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Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company is organized and operates in a manner that enables it to qualify as a REIT for U.S. federal income tax purposes beginning with the Company's taxable year ended December 31, 2017. The Company's taxable REIT subsidiary ("TRS") files separate income tax returns as a C corporation. The Company also files separate income tax returns in various states. As a REIT, the Company will generally be allowed a deduction for dividends that it pays, and therefore, will not be subject to U.S. federal corporate income tax on its taxable income that is currently distributed to shareholders. The Company may be subject to certain state gross income and franchise taxes, as well as taxes on any undistributed income and federal and state corporate taxes on any income earned by its TRS. Distributions with respect to the Company’s common stock can be characterized for U.S. federal income tax purposes as ordinary income, capital gains, unrecaptured section 1250 gains, return of capital, or a combination thereof. Taxable distributions paid for the years ended December 31, 2025, 2024, and 2023, were classified as ordinary income. The income tax expense (benefit) on income (loss) from continuing operations for the years ended December 31, 2025, 2024, and 2023, consisted of the following (in thousands):
|  | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |  |
Federal |  | $ | 47 |  |  | $ | 170 |  |  | $ | (9) |
State |  | (116) |  |  | 4 |  |  | 44 |
Total Current |  | $ | (69) |  |  | $ | 174 |  |  | $ | 35 |
Deferred: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  | — |  |  | — |  |  | — |
Total Deferred |  | $ | — |  |  | $ | — |  |  | $ | — |
Income tax expense (benefit) |  | $ | (69) |  |  | $ | 174 |  |  | $ | 35 |
Income tax expense (benefit) for the years ended December 31, 2025, 2024, and 2023, differs from amounts computed by applying the statutory federal rate to income from continuing operations before income taxes for the following reasons (in thousands):
|  | 2025 |  | 2024 |  | 2023
|  | Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Computed federal income tax expense (benefit) |  | $ | 13,548 |  |  | 21% |  | $ | 13,477 |  |  | 21% |  | $ | 8,577 |  |  | 21%
State and local income tax, net of federal income tax effect 1 |  | 3 |  |  | —% |  | 485 |  |  | 1% |  | 45 |  |  | —%
Changes in valuation allowances |  | (1,943) |  |  | (3)% |  | (3,523) |  |  | (6)% |  | 986 |  |  | 2%
REIT rate differential |  | (14,689) |  |  | (23)% |  | (10,553) |  |  | (16)% |  | (9,325) |  |  | (23)%
Nontaxable or nondeductible items |  | 3,008 |  |  | 5% |  | 124 |  |  | —% |  | (96) |  |  | —%
Other, net |  | 4 |  |  | —% |  | 164 |  |  | —% |  | (152) |  |  | —%
Income tax expense (benefit) |  | $ | (69) |  |  | —% |  | $ | 174 |  |  | — | % |  | $ | 35 |  |  | — | %
1 State income taxes in Hawaii and California made up the majority (greater than 50 percent) of the tax effect in this category.
