XML 34 R12.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Dec. 31, 2024

Lessee

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. As most of our leases do not provide a rate implicit in the lease agreement, we generally use our incremental borrowing rate available at lease commencement, underlying collateral for the lease and the ability to borrow against that collateral on a secured basis to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer term market rates).

The components of lease expense were as follows for the periods presented (in thousands):


		Year Ended December 31,
	Classification	2024		2023		2022
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	42,110	$	21,970	$	22,150
Non-real estate investment lease expense	General and administrative expenses	5,190		7,243		5,794
Financing lease cost:
Amortization of leased assets	Property operating expenses	5,852		5,854		6,837
Interest on lease liabilities	Interest expense	4,332		4,050		6,164
Sublease income	Rental income	—		(3,933)		(11,487)
Total		$	57,484	$	35,184	$	29,458

(1) Includes short-term leases, which are immaterial.

Maturities of lease liabilities as of December 31, 2024 are as follows (in thousands):


	Operating Leases		Financing Leases
2025	$	79,616	$	7,883
2026	79,455		7,892
2027	79,471		7,233
2028	79,467		5,333
2029	78,636		5,320
Thereafter	1,892,926		422,093
Total lease payments	2,289,571		455,754
Less: Imputed interest	(1,139,509)		(347,717)
Total present value of lease liabilities	$	1,150,062	$	108,037

Supplemental balance sheet information related to leases in which we are the lessee is as follows for the periods presented (in thousands, except lease terms and discount rate):


	Classification	December 31, 2024			December 31, 2023
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	1,094,549		$	283,293
Financing leases - real estate	Right of use assets, net	106,582			67,676
Real estate right of use assets, net		1,201,131			350,969
Operating leases - non-real estate investments	Receivables and other assets	7,605			11,338

Total right of use assets, net		$	1,208,736		$	362,307

Lease liabilities:
Operating leases		$	1,150,062		$	303,553
Financing leases		108,037			79,677
Total lease liabilities		$	1,258,099		$	383,230

Weighted average remaining lease term (years):
Operating leases		28.1			45.6
Financing leases		51.2			60.7

Weighted average discount rate:
Operating leases		5.0		%	5.3		%
Financing leases		6.0		%	7.7		%

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):


		Year Ended December 31,
	Classification	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	13,108	$	(590)	$	8,805
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(10,570)		(2,037)		(5,570)
Operating cash flows from financing leases	Decrease (increase) in receivables and other assets	885		3,061		8,672
Financing cash flows from financing leases	Other financing activities	1,211		(2,704)		(2,255)

Leases

Lessee

The components of lease expense were as follows for the periods presented (in thousands):


		Year Ended December 31,
	Classification	2024		2023		2022
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	42,110	$	21,970	$	22,150
Non-real estate investment lease expense	General and administrative expenses	5,190		7,243		5,794
Financing lease cost:
Amortization of leased assets	Property operating expenses	5,852		5,854		6,837
Interest on lease liabilities	Interest expense	4,332		4,050		6,164
Sublease income	Rental income	—		(3,933)		(11,487)
Total		$	57,484	$	35,184	$	29,458

(1) Includes short-term leases, which are immaterial.

Maturities of lease liabilities as of December 31, 2024 are as follows (in thousands):


	Operating Leases		Financing Leases
2025	$	79,616	$	7,883
2026	79,455		7,892
2027	79,471		7,233
2028	79,467		5,333
2029	78,636		5,320
Thereafter	1,892,926		422,093
Total lease payments	2,289,571		455,754
Less: Imputed interest	(1,139,509)		(347,717)
Total present value of lease liabilities	$	1,150,062	$	108,037

Supplemental balance sheet information related to leases in which we are the lessee is as follows for the periods presented (in thousands, except lease terms and discount rate):


	Classification	December 31, 2024			December 31, 2023
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	1,094,549		$	283,293
Financing leases - real estate	Right of use assets, net	106,582			67,676
Real estate right of use assets, net		1,201,131			350,969
Operating leases - non-real estate investments	Receivables and other assets	7,605			11,338

Total right of use assets, net		$	1,208,736		$	362,307

Lease liabilities:
Operating leases		$	1,150,062		$	303,553
Financing leases		108,037			79,677
Total lease liabilities		$	1,258,099		$	383,230

Weighted average remaining lease term (years):
Operating leases		28.1			45.6
Financing leases		51.2			60.7

Weighted average discount rate:
Operating leases		5.0		%	5.3		%
Financing leases		6.0		%	7.7		%

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):


		Year Ended December 31,
	Classification	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Decrease (increase) in receivables and other assets	$	13,108	$	(590)	$	8,805
Operating cash flows from operating leases	Increase (decrease) in accrued expenses and other liabilities	(10,570)		(2,037)		(5,570)
Operating cash flows from financing leases	Decrease (increase) in receivables and other assets	885		3,061		8,672
Financing cash flows from financing leases	Other financing activities	1,211		(2,704)		(2,255)

Leases

Lessor

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. During the year ended December 31, 2024, we wrote-off previously recognized straight-line rent receivable and unamortized lease incentive balances of $139,652,000, through a reduction of rental income, which related to leases for which the collection of substantially all contractual lease payments were no longer probable due primarily to agreements reached to convert Triple-net leased properties to Seniors Housing Operating RIDEA structures. During the year

ended December 31, 2023, we wrote off previously recognized straight-line rent receivable and unamortized lease incentive balances of $16,642,000 for which collection was no longer deemed probable.

Leases in our Triple-net and Outpatient Medical portfolios recognized under ASC 842 typically include some form of operating expense reimbursement by the tenant. Rental income related to operating leases and the corresponding variable lease payments, which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes, for the periods indicated were as follows (in thousands):


	Year Ended December 31,
	2024		2023		2022
Fixed income from operating leases	$	1,351,865	$	1,344,096	$	1,258,238
Variable lease income	218,413		211,977		193,548

On September 30, 2024, we reached agreements with a tenant to sell 15 properties, which are included in two master leases previously classified as operating leases. As a result of the agreement to sell the properties, the two leases were classified as sales-type leases in accordance with ASC 842 and a gain of $92,593,000 was recognized in gain (loss) on real estate dispositions and acquisitions of controlling interests, net in the Consolidated Statements of Comprehensive Income. We recognized $8,167,000 of interest income related to investments in sales-type leases during the year ended December 31, 2024. We did not record any interest income from sales-type leases during the years ended December 31, 2023 or 2022. During the three months ended December 31, 2024, we sold 11 of the properties for net proceeds of $101,614,000, which was recognized in proceeds from sales of real property in the Consolidated Statements of Cash Flows. We expect to sell the remaining four properties during 2025.

For the majority of our Seniors Housing Operating segment, revenue from resident fees and services is predominantly service-based, and as such, resident agreements are accounted for under ASC 606. Within that reportable segment, we also recognize revenue from residential seniors apartment leases in accordance with ASC 842. The amount of revenue related to these leases was $587,224,000, $466,162,000 and $410,749,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table sets forth the future minimum lease payments receivable for operating leases in effect at December 31, 2024 (excluding properties in our Seniors Housing Operating portfolio and excluding any operating expense reimbursements) (in thousands):


	Operating Leases
2025	$	1,430,747
2026	1,414,315
2027	1,405,804
2028	1,384,054
2029	1,355,320
Thereafter	10,224,420
Total	$	17,214,660

Future payments related to properties subject to leases classified as sales-type leases as of December 31, 2024, which represent the estimated purchase price plus remaining rents, totaled $174,560,000.