v3.26.1
Series C Preferred Equity
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
Series C Preferred Equity

11. Series C Preferred Equity

 

On April 19, 2024, the Company entered into Amendment No. 4 to the Second Amended and Restated Limited Liability Company Agreement (“Fourth Amendment”) with an effective date of March 31, 2024, to effect a 100-for-1 unit split of its Series C cumulative preferred units (“Series C Preferred Units”) that became effective March 31, 2024. As a result of the split, every Series C Preferred Unit, issued and outstanding immediately prior to March 31, 2024, will automatically be reclassified (without any further act) into one hundred Series C Preferred Units.

 

The Fourth Amendment also increased the maximum number of authorized Series C Preferred Units to 20,000, of which 8,000 are to be issued only pursuant to the Preferred Unit Reinvestment Program. In addition, pursuant to the Fourth Amendment, after six years from the date of investment, instead of being entitled to the right of redemption, the holders of Series C Preferred Units will be entitled to convert all or a portion of the Series C Preferred Units to the common units of the Registrant, on a 1 for 1 basis, after a 12-month waiting period after the notice of conversion is given.

 

In addition, the Fourth Amendment restricted the right to require the Company to redeem the Series C Preferred Units for cash; therefore, the units were reclassified from mezzanine equity to Members’ Capital. The Company’s convertable Series C preferred equity was $3,336 and $2,710 as of December 31, 2025 and 2024, respectively.

 

The Series C Preferred Units have a fixed value of $1 per unit in addition to preferred liquidation and distribution rights. The Company makes distributions to preferred members at a fixed rate, currently 12% of the Series C Preferred Units’ undiscounted value, in quarterly installments as a distribution of income.

 

All distributions, liquidation rights and conversion features are determined based on the undiscounted value of the Series C Preferred Units, which was $9,085 and $8,951 December 31, 2025 and 2024, respectively.

 

On March 31, 2025, the Company terminated its relationship with a member who owned 2,969 units of Class A common equity. Effective April 1, 2025, the Company executed a unit exchange agreement with the respective member where all 2,969 units of common equity with a carrying value of $287 were exchanged for 2,329.533 Series C Preferred Units with a stated value of $2,330. The difference between the carrying value of the Class A common units and the fixed value of the Series C Preferred Units of $2,043 is reflected as a discount on preferred equity at December 31, 2025.

 

On May 30, 2025, the Company redeemed 251.10821 of the Series C Preferred Units beneficially owned by the Company’s CEO and his wife, at a redemption price of $251.

 

Roll forward of Series C Preferred Equity, net of discounts:

 

  

December 31,

2025

  

December 31,

2024

 
         
Beginning balance  $6,430   $4,773 
Additions from new investments   -    1,200 
Distributions   (663)   (245)
Additions from reinvestment   988    702 
Series C issued in exchange for Class A common equity, net of discount   287    - 
           
Ending balance  $7,042   $6,430 

 

 

The following table shows the earliest conversion options for investors in Series C preferred equity as of December 31, 2025. Amounts are presented at redeemable values, which are prior to discounts reflected in the carrying amounts:

 

Year Maturing 

Total

Amount

Convertible

 
     
Currently convertible (requires notice of 12 months)  $3,336 
2026   309 
2027   1,355 
2028   206 
2029   - 
2030 and thereafter   3,879 
      
Total  $9,085