INVESTMENTS |
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENTS | INVESTMENTS Investment in Kukio Resort Land Development Partnerships On November 27, 2013, Barnwell, through a wholly-owned subsidiary, entered into two limited liability limited partnerships, KD Kona 2013 LLLP (“KD Kona”) and KKM Makai, LLLP (“KKM”), and indirectly acquired a 19.6% non-controlling ownership interest in each of KD Kukio Resorts, LLLP, KD Maniniowali, LLLP and KD Kaupulehu, LLLP (“KDK”) for $5,140,000. These entities, collectively referred to hereinafter as the “Kukio Resort Land Development Partnerships,” own certain real estate and development rights interests in the Kukio, Maniniowali and Kaupulehu portions of Kukio Resort, a private residential community on the Kona coast of the island of Hawaii, as well as Kukio Resort’s real estate sales office operations. KDK holds interests in KD Acquisition, LLLP (“KD I”) and KD Acquisition II, LP, formerly KD Acquisition II, LLLP (“KD II”). KD I is the developer of Kaupulehu Lot 4A Increment I (“Increment I”), and KD II is the developer of Kaupulehu Lot 4A Increment II (“Increment II”). Barnwell’s ownership interests in the Kukio Resort Land Development Partnerships is accounted for using the equity method of accounting. In March 2019, KD II admitted a new development partner, Replay Kaupulehu Development, LLC (“Replay”), a party unrelated to Barnwell, in an effort to move forward with development of the remainder of Increment II at Kaupulehu. KDK and Replay hold ownership interests of 55% and 45%, respectively, of KD II and Barnwell has a 10.8% indirect non-controlling ownership interest in KD II through KDK, which is accounted for using the equity method of accounting. Barnwell continues to have an indirect 19.6% non-controlling ownership interest in KD Kukio Resorts, LLLP, KD Maniniowali, LLLP, and KD I. The Kukio Resort Land Development Partnerships derive income from the sale of residential parcels in Increment I, which is now completely sold, as well as from commissions on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships. The last two single-family lots of the 80 lots developed within Increment I were sold in the quarter ended March 31, 2024. Increment II is not yet under development, and there is no assurance that development of such acreage will in fact occur. No definitive development plans have been made by KD II, the developer of Increment II, as of the date of this report. Barnwell has the right to receive distributions from the Kukio Resort Land Development Partnerships via its non-controlling interest in KD Kona and KKM, based on its respective partnership sharing ratios of 75% and 34.45%, respectively. During the three and nine months ended June 30, 2026, the Company received cash distributions of nil and $323,000, respectively (resulting in net amounts of nil and $288,000, after distributing nil and $35,000 to non-controlling interests) from the Kukio Resort Land Development Partnerships. Comparatively, there were no cash distributions received during the three and nine months ended June 30, 2025. Equity in income of affiliates was $376,000 and $714,000 for the three and nine months ended June 30, 2026, respectively, as compared to nil for the three and nine months ended June 30, 2025. Summarized financial information for the Kukio Resort Land Development Partnerships is as follows:
In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnerships investment balance was reduced to nil with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development Partnerships. During periods in which equity‑method earnings were suspended, future equity‑method earnings were not recognized until the Company’s share of the Kukio Partnerships’ cumulative earnings subsequent to the suspension exceeded the amount of previously recognized excess distributions. During this suspended period, distributions received were recorded as equity in income of affiliates. During the three months ended March 31, 2026, the Company's share of earnings from the Kukio Resort Land Development Partnerships exceeded distributions received and previously recognized excess distributions. Accordingly, the Company resumed equity-method earnings recognition during the period. For the three and nine months ended June 30, 2026, the Company recognized equity in income of affiliates only to the extent its share of net earnings exceeded cumulative excess distributions recognized during the suspended periods. As a result, $376,000 and $714,000 was recognized as equity in income from affiliates during the three and nine months ended June 30, 2026, respectively (three and nine months ended June 30, 2025 - nil and nil), which resulted in an investment balance of $391,000 as at June 30, 2026 (nil as at September 30, 2025). Cumulative distributions received from Kukio Resort Land Development Partnerships in excess of our investment balance was $106,000 at September 30, 2025. Sale of Interest in Leasehold Land Kaupulehu Developments holds rights to receive payments from KD I and KD II resulting from the sale of lots and/or residential units within Increment I, which is now fully sold, and within Increment II, which is not yet developed (see Note 18). With respect to Increment I, Kaupulehu Developments was entitled to receive payments from KD I based on 10% of the gross receipts from KD I’s sales of single-family residential lots in Increment I. The last two single-family lots of the 80 lots developed within Increment I were sold in the quarter ended March 31, 2024. Under the terms of the Increment II agreement with KD II, Kaupulehu Developments is entitled to 15% of the distributions of KD II, the cost of which is to be solely borne by KDK out of its 55% ownership interest in KD II, plus a priority payout of 10% of KDK’s cumulative net profits derived from Increment II sales subsequent to Phase 2A, up to a maximum of $3,000,000 as to the priority payout. Such interests are limited to distributions or net profits interests and Barnwell does not have any partnership interests in KD II or KDK through its interest in Kaupulehu Developments. The arrangement