Highlands REIT (HHDS) 10-Q 10 Nov 22 2022 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Nov. 10, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	000-55580
Entity Registrant Name	HIGHLANDS REIT, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	81-0862795
Entity Address, Address Line One	1 South Dearborn Street
Entity Address, Address Line Two	20th Floor
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60603
City Area Code	312
Local Phone Number	583-7990
Title of 12(g) Security	Common Stock
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		885,566,824
Entity Central Index Key	0001661458
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
No Trading Symbol Flag	true

Consolidated Balance Sheets (un

Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Investment properties
Land	$ 79,726	$ 83,168
Building and other improvements	270,471	270,387
Construction in progress	13	6,542
Total	350,210	360,097
Less accumulated depreciation	(74,374)	(67,478)
Net investment properties	275,836	292,619
Cash and cash equivalents	30,680	18,321
Restricted cash and escrows	1,793	3,689
Accounts receivable (net of allowance of $192 and $153 as of September 30, 2022 and December 31, 2021, respectively)	4,927	2,739
Deferred costs and other assets, net	4,808	3,645
Total assets	318,044	321,013
Liabilities
Debt, net	61,891	62,130
Accounts payable and accrued expenses	10,796	9,526
Intangible liabilities, net	27	658
Other liabilities	2,091	2,162
Total liabilities	74,805	74,476
Commitments and contingencies (see Note 11)
Stockholders’ Equity
Common stock, $0.01 par value, 1,000,000 shares authorized, 885,567 and 885,222 shares issued and outstanding as of September 30, 2022 and December 31, 2021	8,856	8,852
Additional paid-in capital	1,411,914	1,411,818
Accumulated distributions in excess of net income	(1,177,981)	(1,173,905)
Accumulated other comprehensive income (loss)	375	(202)
Total Highlands REIT, Inc. stockholders’ equity	243,164	246,563
Non-controlling interests	75	(26)
Total equity	243,239	246,537
Total liabilities and equity	$ 318,044	$ 321,013

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for accounts and rent receivables	$ 192	$ 153
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	885,566,824	885,221,996
Common stock, shares outstanding	885,566,824	885,221,996

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues
Total revenues	$ 7,604	$ 7,122	$ 23,353	$ 21,236
Expenses
Property operating expenses	2,229	2,017	6,573	6,112
Real estate taxes	1,400	1,513	3,836	4,639
Depreciation and amortization	2,596	2,640	7,829	7,967
General and administrative expenses	2,325	1,996	7,259	8,481
Total expenses	8,550	8,166	25,497	27,199
Loss on sale of investment properties, net	0	0	(6)	0
Loss from operations	(946)	(1,044)	(2,150)	(5,963)
Interest income	46	3	55	27
Interest expense	(705)	(715)	(1,982)	(2,537)
Net loss	(1,605)	(1,756)	(4,077)	(8,473)
Net loss attributable to non-controlling interests	3	7	1	17
Net loss attributable to Highlands REIT, Inc. common stockholders	$ (1,602)	$ (1,749)	$ (4,076)	$ (8,456)
Net income per common share, basic (in dollars per share)	$ 0	$ 0	$ 0	$ (0.01)
Net income per common share, diluted (in dollars per share)	$ 0	$ 0	$ 0	$ (0.01)
Weighted average number of common shares outstanding, basic (in shares)	885,567,000	881,673,000	885,365,000	881,136,000
Weighted average number of common shares outstanding, diluted (in shares)	885,567,000	881,673,000	885,365,000	881,136,000
Comprehensive loss
Net income	$ (1,605)	$ (1,756)	$ (4,077)	$ (8,473)
Unrealized gain on derivatives	112	56	679	230
Total other comprehensive income	112	56	679	230
Comprehensive loss	(1,493)	(1,700)	(3,398)	(8,243)
Comprehensive income attributable to non-controlling interests	(14)	(2)	(101)	(18)
Comprehensive loss attributable to Highlands REIT, Inc. common stockholders	(1,507)	(1,702)	(3,499)	(8,261)
Rental income
Revenues
Total revenues	7,321	6,842	22,626	20,498
Other property income
Revenues
Total revenues	$ 283	$ 280	$ 727	$ 738

