million in committed funding from GLPI for the M Resort Project, of which the new hotel tower is expected to open on December 1, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project or Columbus Project. Effective August 1, 2025, we determined that the sale-and-lease back of real estate assets related to the new Joliet facility to GLPI for $130.0 million constituted a lease modification under ASC Topic 842, “Leases,” (“ASC 842”). In connection with the August 1, 2025 lease modification, the Company reassessed the land and building components and remeasured the related lease liabilities. The assessment and remeasurement included the following elements: (i) the removal of the previously leased Joliet facility assets; (ii) the addition of the newly leased Joliet facility assets; and (iii) a $10.1 million increase in annual rent, which is specific to the lease back of the real estate assets related to the new Joliet facility, subject to annual escalation in accordance with the 2023 Master Lease. The modification did not result in a change to the lease classification, and all lease components continue to be accounted for as operating leases. Remeasurement of the related operating lease liabilities resulted in a $3.3 million gain, recognized in “Gain on REIT transaction, net” in the unaudited Consolidated Statements of Operations. As of the modification date, the Company recognized $166.3 million in ROU assets and $163.0 million in corresponding lease liabilities in the unaudited Consolidated Balance Sheets. We concluded that the lease term will continue to end on the current lease expiration date of October 31, 2033, and that the three optional five-year renewal terms are not included in the lease term. As the Company continues to transition from a leading retail gaming operator to a diversified provider of integrated entertainment, sports content, and casino gaming experiences, the execution of its omni-channel strategy has diversified earnings streams and does not provide reasonable assurance that the renewal options will be exercised. Subsequent to quarter end, we also determined that the sale-and-lease back of real estate assets related to the new M Resort hotel tower to GLPI for $150.0 million constituted a lease modification under ASC 842, effective November 3, 2025. This sale-and-leaseback transaction resulted in a $11.7 million increase in annual rent, subject to annual escalation in accordance with the 2023 Master Lease. We are in the process of reassessing and remeasuring the lease components and quantifying the impact of this transaction on the Consolidated Financial Statements, which may be material. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc. 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”). The Pinnacle Master Lease contains land and building components that are classified as finance leases and financing obligations. Lease components classified as a finance lease are recorded to “Depreciation and amortization” and “Interest expense, net” within the unaudited Consolidated Statements of Operations. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. We did not incur an annual escalator for the lease year ended April 30, 2025. The next annual escalator test date and Pinnacle Percentage Rent reset are both scheduled to occur on May 1, 2026. 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 in rent credits. 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 Topic 470, “Debt,” (“ASC 470”) and continue to recognize the underlying land asset in “Property and equipment, net” within the 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”). As a result of the annual escalator test, effective as of February 1 for the lease year ended January 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Annual escalator | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 2.5 |
The Margaritaville Percentage Rent reset on February 1, 2025 and will be effective until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2027. As a result of the Margaritaville Percentage Rent reset for the lease year ended January 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Decrease to the performance-based component of rent | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
The land and building components contained within the Margaritaville Lease are classified as operating leases and are recorded to “General and administrative” within the 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”). On April 1, 2024, the lease was amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year beginning on June 1, 2027. The land and building components contained within the Greektown Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. We did not incur an annual escalator for the lease year ended May 31, 2025. The next annual escalator test date is scheduled to occur on June 1, 2026. The Greektown Percentage Rent reset on June 1, 2025 and will be effective until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2027. As a result of the Greektown Percentage Rent reset for the lease year ended May 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Increase to the performance-based component of rent | $ | 1.1 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
