| Segment Reporting |
Note 16—Segment Reporting Prior to January 1, 2026, the Company conducted its business through one reportable and one operating segment by acquiring, managing and capitalizing Ground Leases, which the Company believes provides an opportunity for safe, growing income. On January 1, 2026, the Company became responsible for operating two hotel properties that reverted to it following the expiration of a master lease (refer to Note 3). Subsequent to January 1, 2026, the Company operates its two hotel properties under a new reportable and operating “Hotel Operations” segment. All of the Company’s interest expense and general and administrative expenses are included in its Ground Leases segment. The Company’s chief executive officer is the chief operating decision maker (“CODM”) and uses net income (loss) before income taxes to measure segment operating performance and allocate resources in line with its business and operating needs. All of the Company’s expenses are included in segment operating performance and are reviewed regularly. However, the CODM reviews interest expense and general and administrative expense on a more disaggregated basis. The CODM reviews interest expense in more detail because the Company uses its cost of capital to price its investments. The CODM also reviews general and administrative expense, which includes public company costs consisting of compensation, occupancy, and other corporate costs, in more detail to ensure its resources are in line with its business and operating needs. The Company’s income statement segment information is as follows for the three and nine months ended September 30, 2026 ($ in thousands): | | | | | | | | | | | | Ground | | Hotel | | | Three Months Ended September 30, 2026 | | Leases | | Operations | | Total | Revenues: | | | | | | | | | | Interest income from sales-type leases | | $ | 78,767 | | $ | — | | $ | 78,767 | Operating lease income | | | 15,841 | | | — | | | 15,841 | Hotel revenues | | | — | | | 18,000 | | | 18,000 | Interest income | | | 3,401 | | | — | | | 3,401 | Other income | | | 2,670 | | | — | | | 2,670 | Total revenues | | | 100,679 | | | 18,000 | | | 118,679 | Costs and expenses and other items: | | | | | | | | | | Interest expense - cash | | | (47,763) | | | — | | | | Interest expense - non-cash | | | (8,142) | | | — | | | | Hotel expenses | | | — | | | (14,736) | | | | Depreciation and amortization | | | (1,262) | | | (614) | | | | General and administrative - public company costs(1) | | | (10,276) | | | — | | | | General and administrative - stock-based compensation(1) | | | (3,994) | | | — | | | | (Provision for) recovery of credit losses | | | (1,737) | | | — | | | | Earnings (losses) from equity method investments | | | 3,517 | | | — | | | | Other segment items(2) | | | (593) | | | (247) | | | | Segment profit (loss) | | $ | 30,429 | | $ | 2,403 | | $ | 32,832 | | | | | | | | | | | Nine Months Ended September 30, 2026 | | | | | | | | | | Revenues: | | | | | | | | | | Interest income from sales-type leases | | $ | 230,703 | | $ | — | | $ | 230,703 | Operating lease income | | | 51,803 | | | — | | | 51,803 | Hotel revenues | | | — | | | 43,801 | | | 43,801 | Interest income | | | 9,801 | | | — | | | 9,801 | Other income | | | 8,071 | | | — | | | 8,071 | Total revenues | | | 300,378 | | | 43,801 | | | 344,179 | Costs and expenses and other items: | | | | | | | | | | Interest expense - cash | | | (142,102) | | | — | | | | Interest expense - non-cash | | | (22,506) | | | — | | | | Hotel expenses | | | — | | | (40,863) | | | | Depreciation and amortization | | | (3,734) | | | (1,839) | | | | General and administrative - public company costs(1) | | | (32,754) | | | — | | | | General and administrative - stock-based compensation(1) | | | (11,162) | | | — | | | | (Provision for) recovery of credit losses | | | (2,505) | | | — | | | | Earnings (losses) from equity method investments | | | 11,413 | | | — | | | | Other segment items(2) | | | (2,855) | | | (741) | | | | Segment profit (loss) | | $ | 94,173 | | $ | 358 | | $ | 94,531 |
| (1) | The CODM also considers management fees earned from Star Holdings (refer to Note 15) in their review of general and administrative expense because many of the Company’s employees spend time and resources performing basic functions for the management of Star Holdings. During the three and nine months ended September 30, 2026, the Company earned $1.9 million and $5.8 million, respectively, in management fees from Star Holdings. The management fees are included in “Other income” in the Company’s consolidated statements of operations. |
| (2) | Includes real estate expense and other expenses. |
As of September 30, 2026, approximately $95.0 million of total assets were attributable to the Hotel Operations segment. All other total assets were attributable to the Ground Leases segment.
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