Consolidated Statements of Equi

Consolidated Statements of Equity (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Distributions in Excess of Net Income	Accumulated Other Comprehensive Income (Loss)	Total Company's Stockholders' Equity	Non- controlling Interests
Beginning balance at Dec. 31, 2020	$ 257,063	$ 8,778	$ 1,409,767	$ (1,160,859)	$ (548)	$ 257,138	$ (75)
Beginning balance (in shares) at Dec. 31, 2020		877,759
Net income (loss)	(4,688)			(4,678)		(4,678)	(10)
Other comprehensive income	113				96	96	17
Share-based compensation (in shares)		3,557
Share-based compensation	995	$ 35	960			995
Ending balance (in shares) at Mar. 31, 2021		881,316
Ending balance at Mar. 31, 2021	253,483	$ 8,813	1,410,727	(1,165,537)	(452)	253,551	(68)
Beginning balance at Dec. 31, 2020	257,063	$ 8,778	1,409,767	(1,160,859)	(548)	257,138	(75)
Beginning balance (in shares) at Dec. 31, 2020		877,759
Net income (loss)	(8,473)
Other comprehensive income	230
Ending balance (in shares) at Sep. 30, 2021		881,673
Ending balance at Sep. 30, 2021	249,916	$ 8,817	1,410,824	(1,169,315)	(353)	249,973	(57)
Beginning balance at Mar. 31, 2021	253,483	$ 8,813	1,410,727	(1,165,537)	(452)	253,551	(68)
Beginning balance (in shares) at Mar. 31, 2021		881,316
Net income (loss)	(2,029)			(2,029)		(2,029)	0
Other comprehensive income	61				52	52	9
Share-based compensation (in shares)		357
Share-based compensation	101	$ 4	97			101
Ending balance (in shares) at Jun. 30, 2021		881,673
Ending balance at Jun. 30, 2021	251,616	$ 8,817	1,410,824	(1,167,566)	(400)	251,675	(59)
Net income (loss)	(1,756)			(1,749)		(1,749)	(7)
Other comprehensive income	56				47	47	9
Share-based compensation (in shares)		0
Share-based compensation	0	$ 0	0			0
Ending balance (in shares) at Sep. 30, 2021		881,673
Ending balance at Sep. 30, 2021	249,916	$ 8,817	1,410,824	(1,169,315)	(353)	249,973	(57)
Beginning balance at Dec. 31, 2021	246,537	$ 8,852	1,411,818	(1,173,905)	(202)	246,563	(26)
Beginning balance (in shares) at Dec. 31, 2021		885,222
Net income (loss)	(888)			(890)		(890)	2
Other comprehensive income	385				327	327	58
Ending balance (in shares) at Mar. 31, 2022		885,222
Ending balance at Mar. 31, 2022	246,034	$ 8,852	1,411,818	(1,174,795)	125	246,000	34
Beginning balance at Dec. 31, 2021	246,537	$ 8,852	1,411,818	(1,173,905)	(202)	246,563	(26)
Beginning balance (in shares) at Dec. 31, 2021		885,222
Net income (loss)	(4,077)
Other comprehensive income	679
Ending balance (in shares) at Sep. 30, 2022		885,567
Ending balance at Sep. 30, 2022	243,239	$ 8,856	1,411,914	(1,177,981)	375	243,164	75
Beginning balance at Mar. 31, 2022	246,034	$ 8,852	1,411,818	(1,174,795)	125	246,000	34
Beginning balance (in shares) at Mar. 31, 2022		885,222
Net income (loss)	(1,584)			(1,584)		(1,584)
Other comprehensive income	182				155	155	27
Share-based compensation (in shares)		345
Share-based compensation	100	$ 4	96			100
Ending balance (in shares) at Jun. 30, 2022		885,567
Ending balance at Jun. 30, 2022	244,732	$ 8,856	1,411,914	(1,176,379)	280	244,671	61
Net income (loss)	(1,605)			(1,602)		(1,602)	(3)
Other comprehensive income	112				95	95	17
Share-based compensation (in shares)		0
Share-based compensation	0	$ 0	0			0
Ending balance (in shares) at Sep. 30, 2022		885,567
Ending balance at Sep. 30, 2022	$ 243,239	$ 8,856	$ 1,411,914	$ (1,177,981)	$ 375	$ 243,164	$ 75

