12. Leases

Lessor

We lease commercial space to the U.S. Government through the GSA or other federal agencies or nongovernmental tenants. These leases may contain extension options that are predominately at the sole discretion of the tenant. Certain of our leases contain a “soft-term” period of the lease, meaning that the U.S. Government tenant agency has the right to terminate the lease prior to its stated lease end date. While certain of our leases are contractually subject to early termination, we do not believe that our tenant agencies are likely to terminate these leases early given the build-to-suit features at the properties subject to the leases, the weighted average age of these properties based on the date the property was built or renovated-to-suit, where applicable (approximately 20.7 years as of March 31, 2026), the mission-critical focus of the properties subject to the leases and the current level of operations at such properties. Certain lease agreements include variable lease payments that, in the future, will vary based on changes in inflationary measures, real estate tax rates, usage, or share of expenditures of the leased premises.

On February 22, 2026, we received a lump sum reimbursement for FDA Atlanta relating to the landlord improvements in excess of the U.S. Government’s tenant improvement allowance of $12.6 million. Total reimbursements received for the project as of March 31, 2026 are $150.7 million. We recorded the payments as Deferred revenue on our Consolidated Balance Sheet and began amortizing over the life of the lease through Rental income.

Lessee

We lease corporate office space under operating lease arrangements in Washington, D.C., San Diego, CA and West Palm Beach, FL. The leases include variable lease payments that, in the future, will vary based on changes in real estate tax rates, usage, or share of expenditures of the leased premises. We have elected not to separate lease and non-lease components for our corporate office leases.

As of March 31, 2026, the unamortized balances associated with our right-of-use operating lease asset and operating lease liability were $4.1 million and $4.6 million, respectively. We used our incremental borrowing rate, which was arrived at utilizing prevailing market rates and the spread on our revolving credit facility, in order to determine the net present value of the minimum lease payments.