GROUND LEASES
At December 31, 2025, the Company had four properties subject to operating ground leases with a weighted average remaining term of 74 years. At December 31, 2025, the Company had right-of-use assets from operating ground leases of $45.1 million included in operating properties or land on the consolidated balance sheet. At December 31, 2025, the Company had lease liabilities for operating ground leases of $50.2 million included in other liabilities on the consolidated balance sheet. The weighted average discount rate used in determining these liabilities associated with ground leases at December 31, 2025 was 4.3%. At December 31, 2025, the Company had no right-of-use assets or liabilities related to finance ground leases.
At December 31, 2024, the Company had four properties subject to operating ground leases with a weighted average remaining lease term of 76 years. At December 31, 2024, the Company had right-of-use assets from operating ground leases of $45.2 million included in operating properties or land on the consolidated balance sheet. At December 31, 2024, the Company had lease liabilities for operating ground leases of $50.0 million included in other liabilities on the consolidated balance sheet. The weighted average discount rate used in determining these liabilities associated with ground leases at December 31, 2024 was 4.3%. In February 2024, the Company paid $3.8 million under the provisions of a finance ground lease to purchase the fee interest in land previously controlled by the Company through that lease. At December 31, 2024, the Company had no right-of-use assets or liabilities related to finance ground leases.
Rental payments on these ground leases are adjusted periodically based on either the Consumer Price Index, changes in developed square feet on the underlying leased asset, or on a pre-determined schedule. The monthly payments on a pre-determined schedule are recognized on a straight-line basis over the terms of the respective leases while payments resulting from changes in the Consumer Price Index or future development are reflected in the statement of operations at the time of the change.
For the years ended December 31, 2025, 2024, and 2023, the Company recognized operating ground lease expense of $2.9 million, $2.8 million, and $2.9 million, respectively. For the years ended December 31, 2025, 2024, and 2023, the Company had $300,000, $128,000 and $155,000, respectively, of variable lease expenses related to ground lease expense. Additionally, the Company recognized interest expense related to finance ground leases of $27,000 and $162,000 in 2024 and 2023, respectively. For the years ended December 31, 2025, 2024, and 2023, the Company paid $2.3 million, $2.1 million, and $2.1 million, respectively, in cash related to operating ground leases and, excluding the purchase of fee interest noted above, made $39,000 and $162,000, in cash payments related to financing ground leases in 2024 and 2023, respectively.
The following table represents the undiscounted cash flows of our scheduled obligations for future minimum payments for ground leases as of December 31, 2025, with a reconciliation of these cash flows to the related ground lease liabilities in accordance with ASC 842 ($ in thousands):
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| Operating Ground Leases | | |
| 2026 | $ | 2,006 | | | |
| 2027 | 2,010 | | | |
| 2028 | 2,022 | | | |
| 2029 | 2,022 | | | |
| 2030 | 2,044 | | | |
| Thereafter | 167,224 | | | |
| $ | 177,328 | | | |
| | | |
| Discount | (127,143) | | | |
| Lease liability | $ | 50,185 | | | |