Investments in Real Estate |
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| Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in Real Estate | Investments in Real Estate Acquisitions The Company made the following acquisition during the three months ended March 31, 2025 (dollars in thousands):
(1)Includes expected rentable square feet at completion of construction at the property. (2)$0.6 million was allocated to land and $7.2 million was allocated to building and improvements. Acquired In-Place Lease Intangible Assets In-place lease intangible assets and related accumulated amortization as of March 31, 2025 and December 31, 2024 is as follows (in thousands):
Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our condensed consolidated statements of income was $0.2 million in each of the three months ended March 31, 2025 and 2024. The weighted-average remaining amortization period of the acquired in-place leases was 8.5 years, and the estimated annual amortization of the value of the acquired in-place leases as of March 31, 2025 is as follows (in thousands):
Above-Market Lease The above-market lease and related accumulated amortization included in other assets, net on our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 is as follows (in thousands):
The above-market lease is amortized on a straight-line basis as a reduction to rental revenues over the remaining lease term of 8.2 years. For both the three months ended March 31, 2025 and 2024, the amortization of the above-market lease was $23,000. Lease Amendments In January 2025, we entered into lease amendments with PharmaCann with respect to nine of its leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado. Those lease amendments reduced cumulative total base rent from $2.8 million per month to $2.6 million per month, with cash rent payments commencing February 1, 2025, and provided for pro-rata replenishment of security deposits over thirty-six months commencing February 1, 2027. We also entered into lease amendments with PharmaCann with respect to two of its leases for cultivation properties in Michigan and Massachusetts. Those amendments provide that monthly base rent of $1.3 million for these two properties will be abated in full effective February 1, 2025 and, if the properties have not been transitioned to new tenant(s) by August 1, 2025, we will regain full control over the properties. We applied security deposits held by us pursuant to all of the PharmaCann leases for the payment in full of all defaulted rent for December 2024 and January 2025 and certain penalties. The lease amendments also provided that if PharmaCann defaults again or is not able to refinance its existing senior secured credit facility maturing June 30, 2025, all modifications to our leases with PharmaCann described above will immediately be null and void and the leases will revert to the terms in effect as of January 1, 2025. In March 2025, PharmaCann defaulted on its obligations to pay rent for the month of March under nine of its eleven leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado and therefore, all modifications to our leases with PharmaCann described above became null and void and the leases reverted to the terms in effect as of January 1, 2025. Subsequent to March 31, 2025, the lease for the cultivation property in Michigan was terminated concurrently with the execution of a new lease with a new tenant in April 2025. In March 2025, we amended our lease with a subsidiary of AYR Wellness, Inc. at one of our Florida properties to reduce the improvement allowance by $2.5 million to $27.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property. Capitalized Costs During the three months ended March 31, 2025, we capitalized costs of $7.7 million relating to improvements and construction activities at our properties. Property Disposition In March 2023, we sold the portfolio of four properties in California previously leased to affiliates of Medical Investor Holdings, LLC (“Medical Investor Holdings”) for $16.2 million (excluding transaction costs) and provided a secured loan for $16.1 million to the buyer of the properties. The loan matures on February 29, 2028 with two options to extend the maturity for twelve months, conditional in each instance on the payment of an extension fee and at least $0.5 million of the principal balance. The loan is interest only and payments are payable monthly in advance. The transaction did not qualify for recognition as a completed sale under GAAP since not all of the criteria were met. Accordingly, we have not derecognized the assets transferred on our condensed consolidated balance sheets. All consideration received, as well as any future payments, from the buyer will be recognized as a deposit liability and will be included in other liabilities on our condensed consolidated balance sheet until such time the criteria for recognition as a sale have been met. As of March 31, 2025, we have received interest payments of $2.6 million. In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with a gross carrying value of $3.4 million and $13.9 million, respectively, and accumulated depreciation of $2.1 million as of March 31, 2025, remain on the condensed consolidated balance sheet, and the buildings and improvements continue to be depreciated. We declared this loan in default in March 2025 due to borrower's failure to pay $0.8 million of interest and reimbursement for taxes. As a result, the principal amount of the note, plus accrued and unpaid interest, are immediately due and payable. Future Contractual Minimum Rent Future contractual minimum rent (including base rent and property management fees) to be received on our leases as of March 31, 2025 for future periods is summarized as follows (in thousands):
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