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Leases

12 Months Ended

Dec. 31, 2024

Note 3 – Leases

Lessor Accounting

We own rental properties which are leased to tenants under operating leases that typically have terms of between 12 and 24 months with current expirations ranging from 2025 to 2040, and with options to extend or terminate the leases. Revenues from such leases are reported as Rental revenue in our consolidated statements of operations, 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. We do 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.

Fixed lease revenues represent the base rent that each tenant is required to pay in accordance with the terms of their respective leases reported on a straight-line basis over the non-cancelable term of the lease. Variable lease revenues 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, or (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 following table summarizes the components of lease revenues (amounts in thousands):

	2024		2023
	Years Ended December 31,
	2024		2023
Fixed lease revenues	$	2,121	$	1,019
Variable lease revenues ⁽¹⁾		552		415
Lease revenues ^{(2) (3)}	$	2,673	$	1,434

⁽¹⁾	Includes reimbursements for property taxes, insurance, and common area maintenance services.
⁽²⁾	Excludes lease intangible amortization of less than $0.1 million, and $0.8 million, for the years ended December 31, 2024, and 2023, respectively.
⁽³⁾	Excludes straight-line rent of less than $0.1 million for the years ended December 31, 2024, and 2023, respectively.

In certain of our 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 our 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.

We assess the collectability of substantially all lease payments due, including unbilled rent receivable balances, by reviewing a tenant’s payment history and financial condition, and the age of the receivables. Changes to collectability are recognized as a current period adjustment to rental revenue. We have assessed the collectability of all recorded lease revenues as probable as of December 31, 2024.

Minimum Future Lease Payments

The following table summarizes the minimum future contractual rents to be received (exclusive of expenses paid by tenants, and percentage of sales rents) on non-cancellable tenant operating leases as of December 31, 2024 (amounts in thousands):

For the year ended December 31, ⁽¹⁾	(1)
2025	$	5,569
2026		3,287
2027		1,324
2028		1,352
2029		1,348
Thereafter		10,720
Total ⁽²⁾	$	23,600

⁽¹⁾	A majority of our operating leases have terms of between 12 and 24 months, however expiration dates range from 2025 to 2040.
⁽²⁾	Excludes $0.1 million of straight-line rent and $1.2 million of lease intangible amortization.