ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains forward-looking statements that involve risks and uncertainties. Our actual results may vary materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Risk Factors” and the other matters set forth in this Annual Report. See “Cautionary Statement Regarding Forward-Looking Statements.”
All references to numbered Notes are to specific footnotes to our Consolidated Financial Statements included in this Annual Report. You should read this discussion in conjunction with our Consolidated Financial Statements, the notes thereto and other financial information included elsewhere in this Annual Report. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) have the same meanings as in such Notes.
Overview
Prior to our adoption of the Plan of Sale, we were principally engaged in the ownership, development, redevelopment, management, sale and leasing of diversified retail and mixed-use properties throughout the United States. As of December 31, 2025, our portfolio consisted of interests in 10 properties comprised of approximately 0.8 million square feet of GLA or build-to-suit leased area and 156 acres of land. The portfolio encompasses five consolidated properties consisting of approximately 0.3 million square feet of GLA and 71 acres and five unconsolidated entities consisting of approximately 0.5 million square feet of GLA and 85 acres.
Review of Strategic Alternatives
On March 1, 2022, the Company announced that its Board of Trustees has commenced a process to review a broad range of strategic alternatives to enhance shareholder value. The Board of Trustees created a special committee of the Board of Trustees (the “Special Committee”) to oversee the process. The Special Committee retained Barclays as its financial advisor from March 2022 to August 2023 to assist with the strategic review. The Company sought a shareholder vote to approve a proposed plan of sale of our assets and dissolution (the “Plan of Sale”) that would allow our Board of Trustees to sell all of our assets, distribute the net proceeds to shareholders and dissolve the Company.
The 2022 Annual Meeting of Shareholders occurred on October 24, 2022, at which time the Plan of Sale was approved by the shareholders, following our filing of a final proxy statement with the SEC on September 14, 2022. See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information about the Plan of Sale. The strategic review process remains ongoing as the Company executes the Plan of Sale, and the Company remains open minded to pursuing value maximizing alternatives, including a potential sale of the Company. There can be no assurance that the review process will result in any transaction or that the Company will be successful in fully executing on the Plan of Sale. See “Item 1A. Risk Factors—Risks Related to Our Business and Operations—There can be no assurance that our review of strategic alternatives will result in any transaction or any strategic change at this time.” The Board of Trustees is currently overseeing the Plan of Sale.
Impairment of Real Estate Assets and Investments in Unconsolidated Entities
For the year ended December 31, 2025, we recognized a total of $18.8 million of impairment losses, mostly due to accepting an offer to sell below carrying value, which are included in impairment of real estate assets within the consolidated statements of operations. During the year ended December 31, 2025 we recognized $8.5 million in other-than-temporary impairment losses on our investments in unconsolidated entities, which is included in equity in loss of unconsolidated entities within the consolidated statements of operations. In addition, during the year ended December 31, 2025, we recognized an equity loss of $7.1 million representing our proportionate share of an impairment charge at one of our unconsolidated entities. The equity loss recognized was net of previous basis differences. We continue to evaluate our portfolio, including our development plans, hold periods and, if applicable, offers received, which may result in additional impairments in future periods on our consolidated properties and investments in unconsolidated entities.
Asset Sales and Sales of Unconsolidated Properties
During the year ended December 31, 2025, the Company sold five wholly owned assets, generating gross proceeds of $222.6 million and monetized two unconsolidated properties for an additional $8.1 million of gross proceeds.
Subsequent to the year ended December 31, 2025, the Company sold an interest in an unconsolidated property and received a distribution of $5.7 million.
As of March 31, 2026, we had one asset owned by our consolidated joint venture under contract to sell for total anticipated proceeds of $11.0 million, subject to buyer diligence and closing conditions.
Effects of Natural Disasters
The Company assessed the impact of the natural disasters that occurred during the year ended December 31, 2025 and determined that natural disasters did not have a material impact on our operating results or financial position. The Company did not experience interruptions in rental payments related to natural disasters nor has it incurred material capital expenditures to repair any property damage. As a result of changes to weather patterns caused by climate change, our properties could experience increased storm intensity and other natural disasters in future periods and, as such, we cannot provide assurance that natural disasters will not have a material impact on our financial condition, results of operations or cash flows over the foreseeable future.
Results of Operations
We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties. This revenue generally includes fixed base rents and recoveries of expenses that we have incurred and that we pass through to the individual tenants, in each case as provided in the respective leases.
Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities.
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
The following table presents selected data on comparative results from the Company’s consolidated statements of operations for the year ended December 31, 2025, as compared to the year ended December 31, 2024 (in thousands):
Year Ended
December 31,
$ Change
Revenue
Rental income
Expenses
Property operating
Abandoned project costs
Real estate taxes
Depreciation and amortization
General and administrative
Gain on sale of real estate, net
Gain/(loss) on sale of interest in unconsolidated entities
Impairment of real estate assets
Equity in income (loss) of unconsolidated entities
Interest and other income (expense), net
Interest expense
Rental Income
Rental income increased by $0.5 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is primarily due to lease up at the Aventura, FL property. The increase was partially offset by a decrease of rental income due to property sales.
Property Operating Expenses
The decrease of $2.4 million in property operating expense for the year ended December 31, 2025 was primarily due to a decrease in $1.5 million of common area maintenance costs and $0.8 million of insurance expense related to sold properties, as well as savings in utilities expenses.
Abandoned Project Costs
During the year ended December 31, 2024, the Company expensed costs that were previously capitalized in construction in progress on account of a tenant that defaulted on its lease prior to opening and predevelopment costs on a property which the Company is not currently pursuing entitlements. There were no abandoned project costs in 2025.
Real Estate Taxes
Real estate taxes decreased by approximately $1.5 million due to property sales.
Depreciation and Amortization Expenses
The decrease of $6.8 million in depreciation and amortization expenses for the year ended December 31, 2025 was primarily due to property sales which was partially offset by $1.5 million in depreciation related to moving a property out of held for sale in 2024.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, including share-based compensation and third party consulting fees, professional fees, office expenses and overhead expenses.
The increase of $1.9 million for the year ended December 31, 2025 was primarily driven by an increase in severance expense of $6.7 million, partially offset by decreases in personnel costs of $4.8 million.
Gain on Sale of Real Estate
During the year ended December 31, 2025, the Company sold five properties for aggregate consideration of $222.6 million and recorded a gain totaling $20.3 million.
During the year ended December 31, 2024, the Company sold 13 properties, for aggregate consideration of $163.5 million and recorded a gain totaling $10.7 million.
Gain/Loss on Sale of Interests in Unconsolidated Entities
During the year ended December 31, 2025, the Company sold its interest in one unconsolidated property and recorded a loss of $1.4 million.
During the year ended December 31, 2024, the Company sold its interest in one unconsolidated property, and recorded a gain of $2.0 million.
Impairment of Real Estate Assets
During the year ended December 31, 2025, the Company recognized $18.0 million impairment of real estate assets as a result of the Company agreeing to sell one property at an amount below book value. In addition, the Company also recognized a $0.8 million impairment of real estate assets as a result of the Company transferring the Aventura, FL property to held for sale which requires the asset to be carried at the lower of book value or fair value less estimated costs to sell.
During the year ended December 31, 2024, the Company recognized $1.7 million impairment of real estate assets as a result of the Company accepting offers below book value on three properties and an $85.8 million impairment of real estate assets on the Company's development property in Aventura, FL due to negotiations for rent relief with existing tenants that began during the second quarter of 2024 which triggered the need for an impairment analysis pursuant to ASC 360, Property, Plant and Equipment . The Company determined the fair value of this property by applying a discount to projected cash flows over the estimated hold period.
Equity in Loss of Unconsolidated Entities
The increase in loss for the year ended December 31, 2025 was driven by the recognition of $8.5 million of other-than-temporary impairment losses and the Company’s share of impairment losses of $7.1 million from one of its investments in unconsolidated entities.
The increase in loss was partially offset by an increase in income of $0.5 million from the Company’s investment in UTC and a decrease in losses on sale of unconsolidated entities of $5.1 million.
Interest and Other Income (Expense), Net
For the year ended December 31, 2025, interest income decreased by $1.5 million due to a decrease in cash balances and a decrease of interest rates. The decrease was partially offset by a decrease in other expenses of $0.5 million, primarily driven by a decrease in settlement expenses related to litigation.
Interest Expense
The decrease of $4.7 million in interest expense for the year ended December 31, 2025 was driven by partial Term Loan Facility pay downs, partially offset by an increase in amortization expense of deferred financing costs.
