INVESTMENTS IN REAL ESTATE

9 Months Ended

Sep. 30, 2025

3. INVESTMENTS IN REAL ESTATE

Investments in real estate consist of the following (in thousands):


	September 30, 2025		December 31, 2024
Land	$	175,201	$	175,682
Land improvements	5,595		5,863
Buildings and improvements	651,912		636,525
Furniture, fixtures, and equipment	20,022		12,844
Tenant improvements	16,681		26,942
Work in progress	23,198		36,929
Investments in real estate	892,609		894,785
Accumulated depreciation	(189,938)		(185,591)
Net investments in real estate	$	702,671	$	709,194

For the three months ended September 30, 2025 and 2024, the Company recorded depreciation expense of $6.9 million and $5.9 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded depreciation expense of $18.6 million and $17.5 million, respectively.

Impairment—The Company performs quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could indicate that the carrying value of certain of its investments in real estate may not be recoverable. See Note 2 for a discussion of the Company’s accounting policies regarding impairment of investments in real estate.

During the nine months ended months ended September 30, 2025, one office property in Austin, Texas, with a carrying value of $2.1 million, was deemed to be impaired and its carrying value was reduced to an estimated fair value of $1.9 million, resulting in impairment charges of $0 and $221,000 during the three and nine months ended September 30, 2025, respectively. The Company recorded no impairment charges during the three and nine months ended September 30, 2024. See Note 2 for a discussion of the Company’s policies regarding impairment of real estate assets.

See Note 13 for a further discussion regarding these impairment charges during the three and nine months ended September 30, 2025.

2025 and 2024 Transactions and Assets Held for Sale—In July 2025, the Company sold a vacant land parcel adjacent to its multifamily property at 1150 Clay Street in Oakland, California (“1150 Clay”). The Company received proceeds of $1.2 million, net of transaction costs of $89,000, and recorded a gain on the sale of $679,000 during the three and nine months ended September 30, 2025. In connection with the sale, the Company used a portion of the proceeds to make a repayment of $696,000 under the mortgage loan at 1150 Clay.

There were no acquisitions or dispositions during the nine months ended September 30, 2024.