v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income Tax Provision

The components of our provision for income taxes for the periods presented are as follows (in thousands):
Years Ended December 31,
202520242023
Federal
Current$588 $(450)$(291)
Deferred(11)(71)— 
577 (521)(291)
State and Local
Current3,044 2,209 3,456 
3,044 2,209 3,456 
Foreign
Current39,161 34,195 41,085 
Deferred(10,874)(4,174)(198)
28,287 30,021 40,887 
Total Provision for Income Taxes$31,908 $31,709 $44,052 
The composition of income before income taxes for the year ended December 31, 2025 is as follows (in thousands):

Income before Income TaxesYear Ended December 31, 2025
Domestic$285,029 
International219,794 
Total$504,823 

A reconciliation of effective income tax for the periods presented is as follows (in thousands):
Year Ended December 31,
2025
Income before income taxes
$504,823 
Federal provision at statutory tax rate$106,013 21.0 %
REIT income not subject to federal income taxes(88,760)(17.6)%
State and local taxes, net of federal benefit (a)
3,038 0.6 %
Foreign Tax Effects:
The Netherlands:
Change in valuation allowance(6,524)(1.3)%
Other278 0.1 %
United Kingdom6,822 1.4 %
Other foreign jurisdictions11,561 2.3 %
Changes in unrecognized tax benefits(1,421)(0.3)%
Change in valuation allowance196 0.0 %
Other705 0.1 %
Total Provision for Income Taxes$31,908 6.3 %
Years Ended December 31,
20242023
Income before income taxes attributable to taxable subsidiaries
$63,669 $73,669 
Federal provision at statutory tax rate (21%)
$13,370 $15,471 
Non-deductible expense6,227 3,201 
Change in valuation allowance3,215 9,970 
Rate differential2,712 1,357 
State and local taxes, net of federal benefit2,382 3,517 
Other3,803 10,536 
Total Provision for Income Taxes$31,709 $44,052 
__________
(a)State taxes in California, North Carolina, Tennessee, and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
Deferred Income Taxes

Deferred income taxes at December 31, 2025 and 2024 consist of the following (in thousands):
 December 31,
 20252024
Deferred Tax Assets  
Net operating loss and other tax credit carryforwards$42,685 $47,134 
Basis differences — foreign investments34,486 24,991 
Other741 953 
Total deferred tax assets77,912 73,078 
Valuation allowance(44,761)(55,488)
Net deferred tax assets33,151 17,590 
Deferred Tax Liabilities  
Basis differences — foreign investments(151,820)(147,462)
Total deferred tax liabilities(151,820)(147,462)
Net Deferred Tax Liability$(118,669)$(129,872)

Our deferred tax assets and liabilities are primarily the result of temporary differences related to the following:

•Basis differences between tax and GAAP for certain international real estate investments. For income tax purposes, in certain acquisitions, we assume the seller’s basis, or the carry-over basis, in the acquired assets. The carry-over basis is typically lower than the purchase price, or the GAAP basis, resulting in a deferred tax liability with an offsetting increase to goodwill or the acquired tangible or intangible assets;
•Timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to capitalized acquisition costs, straight-line rent, prepaid rents, and intangible assets, as well as unearned and deferred compensation; and
•Tax net operating losses in certain subsidiaries, including those domiciled in foreign jurisdictions, that may be realized in future periods if the respective subsidiary generates sufficient taxable income. Certain net operating losses and interest carryforwards were subject to limitations as a result of certain business combinations, and thus could not be applied to reduce future income tax liabilities.

As of December 31, 2025, U.S. federal and state net operating loss carryforwards were $20.4 million and $12.7 million, respectively, which will begin to expire in 2033. As of December 31, 2025, net operating loss carryforwards in foreign jurisdictions were $105.9 million, which will begin to expire in 2026.

The net deferred tax liability in the table above is comprised of deferred tax asset balances, net of certain deferred tax liabilities and valuation allowances, of $33.2 million and $17.6 million at December 31, 2025 and 2024, respectively, which are included in Other assets, net in the consolidated balance sheets, and other deferred tax liability balances of $151.8 million and $147.5 million at December 31, 2025 and 2024, respectively, which are included in Deferred income taxes in the consolidated balance sheets.

Our taxable subsidiaries recognize tax positions in the financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the financial statements.
The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits (in thousands):
 Years Ended December 31,
 20252024
Beginning balance$2,909 $5,112 
Decrease based on tax positions related to the prior year(1,588)(1,379)
Addition based on tax positions related to the current year1,543 77 
Decrease due to lapse in statute of limitations(742)(745)
Foreign currency translation adjustments110 (156)
Ending balance$2,232 $2,909 

At December 31, 2025 and 2024, we had unrecognized tax benefits as presented in the table above. These unrecognized tax benefits are recorded as liabilities within Accounts payable, accrued expenses and other liabilities on our consolidated balance sheets. We recognize interest and penalties related to uncertain tax positions in income tax expense. At December 31, 2025 and 2024, we had approximately $0.3 million and $1.0 million, respectively, of accrued interest related to uncertain tax positions.

Income Taxes Paid

Income taxes paid during the year ended December 31, 2025 consist of the following (in thousands):
Year Ended December 31, 2025
Domestic:
 Federal $(257)
 State and local 2,453 
 Foreign:
 The Netherlands 7,664 
 United Kingdom 6,642 
 Poland 4,561 
 Canada 3,559 
 France 2,954 
 Spain 2,193 
 Mexico 2,056 
 Other Foreign 8,270 
 Total Income Taxes Paid$40,095 

Income taxes paid were $36.3 million and $38.6 million during the years ended December 31, 2024, and 2023, respectively.

REIT Qualification

We elected to be taxed as a REIT under Section 856 through 860 of the Internal Revenue Code effective as of February 15, 2012. In order to maintain our qualification as a REIT, we are required, among other things, to distribute at least 90% of our REIT net taxable income to our stockholders and meet certain tests regarding the nature of our income and assets. As a REIT, we are not subject to federal income taxes on our income and gains that we distribute to our stockholders as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, as well as other factors. We believe that we have operated, and we intend to continue to operate, in a manner that allows us to continue to qualify as a REIT. We conduct business primarily in North America and Europe, and as a result, we or one or more of our subsidiaries file income tax returns in the United States federal jurisdiction and various state, local, and foreign jurisdictions.

Tax authorities in the relevant jurisdictions may select our tax returns for audit and propose adjustments before the expiration of the statute of limitations. Our tax returns filed for tax years 2020 through 2024 or any ongoing audits remain open to adjustment in the major tax jurisdictions.