Liquidity and Capital Resources
Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, “Obligations”), and certain development expenditures. Property rental income, which is the Company’s primary source of operating cash flow, did not fully fund Obligations incurred during the year ended December 31, 2025 and the Company recorded net operating cash outflows of $34.9 million. Additionally, the Company generated net investing cash inflows of $198.5 million during the year ended December 31, 2025, which were driven by asset sales and partially offset by development expenditures.
Obligations are projected to continue to exceed property rental income and we expect to fund such Obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to, sales of Consolidated Properties, sales of interests in Unconsolidated Properties and potential financing transactions, subject to any approvals that may be required under the Term Loan Agreement. Below is our sales activity since we began our capital recycling program:
Sales of Consolidated Properties. We began our capital recycling program in July 2017 and have been monetizing assets since. In March of 2022, we elected to terminate our REIT status effective January 1, 2022 in order to remove any restrictions around asset sales. On October 24, 2022, we received shareholder approval of the Plan of Sale.
We sold 90 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $986.8 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021;
We sold 40 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $438.1 million of gross proceeds from December 31, 2021, the date we terminated our REIT status, through the approval of the Plan of Sale on October 24, 2022;
From the approval of the Plan of Sale on October 24, 2022 through December 31, 2025, we sold 94 Consolidated Properties, and additional outparcels at certain properties, and generated approximately $1.2 billion of gross proceeds.
Sales of interests in Unconsolidated Properties. Certain of our unconsolidated entity agreements also include rights that allow us to sell our interests in select Unconsolidated Properties to our partners at fair market value.
We sold our interests in 15 Unconsolidated Properties and generated approximately $278.1 million of gross proceeds from the beginning of our capital recycling program in July 2017 through the date our REIT status terminated on December 31, 2021;
We sold our interests in 8 Unconsolidated Properties and generated approximately $84.8 million of gross proceeds since we terminated our REIT status on December 31, 2021, through the approval of the Plan of Sale on October 24, 2022;
From the approval of the Plan of Sale on October 24, 2022 through December 31, 2025, we sold our interests in 12 Unconsolidated Properties and generated approximately $159.6 million of gross proceeds.
Unconsolidated Properties. We had contributed interests in 12 properties to unconsolidated entities, which generated approximately $242.4 million of gross proceeds from July 2017 through December 31, 2025. In addition to generating liquidity upon closing, these entities also reduce our development expenditures by the amount of our partners’ interests in the unconsolidated entities.
Subsequent to year end we sold an interest in an unconsolidated property and received a distribution of $5.7 million. As of March 31, 2026, we had one asset owned by our consolidated joint venture under contract to sell for total anticipated proceeds of $11.0 million, subject to buyer diligence and closing conditions.
Term Loan Facility / Incremental Funding Facility
As previously disclosed, on May 5, 2020, the Operating Partnership and Berkshire Hathaway entered into an amendment (the “Term Loan Amendment”) to the Term Loan Agreement by and among the Operating Partnership and Berkshire Hathaway as initial lender and administrative agent that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of the Operating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, “Available Cash”) is equal to or less than $30.0 million. In such instances, for each interest period, the Operating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii) $20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable on July 31, 2023; provided, that the Operating Partnership is required to pay any deferred interest from Available Cash in excess of $30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion).
In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the $400.0 million incremental funding facility under the Term Loan Agreement (the “Incremental Funding Facility”).
Additionally, the Term Loan Amendment provides that the administrative agent and the lenders express their continued support for asset dispositions, subject to the administrative agent’s right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Agreement. The Third Term Loan Amendment (as defined in Note 6 – Debt of the Notes to the condensed consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K) executed on June 16, 2022 provided exceptions to this right.
Our Term Loan Facility includes a $400.0 million Incremental Funding Facility, access to which is subject to rental income from non-Sears Holdings tenants of at least $200.0 million, on an annualized basis and after giving effect to SNO leases expected to commence rent payment within 12 months, which we have not yet achieved, as disclosed in Note 6. There is no assurance of the Company’s ability to access the Incremental Funding Facility.
On July 28, 2025, the Company exercised its extension option and on July 30, 2025, the Company paid a 2% extension fee equal to $4.0 million extending the maturity date to July 31, 2026. The Company also paid the incremental facility fee of $4.0 million. All other terms under the Term Loan Agreement shall remain unchanged during the extension period including the interest rate and the incremental facility fee in accordance with the Term Loan Agreement.
During the year ended December 31, 2025, we repaid $190.0 million against the principal of the Term Loan Facility. Our outstanding balance as of December 31, 2025 is $50.0 million.
