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OPERATING LEASES
 6 Months Ended
Jun. 30, 2025
Leases [Abstract]  
OPERATING LEASES OPERATING LEASES
Lessor Accounting
As of June 30, 2025, the substantial majority of the Company’s real estate properties (excluding 73 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 19 years. As of June 30, 2025, the leases had a weighted average remaining term of seven years. The leases generally include provisions to extend the lease terms and other negotiated terms and conditions. The Company, through its subsidiaries, retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. The Company may receive additional security under these operating leases in the form of letters of credit and security deposits from the lessee or guarantees from the parent of the lessee. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets and totaled $10.3 million and $9.0 million as of June 30, 2025 and December 31, 2024, respectively, and letters of credit deposited with the Company totaled approximately $66 million and $64 million as of June 30, 2025 and December 31, 2024, respectively. In addition, the Company’s tenants have deposited with the Company $11.8 million and $10.8 million as of June 30, 2025 and December 31, 2024, respectively, for future real estate taxes, insurance expenditures and tenant improvements related to the Company’s properties and their operations, and these amounts are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.
Lessor costs that are paid by the lessor and reimbursed by the lessee are included in the measurement of variable lease revenue and the associated expense. As a result, the Company recognized variable lease revenue and the associated expense of $3.5 million and $7.1 million during the three and six months ended June 30, 2025, respectively, and $3.2 million and $6.5 million during the three and six months ended June 30, 2024, respectively.
The Company monitors the creditworthiness of its tenants by evaluating the ability of the tenants to meet their lease obligations to the Company based on the tenants’ financial performance, including, as applicable and appropriate, the evaluation of any parent guarantees (or the guarantees of other related parties) of such lease obligations. The primary basis for the Company’s evaluation of the credit quality of its tenants (and more specifically the tenant’s ability to pay their rent obligations to the Company) is the tenant’s lease coverage ratio as supplemented by the parent’s fixed charge coverage ratio for those entities with a parent guarantee. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent at the lease level and consolidated EBITDAR to total fixed charges at the parent guarantor level when such a guarantee exists. The Company obtains various financial and operational information from the majority of its tenants each month and reviews this information in conjunction with the above-described coverage metrics to identify financial and operational trends, evaluate the impact of the industry’s operational and financial environment (including the impact of government reimbursement), and evaluate the management of the tenant’s operations. These metrics help the Company identify potential areas of concern relative to its tenants’ credit quality and ultimately the tenant’s ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.
For the three and six months ended June 30, 2025, no tenant relationship represented 10% or more of the Company’s total revenues.
As of June 30, 2025, the future minimum rental payments from the Company’s properties held for investment under non-cancelable operating leases were as follows and may materially differ from actual future rental payments received (in thousands):
July 1 through December 31, 2025$182,614 
2026368,457 
2027356,045 
2028336,871 
2029288,359 
Thereafter1,235,962 
$2,768,308 
Lessee Accounting
For operating leases greater than 12 months for which the Company is the lessee, such as corporate office leases and ground leases, the Company recognizes a right-of-use (“ROU”) asset and related lease liability on its consolidated balance sheets at inception of the lease. ROU assets represent the Company’s right to use underlying assets for the lease term, and lease
liabilities are determined based on the estimated present value of the Company’s minimum lease payments under the agreements. The discount rate used to determine the lease liabilities is based on the estimated incremental borrowing rate on a lease-by-lease basis. Certain of the Company’s lease agreements have options to extend or terminate the contract terms upon meeting certain criteria. The lease term utilized in the calculation of the lease liability includes these options if exercise is considered reasonably certain. As of June 30, 2025 and December 31, 2024, the Company had $6.8 million and $7.0 million of ROU assets included in accounts receivable, prepaid expenses and other assets, net, and $7.8 million and $8.3 million of lease liabilities included in accounts payable and accrued liabilities, respectively, on its consolidated balance sheets.