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (4,077)	$ (8,473)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7,829	7,967
Amortization of below market leases	(22)	(64)
Amortization of debt discounts and financing costs	118	182
Straight-line rental income	(2,140)	(328)
Write-off of debt issuance costs	0	225
Loss on sale of investment properties, net	6	0
Non-cash stock-based compensation expense	100	1,979
Changes in assets and liabilities:
Accounts and rents receivable, net	(48)	(27)
Deferred costs and other assets, net	(660)	(60)
Accounts payable and accrued expenses	1,270	(1,568)
Other liabilities	607	28
Net cash flows provided by (used in) operating activities	2,983	(139)
Cash flows from investing activities:
Capital expenditures and tenant improvements	(392)	(7,227)
Proceeds from sale of investment properties, net	8,938	0
Payment of leasing fees	(709)	(964)
Net cash flows provided by (used in) investing activities	7,837	(8,191)
Cash flows from financing activities:
Payment of debt issuance costs	(222)	0
Payoff of debt	(8,677)	0
Proceeds from debt	9,265	0
Payoff of term loan related to credit agreement	0	(20,000)
Principal payments of debt	(723)	(802)
Payment for tax withholding for share-based compensation	0	(883)
Net cash flows used in financing activities	(357)	(21,685)
Net increase (decrease) in cash and cash equivalents and restricted cash and escrows	10,463	(30,015)
Cash and cash equivalents and restricted cash and escrows, at beginning of period	22,010	53,637
Cash and cash equivalents and restricted cash and escrows, at end of period	32,473	23,622
Restricted Cash [Abstract]
Cash and cash equivalents	30,680	20,131
Restricted cash	1,793	3,491
Total cash, cash equivalents and restricted cash	32,473	23,622
Supplemental disclosure of cash flows information:
Cash paid for interest	1,874	2,206
Supplemental schedule of non-cash investing and financing activities:
Non-cash accruals for capital expenditures and tenant improvements	$ 414	$ 428

Organization

Organization	9 Months Ended
	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Highlands REIT, Inc. (“Highlands”), which was formed in December 2015, is a Maryland corporation with a portfolio of assets including multi-family, retail, office and industrial properties, a correctional facility and unimproved land. Prior to April 28, 2016, Highlands was a wholly-owned subsidiary of InvenTrust Properties Corp. (“InvenTrust” and formerly known as Inland American Real Estate Trust, Inc.), its former parent. Unless stated otherwise or the context otherwise requires, the terms “we,” “our” and “us” and references to the “Company” refer to Highlands and its consolidated subsidiaries. On April 28, 2016, Highlands was spun-off from InvenTrust through a pro rata distribution by InvenTrust of 100% of the outstanding shares of common stock, $0.01 par value per share (the “Common Stock”), of Highlands to holders of record of InvenTrust's common stock as of the close of business on April 25, 2016 (the “Record Date”). Each holder of record of InvenTrust's common stock received one share of Common Stock for every one share of InvenTrust's common stock held at the close of business on the Record Date (the “Distribution”). As a result, Highlands became an independent, self-advised, non-traded public company. Highlands has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax purposes commencing with Highlands' short taxable year ending December 31, 2016. Each of our assets is owned by a separate legal entity which maintains its own books and financial records, and each entity’s assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in Note 7. With the exception of one asset we own through a variable interest entity with a third-party partner (the “Corvue Venture”), we are the sole owner of each of these separate legal entities. As of September 30, 2022, we have an approximate 85% interest in the Corvue Venture and have funded equity contributions to the Corvue Venture in the approximate amount of $9,000. See Note 2 for additional information regarding the basis of presentation of the Corvue Venture, which is consolidated in the accompanying consolidated financial statements. As of September 30, 2022 and December 31, 2021, the Company owned 19 and 20 investment properties, respectively, and one parcel of unimproved land. Impact of COVID-19 Pandemic The impact of the COVID-19 pandemic was not as material during the three and nine months ended September 30, 2022 and 2021, as compared to prior periods, due to the reduced impact of government mandated business closures and the related improvement of our tenants' financial performance. The primary impact of the pandemic was and continues to be related to our tenants' ability to make rental payments in a timely fashion or at all. We have been working with our tenants to collect rental payments pursuant to our contractual rights under our lease agreements. At this time, given the uncertainty related to variants of the virus, we are unable to predict whether cases of COVID-19 in our markets will decrease, increase, or remain the same, whether additional COVID-19 vaccines will be available to the general public or will be effective against new variants of the virus, whether local governments will mandate closures of our tenants' businesses or implement other restrictive measures on their and our operations in the future in response to any future resurgence of the pandemic or the degree to which consumers will frequent our tenants' businesses. We have taken and will continue to take a number of measures to mitigate the impact of the pandemic on our business and financial condition.

