v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company elected to be taxed as a REIT under sections 856-860 of the Code, commencing with the filing of its 2015 tax return for its tax year ended December 31, 2015. So long as the Company qualifies as a REIT under the Code, the Company will not be subject to U.S. federal income tax on net taxable income that it distributes annually to its shareholders. If we fail to qualify as a REIT for any taxable year, we will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for the four subsequent taxable years. The Company is subject to certain foreign and state and local income taxes, in particular income taxes arising from its operating activities in Puerto Rico, which are included in income tax expense in the consolidated statements of income and comprehensive income. In addition, the Company’s taxable REIT subsidiaries (“TRSs”) are subject to income tax at regular corporate rates.
The Company satisfied its REIT distribution requirement by distributing $0.76, $0.68 and $0.64 per common share in 2025, 2024 and 2023, respectively. The distributions comprised a regular quarterly cash dividend of $0.19 per common share declared for each quarter of 2025, a regular quarterly cash dividend of $0.17 per common share declared for each quarter of 2024, and a regular quarterly cash dividend of $0.16 per common share declared for each quarter of 2023. The taxability of such dividends for the years ended December 31, 2025, 2024 and 2023 are as follows:
Year Ended December 31,
202520242023
Dividend paid per share$0.76 $0.68 $0.64 
Ordinary income99 %91 %88 %
Return of capital— %— %— %
Capital gains1 %9 %12 %

For U.S. federal income tax purposes, the REIT and other minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their respective tax returns. However, the Company maintains certain non-real estate operating activities that could not be performed by the REIT, and occur through the Company’s TRSs, which are subject to federal, state and local income taxes. These income taxes are included in income tax expense in the consolidated statements of income and comprehensive income.
During the year ended December 31, 2025, the REIT was subject to Puerto Rico corporate income taxes on its allocable share of the Company’s Puerto Rico operating activities. The Puerto Rico corporate income tax consists of a flat 18.5% tax rate plus a graduated income surcharge tax for a maximum corporate income tax rate of 37.5%. In addition, the REIT is subject to a 10% branch profits tax on the earnings and profits generated from its allocable share of the Company’s Puerto Rico operating activities and such tax is included in income tax expense in the consolidated statements of income and comprehensive income.
On August 30, 2023, the Company completed a mortgage refinancing at its mall in Puerto Rico, the Shops at Caguas. As a result of the refinancing and the cancellation of indebtedness for tax purposes, the Company recognized a Puerto Rico income tax expense of $16.3 million, consisting of a current tax liability of $4.7 million and a deferred tax expense of $11.6 million. The deferred tax expense is attributable to a write-down of our Puerto Rico tax basis in the Shops at Caguas for a portion of the debt forgiven.
A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. Management’s determination of the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the underlying temporary differences become deductible. As of December 31, 2025, with the exception of certain state and local deferred tax assets, management determined that it is more likely than not that all deferred tax assets will be realized. The Company recorded a valuation allowance against certain state and local deferred tax assets because management determined it is not more likely than not that these state and local deferred tax assets will be realized. There has been no change to the valuation allowance recorded against these state and local deferred tax assets during 2025.
We account for uncertain tax positions in accordance with ASC 740 Income Taxes on the basis of a two-step process whereby (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The components of income before income taxes were attributable to the following regions:
Year Ended December 31,
(Amounts in thousands)202520242023
Domestic$94,231 $71,130 $226,440 
Foreign5,880 6,698 51,236 
Total income before income taxes$100,111 $77,828 $277,676 
Income tax expense for the years ended December 31, 2025, 2024 and 2023 consist of the following:
Year Ended December 31,
(Amounts in thousands)202520242023
Income tax expense (benefit):
Current:
Federal$514 $— $4 
State17 19 (674)
Foreign(271)2,486 4,753 
Total current260 2,505 4,083 
Deferred:
Federal(89)(1)— 
Foreign2,430 (118)13,717 
Total deferred2,341 (119)13,717 
Total income tax expense$2,601 $2,386 $17,800 

The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 3 for additional details on the adoption of ASU 2023-09.
Provision for income taxes for the year ended December 31, 2025 differs from the amounts computed by applying the statutory federal income tax rate to consolidated net income before income taxes as follows:
Year Ended
December 31, 2025
(Amounts in thousands)AmountRate
Provision for income taxes at U.S federal statutory rate$21,023 21.00 %
State and local income taxes, net of federal benefit(1)
17 0.02 %
Foreign tax effects(2)
2,159 2.16 %
Non-taxable or non-deductible items:
Other(3)
(20,598)(20.58)%
Total tax provision and effective tax rate$2,601 2.60 %
(1) State taxes in New York made up the majority of the tax effect in this category.
(2) Puerto Rico tax credits.
(3) Non-taxed REIT income.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate to consolidated net income before income taxes as follows:
Year Ended December 31,
20242023
U.S federal statutory rate21.00 %21.00 %
State and local income taxes, net of federal benefit0.02 %(0.24)%
Foreign tax effects3.04 %6.65 %
Non-taxable or non-deductible items:
Other(1)
(21.00)%(21.00)%
Effective income tax rate3.06 %6.41 %
(1) Non-taxed REIT income.
Below is a table summarizing the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024:
Balance at December 31,
(Amounts in thousands)20252024
Deferred tax assets:
Depreciation$22,509 $21,936 
Amortization of deferred financing costs120 136 
Rental revenue deemed uncollectible713 627 
Charitable contribution7 7 
Net operating loss7 7 
Tax credit carryforward(1)
1,011 3,808 
Loss reserve discount89 — 
Total deferred tax assets24,456 26,521 
Deferred tax liabilities:
Straight line rent(1,870)(1,568)
Amortization of acquired leases(100)(126)
Total deferred tax liabilities(1,970)(1,694)
Net deferred tax assets$22,486 $24,827 
(1) As of December 31, 2025, the Company has a Puerto Rico tax credit carryforward totaling $1.0 million which, if unused, may be carried forward indefinitely.