INVESTMENT IN REAL ESTATE LOANS

3 Months Ended

Mar. 31, 2026

Real Estate [Abstract]

INVESTMENT IN REAL ESTATE LOANS

INVESTMENT IN REAL ESTATE LOANS

Real Estate Development Loans

Onera Mezzanine Financing Loan

In January 2023, we entered into an agreement with affiliates of Onera Opportunity Fund I, LP (“Onera”) to provide a mezzanine financing loan of $4.6 million (the “Onera Mezzanine Loan”) for the development of a glamping property. The Onera Mezzanine Loan had an original maturity date of January 2026 and is secured by a second mortgage on the property that is subordinate to the senior loan on the development project. During the first quarter of 2026, the agreement with Onera was amended to extend the maturity of the Onera Mezzanine loan to June 2027 (the “Onera Amendment”). As of March 31, 2026, we have funded our entire $4.6 million commitment under the Onera Mezzanine Loan. The development of the property was completed and operations commenced in September 2024.

We also have an option to purchase 90% of the equity of the entity that owns the property that became exercisable upon completion of construction in September 2024 (the “Onera Purchase Option”). The Onera Amendment modified the Onera Purchase Option (the “Modified Purchase Option”) to extend the exercise date to March 2027.

We recorded the estimated fair value of the Onera Purchase Option in Other assets and as a contra-asset to Investments in lodging property, net at its estimated fair value of $0.9 million on the transaction date using the Black-Scholes model. Our estimate of the fair value of the Onera Purchase Option under the Black-Scholes model requires substantial judgment related to the future operating performance of the property and the volatility of the underlying equity.

The recorded amount of the Onera Purchase Option was amortized as non-cash interest income beginning in January 2023 using the straight-line method, which approximated the interest method, through September 2024 when the Onera Purchase Option became exercisable. Upon the execution of the Onera Amendment, the Modified Onera Purchase Option was revalued using the Monte Carlo simulation model. The fair value of the Modified Onera Purchase Option was estimated to be approximately the same as estimated fair value of the original Onera Purchase Option. As such, no change in the carrying amount of the purchase option was required at March 31, 2026.