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2022
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The accompanying consolidated financial statements include the accounts of Highlands and its consolidated subsidiaries. Highlands consolidates its wholly-owned subsidiaries and any other entities which it controls (i) through voting rights or similar rights or (ii) by means other than voting rights if Highlands is the primary beneficiary of a variable interest entity (“VIE”). The portions of the equity and net income of consolidated subsidiaries that are not attributable to the Company are presented separately as amounts attributable to non-controlling interests in our consolidated financial statements. Entities which Highlands does not control, and entities which are VIEs in which Highlands is not a primary beneficiary, if any, are accounted for under appropriate GAAP. Highlands' subsidiaries generally consist of limited liability companies (“LLCs”). The effects of all significant intercompany transactions have been eliminated. Refer to the Company’s audited consolidated financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 16, 2022, as certain note disclosures contained in such audited financial statements have been condensed or omitted from these interim consolidated financial statements. Variable Interest Entities As of September 30, 2022 and December 31, 2021, we have determined we are the primary beneficiary of one VIE, the Corvue Venture, and have consolidated the operations of this entity in the accompanying consolidated financial statements. We reviewed the operating agreement of the Corvue Venture in order to determine our rights and the rights of our third-party partner, including whether those rights are protective or participating. We have determined we are the primary beneficiary of the Corvue Venture because we have (a) the power to direct the activities that most significantly impact the economic performance of the Corvue Venture, (b) the obligation to absorb the losses that could be significant to the Corvue Venture and (c) the right to receive the benefits that could be significant to the Corvue Venture. Included in total assets and liabilities on the Company’s consolidated balance sheets as of September 30, 2022 is $25,295 and $18,143, respectively, related to the Corvue Venture. Included in total assets and liabilities on the Company’s consolidated balance sheets as of December 31, 2021 is $25,396 and $18,521, respectively, related to the Corvue Venture. The assets of the Corvue Venture may only be used to settle obligations of the Corvue Venture and the creditors of the Corvue Venture have no recourse to the general credit of the Company. Reclassifications The Company has made certain reclassifications to the consolidated statements of cash flows as of September 30, 2021, to conform to the 2022 presentation. Recently Issued Accounting Pronouncements Recently issued accounting standards or pronouncements not discussed herein have been excluded because they are either not relevant to the Company, or are not expected to have, or did not have, a material effect on the consolidated financial statements of the Company.

Disposed Investment Properties

Disposed Investment Properties	9 Months Ended
	Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
Disposed Investment Properties	Disposed Investment Properties The following table reflects the investment property dispositions during the nine months ended September 30, 2022. The Company recognized a net loss on sale of investment properties of $6. Property Location Disposition Date Gross Disposition Price Sale Proceeds, Net Loss on Sale State Street Market Rockford, Illinois March 10, 2022 $ 9,000 $ 8,938 $ (6) There were no investment property dispositions during the nine months ended September 30, 2021.

Leases

Leases	9 Months Ended
	Sep. 30, 2022
Leases [Abstract]
Leases	Leases Leasing as a lessor We lease multifamily properties under operating leases with terms of generally one year or less. We lease commercial properties under operating leases with remaining lease terms that range from less than one year to fifteen Lease income related to the Company's operating leases is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Lease income related to fixed lease payments $ 6,248 $ 5,908 $ 19,260 $ 17,440 Lease income related to variable lease payments (1) 1,073 934 3,366 3,058 Other 283 280 727 738 Total revenues $ 7,604 $ 7,122 $ 23,353 $ 21,236 (1) Variable lease payments are comprised of tenant recovery income. Future Minimum Rental Income As of September 30, 2022, commercial operating leases provide for future minimum rental income, assuming no expiring leases are renewed, as follows. Apartment leases are not included as the terms are generally for one year or less. 2022 (remaining) $ 1,879 2023 9,263 2024 9,158 2025 8,409 2026 8,139 Thereafter 52,207 Total $ 89,055