See Note 1 – Organization of the Notes to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for a discussion of liquidity and going concern.
Dividends and Distributions
The Company’s Board of Trustees did not declare dividends on the Company’s Class A common shares during 2025. The last dividend on the Company’s Class A and C common shares that the Board of Trustees declared was on February 25, 2019, which was paid on April 11, 2019 to shareholders of record on March 29, 2019.
The Company’s Board of Trustees also declared the following dividends on the Company’s Series A Preferred Shares during 2026, 2025 and 2024:
Series A
Declaration Date
Record Date
Payment Date
Preferred Share
February 25
March 31
April 15
October 29
December 31
January 15, 2026
July 23
September 30
October 15
May 8
June 30
July 15
February 26
March 31
April 15
October 28
December 31
January 15, 2025
July 31
September 30
October 15
May 2
June 28
July 15
February 29
March 29
April 15
Minimum Cash Requirements
Our contractual obligations relate to our Term Loan Facility and non-cancelable operating leases in the form of a ground lease at one of our properties, as well as an operating lease for our corporate office.
Information concerning our obligations and commitments to make future payments under contracts for these loan and lease agreements as of December 31, 2025 is aggregated in the following table (in thousands):
Payments due by Period
Within
After
Minimum Cash Requirements
Total
1 year
2 - 3 years
4 -5 years
5 years
Long-term debt (1)
Operating leases
Total
Includes expected interest payments.
Off-Balance Sheet Arrangements
The Company accounts for its investments in entities that it does not have a controlling interest in but exercises significant influence under the equity method of accounting and those investments are reflected on the condensed consolidated balance sheets of the Company as investments in unconsolidated entities. As of December 31, 2025 and December 31, 2024, we did not have any off balance sheet financing arrangements.
Capital Expenditures
During the year ended December 31, 2025 the Company invested $26.3 million in our consolidated properties and $0.5 million in its unconsolidated entities.
During the year ended December 31, 2024 the Company invested $27.5 million in its consolidated properties and $9.3 million in its unconsolidated entities.
Cash Flows for the Year Ended December 31, 2025 Compared to December 31, 2024
The following table summarizes the Company’s cash flow activities for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31,
$ Change
Net cash used in operating activities
Net cash provided by investing activities
Net cash used in financing activities
Cash Flows from Operating Activities
Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses. Rental revenues are not sufficient to cover these expenses.
Cash Flows from Investing Activities
Significant components of net cash provided by investing activities include:
In 2025, $210.0 million of net proceeds from the sale of real estate, $8.1 million of net proceeds from the sale of interests in unconsolidated entities and $7.1 million of distributions from the unconsolidated entities offset by development of real estate of ($26.3) million and investments in unconsolidated entities of ($0.5) million; and
In 2024, $155.7 million of net proceeds from the sale of real estate and $8.0 million of distributions and proceeds from the disposition of interests in unconsolidated entities offset by development of real estate of ($27.5) million and investments in unconsolidated entities of ($9.3) million.
Cash Flows from Financing Activities
Significant components of net cash used in financing activities include:
In 2025, ($190.0) million cash repayment of Term Loan Facility principal, payment of deferred financing costs of ($4.0) million and ($4.9) million cash payments of preferred dividends; and
In 2024, ($120.0) million cash repayment of Term Loan Facility principal and ($4.9) million cash payment of preferred dividends.
Litigation and Other Matters
In accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or disclose the fact that such a range of loss cannot be estimated. We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. In such cases, we disclose the nature of the material contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made.
