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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

Note 7 – Income Taxes

The Company had previously elected to be taxed as a REIT as defined under Section 856(a) of the Code for federal income tax purposes upon formation and through December 31, 2021. On March 31, 2022, the Company announced that its Board of Trustees unanimously approved a plan to terminate the Company’s REIT status and become a taxable C Corporation, effective for the year ended December 31, 2022. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2022, the Company is subject to federal, state and local income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT since inception and through the 2021 tax year, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place until December 31, 2021.

As a result of the Company’s revocation of its REIT status in fiscal year 2022, the Company incurred a one-time, non-cash deferred tax benefit of approximately $161.3 million during the three months ended March 31, 2022. As a result of ongoing operations and sales activity, the Company recognized a deferred tax benefit of $26.5 million and $29.1 million during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company has recorded a full valuation allowance of $254.4 million and $227.9 million, respectively, against the deferred tax asset (the “DTA”) pursuant to ASC 740 as discussed in more detail below. While the Company has recorded a full valuation allowance against its DTAs due to the uncertainty that it will be able to utilize them, if the Company is able to sell assets at prices above its tax basis, the DTAs will be utilized to offset any taxes due on those gains to the extent of the DTAs.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

 

 

 

2025

 

U.S. Federal tax benefit at statutory rate

$

(14,325

)

 

 

21.0

%

State and local income taxes, net of federal income tax effect (1)

 

(11,081

)

 

 

16.3

%

Changes in valuation allowance

 

22,774

 

 

 

-33.4

%

Nontaxable and nondeductible items

 

 

 

 

 

 

Deduction limitation on executive compensation

 

1,420

 

 

 

-2.1

%

 

Other

 

14

 

 

 

0.0

%

Other adjustments

 

 

 

 

 

 

Utilization of capital loss carryover

 

1,353

 

 

 

-2.0

%

 

Other

 

 

 

 

 

(155

)

 

 

0.2

%

Income tax expense

$

-

 

 

 

0

%

(1) In 2025, state and local income taxes in Florida made up the majority (greater than 50%) of tax effect in this category.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for the year prior to the adoption of ASU 2023-09 is as follows:

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

 

 

 

2024

 

Pre-tax book income (loss)

$

(153,536

)

 

Tax on pre-tax book income (loss)

 

(32,243

)

 

State taxes on current year income, permanent items

 

(5,466

)

 

Valuation allowance

 

29,054

 

 

Deferred rate change

 

7,504

 

 

Other

 

1,151

 

Income tax expense

 

-

 

Effective tax rate

 

0

%

The Company’s effective tax rate of 0% differs from the U.S. statutory rate of 21% in 2025 and 2024 primarily due to the placement of a valuation allowance on its deferred tax assets.

The significant components of the Company’s deferred tax assets of $254.4 million and $227.9 million as of December 31, 2025 and 2024, respectively, consist of book to tax basis differences, net operating losses, and carryover net operating losses. As discussed below, the Company has recorded a full valuation allowance on the deferred tax assets as of December 31, 2025 and 2024, respectively.

The total deferred tax assets and liabilities are comprised of the following (in thousands):

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

2025

 

 

2024

 

Deferred income tax assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss carryforwards and credits

$

244,147

 

 

$

133,499

 

 

Difference between book and tax basis of property, plant, and equipment

 

1,344

 

 

 

88,732

 

 

Straight-line rent

 

(14

)

 

 

(662

)

 

Prepaid insurance

 

(747

)

 

 

(405

)

 

Allowance for bad debts

 

417

 

 

 

722

 

 

Joint ventures

 

3,973

 

 

 

1,228

 

 

Accrued bonus

 

753

 

 

 

1,152

 

 

Stock compensation

 

3,447

 

 

 

3,424

 

 

Prepaid rent

 

—

 

 

 

11

 

 

Unearned revenue

 

210

 

 

 

368

 

 

Severance

 

 

 

 

 

1,075

 

 

 

—

 

 

State depreciation differences

 

(197

)

 

 

(208

)

 

Valuation allowance

 

(254,408

)

 

 

(227,861

)

Net deferred income tax asset

$

—

 

 

$

—

 

Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria. ASC 740 states that deferred tax assets shall be reduced by a valuation allowance if there is insufficient objectively verifiable evidence to support that it is more likely than not that they will be realized. This evaluation requires significant judgment which should be weighted commensurate with the extent to which the evidence can be objectively verified. Additionally, under ASC 740, forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years. Given the Company’s history of cumulative losses combined with the fact that the Company’s utilization of deferred tax assets is highly dependent on the outcome of the review of a broad range of strategic alternatives announced by its Board of Trustees and the uncertainty in timing and volume of future property sales, we have deemed that their realization, at this time, cannot be objectively verified. The Company has therefore recorded a full valuation allowance against the Company’s deferred tax assets as of December 31, 2025 and 2024. The Company will evaluate this position each quarter as verifiable positive evidence becomes available, such as the execution of asset sales, to support the future utilization of the deferred tax assets.

A summary of the Company’s valuation allowance activity is as follows (in thousands):

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

 

 

 

 

2025

 

 

2024

 

Balance, beginning of year

$

227,861

 

 

$

198,807

 

 

Charged to income tax expense

 

26,547

 

 

 

29,054

 

Balance, end of year

$

254,408

 

 

$

227,861