Accounts Payable and Accrued Ex

Accounts Payable and Accrued Expenses	9 Months Ended
	Sep. 30, 2022
Payables and Accruals [Abstract]
Accounts Payable and Accrued Expenses	Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: September 30, 2022 December 31, 2021 Accrued real estate taxes $ 6,629 $ 6,593 Accrued compensation 2,511 1,140 Accrued interest payable 205 215 Other accrued expenses 1,451 1,578 Total accounts payable and accrued expenses $ 10,796 $ 9,526

Debt

Debt	9 Months Ended
	Sep. 30, 2022
Debt Disclosure [Abstract]
Debt	Debt Total debt outstanding as of September 30, 2022 and December 31, 2021 was as follows: September 30, 2022 December 31, 2021 Debt, gross $ 62,687 $ 62,821 Mortgage discount (224) (257) Deferred financing costs, net (572) (434) Total Debt, Net $ 61,891 $ 62,130 As of September 30, 2022, the Company’s outstanding mortgage indebtedness included six mortgage loans with various maturities through July 2032, as follows: Debt maturing during the year As of September 30, 2022 Weighted average interest rate 2022 (remaining) $ — — % 2023 17,594 3.28 % (1) 2024 — — % 2025 — — % 2026 24,379 4.56 % Thereafter 20,714 4.33 % Total $ 62,687 4.12 % (1) See below for discussion of the swap agreement entered into with the mortgage loan obtained in connection with the acquisition of The Locale. The weighted average interest rate reflected is the fixed swap rate. The Company obtained two loans on June 30, 2022 which were each secured by a mortgage encumbering one of the Company's multi-family assets. The loan secured by a mortgage on Kenilworth Court has a principal amount of $3,784, and the loan secured by a mortgage on The Lafayette has a principal amount of $5,481. Both loans mature on July 1, 2032, bear interest at a fixed rate of 4.74% and require interest-only payments for the duration of their 10-year term. The Company's mortgage on The Locale matures September 1, 2023. Prior to maturity, the Company expects it will exercise the one-year extension option provided for in the loan documents, which requires, among other criteria, that, at the time of extension, the mortgage is not in default and a minimum debt service coverage ratio and minimum loan to value ratio are met. The Company's ability to pay off the mortgages when they become due is dependent upon the Company's ability either to refinance the related mortgage debt or to sell the related asset. With respect to each mortgage loan, if the applicable wholly-owned property-owning subsidiary is unable to refinance or sell the related asset, or in the event that the estimated asset value is less than the mortgage balance, the applicable wholly-owned property-owning subsidiary may, if appropriate, satisfy a mortgage obligation by transferring title of the asset to the lender or permitting a lender to foreclose. As of September 30, 2022 and December 31, 2021, none of our mortgage debt was recourse to the Company, although Highlands or its subsidiaries may act as guarantor under customary, non-recourse, carve-out guarantees in connection with obtaining mortgage loans on certain of our investment properties. The loan documents governing the mortgage that encumbered State Street Market included a “cash trap” provision that was triggered when DICK'S Sporting Goods, which was an anchor tenant at the property, failed to renew its lease agreement. The lender exercised its right to trigger this “cash trap” provision, and, beginning in the fourth quarter of 2020, all of the cash flows from State Street Market which would otherwise have been available for our use were trapped into a blocked account controlled by the lender pending approval of a substitute lease or repayment of the loan. The Company sold the State Street Market asset on March 10, 2022 and the mortgage was simultaneously repaid. The funds previously trapped and held by the lender, along with all required lender escrows, totaling $2.0 million, were returned to the Company in April 2022. Some of the mortgage loans require compliance with certain covenants, such as debt service coverage ratios and minimum net worth requirements. As of September 30, 2022 and December 31, 2021, the Company was in compliance with such covenants. Termination of Credit Agreement On January 21, 2021, the Company repaid $5,000 of the outstanding principal balance of its secured revolving credit facility (the "Revolving Credit Loan") under the Company's Credit Agreement, previously entered into on February 15, 2019 with Huntington National Bank (the "Credit Agreement") and on March 29, 2021, repaid in full all of the remaining outstanding indebtedness related to the Revolving Credit Loan, consisting of approximately $15,000 of principal plus accrued and unpaid interest thereon. The Credit Agreement and related security interests, and all commitments thereunder, were terminated in conjunction with such payment in full. LIBOR Reform In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC"), which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative rate for USD LIBOR in derivatives and other financial contracts. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. The Company obtained a mortgage loan in the principal amount of $18,750 in connection with the acquisition of The Locale in 2019. Because that loan is indexed to LIBOR, the Company is monitoring and evaluating the related risks that have arisen in connection with transitioning to an alternative rate, including any resulting value transfer that may occur. The value of derivative instruments tied to LIBOR, as well as interest rates on our current or future indebtedness, may also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative reference rate may be challenging, especially if we cannot agree with the respective counterparty about how to make the transition. While we expect LIBOR to be available in substantially its current form until at least the end of June 2023, it is possible that LIBOR will become unavailable prior to that point. This could occur, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified. Alternative rates and other market changes related to the replacement of LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation challenges, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate. The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2022
