Commitments and Contingencies
Legal Proceedings
The Company is from time to time involved in various disputes, lawsuits, warranty claims, environmental and other matters arising in the ordinary course of its business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.
The Company currently is a party to various legal proceedings, none of which management expects will have a material adverse effect on the Company’s financial position, results of operations, or liquidity. Management accrues a liability for litigation if an unfavorable outcome is determined to be probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is determined by management to be probable and a range of loss can be reasonably estimated, management accrues the best estimate within the range; however, if no amount within the range is a better estimate than any other, the minimum amount within the range is accrued. Legal fees related to litigation are expensed as incurred. Management does not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on the Company’s financial position or results of operations; however, litigation is subject to inherent uncertainties.
Under the Company’s leases, tenants are typically obligated to indemnify the Company from and against all liabilities, costs, and expenses imposed upon or asserted against it as owner of the properties due to certain matters relating to the operation of the properties by the tenant.
Guarantees
In connection with the Company's real estate financing activities and equity method investments, the Company has made guarantees to pay portions of certain senior loans of third parties associated with the development projects. As of December 31, 2025, the Company had no outstanding guarantee liabilities.
Commitments
The Company has a bonding line of credit for its general contracting construction business and is contingently liable under performance and payment bonds, bonds for cancellation of mechanics liens, and defect bonds. Such bonds collectively totaled $14.0 million and $8.3 million as of December 31, 2025 and 2024, respectively.
Unfunded Loan Commitments
The Company has certain commitments related to its notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the
occurrence of events outside of the Company's direct control. As of December 31, 2025, the Company had four notes receivable with $6.5 million of unfunded commitments, all of which relates to unfunded contingencies. The Company considers the probability of contingency funding to be remote. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments. As of December 31, 2025, the Company has recorded a less than $0.1 million CECL allowance that relates to the unfunded commitments, which was recorded as a liability in other liabilities in the consolidated balance sheet. See Note 8 for more information.
Concentrations of Credit Risk
The majority of the Company’s properties are located in Hampton Roads, Virginia. For the years ended December 31, 2025, 2024, and 2023, rental revenues from Hampton Roads properties represented 35%, 35% and 37%, respectively, of the Company’s rental revenues. Many of the Company’s Hampton Roads properties are located in the Town Center of Virginia Beach. For the years ended December 31, 2025, 2024, and 2023, rental revenues from Town Center properties represented 23%, 22% and 24%, respectively, of the Company’s rental revenues.
The Company also has a concentration of properties at Harbor Point in Baltimore, Maryland. For the years ended December 31, 2025, 2024, and 2023, rental revenues from Harbor Point properties represented 29%, 27% and 25%, respectively, of the Company's rental revenues.