The Company incurred lease expense of $0.2 million and $0.5 million during the three and six months ended June 30, 2025, respectively, and $0.4 million and $0.8 million during the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the weighted average remaining lease term and discount rate were 12 years and 8%, respectively, and the future minimum lease payments under the operating leases included in the Company’s lease liability were as follows (in thousands):
July 1 through December 31, 2025$739 
20261,032 
20271,047 
20281,021 
20291,050 
Thereafter7,888 
Undiscounted minimum lease payments included in the lease liability12,777 
Less: imputed interest(4,964)
Present value of lease liability$7,813 
OPERATING LEASES OPERATING LEASES
Lessor Accounting
As of June 30, 2025, the substantial majority of the Company’s real estate properties (excluding 73 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 19 years. As of June 30, 2025, the leases had a weighted average remaining term of seven years. The leases generally include provisions to extend the lease terms and other negotiated terms and conditions. The Company, through its subsidiaries, retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. The Company may receive additional security under these operating leases in the form of letters of credit and security deposits from the lessee or guarantees from the parent of the lessee. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets and totaled $10.3 million and $9.0 million as of June 30, 2025 and December 31, 2024, respectively, and letters of credit deposited with the Company totaled approximately $66 million and $64 million as of June 30, 2025 and December 31, 2024, respectively. In addition, the Company’s tenants have deposited with the Company $11.8 million and $10.8 million as of June 30, 2025 and December 31, 2024, respectively, for future real estate taxes, insurance expenditures and tenant improvements related to the Company’s properties and their operations, and these amounts are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.
Lessor costs that are paid by the lessor and reimbursed by the lessee are included in the measurement of variable lease revenue and the associated expense. As a result, the Company recognized variable lease revenue and the associated expense of $3.5 million and $7.1 million during the three and six months ended June 30, 2025, respectively, and $3.2 million and $6.5 million during the three and six months ended June 30, 2024, respectively.
The Company monitors the creditworthiness of its tenants by evaluating the ability of the tenants to meet their lease obligations to the Company based on the tenants’ financial performance, including, as applicable and appropriate, the evaluation of any parent guarantees (or the guarantees of other related parties) of such lease obligations. The primary basis for the Company’s evaluation of the credit quality of its tenants (and more specifically the tenant’s ability to pay their rent obligations to the Company) is the tenant’s lease coverage ratio as supplemented by the parent’s fixed charge coverage ratio for those entities with a parent guarantee. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent at the lease level and consolidated EBITDAR to total fixed charges at the parent guarantor level when such a guarantee exists. The Company obtains various financial and operational information from the majority of its tenants each month and reviews this information in conjunction with the above-described coverage metrics to identify financial and operational trends, evaluate the impact of the industry’s operational and financial environment (including the impact of government reimbursement), and evaluate the management of the tenant’s operations. These metrics help the Company identify potential areas of concern relative to its tenants’ credit quality and ultimately the tenant’s ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.
For the three and six months ended June 30, 2025, no tenant relationship represented 10% or more of the Company’s total revenues.
As of June 30, 2025, the future minimum rental payments from the Company’s properties held for investment under non-cancelable operating leases were as follows and may materially differ from actual future rental payments received (in thousands):
July 1 through December 31, 2025$182,614 
2026368,457 
2027356,045 
2028336,871 
2029288,359 
Thereafter1,235,962 
$2,768,308 
Lessee Accounting
For operating leases greater than 12 months for which the Company is the lessee, such as corporate office leases and ground leases, the Company recognizes a right-of-use (“ROU”) asset and related lease liability on its consolidated balance sheets at inception of the lease. ROU assets represent the Company’s right to use underlying assets for the lease term, and lease
liabilities are determined based on the estimated present value of the Company’s minimum lease payments under the agreements. The discount rate used to determine the lease liabilities is based on the estimated incremental borrowing rate on a lease-by-lease basis. Certain of the Company’s lease agreements have options to extend or terminate the contract terms upon meeting certain criteria. The lease term utilized in the calculation of the lease liability includes these options if exercise is considered reasonably certain. As of June 30, 2025 and December 31, 2024, the Company had $6.8 million and $7.0 million of ROU assets included in accounts receivable, prepaid expenses and other assets, net, and $7.8 million and $8.3 million of lease liabilities included in accounts payable and accrued liabilities, respectively, on its consolidated balance sheets.
The Company incurred lease expense of $0.2 million and $0.5 million during the three and six months ended June 30, 2025, respectively, and $0.4 million and $0.8 million during the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the weighted average remaining lease term and discount rate were 12 years and 8%, respectively, and the future minimum lease payments under the operating leases included in the Company’s lease liability were as follows (in thousands):
July 1 through December 31, 2025$739 
20261,032 
20271,047 
20281,021 
20291,050 
Thereafter7,888 
Undiscounted minimum lease payments included in the lease liability12,777 
Less: imputed interest(4,964)
Present value of lease liability$7,813