Our apartment homes and commercial spaces are leased to tenants under operating leases. As of December 31, 2024, our apartment home leases generally have initial terms of 24 months or less. As of December 31, 2024, our commercial space leases have initial terms between 5 and 15 years and represent approximately 7% to 8% of our total revenue. Our apartment home leases are generally renewable at the end of the lease term, subject to potential changes in rental rates, and our commercial space leases generally have renewal options, subject to associated increases in rental rates due to market based or fixed price renewal options and other certain conditions.

Our apartment home and commercial lease agreements do not contain residual value guarantees. As we are the lessor of real estate assets which tend to either hold their value or appreciate, residual value risk is not deemed to be substantial. Furthermore, we are insured for a portion of our real estate assets’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood, and other perils.

We have a sublease arrangement providing space within our corporate office for fixed rents, commencing on January 1, 2021, and expiring on May 31, 2029. For the years ended December 31, 2024, 2023, and 2022, we recognized sublease income of $1.4 million, $1.4 million, and $1.4 million, respectively.

The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services. We have elected the practical expedient to not separate non-lease components from associated lease components in accordance with ASC 842. For the years ended December 31, 2024, 2023, and 2022, our total lease income was comprised of the following amounts for all residential and commercial property leases (in thousands):


	Year ended December 31,
	2024		2023		2022
Fixed lease income	$	186,869	$	172,580	$	176,080
Variable lease income		15,121		13,892		13,654
Total lease income	$	201,990	$	186,472	$	189,734

Future minimum lease payments that are contractually due to us from our office space sublease and commercial space leases, excluding extension options, as of December 31, 2024, are as follows (in thousands):


	Corporate Office Sublease		Commercial Leases
2025	$	1,423	$	2,435
2026		1,433		2,298
2027		1,443		2,112
2028		1,453		2,023
2029		630		2,074
Thereafter		—		15,898
Total	$	6,382	$	26,840

We are lessee to finance leases for the land underlying our development sites at Upton Place, Strathmore Square, and Oak Shore. We have operating leases primarily for corporate office space. Substantially all of our office lease payments are fixed. See the table below for lease costs, net of capitalized finance lease costs, for the years ended December 31, 2024, 2023, and 2022.


	Year ended December 31,
	2024		2023		2022
Operating lease costs	$	1,504	$	1,514	$	1,084
Finance lease costs:
Amortization of right-of-use assets, net of capitalized amounts		1,092		—		6,731
Interest on lease liabilities, net of capitalized amounts		6,300		282		7,465
Total lease costs, net of capitalized amounts	$	8,896	$	1,796	$	15,280

Our finance lease for the land at Oak Shore provides Aimco with the option to terminate the lease after the property reaches stabilization, subject to certain conditions. The lease term includes the periods covered by this option. The weighted-average remaining terms and discount rates for our operating and finance leases are summarized in the table below as of December 31, 2024 and 2023.


	2024			2023
Weighted average remaining lease term (years):
Operating leases		4.3			5.2
Finance leases		92.5			93.4

Weighted-average discount rate:
Operating leases		3.5	%		3.3	%
Finance leases		6.1	%		6.1	%

As of December 31, 2024 and 2023, operating lease right-of-use lease assets of $4.7 million and $6.2 million, respectively, are included in Other assets, net in our Consolidated Balance Sheets. As of December 31, 2024 and 2023, operating lease liabilities of $9.2 million and $11.5 million, respectively, are included in Accrued liabilities and other in our Consolidated Balance Sheets.

For finance and operating leases, when the rate implicit in the lease cannot be determined, we estimate the value of our lease liabilities using discount rates equivalent to the rates we would pay on a secured borrowing with terms similar to the leases. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease components, and have elected to not separate these components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded in our Consolidated Balance Sheets. Leases with an initial term greater than 12 months are recorded as operating or finance leases in our Consolidated Balance Sheets.

We have provided a lessor with a residual value guarantee of $6.1 million, which provides that if the residual value of the leased asset is less than the specified residual value guarantee at the earlier of lease expiration or termination, we are required to pay the difference.

In June 2022, we, as lessee, and AIR, as lessor, entered into a lease termination agreement with respect to four leases entered into on January 1, 2021 that pertained to our North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism properties. This agreement terminated these four finance leases on September 1, 2022. Upon termination, both parties were released of any and all liabilities and obligations under each respective lease other than those liabilities and obligations, if any, that expressly survived termination. On September 1, 2022, we relinquished control of the leasehold improvements on these four properties as well as the underlying land. In exchange, AIR remitted a total of $200.0 million in consideration to us as termination payments.

Because the termination agreement modified the expiration date of each lease to September 1, 2022, we accelerated depreciation on the associated leasehold improvements using lease terms that ended September 1, 2022. We recorded $85.7 million of total depreciation expense for the year ended December 31, 2022. In addition, we recognized Lease modification income of $207.0 million, which is included in our Consolidated Statements of Operations for the year ended December 31, 2022.

Combined minimum annual lease payments under operating and finance leases are as follows as of December 31, 2024 (in thousands):


	Operating Leases			Finance Leases
2025	$	2,195		$	4,146
2026		2,341			4,954
2027		2,380			5,483
2028		2,181			5,596
2029		800			5,708
Thereafter		—			1,421,989
Total		9,897			1,447,876
Less: Discount		(719	)		(1,326,031	)
Total lease liabilities	$	9,178		$	121,845