v3.26.1
Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate the fair value.

Cash and cash equivalents - The carrying amount approximated the fair value. The fair value estimates were determined using level 1 inputs.

Notes and mortgage note receivable - The fair value was estimated using cash flow analyses which are based on an assumed market rate of interest or at a rate consistent with the rates on notes carried by the Company and were classified as level 2 inputs in the hierarchy.

Notes receivable, net of credit loss - The fair value of these notes, net of credit loss, was estimated based on its estimated value of the underlying collateral on the notes and are classified as Level 3 in the hierarchy.

Borrowings under our Credit Facility - The carrying amount approximated the fair value because the borrowings were based on variable market interest rates. The fair value estimates were determined using level 2 inputs.
Derivative financial instruments (Interest rate swaps) - The fair value was estimated using discounted cash flow techniques. These techniques incorporate primarily level 2 inputs. The market inputs were utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps were observable in active markets and were classified as level 2 inputs in the hierarchy.

The table below details the fair values and carrying values for our notes and mortgage note receivable, and interest rate swaps at March 31, 2026 and December 31, 2025.
March 31, 2026December 31, 2025
(Dollars in thousands)Carrying ValueFair ValueCarrying ValueFair Value
Notes and mortgage note receivable, level 2$3,680 $3,808 $3,830 $3,964 
Notes receivable, net of credit loss, level 3(1)(2)
$— $— $— $— 
Interest rate swap asset$7,395 $7,395 $6,691 $6,691 
___________________
(1) During 2025 and 2024, the Company recorded an $8.7 million and $11.0 million, respectively, credit loss reserve related to the notes receivable with one tenant and moved from measuring fair value utilizing Level 2 inputs to Level 3 inputs, based on its estimated value of the underlying collateral.
(2) Calculated utilizing Level 3 inputs at March 31, 2026 and December 31, 2025. See the table below for Level 3 activity for the three months ended March 31, 2026 and the year ended December 31, 2025.
Level 3 Inputs
Notes Receivable:
March 31, 2026
December 31, 2025
Beginning fair value$— $10,547 
 Payments— (1,875)
Transfers from Level 2 to Level 3— — 
Credit loss reserve— (8,672)
Ending fair value$— $—