Investments in Real Estate |
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| Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in Real Estate | Investments in Real Estate Certain acquisitions of real estate did not satisfy the requirements for sale-leaseback accounting and therefore as of both March 31, 2026 and December 31, 2025, acquisitions of $16.8 million have been recognized as notes receivable and are included in other assets, net on our consolidated balance sheets. No impairment losses were recognized during the three months ended March 31, 2026. During the three months ended March 31, 2025, we recognized an impairment loss on real estate of $3.5 million related to one of our properties in Palm Springs, California which was under contract for sale and sold in June 2025. Acquired In-Place Lease Intangible Assets In-place lease intangible assets and related accumulated amortization as of March 31, 2026 and December 31, 2025 is as follows (in thousands):
Amortization of in-place lease intangible assets classified in depreciation and amortization expense in our consolidated statements of income was $0.2 million for both the three months ended March 31, 2026 and 2025, respectively. The weighted-average remaining amortization period of the acquired in-place leases was 7.5 years, and the estimated annual amortization of the value of the acquired in-place leases as of March 31, 2026 is as follows (in thousands):
Above-Market Lease The above-market lease and related accumulated amortization included in other assets, net on our consolidated balance sheets as of March 31, 2026 and December 31, 2025 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 7.3 years. For both the three months ended March 31, 2026 and 2025, the amortization of the above-market lease was $23,000. Lease Amendments, Terminations and New Leases In January 2024, the lease modifications for two of our leases to extend the initial term of each lease changed the lease classification from operating lease to sales-type lease that did not satisfy all the criteria for recognition as a completed sale. Accordingly, we continue to recognize the underlying assets within net real estate held for investment and all lease payments received, as well as any future lease payments, will be recognized as a deposit liability and will be included in other liabilities on our consolidated balance sheet until certain criteria are met. As of March 31, 2026, we have received lease payments of $5.1 million that have been included in other liabilities on our consolidated balance sheet. The underlying assets’ land and building and improvements had a gross carrying value of $4.1 million and $28.9 million, respectively, and accumulated depreciation of $4.6 million as of March 31, 2026. During the three months ended March 31, 2026, the leases with Gold Flora, LLC for the properties located in Desert Hot Springs and Palm Springs, California were terminated in connection with the receivership and concurrent with the lease terminations, we executed new leases with a new tenant for both properties. In March 2026, we executed a new lease with a new tenant for one of our properties located in Illinois, which was previously leased to PharmaCann. Capitalized Costs During the three months ended March 31, 2026, we capitalized costs of $0.9 million relating to improvements and construction activities at our properties. Property Dispositions In April 2025, we sold a property in Michigan for $9.0 million (excluding transaction costs) and provided a secured loan for $8.5 million to the buyer of the property. The loan matures on April 24, 2028 with an option to extend the maturity for twelve months, conditional on the payment of an extension fee. 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 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 consolidated balance sheet until such time the criteria for recognition as a sale have been met. As of March 31, 2026, we have received a total of $1.8 million for a loan origination fee and interest. 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 $0.4 million and $9.6 million, respectively, and accumulated depreciation of $2.2 million as of March 31, 2026, remain on the consolidated balance sheet, and the buildings and improvements continue to be depreciated. In February 2026, we sold a property in Arizona for net proceeds of $2.6 million and recognized a gain on sale of real estate of $0.4 million. 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, 2026 for future periods is summarized as follows (in thousands):
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