NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

At June 30, 2025, the Company held investments in seven real estate properties, three of which are included in investments in real estate, and four of which are included in properties held for sale on the consolidated balance sheet.

The following table summarizes the book value of the Company’s acquired assets and assumed liabilities (in thousands, except amounts in the footnotes):


	June 30, 2025							December 31, 2024
	Cost Basis		Accumulated Depreciation & Amortization			Carrying Value		Cost Basis		Accumulated Depreciation & Amortization			Carrying Value
Assets acquired:
Investments in real estate, equity:
Investments in real estate (1)	$	84,339	$	(6,828	)	$	77,511	$	82,265	$	(5,657	)	$	76,608
Right of use assets (2)(3)		20,064		(923	)		19,141		20,064		(759	)		19,305
Intangible assets (4)		9,833		(3,169	)		6,664		9,833		(2,845	)		6,988
Subtotal		114,236		(10,920	)		103,316		112,162		(9,261	)		102,901

Investments in real estate from lending activities:
Properties held for sale (5)		201,166		—			201,166		201,125		—			201,125
Total		315,402		(10,920	)		304,482		313,287		(9,261	)		304,026

Liabilities assumed:
Investments in real estate, equity:
Mortgage payables		76,391		3,185			79,576		76,631		2,925			79,556
Other liabilities		41		(41	)		—		41		(29	)		12
Lease liabilities (3)(6)		44,974		—			44,974		44,606		—			44,606
Subtotal		121,406		3,144			124,550		121,278		2,896			124,174

Investments in real estate from lending activities:
Liabilities held for sale (7)		3,175		—			3,175		3,226		—			3,226
Total		124,581		3,144			127,725		124,504		2,896			127,400

Total net investments in real estate and properties held for sale (8)	$	190,821				$	176,757	$	188,783				$	176,626

(1)

Includes $15.2 million of land, which is not depreciable, at both June 30, 2025 and December 31, 2024. Also includes $3.3 million and $3.2 million of construction in progress, which is also not depreciable until placed in service, at June 30, 2025 and December 31, 2024, respectively.

(2)

Primarily comprised an $18.5 million and $18.6 million right of use asset, at June 30, 2025 and December 31, 2024, respectively, associated with the ground lease disclosed at footnote (6) below as an operating lease. Amortization is booked to real estate expenses on the consolidated statements of operations. Additionally, the Company has an operating lease with a value of $344,000 and $367,000 at June 30, 2025 and December 31, 2024, respectively, associated with a parking lease.

(3)

Refer to Note 8 for additional information on the Company’s remaining operating leases.

(4)

Primarily comprised of a franchise intangible of $3.8 million and $4.1 million, a management contract intangible of $2.7 million and $2.8 million, in-place leases of $162,000 and $68,000 and a customer list intangible of $153,000 and $371,000, at June 30, 2025 and December 31, 2024, respectively.

(5)

At June 30, 2025 and December 31, 2024, properties held for sale included a hotel acquired via deed-in-lieu of foreclosure in November 2020, an office property acquired via deed-in-lieu of foreclosure in June 2023, two student housing properties acquired in April 2022 and an office complex acquired in July 2024.

(6)

Primarily comprised of a $44.3 million ground lease with a remaining term of 91 years at June 30, 2025. Lease expense was $1.4 million for both the six months ended June 30, 2025 and 2024, respectively, and $705,000 and $685,000 for the three months ended June 30, 2025 and 2024, respectively.

(7)

Comprised of an operating lease liability.

(8)

Excludes items of working capital, either acquired or assumed.

The Company acquired a ground lease with its equity investment in a hotel property in April 2022. This ground lease has an associated above-market lease intangible liability. The ground lease confers to the Company the right to use the land on which its hotel operates, and the ground lease payments increase 3.00% per year until 2116. The Company acquired the original 99-year lease with 94 years remaining. At June 30, 2025, 91 years remain in its term.

In December 2024, the Company entered into a parking lease at an asset acquired in August 2024. The parking lease allows the Company to have access to a designated amount of parking spots adjacent to the building which the Company operates. The lease payments increase 2.00% per year until 2123, or a 99-year lease. At June 30, 2025, 99 years remain in its term.

The following table summarizes the expenses of intangible assets, right of use assets and leases related to investments in real estate and other acquired assets and assumed liabilities (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
Assets:
Amortization related to intangible assets	$	221,000	$	243,000	$	324,000	$	486,000
Amortization related to right of use assets		82,000		51,000		164,000		102,000
Liabilities:
Accretion related to ground lease liability	$	656,000	$	634,000	$	1,307,000	$	1,263,000
Lease payments		458,000		439,000		916,000		877,000