Note 7 - Long-term Leases

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note 7 – Long–Term Leases

Operating Leases

At December 31, 2024, we lease from NHI the real property of 28 skilled nursing facilities, five assisted living centers and three independent living centers under one master lease agreement. As part of the lease agreement, we sublease four Florida skilled nursing facilities to a third-party operator. The lease includes base rent plus a percentage rent.

The annual base rent was $32,625,000 in 2024. The annual base rent is $32,225,000 in 2025 and $31,975,000 in 2026 with the lease term expiring at December 31, 2026. The percentage rent is based on a quarterly calculation of revenue increases and is payable on a quarterly basis. Percentage rent expense under the NHI lease agreements for 2024, 2023, and 2022 was $6,289,000, $5,549,000 and $3,887,000, respectively.

We have a right of first refusal with NHI to purchase any of the properties should NHI receive an offer from an unrelated party during the term of the lease or up to 180 days after termination of the related lease.

Minimum Lease Payments

The following table summarizes the maturity of our operating lease liabilities as of December 31, 2024 (in thousands):

	Operating Leases
2025	$	35,873
2026		35,195
2027		2,420
2028		1,825
2029		1,565
Thereafter		11,788
Total minimum lease payments	$	88,666
Less: amounts representing interest		(10,900	)
Present value of future minimum lease payments		77,766
Less: current portion		(31,841	)
Noncurrent lease liabilities	$	45,925

As of December 31, 2024 and 2023, the weighted average remaining lease term is 3.7 years and 3.0 years, respectively. As of December 31, 2024 and 2023, the weighted average discount rate used to determine lease liabilities is 7.0% and 6.6%, respectively.

Lease Costs 

Lease costs recorded in the consolidated statement of operations are as follows (in thousands):

	December 31,
	2024		2023		2022
Operating lease costs:
Operating lease costs		35,669		34,953		36,051
Variable lease costs		6,289		5,549		3,887
Short-term lease costs		1,224		1,023		1,039
Total operating lease costs		43,182		41,525		40,977

Cash paid for amounts included in the measurement of lease liabilities were $35,394,000, $36,198,000 and $36,051,000 for the years ended December 31, 2024, 2023 and 2022, respectively.