Note 3 - Real Estate

6 Months Ended

Jun. 30, 2023

Note 3 – Real Estate

Real Estate Held for Sale

The Company records properties as held for sale, and any associated mortgages payable, net, as mortgages payable, net, associated with real estate held for sale, on the Company's condensed consolidated balance sheets when management has committed to a plan to sell the assets, actively seeks a buyer for the assets, and the consummation of the sale is considered probable and is expected within one year.

In May 2023, the Company's board of directors and the Fortress Member approved the sale of Dekalb Plaza, and as such, the Company classified the property as real estate held for sale.

On May 23, 2023, the Company determined that the carrying value of the asset group associated with Dekalb Plaza exceeded its fair value, less estimated costs to sell. This real estate held for sale with a carrying amount of $24.4 million was written down to its fair value of $23.1 million, less estimated costs to sell of $0.7 million, resulting in an impairment charge of approximately $2.0 million, which was included in impairment of real estate held for sale in the Company's condensed consolidated statement of operations. Impairment expenses on assets held for sale was $2.0 million for each of the three and six months ended June 30, 2023. On July 20, 2023, the Company completed the sale of Dekalb Plaza for a sales price of $23.1 million in cash.

The following table provides a summary of the major components of assets and liabilities related to real estate held for sale as of June 30, 2023.


(in thousands)	June 30, 2023
Assets held for sale
Real estate property	$	22,418
Accounts receivable, net		9
Straight-line rent receivable, net		407
Other assets		378
Total assets held for sale	$	23,212

Liabilities related to real estate held for sale
Mortgage and other indebtedness	$	14,552
Accounts payable and accrued liabilities		224
Unamortized intangible lease liabilities, net		308
Deferred revenue		45
Total liabilities related to real estate held for sale	$	15,129

Disposal of Real Estate

On June 30, 2023, the Company completed the sale of the Spotswood Valley Square Shopping Center for a sales price of $23.0 million in cash and recognized a net gain of $11.6 million in its condensed consolidated statements of operations. The Company used $11.8 million of the proceeds to repay the mortgage loan secured by Spotswood Valley Square Shopping Center, $2.3 million to redeem the Lamont Street Preferred Interest (as defined below) and $0.6 million in transaction costs.

Concentrations of Credit Risks

The following table contains information regarding the geographic concentration of the properties in the Company’s portfolio as of June 30, 2023, which includes rental income for the six months ended June 30, 2023 and 2022.


(dollars in thousands)	Number of Properties	Gross Real Estate Assets		Percentage of Total Real Estate Assets			Rental income for the six months ended June 30,
Location	June 30, 2023	June 30, 2023		June 30, 2023			2023		2022
Maryland	6	$	101,203		25.8	%	$	6,078	$	6,061
Virginia	5		197,208		50.3	%		8,703		3,636
Pennsylvania (1)	1		20,923		5.3	%		1,353		1,058
Washington D.C.	1		8,422		2.2	%		303		306
Colorado	3		64,254		16.4	%		4,028		2,604
	16	$	392,010		100.0	%	$	20,465	$	13,665

(1)

Represents Dekalb Plaza, which was sold on July 20, 2023.