LEASE INFORMATION
Rental Income
The Company receives rental income from the leasing of retail and office space. The lease agreements generally provide for certain increases in base rent and reimbursements for certain operating expenses, and they may require tenants to pay contingent rent to the extent their sales exceed a defined threshold. Certain tenants have the option in their lease agreement to extend their lease upon the expiration of the contractual term. Variable lease payments are based upon tenant sales information and are recognized once a tenant’s sales volume exceeds a defined threshold. Variable lease payments for the reimbursement of operating expenses are based upon the operating expense activity for the period.
Rental income related to the Company’s operating leases is comprised of the following for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Fixed contractual lease payments – operating leases | $ | 659,955 | | | $ | 653,537 | | | $ | 637,915 | |
| Variable lease payments – operating leases | 160,000 | | | 156,200 | | | 151,853 | |
| Bad debt reserve | (7,838) | | | (5,356) | | | (3,459) | |
| Straight-line rent adjustments | 11,341 | | | 12,742 | | | 13,186 | |
| Straight-line rent reserve for uncollectibility | (987) | | | (653) | | | (1,374) | |
| Amortization of in-place lease liabilities, net | 8,300 | | | 10,078 | | | 12,025 | |
| Rental income | $ | 830,771 | | | $ | 826,548 | | | $ | 810,146 | |
The weighted-average remaining term of the lease agreements is approximately 4.9 years. During the years ended December 31, 2025, 2024 and 2023, the Company earned overage rent totaling $6.0 million, $7.1 million, and $7.5 million, respectively.
As of December 31, 2025, the future minimum rentals to be received under non-cancelable operating leases, excluding variable lease payments and amounts deferred under lease concession agreements, for each of the next five years and thereafter are as follows (in thousands):
| | | | | |
| Lease Payments |
| 2026 | $ | 605,363 | |
| 2027 | 561,582 | |
| 2028 | 484,444 | |
| 2029 | 393,729 | |
| 2030 | 319,166 | |
| Thereafter | 995,735 | |
| Total | $ | 3,360,019 | |
Commitments under Ground Leases
As of December 31, 2025, we are obligated under 11 ground leases for approximately 98 acres of land. Most of these ground leases require fixed annual rent payments. The expiration dates of the remaining initial terms of these ground leases range from 2028 to 2092, with a weighted average remaining term of 32.8 years. Certain of these leases have five- to 10-year extension options ranging in total from 20 to 25 years.
Right-of-use assets are included within “Prepaid and other assets,” and lease liabilities are reflected within “Deferred revenue and other liabilities” in the accompanying consolidated balance sheets.
During the years ended December 31, 2025, 2024 and 2023, the Company incurred ground lease expense on these operating leases of $6.3 million, $6.3 million, and $6.2 million, respectively. The Company made payments of $5.3 million, $5.2 million, and $5.2 million during the years ended December 31, 2025, 2024 and 2023, respectively, which are included within operating cash flows.
As of December 31, 2025, the future minimum lease payments due under ground leases for each of the next five years and thereafter are as follows (in thousands):
| | | | | |
| Lease Obligations |
| 2026 | $ | 5,238 | |
| 2027 | 5,283 | |
| 2028 | 5,063 | |
| 2029 | 5,018 | |
| 2030 | 5,325 | |
| Thereafter | 95,918 | |
| $ | 121,845 | |
| Adjustment for discounting | (56,502) | |
| Lease liabilities as of December 31, 2025 | $ | 65,343 | |