AH Realty Trust, Inc.AHRT
AH Realty Trust, Inc. Leases Disclosure
Leases
Lessee Disclosures
As a lessee, the Company has nine ground leases on nine properties, including participating ground leases. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Five of these leases have been classified as operating leases and four of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.
The components of lease cost for the years ended December 31, 2025, 2024, and 2023 were as follows (in thousands):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
Operating lease cost (1) | $ | 1,988 | $ | 1,978 | $ | 1,969 | ||||||||||||||
| Finance lease cost: | ||||||||||||||||||||
Amortization of right-of-use assets (1) | 1,578 | 1,578 | 1,349 | |||||||||||||||||
| Interest on lease liabilities | 4,480 | 4,475 | 3,636 | |||||||||||||||||
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(1) Includes amortization of above & below-market ground lease intangible assets.
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2025, 2024, and 2023 (in thousands):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 1,923 | $ | 1,898 | $ | 1,852 | ||||||||||||||
| Operating cash flows from finance leases | 3,633 | 3,624 | 2,876 | |||||||||||||||||
Additional information related to leases as of December 31, 2025 and 2024 were as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Weighted Average Remaining Lease Term (years) | ||||||||||||||
| Operating leases | 33.0 | 33.9 | ||||||||||||
| Finance leases | 75.2 | 76.1 | ||||||||||||
| Weighted Average Discount Rate | ||||||||||||||
| Operating leases | 5.5 | % | 5.5 | % | ||||||||||
| Finance leases | 4.5 | % | 4.5 | % | ||||||||||
The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below (in thousands). The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.
| Year Ending December 31, | Operating Leases | Finance Leases | ||||||||||||
| 2026 | $ | 1,882 | $ | 3,580 | ||||||||||
| 2027 | 1,890 | 3,602 | ||||||||||||
| 2028 | 1,930 | 3,697 | ||||||||||||
| 2029 | 1,969 | 3,817 | ||||||||||||
| 2030 | 1,986 | 3,858 | ||||||||||||
| Thereafter | 60,611 | 366,796 | ||||||||||||
| Total lease liabilities | 70,268 | 385,350 | ||||||||||||
| Less imputed interest | (39,070) | (291,873) | ||||||||||||
| Present value of lease liabilities | $ | 31,198 | $ | 93,477 | ||||||||||
Lessor Disclosures
As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from to 25 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.
Rental revenue for the years ended December 31, 2025, 2024, and 2023 comprised the following (in thousands):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Base rent and tenant charges | $ | 257,600 | $ | 246,797 | $ | 230,379 | ||||||||||||||
| Accrued straight-line rental adjustment | 10,243 | 8,254 | 6,355 | |||||||||||||||||
| Lease incentive amortization | (219) | (435) | (557) | |||||||||||||||||
| (Above) below market lease amortization, net | 2,000 | 2,081 | 2,747 | |||||||||||||||||
| Total rental revenue | $ | 269,624 | $ | 256,697 | $ | 238,924 | ||||||||||||||
The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):
| Year Ending December 31, | Operating Leases | |||||||
| 2026 | $ | 143,194 | ||||||
| 2027 | 142,805 | |||||||
| 2028 | 133,306 | |||||||
| 2029 | 119,801 | |||||||
| 2030 | 104,257 | |||||||
| Thereafter | 479,791 | |||||||
| Total | $ | 1,123,154 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Mar 2, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.