Leases

3 Months Ended

Mar. 31, 2025

(8) Leases

The Company enters into operating leases primarily for standalone homes, luxury condos and hotel rooms and suites. As of March 31, 2025, active leases have remaining initial terms ranging from less than 1 to 19 years, and generally contain extension options at the approval of both parties. The Company has not generally included these renewal periods in the lease term as it is not reasonably certain that the renewal option will be exercised. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Variable lease expense includes expenses incurred as a result of the lease agreement, which are not considered known expenses at lease inception and are recognized as incurred. Variable expenses can include, but are not limited to, revenue shares, owner buyback adjustments and usage-based agreements. Operating lease expense and variable lease expense are included in cost of revenue within the Condensed Consolidated Statements of Operations and Comprehensive Income.

The following table details the composition of operating lease expense (in thousands):


	Three Months Ended March 31,
		2025		2024
Operating lease expense		$	16,815	$	19,728
Variable lease expense		375		301
Total lease expense		$	17,190	$	20,029

The maturities of the operating lease liabilities as of March 31, 2025 are as follows (in thousands):


Fiscal Year Ending	Operating Leases
Remainder of 2025	$	53,623
2026	56,491
2027	38,268
2028	26,282
2029	17,113
2030 and thereafter	41,885
Total minimum lease payments	233,662
Less: interest expense	47,129
Present value of lease obligations	186,533
Less: current lease obligations	55,321
Long-term lease obligations	$	131,212

The Company has entered into a subleasing agreement for a number of homes in a single location which contains an extension option at the approval of both parties. During the three months ended March 31, 2025, the Company had $0.2 million in sublease income related to this agreement. There was no sublease income during the three months ended March 31, 2024.

As of March 31, 2025, the Company was party to 4 leases that had not yet commenced. Future payments under these leases were $5.2 million as of March 31, 2025.

The following table presents additional information about the operating lease obligations:


	March 31, 2025	December 31, 2024
Weighted-average remaining lease term (in years)	5.0	5.1
Weighted-average discount rate	9.15%	9.14%

Impairment of Right-of-Use Assets

The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable.

During the three months ended March 31, 2025 and 2024, the Company reviewed cash flow forecasts of leases against the carrying value of their right-of-use assets. The Company determined that none of the right-of-use assets for leases had net carrying values that exceeded their estimated undiscounted future cash flows and therefore no impairment was recorded for the three months ended March 31, 2025 and 2024.

Gain on Lease Termination

The Company entered into a Lease Termination and Surrender Agreement on August 12, 2024, subsequently amended on August 30, 2024, effective August 31, 2024, (the “Termination Agreement”) to terminate certain previously impaired, underperforming leases under which the Company did not previously have termination rights. The Termination Agreement resulted in a decrease to the Company’s right-of-use assets of $4.6 million and corresponding decrease to operating lease liabilities of approximately $41.7 million, resulting in a gain on lease termination of $37.1 million, which was recorded to (gain) on lease termination and loss on asset impairments on the Consolidated Statement of Operations and Comprehensive Loss in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Additionally, as part of the Termination Agreement, the Company agreed to pay a termination fee of $6.6 million, subject to certain adjustments, payable in installments from August 2024 to March 2025. As of March 31, 2025, the Company has paid the $2.6 million remaining termination fee that was owed as of December 31, 2024.