v3.26.1
DEBT
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
DEBT
7. DEBT
The following table summarizes the debt balances as of June 30, 2026 and December 31, 2025, and the debt activity for the six months ended June 30, 2026 (in thousands):
During the Six Months Ended June 30, 2026
Balances as of December 31, 2025Debt Issuances & AssumptionsRepaymentsAccretion & (Amortization)Balances as of June 30, 2026
Mortgages Payable:
Fixed rate mortgages payable$268,403 $— $(2,000)$— $266,403 
Variable rate mortgages payable208,556 575 (330)— 208,801 
476,959 575 (2,330)— 475,204 
Deferred debt issuance costs — Mortgages Payable(3,520)(80)— 1,231 (2,369)
Total Mortgages Payable473,439 495 (2,330)1,231 472,835 
Other Debt:
Lending division credit facility10,449 — (10,449)— — 
Junior subordinated notes27,070 — — — 27,070 
Discount on junior subordinated notes(1,190)— — 55 (1,135)
Total Other Debt36,329 — (10,449)55 25,935 
Total Debt, Net$509,768 $495 $(12,779)$1,286 $498,770 

Fixed Rate Mortgages Payable—The Company’s fixed rate mortgages payable are non-recourse and are secured by, among other things, first priority deeds of trust, security agreements or other similar security instruments on the fee simple interests in properties underlying such mortgages and assignments of rents receivable. As of June 30, 2026, the Company’s fixed rate mortgages payable had fixed interest rates of 6.25%, 4.14% and 7.41% per annum, with payments of interest only and initial maturity dates of June 7, 2027, July 1, 2026 and January 11, 2030, respectively.
With regard to the mortgage payable with a balance of $64.3 million as of June 30, 2026 (the “1150 Clay Mortgage”), on May 29, 2026, the Company reached an agreement with the lender to extend the maturity date through June 7, 2027 (the “1150 Clay Mortgage Extension”). In connection with the 1150 Clay Mortgage Extension, the Company made a $2.0 million repayment under the 1150 Clay Mortgage. The Company intends to refinance the 1150 Clay Mortgage beyond its stated maturity date of June 7, 2027. Although the Company believes it is likely it will be able to refinance the 1150 Clay Mortgage prior to June 7, 2027, there can be no assurance that such refinancing will occur. If the Company cannot refinance the mortgage and the Company fails to repay the loan in full upon its contractual maturity date, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, take possession of the property.
With regard to the mortgage payable with a balance of $97.1 million as of June 30, 2026 (the “Oakland Office Mortgage”), the Company has been in maturity default since July 1, 2026 as the outstanding mortgage payable was not repaid on its contractual maturity date of July 1, 2026. The Company is evaluating its options with respect to the maturity default, including potential discussions with the lender regarding a resolution of the matured indebtedness and an extension of the Oakland Office Mortgage. There can be no assurance regarding the timing or outcome of this matter. If the Company and the lender under the Oakland Office Mortgage cannot agree on a resolution and the Company fails to repay the loan in full, such failure would allow the lender to, among other remedies, take possession of the property. As a result of the maturity default, all rents, profits and income derived from the property are the property of the lender and must be held in trust for the benefit of the lender. Further, pursuant to the loan agreement entered into in connection with the Oakland Office Mortgage, upon an event of default, all accrued and unpaid interest in respect of the Oakland Office Mortgage and any other amounts due under the loan agreement, accrue interest at the specified default rate per annum equal to the lesser of (a) the maximum legal rate as set forth in the loan agreement or (b) 5.0% above the interest rate of 4.14% per annum. In addition, the Company is party to a guaranty related to certain obligations associated with the Oakland Office Mortgage. Upon the occurrence of specified events, the Company may be required to fund such obligations. See Note 15 for further information regarding the guaranty.
