Other Data

12 Months Ended

Dec. 31, 2023

Other Data [Abstract]

Other Data

OTHER DATA

Taxable Income

The Company has elected to be taxed as a REIT, as defined under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders. The Company has also elected that two of its subsidiaries be treated as a TRS, which are subject to federal and state income taxes. All entities other than the TRS subsidiaries are collectively referred to as "the REIT" within this Note 15 – Other Data.

The REIT generally will not be subject to federal income tax on taxable income it distributes currently to its stockholders. Accordingly, no provision for federal income taxes for the REIT has been made in the accompanying Consolidated Financial Statements; however, the Company may record income tax expense or benefit for its TRSs to the extent applicable. If the REIT fails to qualify as a REIT for any taxable year, then it will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax, and may not be able to qualify as a REIT for four subsequent taxable years. Even if the REIT continues to qualify as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise tax on its undistributed taxable income.

Income tax expense and state income tax payments, net of refunds, are as follows for the years ended December 31, 2023, 2022, and 2021.

	Year Ended December 31,
(Dollars in thousands)	2023		2022		2021
Current	$	106	$	97	$	129
Deferred	306		41		167
Total income tax expense	$	412	$	138	$	296
Income tax payments, net of refunds	$	80	$	120	$	109

Income tax expense primarily relates to permanent differences between federal, state and local taxable income resulting from certain state and local jurisdictions wholly or partially disallowing the deduction for dividends paid allowed at the federal level and temporary differences resulting from the bases of assets and liabilities of the Company's TRSs for financial reporting purposes and the bases of those assets and liabilities for income tax purposes.

The tax effect of temporary differences included in the net deferred tax assets at December 31, 2023 and 2022 are as follows:

		December 31,
(Dollars in thousands)		2023		2022
Deferred tax assets
	Deferred stock-based compensation	$	5,709	$	7,008
	Net operating losses	1,987		1,349
	Depreciation and amortization	45		35
	Prepaid expenses	15		22
	Total deferred tax assets	7,756		8,414
	Valuation allowance	(2,141)		(1,406)
Deferred tax assets, net		5,615		7,008
Deferred tax liabilities
	Deferred administrative services fee	(5,613)		(6,702)
	Other	(2)		—
Deferred tax liabilities		(5,615)		(6,702)
Net Deferred tax assets		$	—	$	306

The Company has federal net operating loss carryforwards in the aggregate amount of $0.3 million that expire in 2036 and 2037 and in the aggregate amount of $7.3 million that do not expire. Additionally, the Company has state net operating loss carryforwards in the aggregate amount of $7.7 million that expire from 2031 to 2038.

The following table reconciles the Company’s net income to taxable income for the years ended December 31, 2023, 2022 and 2021.

		Year Ended December 31,
(Dollars in thousands)		2023		2022		2021
Net income		$	7,714	$	22,019	$	22,492
Reconciling items to taxable income:
	Depreciation and amortization	15,773		11,493		11,121
	Gain on sale of real estate	(647)		—		36
	Straight-line rent	(3,157)		(3,265)		(3,522)
	Receivable allowance	250		—		(25)
	Stock-based compensation	(7,801)		5,681		3,872
	Sec. 162(m) compensation disallowance	22,199		—		—
	Deferred rent	1,351		61		1,196
	Deferred income taxes	306		41		166
	Other	(135)		(17)		(68)
		28,139		13,994		12,776
Taxable income (1)		$	35,853	$	36,013	$	35,268
Dividends paid (2)		$	45,439	$	41,642	$	40,092
__________
(1) Before REIT dividends paid deduction.
(2) Net of dividends paid on restricted stock included as a reconciling item.

Characterization of Distributions (unaudited)

Earnings and profits (as defined under the Code), the current and accumulated amounts of which determine the taxability of distributions to stockholders, vary from net income attributable to common stockholders and taxable income because of different depreciation recovery periods, depreciation methods, and other items. Distributions in excess of earnings and profits generally constitute a return of capital. The following table shows the characterization of the distributions on the Company's common stock for the years ended December 31, 2023, 2022 and 2021. No preferred shares have been issued by the Company and no dividends have been paid to date relating to preferred shares.

		2023				2022				2021
		Per Share		%		Per Share		%		Per Share		%
Common stock:
	Ordinary income	$	1.569469	87.0	%	$	1.575094	89.2	%	$	1.537982	89.2	%
	Return of capital	$	0.235531	13.0	%	$	0.189906	10.8	%	$	0.175047	10.1	%
	Capital gain	$	—	—	%	$	—	—	%	$	0.011971	0.7	%
Common stock distributions		$	1.805000	100.0	%	$	1.765000	100.0	%	$	1.725000	100.0	%