Leases

6 Months Ended

Jun. 30, 2025

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.

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


		Six Months Ended
	Classification	June 30, 2025		June 30, 2024
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	48,093	$	11,830
Non-real estate investment lease expense	General and administrative expenses	3,081		3,084
Financing lease cost:
Amortization of leased assets	Property operating expenses	2,428		2,165
Interest on lease liabilities	Interest expense	2,649		1,747

Total		$	56,251	$	18,826

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

Supplemental balance sheet information related to leases in which we are the lessee is as follows (in thousands):


	Classification	June 30, 2025		December 31, 2024
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	1,152,154	$	1,094,549
Financing leases - real estate	Right of use assets, net	127,018		106,582
Real estate right of use assets, net		1,279,172		1,201,131
Operating leases - non-real estate investments	Receivables and other assets	22,143		7,605

Total right of use assets, net		$	1,301,315	$	1,208,736

Lease liabilities:
Operating leases		$	1,227,184	$	1,150,062
Financing leases		108,463		108,037
Total		$	1,335,647	$	1,258,099

Leases

Lessee

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


		Six Months Ended
	Classification	June 30, 2025		June 30, 2024
Operating lease cost: (1)
Real estate lease expense	Property operating expenses	$	48,093	$	11,830
Non-real estate investment lease expense	General and administrative expenses	3,081		3,084
Financing lease cost:
Amortization of leased assets	Property operating expenses	2,428		2,165
Interest on lease liabilities	Interest expense	2,649		1,747

Total		$	56,251	$	18,826

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

Supplemental balance sheet information related to leases in which we are the lessee is as follows (in thousands):


	Classification	June 30, 2025		December 31, 2024
Right of use assets:
Operating leases - real estate	Right of use assets, net	$	1,152,154	$	1,094,549
Financing leases - real estate	Right of use assets, net	127,018		106,582
Real estate right of use assets, net		1,279,172		1,201,131
Operating leases - non-real estate investments	Receivables and other assets	22,143		7,605

Total right of use assets, net		$	1,301,315	$	1,208,736

Lease liabilities:
Operating leases		$	1,227,184	$	1,150,062
Financing leases		108,463		108,037
Total		$	1,335,647	$	1,258,099

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 six months ended June 30, 2024, we wrote off previously recognized straight-line rent receivable and unamortized lease incentive balances of $97,674,000 through a reduction of rental income, which related to leases for which the collection of substantially all contractual lease payments was no longer probable due primarily to agreements reached to convert Triple-net leased properties to Seniors Housing Operating RIDEA structures.

Leases in our Triple-net and Outpatient Medical portfolios recognized under ASC 842, "Leases" ("ASC 842"), typically include some form of operating expense reimbursement by the tenant. For the six months ended June 30, 2025, we recognized $944,607,000 of rental income related to operating leases, of which $111,861,000 was for variable lease payments that primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the six months ended June 30, 2024, we recognized $753,463,000 of rental income related to operating leases, of which $109,607,000 was for variable lease payments.

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, "Revenue from Contracts with Customers." 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 $381,566,000 and $265,959,000 for the six months ended June 30, 2025 and 2024, respectively.

During the three months ended March 31, 2025, we sold four properties for which the related master lease was classified as a sales-type lease. We recognized net proceeds of $174,824,000 on the sale, which was included in proceeds from sales of real property in the Consolidated Statements of Cash Flows.