We refer to the Master Leases, the Morgantown Lease, the Margaritaville Lease, and the Greektown Lease, collectively, as our “Triple Net Leases.” 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 September 30, 2025:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2025 (excluding the nine months ended September 30, 2025) | $ | 158.5 |  |  | $ | 40.7 |  |  | $ | 41.6 |
2026 | 637.6 |  |  | 152.5 |  |  | 166.6 |
2027 | 633.1 |  |  | 147.2 |  |  | 166.6 |
2028 | 629.4 |  |  | 147.0 |  |  | 166.6 |
2029 | 609.1 |  |  | 147.0 |  |  | 166.7 |
Thereafter | 2,786.0 |  |  | 3,127.0 |  |  | 3,663.3 |
Total lease payments | 5,453.7 |  |  | 3,761.4 |  |  | 4,371.4 |
Less: Imputed interest | (1,546.6) |  |  | (1,684.8) |  |  | (2,016.8) |
Present value of future lease payments | 3,907.1 |  |  | 2,076.6 |  |  | 2,354.6 |
Less: Current portion of lease obligations | (372.7) |  |  | (49.0) |  |  | (45.2) |
Long-term portion of lease obligations | $ | 3,534.4 |  |  | $ | 2,027.6 |  |  | $ | 2,309.4 |
Total payments made under our Triple Net Leases were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
AR PENN Master Lease | $ | 72.0 |  |  | $ | 71.0 |  |  | $ | 216.1 |  |  | $ | 212.9 |
2023 Master Lease | 61.5 |  |  | 58.9 |  |  | 181.1 |  |  | 176.7 |
Pinnacle Master Lease | 87.4 |  |  | 87.4 |  |  | 262.2 |  |  | 259.3 |
Margaritaville Lease | 6.7 |  |  | 6.7 |  |  | 20.1 |  |  | 20.1 |
Greektown Lease | 13.5 |  |  | 13.2 |  |  | 40.0 |  |  | 39.6 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 2.4 |  |  | 2.4 |
Total | $ | 241.9 |  |  | $ | 238.0 |  |  | $ | 721.9 |  |  | $ | 711.0 |
Information related to lease term and discount rate was as follows:
| September 30, 2025 |  | December 31, 2024
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 9.5 years |  | 10.2 years
Finance leases | 25.5 years |  | 26.3 years
Financing obligations | 25.9 years |  | 26.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.1 | % |  | 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 September 30, |  | For the nine months ended September 30,
(in millions) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 158.1 |  |  | $ | 154.9 |  |  | $ | 470.0 |  |  | $ | 464.6 |
Operating lease cost (1) | Primarily General and administrative |  | 4.1 |  |  | 4.5 |  |  | 12.4 |  |  | 14.8 |
Short-term lease cost | Primarily Gaming expenses |  | 26.0 |  |  | 21.9 |  |  | 75.3 |  |  | 67.7 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.8 |  |  | 0.6 |  |  | 2.3 |  |  | 2.5 |
Total |  |  | $ | 189.0 |  |  | $ | 181.9 |  |  | $ | 560.0 |  |  | $ | 549.6 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.3 |  |  | $ | 27.9 |  |  | $ | 82.4 |  |  | $ | 83.0 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.7 |  |  | 22.7 |  |  | 68.2 |  |  | 67.1 |
Total |  |  | $ | 50.0 |  |  | $ | 50.6 |  |  | $ | 150.6 |  |  | $ | 150.1 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 36.9 |  |  | $ | 37.5 |  |  | $ | 111.1 |  |  | $ | 111.2 |
(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 nine months ended September 30,
(in millions) | 2025 |  | 2024
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 306.9 |  |  | $ | 2.7 |
Derecognition of operating lease liabilities | $ | 122.2 |  |  | $ | — |
Commencement of finance leases | $ | 0.9 |  |  | $ | 63.0 |
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. 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 (“AR PENN Percentage Rent”). The land and building components contained within the AR PENN Master Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. As a result of the annual escalator, effective November 1, 2025, for the lease year ending October 31, 2025, the fixed component of rent increased by $4.3 million. The next AR PENN Percentage Rent reset is scheduled to occur on November 1, 2028. 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. The 2023 Master Lease includes a base rent (the “2023 Master Lease Base Rent”) 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 the relocation of our 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 the development projects with respect to Joliet (the “Joliet Project”), M Resort (the “M Resort Project”), and Columbus (the “Columbus Project” and together with the Joliet Project and M Resort Project, the “Other Development Projects,” and together with the Aurora Project, referred to as the “PENN Development Projects”). The Master Development Agreement provides that GLPI will fund up to $225.0 million for the Aurora Project and, upon our request, up to $130.0 million for the Joliet Project, up to $150.0 million for the M Resort Project, and up to $70.0 million for the Columbus Project, in accordance with certain terms and conditions set forth in the Master Development Agreement. These funding obligations of GLPI expire on January 1, 2026, provided that (i) for the Columbus Project, if the Company provides notice to GLPI by December 31, 2025 that the Company is electing to receive GLPI funding, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 2026 and (ii) for the Aurora Project, the Company shall submit a draw notice for such project by no later than March 31, 2026 requesting to receive GLPI funds by no later than June 30, 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 and will continue to increase annually thereafter. 