also gives Barnwell rights to three single-family residential lots in Phase 2A of Increment II, and four single-family residential lots in phases subsequent to Phase 2A when such lots are developed by KD II, all at no cost to Barnwell. Barnwell is committed to commence construction of improvements within 90 days of the transfer of the four lots in the phases subsequent to Phase 2A as a condition of the transfer of such lots. Also, in addition to Barnwell’s existing obligations to pay professional fees to certain parties based on percentages of its gross receipts, Kaupulehu Developments is obligated to pay an amount equal to 0.72% and 0.20% of the cumulative net profits of KD II to KD Development and a pool of various individuals, respectively, all of whom are partners of KKM and are unrelated to Barnwell, in compensation for the agreement of these parties to admit the new development partner for Increment II. Such compensation will be reflected as the obligation becomes probable and the amount of the obligation can be reasonably estimated. There is no assurance with regards to any payments in the future from Increment II to be received or that the remaining acreage within Increment II will be developed. No definitive development plans have been made by KD II, the developer of Increment II, as of the date of this report. Contracts to Sell Interests in Increment II In November 2025, Kaupulehu Developments entered into an agreement with Mr. David Johnston, the son of Mr. Terry Johnston, a partner in Kaupulehu Developments, to surrender any and all remaining rights of Kaupulehu Developments for Increment II for the total consideration of $2,000,000. The purchaser paid an initial $70,000, which was recognized as revenue during the nine months ended June 30, 2026 as it represented nonrefundable consideration earned upon execution of the agreement. Additionally, the purchaser has the right to extend the closing by up to 2 years by making a $70,000 payment in each of the next 2 years, with those payments applied against the $2,000,000 purchase price. The transaction remains subject to the purchaser's election to proceed and other closing conditions. Because the agreement is subject to substantive contingencies and closing conditions that have not been satisfied, the criteria for revenue recognition under ASC 606 have not been met for the remaining $1,930,000. Accordingly, no additional revenue has been recognized in the condensed consolidated financial statements. Also in November 2025, pursuant to a unit purchase agreement, KDK agreed to sell KDK’s interests in Increment II to Mr. David Johnston for $2,109,000. The unit purchase agreement is subject to due diligence, and there is no certainty that the transaction will close. Furthermore, there is also no assurance on the timing or amounts that the general partner of KDK would distribute upon a closing. There are substantive contingencies and closing conditions that have not been satisfied, therefore the criteria for revenue recognition has not been met, and no revenue has been recognized in the condensed consolidated financial statements. On July 31, 2026, Barnwell Hawaiian Properties, Inc., a Delaware corporation and a subsidiary of the Company (“BHP”), together with Kaupulehu Developments, entered into a Purchase and Sale Agreement (the “PSA”) with Mr. David Johnston, as purchaser. BHP and Kaupulehu Developments are each severally, and not jointly, sellers under the PSA (together, the “Sellers”). Under the Purchase Agreement, the Sellers agreed to sell to Mr. Johnston at closing: (i) BHP’s 34.45% limited partner interest in KKM and BHP’s 75% general partner interest in KD Kona (together, the “Partner Interests”); (ii) Kaupulehu Developments’ rights in KD II and Increment II under a Retained Rights Agreement dated March 7, 2019; and (iii) Kaupulehu Developments’ rights under an Agreement to Terminate Project Rights dated November 17, 2025 between Mr. Johnston and Kaupulehu Developments. The aggregate purchase price is $1,770,000 in cash, payable at closing, allocated $770,000 to the Partner Interests and $1,000,000 to the remaining rights described above. After giving effect to the minority interest held by Cambridge Hawaii LP in Kaupulehu Developments, net consideration to the Company is estimated at approximately $1,550,000, and a pre-closing distribution of $500,000 by KKM to its partners is expected to result in a further distribution of approximately $160,000 to the Company. Closing is expected to occur on or before September 15, 2026, subject to customary closing conditions, including the accuracy of the parties’ representations and warranties, the absence of any restraining proceeding, the KKM distribution described above, and the absence of a material adverse change with respect to KKM or KD Kona. Either party may terminate the PSA if a condition to its obligation to close is not satisfied or waived, or if closing has not occurred within five business days after the closing date, subject to certain exceptions. The Sellers’ representations and warranties are limited and survive for six months after closing, and each Seller’s aggregate liability is capped at 10% of the purchase price allocated to the assets it sold, subject to a $25,000 claim threshold, in each case other than for actual fraud. The PSA is governed by Hawaii law. Upon closing, the Company expects to achieve a complete exit from all of its known remaining Hawaii real estate-related interests, subject to minimal administrative winding up activities, although there can be no assurance that the closing will occur on the anticipated timeline or at all. See Note 20 “Subsequent Events” for additional information. Investment in Leasehold Land Interest - Lot 4C Kaupulehu Developments held an interest in an area of approximately 1,000 acres of vacant leasehold land zoned conservation located adjacent to Lot 4A, which currently has no development potential without both a development agreement with the lessor and zoning reclassification. The lease expired by its terms in December 2025.
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