NOTE 3. PROPERTY PORTFOLIO

As of June 30, 2026, the Company’s income property portfolio consisted of 128 properties, including five properties classified as commercial loans and investments, with total square footage of 4.5 million.

Leasing revenue consists of long-term rental revenue from net leased commercial properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are comprised of percentage rent payments and reimbursements from tenants for common area maintenance, insurance, real estate taxes, and other operating expenses.

The components of leasing revenue are as follows (in thousands):

Minimum Future Rental Receipts. Minimum future rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to June 30, 2026, are summarized as follows (in thousands):

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2026 Activity. During the six months ended June 30, 2026, the Company acquired four properties for a combined purchase price of $46.8 million, including capitalized acquisition costs. Of the total acquisitions, the Company acquired two properties for a combined purchase price of $20.5 million, including capitalized acquisition costs, and those two properties were subject to purchase accounting for acquisitions subject to a lease, of which $12.0 million was allocated to land, $6.8 million was allocated to buildings and improvements, $2.0 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $0.3 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 4.7 years at acquisition. The remaining $26.3 million of total acquisition costs are attributable to (i) the acquisition of one property for a purchase price of $10.0 million through a sale-leaseback transaction that includes a tenant repurchase option (the “2026 Sale-Leaseback Property”) and (ii) the acquisition of a property subject to a ground lease for $16.3 million which qualifies as a sales-type lease (the “2026 Sales-Type Lease”). Pursuant to FASB ASC Topic 842, Leases, GAAP requires that the 2026 Sale-Leaseback Property and the 2026 Sales-Type Lease be accounted for as financing arrangements, and accordingly the related assets and corresponding revenue are included in the Company’s commercial loans and investments in the accompanying consolidated balance sheets and consolidated statement of operations. However, as the 2026 Sale-Leaseback Property and the 2026 Sales-Type Lease both constitute real estate assets for both legal and tax purposes, we include them in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto.

During the six months ended June 30, 2026, the Company sold three properties for an aggregate sales price of $5.8 million, generating aggregate gains on sale of $0.1 million.

2025 Activity. During the six months ended June 30, 2025, the Company acquired three properties for a combined purchase price of $39.7 million, or a total cost of $39.9 million including capitalized acquisition costs. The properties are located in three different states, leased to three different tenants, and had a weighted average remaining lease term of 14.3 years at the time of acquisition. Of the total acquisition cost, $4.7 million was allocated to land, $28.8 million was allocated to buildings and improvements, and $6.4 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value. The weighted average amortization period for the intangible assets was 14.1 years at acquisition.

During the six months ended June 30, 2025, the Company sold eight properties for an aggregate sales price of $28.2 million, generating aggregate gains on sale of $2.1 million.

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