Fair Value Measures and Disclosures

12 Months Ended

Dec. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Measurements

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Financial Assets and Liabilities

Companies are required to disclose the estimated fair values of all financial instruments, even if those instruments are not carried at fair value. The fair values of financial instruments are based on estimates that reflect market conditions and perceived risks as of December 31, 2025 and 2024. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.

The carrying values of the Company’s cash, cash equivalents, and restricted cash (including money market accounts), other assets, and accounts payable, accrued expenses, and other liabilities approximate their fair values due to the short-term nature of these instruments. Additionally, the Company believes that the following financial instruments have carrying values that approximate their fair values as of December 31, 2025 and 2024:

•Borrowings under the Company’s Revolver (as defined in “Note 6 – Debt”) approximate fair value based on their nature, terms, and variable interest rates.

•Carrying values of the Company’s mortgage loans receivable approximate fair value based on a number of factors, including either their short-term nature, the availability of market quotes for comparable instruments, and a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads.

•Carrying value of the Company’s mortgage note payable approximates fair value based on a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads.

The table below presents the carrying values and estimated fair values of certain financial assets and liabilities, aggregated by their level in the fair value hierarchy within which those measurements fall (in thousands):

					Fair Value Hierarchy Level
Description	Carrying Value		Fair Value		Level 1		Level 2		Level 3
December 31, 2025
Assets
Derivative assets	$	5,566	$	5,566	$	—	$	5,566	$	—
Liabilities
Derivative liabilities	$	6,850	$	6,850	$	—	$	6,850	$	—
Term loans (1)	$	1,093,331	$	1,103,089	$	—	$	—	$	1,103,089
December 31, 2024
Assets
Derivative assets	$	16,426	$	16,426	$	—	$	16,426	$	—
Liabilities
Term loans (1)	$	622,608	$	626,629	$	—	$	—	$	626,629

(1) Recorded at carrying value in the consolidated balance sheets which represents amortized cost, net of unamortized debt issuance and discount costs.

The estimated fair values of the Company’s term loans (each as defined in “Note 6 – Debt”) are derived based primarily on unobservable market inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads (Level 3 inputs).

The Company’s derivative assets and liabilities are measured at fair value on a recurring basis. The estimated fair values are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

To comply with the provisions of ASC 820, Fair Value Measurement, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2025, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Nonfinancial Assets and Liabilities

Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments only under certain circumstances, such as when an impairment write-down occurs. Depending on impairment triggering events, impairments are typically recorded for properties sold, in the process of being sold, vacant, in bankruptcy, or experiencing difficulties with collection of rent.

The following table summarizes the provisions for impairment on real estate investments during the periods indicated below (dollars in thousands):

	Year Ended December 31,
	2025		2024		2023
Carrying value prior to impairment	$	91,857	$	164,778	$	58,667
Less: total provisions for impairment	(15,909)		(29,969)		(7,083)
Carrying value after impairment	$	75,948	$	134,809	$	51,584
Number of properties: (1)
Classified as held for sale	7		13		16
Disposed within the period	24		35		4
Classified as held for investment	5		15		2

(1) Includes the number of properties that were either (i) impaired during the respective period and remained as held for sale as of period-end, (ii) impaired and disposed during the respective period, or (iii) impaired during the respective period and remained as held for investment at period-end.

The valuation of impaired assets is determined using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, analysis of recent comparable sales transactions, discount rates, and purchase offers from third parties, all of which represent Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of such real estate. Estimating future cash flows is inherently subjective, and actual results may differ materially from these estimates. During the year ended December 31, 2025, the Company accounted for held for investment assets at fair value using a cash flow model (Level 3 inputs) with capitalization rates ranging from 6.2% to 7.5%, which the Company believes is reasonable based on current market rates.