Rental Properties

3 Months Ended

Mar. 31, 2026

Rental Properties [Abstract]

RENTAL PROPERTIES

NOTE 4 – RENTAL PROPERTIES

On March 31, 2026 and December 31, 2025, rental properties, net consisted of the following:

Description	Useful Life (Years)		March 31, 2026			December 31, 2025
Building and building improvements		5-39	$	8,158,431		$	8,158,431
Land		-		5,578,015			5,578,015
Rental properties, at cost				13,736,446			13,736,446
Less: accumulated depreciation				(3,318,798	)		(3,245,660	)
Rental properties, net			$	10,417,648		$	10,490,786

Property Acquisitions and Impairments

Pursuant to the terms of the Agreement Regarding Purchase and Sale Contract and an Assignment and Assumption Agreement, on January 19, 2024, ZPRE Holdings completed the acquisition of its Ashland Avenue Property located in Chicago, Illinois for an aggregate cash purchase price of $1,585,878, including (i) $1,250,000, representing the Purchase Price, (ii) an assignment fees of $185,000, and (iii) closing costs, commissions, and fees customary to the acquisition of real estate of $150,878, which includes a $65,000 commission expense, a $79,634 sponsor fee, and other costs of $6,244. In 2025, the Company was notified that a vehicle crashed into the building, causing significant structural damage. The City of Chicago declared the building unsafe and ordered its demolition. As such, the Ashland Avenue Property remains a vacant lot of land. Based upon the most recent information received by the Company from Justice Grown, the Company believes that the development of the new retail dispensary building will still be completed, and the tenant will open for business in late 2027; however, challenges related to the ongoing permitting and development process required through the City of Chicago may continue to cause delays. The Company’s tenant is expected to continue to pay full rent pursuant to the Justice Grown Lease. If Justice Grown does not construct the new building, the Company may need to pursue recovery through legal claims. In connection with the damage and demolition of the building, during the year ended December 31, 2025, the Company recorded an impairment loss of $1,018,716.

On July 8, 2024, ZP Dysart acquired a property in Surprise AZ (the “Surprise Property”) from NWC Dysart & Bell LLC (“NWC”). Surprise Property is a tract or parcel of land containing approximately 1.114 acres, together with all improvements, buildings, leases, rights, easements, and appurtenances pertaining thereto. The Surprise Property was acquired for an aggregate purchase price of $1,712,541, which included (i) $1,100,000, representing the Purchase Price, (ii) reimbursement to NWC for onsite and offsite improvements of $492,022, and (iii) closing costs, commissions, and fees customary to the acquisition of real estate of $120,519.

During the year ended December 31, 2025, the Company paid $1,000,000 to Sunday Goods as a tenant improvement allowance. The $1,000,000 payment to the tenant was used by the tenant to construct a building on the land as well as for the buildout of the property. Since ZP Dysart will own the building and related improvements at the end of the lease, the $1,000,000 tenant improvement allowance was capitalized to rental properties and is being depreciated on a straight-line basis over the useful life of the building and related improvements beginning when the building and related improvements was placed in service, beginning in September 2025. In September 2025, Sunday Goods completed the construction of a new retail dispensary building on the Surprise Property and opened for business.

During the third quarter of 2025, New Tenant faced operational challenges that impaired its ability to meet contractual rent obligations. On February 13, 2026, the Company sent New Tenant at the Woodward Property a written notice default related to the New Tenant’s failure to i) make timely rental payments and ii) fulfill its obligations related to non-monetary terms under the Woodward Lease. On May 1, 2026, the Company, through its wholly owned subsidiary ZP Woodward entered into and closed on the Woodward Agreement with the Woodward Buyer. Pursuant to the Woodward Agreement, ZP Woodward agreed to sell to the Woodward Buyer all Michigan properties (See Note 13 – Subsequent Events). The Company sold the Woodward Property for $600,000. As of December 31, 2025, based on the potential sale of the Woodward Properties, the net carrying value of the Woodward Property of approximately $2,700,000 would exceed the $600,000 sale price by $2,100,000. Based on these conditions, our projected future cash flows, anticipated holding periods, and market conditions have changed. Accordingly, during the year ended December 31, 2025, the Company recorded an impairment loss of $2,100,000.

For the three months ended March 31, 2026 and 2025, depreciation of rental properties amounted to $73,138 and $87,811, respectively.