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. On August 1, 2025, the Company received the full $130.0 million in committed funding from GLPI for the Joliet Project which opened on August 11, 2025, and on November 3, 2025, the Company received the full $150.0 million in committed funding from GLPI for the M Resort Project, of which the new hotel tower is expected to open on December 1, 2025. We have neither requested nor received any funding from GLPI for the Aurora Project or Columbus Project. Effective August 1, 2025, we determined that the sale-and-lease back of real estate assets related to the new Joliet facility to GLPI for $130.0 million constituted a lease modification under ASC Topic 842, “Leases,” (“ASC 842”). In connection with the August 1, 2025 lease modification, the Company reassessed the land and building components and remeasured the related lease liabilities. The assessment and remeasurement included the following elements: (i) the removal of the previously leased Joliet facility assets; (ii) the addition of the newly leased Joliet facility assets; and (iii) a $10.1 million increase in annual rent, which is specific to the lease back of the real estate assets related to the new Joliet facility, subject to annual escalation in accordance with the 2023 Master Lease. The modification did not result in a change to the lease classification, and all lease components continue to be accounted for as operating leases. Remeasurement of the related operating lease liabilities resulted in a $3.3 million gain, recognized in “Gain on REIT transaction, net” in the unaudited Consolidated Statements of Operations. As of the modification date, the Company recognized $166.3 million in ROU assets and $163.0 million in corresponding lease liabilities in the unaudited Consolidated Balance Sheets. We concluded that the lease term will continue to end on the current lease expiration date of October 31, 2033, and that the three optional five-year renewal terms are not included in the lease term. As the Company continues to transition from a leading retail gaming operator to a diversified provider of integrated entertainment, sports content, and casino gaming experiences, the execution of its omni-channel strategy has diversified earnings streams and does not provide reasonable assurance that the renewal options will be exercised. Subsequent to quarter end, we also determined that the sale-and-lease back of real estate assets related to the new M Resort hotel tower to GLPI for $150.0 million constituted a lease modification under ASC 842, effective November 3, 2025. This sale-and-leaseback transaction resulted in a $11.7 million increase in annual rent, subject to annual escalation in accordance with the 2023 Master Lease. We are in the process of reassessing and remeasuring the lease components and quantifying the impact of this transaction on the Consolidated Financial Statements, which may be material. Pinnacle Master Lease In connection with the acquisition of Pinnacle Entertainment, Inc. 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”). The Pinnacle Master Lease contains land and building components that are classified as finance leases and financing obligations. Lease components classified as a finance lease are recorded to “Depreciation and amortization” and “Interest expense, net” within the unaudited Consolidated Statements of Operations. The Company recognizes interest expense on the lease payments related to the financing obligation under the effective yield method. We did not incur an annual escalator for the lease year ended April 30, 2025. The next annual escalator test date and Pinnacle Percentage Rent reset are both scheduled to occur on May 1, 2026. 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 in rent credits. 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 Topic 470, “Debt,” (“ASC 470”) and continue to recognize the underlying land asset in “Property and equipment, net” within the 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”). As a result of the annual escalator test, effective as of February 1 for the lease year ended January 31, the fixed components of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Annual escalator | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 2.5 |
The Margaritaville Percentage Rent reset on February 1, 2025 and will be effective until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2027. As a result of the Margaritaville Percentage Rent reset for the lease year ended January 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Decrease to the performance-based component of rent | $ | 0.4 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
