Real Estate Dispositions, Held for Sale, and Impairment Charges |
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| Real Estate Dispositions, Held for Sale, and Impairment Charges | Real Estate Dispositions, Held for Sale, and Impairment Charges Real Estate Dispositions
During the year ended December 31, 2025, we continued to execute our capital recycling program, whereby we sell properties and redeploy proceeds to either fund property acquisitions in our target secondary growth markets, or repay outstanding debt. We expect to continue to execute our capital recycling plan and sell properties as reasonable disposition opportunities become available. During the year ended December 31, 2025, we sold two properties, located in Hickory, North Carolina and Oklahoma City, Oklahoma, which is summarized in the table below (dollars in thousands):
On April 30, 2025, we completed the transaction to sell our 676,031 square foot property in Tifton, Georgia for $18.5 million, incurring $0.3 million in closing costs, which are included in other expense in the consolidated statements of operations and comprehensive income for the year ended December 31, 2025. During the year ended December 31, 2024, we recorded a sales-type lease receivable on this property and derecognized the carrying value of this property, recognizing a $3.9 million selling profit from sales-type lease, net, that was included in the gain on sale of real estate, net, in the consolidated statement of operations.
Our 2025 dispositions were not classified as discontinued operations because they did not represent a strategic shift in operations, nor will they have a major effect on our operations and financial results. Accordingly, the operating results of these properties are included within continuing operations for all periods reported.
The table below summarizes the components of operating income from the real estate and related assets disposed of during the years ended December 31, 2025, 2024, and 2023, respectively (dollars in thousands):
(1)Includes a $0.01 million impairment charge.
(2)Includes a $0.4 million gain on sale of real estate, net, from two property sales.
(3)Includes a $1.8 million impairment charge.
Real Estate Held for Sale
At December 31, 2025, we had one property classified as held for sale, located in Charlotte, North Carolina, and a portion of a land parcel held for sale, located in Ocala, Florida.
At December 31, 2024, we had two properties classified as held for sale, located in Tifton, Georgia and Hickory, North Carolina, and which have been sold as described above.
The table below summarizes the components of the assets held for sale at December 31, 2025 and 2024 reflected on the accompanying consolidated balance sheet (dollars in thousands):
Impairment Charges
We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the year ended December 31, 2025 and did not recognize an impairment charge.
We evaluated our held for sale assets to determine if any of these assets were impaired during the year ended December 31, 2025 and identified one held for sale asset, located in Oklahoma City, Oklahoma, which was impaired by $0.01 million during the three months ended June 30, 2025. In performing our held for sale assessment, the carrying value of this asset was above the fair value, less costs of sale. As a result, we impaired this property to equal the fair market value less costs of sale. The property was sold during the year ended December 31, 2025.
During the year ended December 31, 2024, we identified one held and used asset, located in Oklahoma City, Oklahoma, which was impaired by $1.8 million during the quarter ended December 31, 2024. In performing our impairment testing, the undiscounted cash flows were below the carrying value, which resulted in an impairment charge. We also identified two held for sale assets, located in Richardson, Texas and Fridley, Minnesota, which were impaired by an aggregate $5.0 million during the three months ended March 31, 2024 and September 30, 2024. In performing our held for sale assessment, the carrying value of these assets were above the fair value, less costs of sale, which resulted in us recognizing an impairment charge.
Fair market value for this asset was calculated using Level 3 inputs (defined in Note 5 “Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes”), which were determined using a negotiated sales price from an executed purchase and sale agreement with a third party. We continue to evaluate our properties on a quarterly basis for changes that could create the need to record impairment. Future impairment losses may result, and could be significant, should market conditions deteriorate in the markets in which we hold our assets or we are unable to secure leases at terms that are favorable to us, which could impact the estimated cash flow of our properties over the period in which we plan to hold our properties. Additionally, changes in management’s decisions to either own and lease long-term or sell a particular asset will have an impact on this analysis.
The fair values for the above properties were calculated using Level 3 inputs which were calculated using an estimated sales price, less estimated costs to sell. The estimated sales price was determined using executed purchase and sale agreements.
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