Variable Rate Mortgages Payable—The Company’s variable rate mortgages payable are non-recourse and are secured by, among other things, first priority deeds of trust, security agreements or other similar security instruments on the Company’s fee simple and leasehold interests in its hotel asset and adjacent parking garage and by a deed of trust on and assignment of rents receivable from a multifamily property. As of June 30, 2026, the Company’s variable rate mortgages
payable had a variable interest rate of SOFR plus 4.35%, SOFR plus 3.36%, SOFR plus 3.00% and SOFR plus 2.95%, with a maturity date of January 1, 2027 (with three one-year extension options), January 31, 2027, February 14, 2027 (with one one-year extension option) and April 3, 2028 (with two one-year extension options), respectively. The mortgages with maturity dates of January 1, 2027, January 31, 2027, and February 14, 2027 have monthly payments of interest only. With regard to the mortgage with an initial maturity date of April 3, 2028 (the “Penn Field Mortgage”), during the six months ended June 30, 2026, the Company entered into an amendment to, among other things, provide additional borrowing advances in the amount of $2.5 million under the Penn Field Mortgage and increase the monthly payments from interest plus $50,000 of principal to interest plus $60,000 of principal, with the increased monthly payments beginning April 2026.
With regard to the mortgage payable with a balance of $81.0 million as of June 30, 2026 secured by a multifamily property in Oakland, California (the “Channel House Mortgage”), on August 4, 2025 the Company reached an agreement with the lender to extend the maturity date through January 31, 2027 (the “Channel House Mortgage Extension”). In connection with the Channel House Mortgage Extension, the Company made a repayment of $6.0 million under the Channel House Mortgage, reducing it from its previous balance of $87.0 million. The Company intends to refinance the Channel House Mortgage beyond its stated maturity date of January 31, 2027. Although the Company believes it is likely it will be able to refinance the Channel House Mortgage prior to January 31, 2027, there can be no assurance that such refinancing will occur. If the Company cannot refinance the mortgage and the Company fails to repay the loan in full upon its contractual maturity date, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, take possession of the property.
Lending Division Revolving Credit Facility—In June 2025, a subsidiary of the Company, as borrower, entered into an agreement (the “Lending Division Revolving Credit Facility”) with a bank that included a $20.0 million revolving credit facility secured by the unguaranteed portion of certain of such subsidiary’s SBA 7(a) loans receivable and other assets of such subsidiary, subject to a borrowing base calculation, and fully guaranteed by the Company. In connection with the closing of the sale of First Western on January 21, 2026, as further discussed in Note 5, the remaining balance of $10.4 million under the Lending Division Revolving Credit Facility was paid in full, resulting in the termination of the Lending Division Revolving Credit Facility. The Company recorded a loss on early extinguishment of debt during the six months ended June 30, 2026 of $705,000 related to the write-off of deferred debt origination costs previously recorded in deferred rent receivable and charges, net in the Company’s consolidated balance sheets.
Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at the Company’s option.
Other—Deferred debt issuance costs, which represent certain legal and third-party fees incurred in connection with the Company’s borrowing activities, are capitalized and amortized to interest expense on a straight-line or effective interest method over the life of the related loan. Deferred debt issuance costs are presented net of accumulated amortization and are a reduction to total debt.
As of June 30, 2026 and December 31, 2025, accrued interest and unused commitment fees payable of $2.2 million and $1.8 million, respectively, are included in accounts payable and accrued expenses.
Future principal payments on the Company’s debt (face value) as of June 30, 2026 are as follows (in thousands):
Years Ending December 31,
Mortgages Payable (1)
Junior Subordinated NotesTotal
2026 (Six months ending December 31, 2026)$97,460 $— $97,460 
2027242,554 — 242,554 
202830,190 — 30,190 
2029— — — 
2030105,000 — 105,000 
Thereafter— 27,070 27,070 
$475,204 $27,070 $502,274 
(1)With regard to the $64.3 million 1150 Clay Mortgage, which matures on June 7, 2027, and the $97.1 million Oakland Office Mortgage, which matured on July 1, 2026, see the discussion under Fixed Rate Mortgages Payable. With regard to the $81.0 million Channel House Mortgage, which matures on January 31, 2027, see the discussion under Variable Rate Mortgages Payable.