CNSREIT-AR-2024 Final - Flipbook - Page 123
Real estate assets will be evaluated for impairment on a quarterly basis. The Company will consider the following factors
when performing its impairment analysis: (i) management, having the authority to approve the action, commits to a plan to
sell the asset; (ii) significant negative industry and economic outlook or trends; (iii) expected material costs necessary to
extend the life of or operate the real estate asset; and (iv) the Company9s ability to hold and dispose of the real estate asset
in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future
undiscounted cash flows to be generated by the real estate asset over the estimated remaining holding period is less than the
carrying value of such real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the
real estate asset over the fair value. When determining the fair value of a real estate asset, the Company makes certain
assumptions, including consideration of projected operating cash flows, comparable selling prices and projected cash flows
from the eventual disposition of the real estate asset based upon its estimate of a capitalization rate and discount rate.
During the years ended December 31, 2024 and 2023, the Company did not incur any impairment charges.
Investments in Real Estate-Related Securities
The Company reports its investments in common stock of publicly-listed REITs and real estate-related preferred securities
at fair value and any changes in fair value are recorded in current period earnings. Dividend income is recorded when
declared and the resulting dividend income, along with gains and losses are recorded as a component of realized and
unrealized gains (losses) from real estate-related securities, net on the Company9s consolidated statements of operations.
The Company classifies its investments in real estate-related debt securities as trading securities and records such
investments at fair value and any changes in fair value are recorded in current period earnings. Interest income from real
estate-related debt investments is recorded on the accrual basis on the Company9s consolidated statements of operations.
The resulting unrealized gains and losses and interest income are recorded as a component of realized and unrealized gains
(losses) from real estate-related securities, net on the Company9s consolidated statements of operations.
Deferred Charges
The Company9s deferred charges include financing costs. Deferred financing costs include legal, structuring and other loan
costs incurred by the Company for its financing agreements. Deferred financing costs related to the mortgage notes at the
Company9s properties are recorded as an offset to the related liability and are amortized over the term of the applicable
financing instrument as interest expense. Deferred leasing costs incurred in connection with leases, consisting primarily of
leasing commissions, are recorded as a component of other assets on the Company9s consolidated balance sheets and are
amortized over the term of the related lease.
Revenue Recognition
Rental revenue primarily consists of base rent and tenant reimbursement income arising from tenant leases at the
Company9s real estate properties. Base rent is recognized on a straight-line basis over the life of the lease, including any
rent step-ups or abatement provisions. Differences between recognized operating lease income and contractually due amounts are recorded as straight-line rent receivable or liability, as applicable. Leases are classified as operating leases
unless they meet specific criteria that would require sales-type or financing lease treatment under Accounting Standards
Codification (
