Company: EPR-PE
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001045450-25-000082
Chunk: 26

Company: EPR PROPERTIES
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 26
---
 throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the 

6

occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless the option is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectability, and the Company records a direct write-off against rental revenue if collectability of these future rents is not probable. There were no straight-line write-offs recognized during the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025 and 2024, the Company recognized $3.4 million and $3.7 million, respectively, of straight-line rental revenue. Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these lessee payments to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the three months ended March 31, 2025 and 2024, the Company recognized $0.7 million and $0.4 million, respectively, in tenant reimbursements related to the gross-up of these reimbursed expenses that are included in rental revenue.Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property-related expenses such as common area maintenance. In accordance with Topic 842, the Company has elected to combine these non-lease components with the lease components in rental revenue. For both the three months ended March 31, 2025 and 2024, the amounts due for non-lease components included in rental revenue was $4.7 million. In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specified triggering events occur as provided by the lease agreement. Rental revenue included percentage rents