v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
 
The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments, and Level 3, for securities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions.

Items Measured at Fair Value on a Recurring Basis

The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs.

Our material financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
June 30, 2026December 31, 2025
LevelCarrying ValueFair ValueCarrying ValueFair Value
Non-recourse mortgage (a)
3$21,900 $16,624 $21,900 $21,900 
__________
(a)We determined the estimated fair value of our non-recourse mortgage loan using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates consider interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity. As of June 30, 2026, we determined that the estimated fair value of the mortgage loan was equal to the fair value of the property encumbered by the loan (Note 5). This non-recourse mortgage loan, which has a maturity date of July 6, 2026, has not been repaid as of the date of this Report (Note 13)

We estimated that our other financial assets and liabilities had fair values that approximated their carrying values at both June 30, 2026 and December 31, 2025.

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. There have been no significant changes in our impairment policies from what was disclosed in the 2025 Annual Report.

The following table presents information about assets for which we recorded an impairment charge and that were measured at fair value on a non-recurring basis (classified as Level 3) (in thousands):
Three Months Ended June 30,
20262025
Fair Value MeasurementsImpairment ChargesFair Value MeasurementsImpairment Charges
Impairment Charges
Real estate$12,576 $7,093 $97,768 $81,817 
$7,093 $81,817 
Six Months Ended June 30,
20262025
Fair Value MeasurementsImpairment ChargesFair Value MeasurementsImpairment Charges
Impairment Charges
Real estate$12,576 $7,093 $113,938 $82,737 
$7,093 $82,737 
Impairment charges, and their related triggering events and fair value measurements, recognized during the three and six months ended June 30, 2026 and 2025, were as follows:

Real Estate

The impairment charges described below are reflected within Impairment charges — real estate in our consolidated statements of operations.

2026 — During the three and six months ended June 30, 2026, we recognized an impairment charge of $7.1 million on one property in order to reduce its carrying value to its estimated fair value, which approximated its estimated selling price, less costs to sell.

2025 — During the three and six months ended June 30, 2025, we recognized an impairment charge of $81.6 million on a property in Houston, Texas, leased to KBR. After performing a strategic review of the asset at the direction of our Board of Trustees during the second quarter of 2025, we commenced sale efforts for the property. As a result, this met our likely disposition impairment trigger event in accordance with ASC 360, Property, Plant, and Equipment, at which time we determined that the carrying value of the asset was not fully recoverable. The impairment charge reflects the excess of the asset’s carrying amount over its estimated fair value. The fair value was determined based on valuation techniques consistent with ASC 820, Fair Value Measurement, which factored in current market conditions, existing lease terms, and assumptions about the highest and best use of the asset, using the following unobservable inputs:

•Cash flow discount rate of 10% commencing on June 30, 2025 and ending on an assumed future sale date;
•Residual value discount rate of 10% commencing on June 30, 2025 and ending on an assumed future sale date; and
•Investor required return of 15% commencing on an assumed future sale date and ending after an assumed buyer hold period.

This property was classified as held for sale as of December 31, 2025 (Note 4) and sold in January 2026 (Note 12).

Additionally, during the three and six months ended June 30, 2025, we recognized impairment charges totaling $0.3 million and $1.2 million on one and two properties, respectively, in order to reduce their carrying values to their estimated fair values, which approximated their estimated selling prices, less costs to sell. One of these properties was sold in May 2025 and one was sold in July 2025.