The change in the Company's reconciliation from its statutory rate to effective tax rate for the year ended December 31, 2025, as compared to the year ended December 31, 2024, is primarily due to non-deductible expenses for tax purposes at the REIT subsidiary. The income taxes paid (net of refunds) for the years ended December 31, 2025, 2024, and 2023, consisted of the following (in thousands):
|  | 2025 |  | 2024 |  | 2023
Federal |  | $ | 68 |  |  | $ | 30 |  |  | $ | 178 |
State |  | 4 |  |  | (61) |  |  | (161) |
Total income taxes paid (net of refunds) |  | $ | 72 |  |  | $ | (31) |  |  | $ | 17 |
State: |  |  |  |  |  |
Hawaii |  | $ | — |  |  | $ | (67) |  |  | $ | (167) |
California |  | 4 |  |  | 6 |  |  | 6 |
Total state income taxes paid (net of refunds) |  | $ | 4 |  |  | $ | (61) |  |  | $ | (161) |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024, were as follows (in thousands):
|  | 2025 |  | 2024
Deferred tax assets: |  |  |  |
Employee benefits |  | $ | 4,202 |  |  | $ | 4,051 |
Capitalized costs |  | 1,290 |  |  | 1,290 |
Joint ventures and other investments |  | 6,952 |  |  | 5,810 |
Impairment and amortization |  | 621 |  |  | 622 |
Solar investment benefits |  | 14,659 |  |  | 14,814 |
Insurance and other reserves |  | 5,056 |  |  | 6,517 |
Disallowed interest expense |  | 8,684 |  |  | 9,075 |
Net operating losses |  | 52,872 |  |  | 53,795 |
Property |  | 7,047 |  |  | 5,348 |
Other |  | 5,730 |  |  | 8,140 |
Total deferred tax assets |  | $ | 107,113 |  |  | $ | 109,462 |
Valuation allowance |  | (106,344) |  |  | (108,021) |
Total net deferred tax assets |  | $ | 769 |  |  | $ | 1,441 |
Deferred tax liabilities: |  |  |  |
Interest rate swap |  | $ | 433 |  |  | $ | 1,110 |
Other |  | 336 |  |  | 331 |
Total deferred tax liabilities |  | $ | 769 |  |  | $ | 1,441 |
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
Federal tax credit carryforwards at December 31, 2025, totaled $7.8 million, of which $7.6 million will expire in 2036 and $0.2 million will expire in 2039. State tax credit carryforwards at December 31, 2025, totaled $6.9 million and may be carried forward indefinitely under state law. As of December 31, 2025, the Company had gross federal net operating loss carryforwards of $190.3 million ($40.0 million tax-effected) that can be carried forward indefinitely under federal law. As of December 31, 2025, the Company had state net operating loss carryforwards of $257.0 million ($12.9 million tax-effected) that can be carried forward indefinitely. A valuation allowance must be provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized, based upon consideration of all positive and negative evidence. Sources of evidence include, among other things, a history of pretax earnings or losses, expectations of future results, tax planning opportunities and appropriate tax law. Due to the recent losses the Company has generated in its TRS, the Company believes that it is more likely than not that its U.S. federal and state deferred tax assets will not be realized as of December 31, 2025. The Company recorded a decrease in the valuation allowance of $1.7 million on its net U.S. federal and state deferred tax assets for the current period. Should the Company determine that it would be able to realize its deferred tax assets in the foreseeable future, an adjustment to the deferred tax assets may cause a material increase to income in the period such determination is made. Significant management judgment is required in determining the period in which reversal of a valuation allowance should occur. The net change to the valuation allowance recorded during each of the years ended December 31, 2025, 2024, and 2023, was as follows (in thousands):
|  | Balance at Beginning of Year |  | Net Change |  | Balance at End of Year
2025 |  | $ | 108,021 |  |  | $ | (1,677) |  |  | $ | 106,344 |
2024 |  | $ | 109,087 |  |  | $ | (1,066) |  |  | $ | 108,021 |
2023 |  | $ | 109,827 |  |  | $ | (740) |  |  | $ | 109,087 |
The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market value of the stock issued at the time of exercise and the option exercise price, tax-effected. The Company also receives an income tax benefit for restricted stock units when they vest, measured as the fair market value of the stock issued at the time of vesting, tax-effected. Due to the Company's valuation allowance in the respective periods, there were no net tax benefits recognized from share-based transactions for the years ended December 31, 2025, 2024, and 2023. The Company recognizes accrued interest and penalties on income taxes as a component of income tax expense. As of December 31, 2025, accrued interest and penalties were not material. The Company has not identified any material unrecognized tax positions and as such has no related interest or penalty accruals. As of December 31, 2025, tax years 2022 and later are open to audit by the tax authorities. The Company does not believe that the result of any potential audits will have a material adverse effect on its results of operations, financial condition or liquidity.

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