On July 1, 2024, a purported shareholder of the Company filed a class action lawsuit in the U.S. District Court for the Southern District of New York, captioned Zhengxu He, Trustee of the He & Fang 2005 Revocable Living Trust v. Seritage Growth Properties, Case No. 1:24:CV:05007, alleging that the Company, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer violated the federal securities laws. The complaint seeks to bring a class action on behalf of all persons and entities that purchased or otherwise acquired Company securities between July 7, 2022 and May 10, 2024. The complaint alleges that the defendants violated federal securities laws by issuing false, misleading, and/or omissive disclosures concerning the Company’s alleged lack of effective internal controls regarding the identification and review of indicators for investments in real estate and the Company’s value and projected gross proceeds of certain real estate assets. The seeks compensatory in an unspecified amount to be proven at trial, an award of reasonable costs and expenses to the and class counsel, and such other and further relief as the court may deem just and proper. On or around January 15, 2025, another shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the District of Maryland, captioned Paul Sidhu v. Seritage Growth Properties, Case No. 1:25-cv-00152. On or around January 20, 2025, another shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the District of Maryland, captioned James Wallen v. Seritage Growth Properties, Case No. 1:25-cv-00190. On or around May 8, 2025, another shareholder of the Company filed a derivative lawsuit in the U.S. District Court for the Southern District of New York, captioned Derrick Cheroti v. Seritage Growth Properties, Case No. 1:25-vc-00152. The derivative actions the same or similar claimed acts and underlying the Securities Action, assert of fiduciary duty and other the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and current and former members of the Company’s Board of Trustees, and name the Company as a nominal . The in each of the derivative actions seeks compensatory in an unspecified amount to be proven at trial, an order directing the Company and the individual to reform and the Company’s corporate governance and internal procedures, restitution from the individual , an award of costs and expenses to the and reasonable attorneys’ and experts’ fees, costs, and expenses, and such other and further relief as the court may deem just and proper. The in the Cheroti Derivative Action also seeks an award of , an order directing the individual to account for all caused by them and all profits and special benefits and enrichment obtained, and the imposition of a trust. On September 2, 2025, the court in the Cheroti Derivative Action stayed the Cheroti Derivative Action until resolution of the anticipated motion to in the Securities Action. On November 5, 2025, the court in the District of Maryland proceedings consolidated the Sidhu Derivative Action and the Wallen Derivative Action and appointed lead counsel. On November 12, 2025, the court in the Consolidated Derivative Action stayed the Consolidated Derivative Action until resolution of the anticipated motion to in the Securities Action. The Company intends to vigorously itself the in these lawsuits.
We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business and due to the current environment. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, the final outcome of such ordinary course legal proceedings and claims will not have a material effect on the consolidated financial position, results of operations or liquidity of the Company.
Critical Accounting Estimates
In preparing the consolidated financial statements, we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Refer to the discussion of our accounting policies included in Note 2 to the consolidated financial statements in Part II, Item 8 of this Annual Report.
Real Estate Investments
The Company, on a periodic basis, assesses whether there are indicators, including macroeconomic conditions, that the value of the real estate assets may be impaired. If an indicator is identified, management will estimate the real estate asset recoverability based on projected operating cash flows (undiscounted and unleveraged), taking into account the anticipated holding period and capitalization rates, to determine if the undiscounted cash flows are less than a real estate asset’s carrying value. If the carrying value of an asset exceeds the undiscounted cash flows, an analysis is performed to determine the estimated fair value of the real asset. In estimating the fair value of an asset, various factors are considered, including expected future operating income, trends and leasing prospects
including the effects of demand, competition, and other economic factors such as discount rates and market comparables. Changes in any estimates and/or assumptions, including the anticipated holding period, could have a material impact on the projected operating cash flows. If management determines that the carrying value of a real estate asset is impaired, a loss will be recorded for the excess of its carrying amount over its estimated fair value. The Company recognized $18.8 million and $87.5 million in impairment losses for the years ended December 31, 2025 and 2024, respectively.
Investments in Unconsolidated Entities
On a periodic basis, management assesses whether there are indicators, including the operating performance of the underlying real estate and general market conditions which include macroeconomic conditions that the value of the Company’s investments in unconsolidated entities may be impaired. An investment’s value is impaired if management’s estimate of the fair value of the Company’s investment is less than its carrying value and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over its estimated fair value. The Company recorded $8.5 million in other-than-temporary impairment losses in investments in in unconsolidated entities for the year ended December 31, 2025. The Company did not record any other-than-temporary impairment losses for the years ending December 31, 2024.
Revenue Recognition
We evaluate on an individual lease basis whether it is probable that we will collect substantially all amounts due from our tenants and recognize changes in the collectability assessment of our operating leases as adjustments to rental revenue. Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant, and other factors. Our assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our consolidated statements of income.
Recent Accounting Pronouncements
Refer to Note 2 of the consolidated financial statements for recently issued accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
As of December 31, 2025, we had $50.0 million of consolidated debt, all of which is borrowed under our fixed-rate Term Loan Facility which is based on a fixed term and imputed interest rate and therefore, neither are subject to interest rate fluctuations.
As of December 31, 2025, the estimated fair value of our consolidated debt was $50.0 million. The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt.
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
Reference is made to the Consolidated Financial Statements and Consolidated Financial Statement Schedule beginning on page F-1 for the required information.
