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LEASES

6 Months Ended

Jun. 30, 2025

NOTE 3 – LEASES

Lessor Accounting

The Company owns rental properties which are leased to tenants under operating leases with current expirations ranging from 2025 to 2046, with options to extend or terminate the lease. Revenues from such leases are reported as Rental income, net, and are comprised of (i) lease components, which includes fixed and variable lease payments and (ii) non-lease components which includes reimbursements of property level operating expenses. The Company does not separate non-lease components from the related lease components, as the timing and pattern of transfer are the same, and account for the combined component in accordance with ASC 842.

Fixed lease revenues represent the base rent that each tenant is required to pay in accordance with the terms of its respective leases, and any lease incentives paid or payable to the lessee, reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues typically include payments based on (i) tenant reimbursements, (ii) changes in the index or market-based indices after the inception of the lease, (iii) percentage rents and (iv) the operating performance of the property. Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred.

The components of lease revenues are as follows (amounts in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Fixed lease revenues	$	20,087	$	18,319	$	39,622	$	36,591
Variable lease revenues		4,116		3,194		8,499		6,990
Lease revenues (a)	$	24,203	$	21,513	$	48,121	$	43,581

(a)	Excludes amortization related to lease intangible assets and liabilities of $276 and $528 for the three and six months ended June 30, 2025, respectively, and $287 and $665 for the three and six months ended June 30, 2024, respectively.

In many of the Company’s leases, the tenant is obligated to pay the real estate taxes, insurance, and certain other expenses directly to the vendor. These obligations, which have been assumed by the tenants, are not reflected in the Company’s consolidated financial statements. To the extent any such tenant defaults on its lease or if it is deemed probable that the tenant will fail to pay for such obligations, a liability for such obligations would be recorded.

On a quarterly basis, the Company assesses the collectability of substantially all lease payments due by, among other things, reviewing the tenant’s payment history or financial condition. Changes to collectability are recognized as a current period adjustment to rental revenue. As of June 30, 2025, the Company has assessed the collectability of all recorded lease revenues as probable.

Minimum Future Rents

As of June 30, 2025, the minimum future contractual rents to be received on non-cancellable operating leases are included in the table below (amounts in thousands). The minimum future contractual rents do not include (i) straight-line rent or amortization of lease intangibles or incentives and (ii) variable lease payments as described above.


From July 1 – December 31, 2025	$	38,000
For the year ending December 31,
2026		75,614
2027		67,977
2028		56,163
2029		45,196
2030		34,741
Thereafter		80,835
Total	$	398,526

NOTE 3 – LEASES (CONTINUED)

Lease Termination Fees

In June 2025, the Company recognized a lease termination fee of $66,000 from an industrial tenant in a lease buy-out transaction. In connection with this transaction, the Company also wrote-off the tenant’s unamortized balances of (i) $24,000 in unbilled rent receivables and intangible lease liabilities, as a net increase to Rental income, net and (ii) $68,000 in tenant origination costs as an increase to Depreciation and amortization expense.

In March 2024, a consolidated joint venture in Lakewood, Colorado, in which the Company holds a 90% interest, recognized a lease termination fee of $250,000 from a tenant due to the early termination of its lease in connection with the sale of the related restaurant parcel (see Note 5).

Lessee Accounting

Ground Lease

The Company is a lessee under a ground lease in Greensboro, North Carolina, which is classified as an operating lease. The ground lease expires March 3, 2030 and provides for up to three, five-year renewal options and one seven-month renewal option. As of June 30, 2025, the remaining lease term is 4.7 years. The Company recognized lease expense related to this ground lease of $122,000 and $244,000 for both the three and six months ended June 30, 2025 and June 30, 2024, respectively, which is included in Real estate expenses on the consolidated statements of income.

Office Lease

The Company is a lessee under a corporate office lease in Great Neck, New York, which is classified as an operating lease. The lease expires December 31, 2031 and provides for a five-year renewal option. As of June 30, 2025, the remaining lease term, including the renewal option deemed exercised, is 11.5 years. The Company recognized lease expense related to this office lease of $14,000 and $28,000 for both the three and six months ended June 30, 2025 and 2024, respectively, which is included in General and administrative expenses on the consolidated statements of income.

Minimum Future Lease Payments

As of June 30, 2025, the minimum future lease payments related to these operating leases are as follows (amounts in thousands):


From July 1 – December 31, 2025	$	313
For the year ending December 31,
2026		627
2027		629
2028		630
2029		692
2030		180
Thereafter		357
Total undiscounted cash flows	$	3,428
Present value discount		(622)
Lease liability	$	2,806

The lease liability is included in Accrued expenses and other liabilities on the consolidated balance sheet.