As part of the adoption of Topic 842, we elected to not reassess the lease classification for any expired or existing leases; therefore, all of the leases for our regulated assets will continue to be classified as operating leases. Additionally, we have elected to exclude lessor costs paid directly by Sharyland to third parties on our behalf from consideration in the contracts and from variable payments.

	Three Months Ended March 31,
(In thousands)	2019		2018
Base rent (straight-line)	$	48,574	$	45,656
Percentage rent		—		—
Total lease revenue	$	48,574	$	45,656

SDTS has entered into various leases with Sharyland for all our placed in service regulated assets. The master lease agreements, as amended, expire at various dates from December 31, 2019 through December 31, 2022. Our leases primarily consist of base rent, but certain lease supplements contain percentage rent as well. All of the rent with respect to the capital expenditures to be placed in service in 2019 consist only of base rent.

Percentage rent under our leases is based on a percentage of Sharyland’s annual gross revenue, as defined in the applicable lease, in excess of an annual breakpoint specified in each lease, which are at least equal to the base rent under each lease. The rate used for percentage rent for the reported time periods varies by lease and ranges from 26% to 30%. Because an annual specified breakpoint must be met under our leases before we can recognize any percentage rent, we anticipate that revenue will grow over the year with little to no percentage rent recognized in the first and second quarters of each year, with the largest amounts recognized during the third and fourth quarters of each year.

Future minimum rent revenue expected in accordance with these lease agreements is as follows for the years ending December 31:

(In thousands)	Total
2019	$	194,068
2020		184,438
2021		9,089
2022		4,954
2023		—
Thereafter		—
Total	$	392,549

See Note 2, Pending Corporate Transactions for information related to the pending sale of InfraREIT, Inc. and asset exchange with Sharyland, including the proposed termination of the leases.

As part of the adoption of Topic 842, we elected not to reassess existing or expired land easements that were not previously treated as leases; therefore, our existing land easements as of January 1, 2019 will continue to be treated as land and not land leases and will be included in electric plant, net on our Consolidated Balance Sheets. Land easements entered into or modified after January 1, 2019 will be evaluated under Topic 842 to determine if they meet the definition of a lease.

We are the lessee under two land leases that are subleased to Sharyland under the master lease agreements described above under the caption Leases with SDTS as Lessor. Sharyland does not make any sublease payments specific to these land leases but pays all rent and other expenses under the land leases. Sharyland’s use of the applicable land is included as part of our five master lease agreements discussed above.

Both land leases are surface leases where the lessor retains the mineral rights. There were no initial direct costs incurred or residual value guarantees provided. The weighted-average remaining lease term is 43.2 years. The following table describes the main attributes of the land leases:

Name of Lease

Expiration Date

Renewal Periods

Rent Escalations

Initial Annual Rent

(In dollars)

Brownsville

November 1, 2067

None

10,435

Scottish Rite-Rocky Road

January 12, 2035

Four 5-year terms

5% increase every 5 years

after initial term

8,000

We have recorded the operating lease right-of-use assets in prepaids and other current assets and other assets, and the lease liabilities in accounts payable and accrued liabilities and long-term operating lease liabilities on our Consolidated Balance Sheets as follows:

(In thousands)	March 31, 2019
Prepaid and other current assets	$	18
Other assets		345
Total right-of-use asset	$	363

Accounts payable and accrued liabilities	$	18
Long-term operating lease liabilities	345
Total operating lease liabilities	$	363

In determining the right-of-use assets and operating lease liabilities, we used a discount rate of 4.25%, which is our incremental borrowing rate, and assumed that we would exercise all four five-year term extensions related to the Scottish Rite-Rocky Road lease.

Rent expense for these operating leases is recognized on a straight-line basis over the lease term and is included in general and administrative expense on our Consolidated Statements of Operations.