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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. It is the Company's current intention to adhere to these requirements and maintain the Company's qualification for taxation as a REIT. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. However, as a REIT, the Company is still subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income of TRSs, including our TRS lessees, are subject to federal, state and local income taxes.
For federal income tax purposes, the cash distributions paid to the Company’s common shareholders and preferred shareholders may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains. Tax law permits certain characterization of distributions which could result in differences between cash basis and tax basis distribution amounts.
The following characterizes distributions paid per common share and preferred share on a tax basis for the years ended December 31, 2024, 2023 and 2022:
202420232022
Amount%Amount%Amount%
Common Shares:
Ordinary non-qualified income$— — %$0.0400 100.00 %$0.0419 83.80 %
Qualified dividend— — %— — %— — %
Capital gain— — %— — %0.0081 16.20 %
Return of capital0.0300 100.00 %— — %— — %
Total$0.0300 100.00 %$0.0400 100.00 %$0.0500 100.00 %
Series E Preferred Shares:
Ordinary non-qualified income$0.9786 81.87 %$1.5938 100.00 %$1.6684 83.75 %
Qualified dividend— — %— — %— — %
Capital gain— — %— — %0.3238 16.25 %
Return of capital0.2167 18.13 %— — %— — %
Total$1.1953 100.00 %$1.5938 100.00 %$1.9922 100.00 %
Series F Preferred Shares:
Ordinary non-qualified income$0.9671 81.87 %$1.5750 100.00 %$1.6488 83.75 %
Qualified dividend— — %— — %— — %
Capital gain— — %— — %0.3200 16.25 %
Return of capital0.2142 18.13 %— — %— — %
Total$1.1813 100.00 %$1.5750 100.00 %$1.9688 100.00 %
Series G Preferred Shares:
Ordinary non-qualified income$0.9786 81.87 %$1.5938 100.00 %$1.6684 83.75 %
Qualified dividend— — %— — %— — %
Capital gain— — %— — %0.3238 16.25 %
Return of capital0.2167 18.13 %— — %— — %
Total$1.1953 100.00 %$1.5938 100.00 %$1.9922 100.00 %
Series H Preferred Shares:
Ordinary non-qualified income$0.8750 81.87 %$1.4250 100.00 %$1.4917 83.75 %
Qualified dividend— — %— — %— — %
Capital gain— — %— — %0.2895 16.25 %
Return of capital0.1938 18.13 %— — %— — %
Total$1.0688 100.00 %$1.4250 100.00 %$1.7812 100.00 %
The common and preferred distributions declared on December 15, 2021 and paid on January 18, 2022 were treated as 2022 distributions for tax purposes.
The common and preferred distributions declared on December 15, 2022 and paid on January 17, 2023 were treated as 2022 distributions for tax purposes.
The common and preferred distributions declared on December 15, 2023 and paid on January 16, 2024 were treated as 2023 distributions for tax purposes.
The common and preferred distributions declared on December 15, 2024 and paid on January 15, 2025 will be treated as 2025 distributions for tax purposes.
The Company's provision (benefit) for income taxes consists of the following (in thousands):
For the year ended December 31,
202420232022
Current:
Federal$1,197 $237 $253 
State and local1,658 418 24 
Total current provision$2,855 $655 $277 
Deferred:
Federal(25,280)— — 
State and local(3,203)— — 
Total deferred provision (benefit)$(28,483)$— $— 
Income tax expense (benefit)$(25,628)$655 $277 
A reconciliation of the statutory federal tax expense (benefit) to the Company's income tax expense (benefit) is as follows (in thousands):
For the year ended December 31,
202420232022
Statutory federal tax expense (benefit)$(5,379)$16,808 $17,906 
State income tax expense (benefit), net of federal tax expense (benefit)(1,829)409 4 
REIT income not subject to tax9,800 (16,536)(17,402)
Change in valuation allowance(28,368)973 (495)
Other148 (999)264 
Income tax expense (benefit), net$(25,628)$655 $277 
The significant components of the Company's deferred tax assets as of December 31, 2024 and 2023 consisted of the following (in thousands):
December 31, 2024December 31, 2023
Deferred Tax Assets:
Net operating loss carryover$34,125 $39,385 
State taxes and other7,671 5,596 
Depreciation31 99 
Total deferred tax asset before valuation allowance$41,827 $45,080 
Valuation allowance(13,344)(45,080)
Deferred tax asset net of valuation allowance$28,483 $— 
The Company evaluates its deferred tax assets each reporting period to determine if it is more likely than not that those assets will be realized or if a valuation allowance is needed. At December 31, 2023, the Company provided a valuation allowance against its federal and state deferred tax assets. During the third quarter of 2024, due to the TRS no longer having a three-year cumulative loss and continued improvement in the Company's financial results coming out of the COVID-19 pandemic and the projected future taxable income of its TRS, the Company determined that the release of a significant portion of its federal and state valuation allowance was appropriate. The change in the valuation allowance was a $31.7 million decrease in 2024 and $3.0 million increase in 2023. The Company has provided a valuation allowance against a portion of its state deferred tax assets at December 31, 2024 due to the uncertainty of realizing the loss in future years.
As of December 31, 2024 and 2023, the Company had no material unrecognized tax benefits. As a policy, the Company recognizes penalties and interest accrued related to unrecognized tax benefits as a component of income tax expense, however, there are currently no such accruals. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable. Due to the net operating loss carryforward, tax years 2020 through 2024 remain open to examination by the major taxing jurisdictions to which the Company is subject.