v3.26.1
INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES
 3 Months Ended
Mar. 31, 2026
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Abstract]  
Investments In Real Estate And Other Acquired Assets And Assumed Liabilities

NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

At March 31, 2026, the Company held investments in five real estate properties, two of which are included in investments in real estate, and three of which are included in properties held for sale on the consolidated balance sheets.

In March 2026, the Company sold unimproved land located in the Northeast region for $20.0 million. This sale generated a gain of $3.3 million, net of selling costs.

 

The following table summarizes the book value of the Company’s acquired assets and assumed liabilities (in thousands, except amounts in the footnotes):

 

 

 

March 31, 2026

 

 

December 31, 2025

 

 

 

Cost Basis

 

 

Accumulated Depreciation & Amortization

 

 

Carrying Value

 

 

Cost Basis

 

 

Accumulated Depreciation & Amortization

 

 

Carrying Value

 

Assets acquired:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate, equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate (1)

 

$

58,070

 

 

$

(8,378

)

 

$

49,692

 

 

$

74,468

 

 

$

(7,797

)

 

$

66,671

 

Right of use assets (2)(3)

 

 

19,664

 

 

 

(1,091

)

 

 

18,573

 

 

 

19,665

 

 

 

(1,024

)

 

 

18,641

 

Intangible assets (4)

 

 

9,469

 

 

 

(3,529

)

 

 

5,940

 

 

 

9,469

 

 

 

(3,342

)

 

 

6,127

 

Subtotal

 

 

87,203

 

 

 

(12,998

)

 

 

74,205

 

 

 

103,602

 

 

 

(12,163

)

 

 

91,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate from lending activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate (1)

 

 

10,025

 

 

 

(335

)

 

 

9,690

 

 

 

10,025

 

 

 

(281

)

 

 

9,744

 

Right of use assets (2)(3)

 

 

399

 

 

 

(76

)

 

 

323

 

 

 

399

 

 

 

(63

)

 

 

336

 

Intangible assets (4)

 

 

364

 

 

 

(304

)

 

 

60

 

 

 

364

 

 

 

(270

)

 

 

94

 

Subtotal

 

 

10,788

 

 

 

(715

)

 

 

10,073

 

 

 

10,788

 

 

 

(614

)

 

 

10,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties held for sale (5)

 

 

90,851

 

 

 

—

 

 

 

90,851

 

 

 

90,825

 

 

 

—

 

 

 

90,825

 

Total

 

$

188,842

 

 

$

(13,713

)

 

$

175,129

 

 

$

205,215

 

 

$

(12,777

)

 

$

192,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities assumed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate, equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage payables

 

$

19,525

 

 

$

620

 

 

$

20,145

 

 

$

19,565

 

 

$

620

 

 

$

20,185

 

Lease liabilities (3)(6)

 

 

45,145

 

 

 

—

 

 

 

45,145

 

 

 

44,958

 

 

 

—

 

 

 

44,958

 

Subtotal

 

 

64,670

 

 

 

620

 

 

 

65,290

 

 

 

64,523

 

 

 

620

 

 

 

65,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate from lending activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

41

 

 

 

(41

)

 

 

—

 

 

 

41

 

 

 

(41

)

 

 

—

 

Lease liabilities (3)(6)

 

 

380

 

 

 

—

 

 

 

380

 

 

 

378

 

 

 

—

 

 

 

378

 

Subtotal

 

 

421

 

 

 

(41

)

 

 

380

 

 

 

419

 

 

 

(41

)

 

 

378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities held for sale (7)

 

 

3,181

 

 

 

—

 

 

 

3,181

 

 

 

3,131

 

 

 

—

 

 

 

3,131

 

Total

 

$

68,272

 

 

$

579

 

 

$

68,851

 

 

$

68,073

 

 

$

579

 

 

$

68,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net investments in real estate and properties held for sale (8)

 

$

120,570

 

 

 

 

 

$

106,278

 

 

$

137,142

 

 

 

 

 

$

123,786

 

 

(1)
Investments in real estate include $1.0 million and $15.2 million of land, which is not depreciable, at March 31, 2026 and December 31, 2025, respectively. Also includes $646,000 and $3.7 million of construction in progress, which is also not depreciable until placed in service, at March 31, 2026 and December 31, 2025, respectively. Depreciation expense for the three months ended March 31, 2026 and 2025, was $635,000 and $551,000, respectively.
(2)
Primarily comprises a $18.4 million right of use asset, at both March 31, 2026 and December 31, 2025, associated with an acquired ground lease disclosed in footnote (6) below accounted for as an operating lease. Amortization is booked to real estate expenses on the consolidated statements of operations. Additionally, the Company entered into an operating lease associated with a parking lease at a newly acquired property. The associated right of use asset has a value of $311,000 and $322,000 at March 31, 2026 and December 31, 2025, respectively.
(3)
Refer to Note 8 for additional information on the Company’s remaining operating leases.
(4)
Primarily comprises a franchise intangible of $3.4 million and $3.5 million, a management contract intangible of $2.5 million and $2.6 million, in-place leases of $6,000 and $7,000 and a customer list intangible of $54,000 and $87,000, at March 31, 2026 and December 31, 2025, respectively.
(5)
At March 31, 2026 and December 31, 2025, properties held for sale included a hotel acquired via deed-in-lieu of foreclosure in November 2020, a student housing property acquired in April 2022 and an office property acquired via deed-in-lieu of foreclosure in June 2023.
(6)
Primarily comprised of a $44.9 million ground lease with a remaining term of 90 years at March 31, 2026. Lease expense was $720,000 and $700,000 for the three months ended March 31, 2026 and 2025, respectively.
(7)
Comprised of an operating lease liability.
(8)
Excludes items of working capital, either acquired or assumed.

The Company acquired a ground lease with its equity investment in a hotel property in April 2022. This ground lease has an associated above-market lease intangible liability. The ground lease confers to the Company the right to use the land on which its hotel operates, and the ground lease payments increase 3.00% per year until 2116. The Company acquired the original 99-year lease with 94 years remaining. At March 31, 2026, 90 years remain in its term.

In December 2024, the Company entered into a parking lease at an asset acquired in August 2024. The parking lease allows the Company to have access to a designated amount of parking spots adjacent to the building which the Company operates. The lease payments increase 2.00% per year until 2123, or a 99-year lease. At March 31, 2026, 98 years remain in its term.

The following table summarizes the expenses of intangible assets, right of use assets and leases related to investments in real estate and other acquired assets and assumed liabilities (in thousands):

 

 

For the Three Months Ended March 31,

 

 

 

2026

 

 

2025

 

Assets:

 

 

 

 

 

 

Amortization related to intangible assets

 

$

221

 

 

$

103

 

Amortization related to right of use assets

 

 

82

 

 

 

80

 

Liabilities:

 

 

 

 

 

 

Accretion related to ground lease liability

 

$

671

 

 

$

651

 

Lease payments

 

 

553

 

 

 

532

 

The following table summarizes the Company's expected fiscal year amortization expense on its intangible lease assets (in thousands):

 

 

Amortization Expense

 

Remainder of 2026

 

$

613

 

2027

 

 

756

 

2028

 

 

748

 

2029

 

 

748

 

2030

 

 

748

 

2031

 

 

748

 

Total

 

$

4,361