The land and building components contained within the Margaritaville Lease are classified as operating leases and are recorded to “General and administrative” within the 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”). On April 1, 2024, the lease was amended to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the ninth lease year beginning on June 1, 2027. The land and building components contained within the Greektown Lease are classified as operating leases and are recorded to “General and administrative” within the unaudited Consolidated Statements of Operations. We did not incur an annual escalator for the lease year ended May 31, 2025. The next annual escalator test date is scheduled to occur on June 1, 2026. The Greektown Percentage Rent reset on June 1, 2025 and will be effective until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2027. As a result of the Greektown Percentage Rent reset for the lease year ended May 31, the performance-based component of rent and an additional ROU asset and corresponding lease liability were recognized as follows:
(in millions) | 2025
Increase to the performance-based component of rent | $ | 1.1 |
Operating ROU asset and lease liability recognized | $ | 9.0 |
We refer to the Master Leases, the Morgantown Lease, the Margaritaville Lease, and the Greektown Lease, collectively, as our “Triple Net Leases.” 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 September 30, 2025:
(in millions) | Operating Leases |  | Finance Leases |  | Financing Obligations
Year ended December 31, |  |  |  |  |
2025 (excluding the nine months ended September 30, 2025) | $ | 158.5 |  |  | $ | 40.7 |  |  | $ | 41.6 |
2026 | 637.6 |  |  | 152.5 |  |  | 166.6 |
2027 | 633.1 |  |  | 147.2 |  |  | 166.6 |
2028 | 629.4 |  |  | 147.0 |  |  | 166.6 |
2029 | 609.1 |  |  | 147.0 |  |  | 166.7 |
Thereafter | 2,786.0 |  |  | 3,127.0 |  |  | 3,663.3 |
Total lease payments | 5,453.7 |  |  | 3,761.4 |  |  | 4,371.4 |
Less: Imputed interest | (1,546.6) |  |  | (1,684.8) |  |  | (2,016.8) |
Present value of future lease payments | 3,907.1 |  |  | 2,076.6 |  |  | 2,354.6 |
Less: Current portion of lease obligations | (372.7) |  |  | (49.0) |  |  | (45.2) |
Long-term portion of lease obligations | $ | 3,534.4 |  |  | $ | 2,027.6 |  |  | $ | 2,309.4 |
Total payments made under our Triple Net Leases were as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
(in millions) | 2025 |  | 2024 |  | 2025 |  | 2024
AR PENN Master Lease | $ | 72.0 |  |  | $ | 71.0 |  |  | $ | 216.1 |  |  | $ | 212.9 |
2023 Master Lease | 61.5 |  |  | 58.9 |  |  | 181.1 |  |  | 176.7 |
Pinnacle Master Lease | 87.4 |  |  | 87.4 |  |  | 262.2 |  |  | 259.3 |
Margaritaville Lease | 6.7 |  |  | 6.7 |  |  | 20.1 |  |  | 20.1 |
Greektown Lease | 13.5 |  |  | 13.2 |  |  | 40.0 |  |  | 39.6 |
Morgantown Lease | 0.8 |  |  | 0.8 |  |  | 2.4 |  |  | 2.4 |
Total | $ | 241.9 |  |  | $ | 238.0 |  |  | $ | 721.9 |  |  | $ | 711.0 |
Information related to lease term and discount rate was as follows:
| September 30, 2025 |  | December 31, 2024
Weighted-Average Remaining Lease Term |  |  |
Operating leases | 9.5 years |  | 10.2 years
Finance leases | 25.5 years |  | 26.3 years
Financing obligations | 25.9 years |  | 26.6 years
Weighted-Average Discount Rate |  |  |
Operating leases | 7.1 | % |  | 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 September 30, |  | For the nine months ended September 30,
(in millions) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Operating Lease Costs |  |  |  |  |  |  |  |  |
Rent expense associated with triple net operating leases | General and administrative |  | $ | 158.1 |  |  | $ | 154.9 |  |  | $ | 470.0 |  |  | $ | 464.6 |
Operating lease cost (1) | Primarily General and administrative |  | 4.1 |  |  | 4.5 |  |  | 12.4 |  |  | 14.8 |
Short-term lease cost | Primarily Gaming expenses |  | 26.0 |  |  | 21.9 |  |  | 75.3 |  |  | 67.7 |
Variable lease cost (1) | Primarily Gaming expenses |  | 0.8 |  |  | 0.6 |  |  | 2.3 |  |  | 2.5 |
Total |  |  | $ | 189.0 |  |  | $ | 181.9 |  |  | $ | 560.0 |  |  | $ | 549.6 |
Finance Lease Costs |  |  |  |  |  |  |  |  |
Interest on lease liabilities (2) | Interest expense, net |  | $ | 27.3 |  |  | $ | 27.9 |  |  | $ | 82.4 |  |  | $ | 83.0 |
Amortization of ROU assets (2) | Depreciation and amortization |  | 22.7 |  |  | 22.7 |  |  | 68.2 |  |  | 67.1 |
Total |  |  | $ | 50.0 |  |  | $ | 50.6 |  |  | $ | 150.6 |  |  | $ | 150.1 |
Financing Obligation Costs |  |  |  |  |  |  |  |  |
Interest on financing obligations (3) | Interest expense, net |  | $ | 36.9 |  |  | $ | 37.5 |  |  | $ | 111.1 |  |  | $ | 111.2 |
(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 nine months ended September 30,
(in millions) | 2025 |  | 2024
Non-cash lease activities: |  |  |
Commencement of operating leases | $ | 306.9 |  |  | $ | 2.7 |
Derecognition of operating lease liabilities | $ | 122.2 |  |  | $ | — |
Commencement of finance leases | $ | 0.9 |  |  | $ | 63.0 |

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