BOSTON OMAHA Corp Leases Disclosure

NOTE 13.

LEASES

 

We enter into operating lease contracts primarily for land and office space. Agreements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases include land lease contracts and contracts for the use of office space.

 

Right of use assets, which we refer to as “ROU assets,” represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

 

Certain of our operating lease agreements include rental payments based on a percentage of revenue and others include rental payments adjusted periodically for inflationary changes. Percentage rent contracts, in which lease expense is calculated as a percentage of advertising revenue, and payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense.

 

Many of our leases entered into in connection with land provide options to extend the terms of the agreements. Generally, renewal periods are included in minimum lease payments when calculating the lease liabilities as, for most leases, we consider exercise of such options to be reasonably certain. As a result, optional terms and payments are included within the lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

The implicit rate within our lease agreements is generally not determinable. As such, we use the incremental borrowing rate, which we refer to as “IBR,” to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is “the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.” 

 

Operating Lease Cost

 

Operating lease cost for the years ended  December 31, 2025 and 2024 is as follows:

 

		Year Ended				Year Ended
		Ended				Ended
		December 31, 2025				December 31, 2024			Statement of Operations Classification
Lease cost		$	8,912,345			$	8,644,098		Cost of billboard revenues, cost of broadband revenues and general and administrative
Variable and short-term lease cost			2,938,388				2,854,938		Cost of billboard revenues, cost of broadband revenues and general and administrative
Total Lease Cost		$	11,850,733			$	11,499,036

 

Supplemental cash flow information related to operating leases was as follows:

 

		Year Ended				Year Ended
		Ended				Ended
		December 31, 2025				December 31, 2024
Cash payments for operating leases		$	8,646,091			$	8,402,005
New operating lease assets obtained in exchange for operating lease liabilities		$	4,728,718			$	3,911,148

 

Operating Lease Assets and Liabilities

 

		December 31, 2025				December 31, 2024			Balance Sheet Classification
Lease assets		$	58,426,854			$	59,742,166		Other Assets: Right of use assets
Current lease liabilities		$	5,269,586			$	5,333,611		Current Liabilities: Lease liabilities
Noncurrent lease liabilities			54,383,643				54,994,879		Long-term Liabilities: Lease liabilities
Total Lease Liabilities		$	59,653,229			$	60,328,490

 

Maturity of Operating Lease Liabilities

 

		December 31, 2025
2026		$	8,302,184
2027			8,013,205
2028			7,640,487
2029			6,941,697
2030			6,278,235
Thereafter			52,896,235
Total lease payments			90,072,043
Less imputed interest			(30,418,814	)
Present Value of Lease Liabilities		$	59,653,229

 

As of  December 31, 2025 our operating leases have a weighted-average remaining lease term of 15.63 years and a weighted-average discount rate of 5.34%.