Company: EPR-PE
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001045450-25-000051
Chunk: 177

Company: EPR PROPERTIES
Filing Date: 2025-02-27
Form: 10-K
Item: Item 8
Chunk 177
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$296,970 $5,781,865 

(1) Included in rental revenue. 

In addition to its lessor arrangements on its real estate investments, as of December 31, 2024 and 2023, the Company was lessee in 51 operating ground leases, 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, 2024, 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, 2024, the ground lease arrangements have remaining terms ranging from one year to 42 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, 2024, the Company does not have any leases that have not commenced but that create significant rights and obligations.

100

EPR PROPERTIES Notes to Consolidated Financial StatementsDecember 31, 2024, 2023 and 2022

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