EPR PROPERTIESEPR
EPR PROPERTIES Leases Disclosure
In addition to its lessor arrangements on its real estate investments, as of December 31, 2025 and 2024, the Company was lessee in 50 and 51 operating ground leases, respectively, as well as lessee in an operating lease of its executive office. The Company's tenants, who are generally subtenants under these ground leases, are responsible for paying the rent under these ground leases. As of December 31, 2025, rental revenue from one of the Company's tenants, who is also a subtenant under certain ground leases, is being recognized on a cash basis. In addition, two of the Company's ground leases do not currently have subtenants. In the event the tenant fails to pay the ground lease rent or if the property does not have sub-tenants, the Company is primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. As of December 31, 2025, the ground lease arrangements have remaining terms ranging from eight months to 17 years. Most of these leases include one or more options to renew. The Company assesses these options using a threshold of reasonably certain, which also includes an assessment of the term of the Company's tenants' leases. For leases where renewal is reasonably certain, those option periods are included within the lease term and also the measurement of the operating lease right-of-use asset and liability. The ground lease arrangements do not contain any residual value guarantees or any material restrictions. As of December 31, 2025, the Company does not have any leases that have not commenced but that create significant rights and obligations.
The Company determines whether an arrangement is or includes a lease at contract inception. For arrangements in which the Company is lessee, operating lease right-of-use assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease terms. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate in determining the present value of lease payments. The incremental borrowing rate was adjusted for collateral based on the information available at adoption or the commencement date. Inputs to the calculation of the Company's incremental borrowing rate include its senior notes and their option adjusted credit spreads over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification.
During the year ended December 31, 2025, the Company exercised an early termination option of a ground lease on an eat & play property. As a result, the Company recognized a gain of $3.4 million due to the reassessment of the lease term and the corresponding remeasurement of the lease liability and right-of-use asset, which is recorded in "Gain (loss) on sale of real estate and early ground lease termination" in the accompanying consolidated statement of income and comprehensive income for the year ended December 31, 2025.
The following table summarizes the future minimum lease payments under the ground lease obligations and the office lease at December 31, 2025, excluding contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales (in thousands):
| December 31, 2025 | ||||||||
| Ground Leases (1) | Office lease (2) (3) | |||||||
| Year: | ||||||||
| 2026 | $ | 28,871 | $ | 717 | ||||
| 2027 | 28,011 | — | ||||||
| 2028 | 27,110 | — | ||||||
| 2029 | 25,552 | — | ||||||
| 2030 | 20,901 | — | ||||||
| Thereafter | 153,854 | — | ||||||
| Total lease payments | $ | 284,299 | $ | 717 | ||||
| Less: imputed interest | 80,252 | 17 | ||||||
| Present value of lease liabilities | $ | 204,047 | $ | 700 | ||||
(1) Included in property operating expense.
(2) Included in general and administrative expense.
(3) Subsequent to December 31, 2025, the Company signed a new office lease for a term of 10.5 years for approximately 41,525 square feet of office space. The lease is expected to commence on January 1, 2027 with an initial annual rent payment of approximately $1.0 million.
The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of December 31, 2025 and 2024 (in thousands):
| As of December 31, | |||||||||||||||||
| Classification | 2025 | 2024 | |||||||||||||||
| Assets: | |||||||||||||||||
| Operating ground lease assets | Operating lease right-of-use assets | $ | 170,101 | $ | 171,885 | ||||||||||||
| Office lease asset | Operating lease right-of-use assets | 654 | 1,479 | ||||||||||||||
| Total operating lease right-of-use assets | $ | 170,755 | $ | 173,364 | |||||||||||||
| Sub-lessor straight-line rent receivable | Accounts receivable | 17,490 | 17,527 | ||||||||||||||
| Total leased assets | $ | 188,245 | $ | 190,891 | |||||||||||||
| Liabilities: | |||||||||||||||||
| Operating ground lease liabilities | Operating lease liabilities | $ | 204,047 | $ | 210,814 | ||||||||||||
| Office lease liability | Operating lease liabilities | 700 | 1,586 | ||||||||||||||
| Total lease liabilities | $ | 204,747 | $ | 212,400 | |||||||||||||
The following table summarizes rental revenue, including sublease arrangements and lease costs, for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Year ended December 31, | |||||||||||||||||
| Classification | 2025 | 2024 | 2023 | ||||||||||||||
| Rental revenue | |||||||||||||||||
| Operating leases | Rental revenue | $ | 582,017 | $ | 559,079 | $ | 588,751 | ||||||||||
| Sublease income - operating ground leases | Rental revenue | 26,588 | 26,088 | 27,388 | |||||||||||||
| Lease costs | |||||||||||||||||
| Operating ground lease cost | Property operating expense | $ | 26,722 | $ | 26,277 | $ | 26,290 | ||||||||||
| Operating office lease cost | General and administrative expense | 896 | 896 | 896 | |||||||||||||
The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for arrangements where the Company is the lessee as of December 31, 2025 and 2024:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Weighted-average remaining lease term in years | |||||||||||
| Operating ground leases | 11.7 | 14.1 | |||||||||
| Operating office lease | 0.8 | 1.8 | |||||||||
| Weighted-average discount rate | |||||||||||
| Operating ground leases | 5.49 | % | 5.40 | % | |||||||
| Operating office lease | 6.04 | % | 6.04 | % | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 25, 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.