The Company is lessor under approximately 820 retail operating leases. The remaining lease terms for the Company’s leases range from less than one year to 14 years. The Company considers the date on which it makes a leased space available to a lessee as the commencement date of the lease. At commencement, the Company determines the lease classification utilizing the classification tests under ASC 842. Options to extend a lease are included in the lease term when it is reasonably certain that the tenant will exercise its option to extend. Termination penalties are included in income when there is a termination agreement, all the conditions of the agreement have been met and amounts due are considered collectable. The termination fees are recognized on a straight-line basis over the remaining lease term in rental income. If an operating lease is modified and the modification is not accounted for as a separate contract, the Company accounts for the modification as if it were a termination of the existing lease and the creation of a new lease. The Company considers any prepaid or accrued rentals relating to the original lease as part of the lease payments for the modified lease. The Company includes options to modify the original lease term when it is reasonably certain that the tenant will exercise its option to extend.

Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Most leases require the tenant to pay monthly fixed base rent in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid.

Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included on the consolidated statements of operations and comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses. Reimbursements for common area maintenance are considered non-lease components that are permitted to be combined with rental income. The combined lease component and reimbursements for insurance and taxes are reported as rental income on the consolidated statements of operations and comprehensive loss.

Rental income related to the Company’s operating leases is comprised of the following for the years ended December 31, 2025, 2024 and 2023:


	Year Ended December 31,
	2025		2024			2023
Rental income - fixed payments	$	120,237	$	118,177		$	115,092
Rental income - variable payments (a)		32,628		31,724			32,221
Amortization of acquired lease intangibles, net		357		(72	)		2,323
Rental income	$	153,222	$	149,829		$	149,636

(a)

Primarily includes tenant recovery income for real estate taxes, common area maintenance and insurance.

The future base rent payments to be received under operating leases including ground leases as of December 31, 2025 for the years indicated, assuming no expiring leases are renewed, are as follows:


	Lease Payments
2026	$	111,309
2027		101,505
2028		86,365
2029		69,304
2030		49,014
Thereafter		137,227
Total	$	554,724

The Company is the lessee under one ground lease. The ground lease, which commenced on July 1, 2007, was assumed as part of a property purchased in October 2015 and extends through June 30, 2037 with six 5-year renewal options which the Company assumes will be exercised. When the Company acquired the lease, the Company considered the lease terms and lease classification. As reassessment was not required under practical expedients accorded in ASC 842, the Company has continued to account for the ground lease as an operating lease with an established lease term and payment schedule. The lease liability was based on the present value of the ground lease’s future lease payments using an interest rate of 6.225% which the Company considered reasonable and within the range of the Company’s incremental borrowing rate. For the years ended December 31, 2025, 2024 and 2023, total rent expense was $1,944, $1,944 and $1,944, respectively, recorded in property operating expenses on the consolidated statements of operations and comprehensive loss.

Lease payments for the ground lease as of December 31, 2025 for each of the five succeeding years and thereafter is as follows:


	Lease Payments
2026	$	1,264
2027		1,332
2028		1,401
2029		1,401
2030		1,401
Thereafter		79,050
Total undiscounted lease payments		85,849
Less: Amount representing interest		(60,251	)
Present value of lease liability	$	25,598

As of December 31, 2025, the Company’s accounts and rent receivable, net balance was $26,845, which was net of an allowance for bad debts of $1,582. As of December 31, 2024, the Company’s accounts and rent receivable, net balance was $23,355, which was net of an allowance for bad debts of $1,044.