Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation

3 Months Ended

Mar. 31, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Net Assets in Liquidation

Plan of Sale

On October 2, 2024, the Company filed a definitive proxy statement, or the Definitive Proxy, with the U.S. Securities and Exchange Commission, or SEC, related to a Special Meeting of Shareholders, or the Special Shareholder Meeting, for the following purposes: (i) to consider and vote upon the Plan of Sale, including the wind-down and complete liquidation of the Company, and the dissolution and termination of the Company, including the establishment of a Liquidating Entity (as defined in the Definitive Proxy), and (ii) on an advisory, non-binding basis, to consider and vote upon compensation that may become payable by the Company to its named executive officers in connection with the Plan of Sale, or the Executive Compensation Proposal. The Plan of Sale, which the Company’s Board of Trustees, the Board, determined was in the best interests of the Company and its shareholders, authorized the Company to sell all of its remaining properties, wind-down the Company’s affairs and distribute the net proceeds to shareholders. At the special shareholder meeting held on November 12, 2024, the Company’s shareholders approved both proposals with: (i) 85.5% of outstanding shares, and 99% of votes cast, in favor of the Plan of Sale proposal (two-thirds of outstanding shares required for approval), and (ii) 86.7% of votes cast in favor of the Executive Compensation Proposal (majority of votes cast required for approval).

The Plan of Sale authorized the Company to sell its remaining properties without further shareholder approval, pay or establish a reserve fund for all actual and contingent liabilities, distribute net proceeds to shareholders, and wind-down the Company’s affairs, including the complete liquidation and dissolution of the Company. The Plan of Sale also authorized the Board to establish or convert into a Liquidating Entity.

While the Company can provide no assurances as to the ultimate timing of the complete liquidation and dissolution of the Company, the Company paid its final cash liquidating distribution on April 22, 2025 (See Notes 7 and 15) and is likely to dissolve and transfer its remaining assets and liabilities into a Liquidating Entity before the end of the second quarter of 2025.

Upon establishing or converting to the Liquidating Entity, the Company’s common shares will then be converted into beneficial interest units in the Liquidating Entity, on a one for one basis. The purpose of the Liquidating Entity will be to pay any remaining liabilities and distribute any remaining proceeds to the holders of the interests in the Liquidating Entity. We expect that the distributions from the Liquidating Entity, if any, would be nominal.

The Company expects to comply with the requirements necessary to continue to qualify as a REIT through its liquidation and dissolution, until such time as any remaining assets are transferred to a Liquidating Entity; provided, however, that the Board may elect to terminate the Company’s status as a REIT if it determines that such termination would be in the best interest of the shareholders.

Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of Sale. As of March 31, 2025, the Company estimated that it will have costs in excess of estimated receipts during the liquidation process. These amounts can vary significantly due to, among other things, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding down of operations. These costs are estimated and are anticipated to be paid out over the liquidation period which is estimated to be complete by September 30, 2025, however, no assurances can be provided that this date will be met.

The change in the liabilities for estimated costs in excess of estimated receipts during liquidation for the three months ended March 31, 2025 is as follows (in thousands):

	December 31, 2024		Cash Payments (Receipts)		Remeasurement of Assets and Liabilities		March 31, 2025
Assets
Estimated net inflows from real estate	$	1,125	$	(388)	$	114	$	851
Estimated inflows from interest income	3,493		(2,299)		27		1,221
	4,618		(2,687)		141		2,072
Liabilities
Liquidation transaction costs(1)	(41,819)		5,397		(548)		(36,970)
General and administrative expenses	(30,993)		14,783		112		(16,098)
Liquidating catch-up distributions on unearned equity awards	(23,764)		25,664		(1,900)		—
Capital expenditures and tenant lease obligations	(8,061)		8,065		(4)		—
	(104,637)		53,909		(2,340)		(53,068)
Total liabilities for estimated costs in excess of estimated receipts during liquidation	$	(100,019)	$	51,222	$	(2,199)	$	(50,996)

(1) Liquidation transaction costs primarily include severance expenses, advisory fees and other professional services expenses.

Net Assets in LiquidationThere were 107,751,132 common shares outstanding at March 31, 2025 (See Note 8). The net assets in liquidation as of March 31, 2025 were $176.5 million. Net assets in liquidation include projections of costs and expenses to be incurred during the estimated period required to complete the Plan of Sale. There is inherent uncertainty with these estimates and projections, and they could change materially based on, among other things, changes in the underlying assumptions of the projected cash flows. Cumulative cash liquidating distributions paid to common shareholders are $2.2 billion ($20.60 per common share) and include the initial $2.0 billion ($19.00 per common share) paid prior to December 31, 2024 and the final $172.4 million ($1.60 per common share) paid on April 22, 2025.