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements In accordance with ASC 820, Fair Value Measurement and Disclosures, the Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: • Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. • Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of debt funding and, to a limited extent, the use of derivative financial instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments, described below, are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company may use interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. We do not enter into derivative financial instruments for speculative purposes. As of September 30, 2022 and December 31, 2021, we had one derivative financial instrument designated as a cash flow hedge, with a notional amount of $18,750 and a maturity date of September 1, 2023. This derivative is an interest rate swap that is measured at fair value on a recurring basis. For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income or loss on the consolidated balance sheets and is subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. The amounts recorded as other comprehensive income related to our derivative financial instrument were $112 and $679 for the three and nine months ended September 30, 2022, respectively, and $56 and $230 for the three and nine months ended September 30, 2021, respectively. Amounts reported in accumulated other comprehensive gain related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. The Company estimates that $442 will be reclassified as a decrease to interest expense over the next twelve months. The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively. September 30, 2022 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 441 $ — $ 441 December 31, 2021 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Other liabilities” $ — $ 238 $ — $ 238 The fair value of our derivative financial instrument was determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument. This analysis reflected the contractual terms of the derivative, including the period to maturity, and used observable market-based inputs, including interest rate market data and implied volatilities in such interest rates. While it was determined that the majority of the inputs used to value the derivative fall within Level 2 of the fair value hierarchy under authoritative accounting guidance, the credit valuation adjustments associated with the derivative also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. However, as of September 30, 2022, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instrument was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instrument. As a result, it was determined that the derivative financial instrument in its entirety should be classified in Level 2 of the fair value hierarchy. Non-Recurring Measurements In accordance with ASC 360-10, the Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. During the three and nine months ended September 30, 2022 and 2021, events and circumstances indicated that certain investment properties might be impaired. However, the Company's estimate of undiscounted cash flows indicated that such carrying amounts were expected to be recovered. Nonetheless, it is reasonably possible that the estimate of undiscounted cash flows may change in the future resulting in the need to write down assets to fair value. Financial Liabilities Disclosed at Fair Value on a Recurring Basis The table below represents the fair value of financial instruments presented at carrying values in the consolidated financial statements as of September 30, 2022 and December 31, 2021. September 30, 2022 December 31, 2021 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 62,687 $ 57,749 $ 62,821 $ 61,052 The Company estimates the fair value of its debt instruments using a weighted average market effective interest rate of 7.15% and 5.05% per annum as of September 30, 2022 and December 31, 2021, respectively. The Company estimates the fair value of its mortgage loans by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are based on credit spreads observed in the marketplace during the quarter for similar debt instruments, and a floor rate that the Company has derived using its subjective judgment for each asset segment. Based on this, the Company determines the appropriate rate for each of its individual mortgage loans based upon the specific terms of the agreement, including the term to maturity, the quality and nature of the underlying property and its leverage ratio. The weighted average market effective interest rates used range from 5.52%

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesThe Company is taxed and operates in a manner that will allow the Company to continue to qualify as a REIT for U.S. federal income tax purposes. So long as it maintains its qualification as a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders each year. If the Company fails to continue to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and would not be able to re-elect REIT status during the four years following the year of the failure. Although the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and U.S. federal income and excise taxes on its undistributed income.During the three and nine months ended September 30, 2022 and 2021, no income tax benefit or expense was included in the consolidated statements of operations and comprehensive loss.

Segment Reporting

Segment Reporting	9 Months Ended
	Sep. 30, 2022
Segment Reporting [Abstract]
Segment Reporting	Segment Reporting GAAP has established guidance for reporting information about a company’s operating segments. The Company monitors and reviews its segment reporting structure in accordance with guidance under ASC Topic 280, Segment Reporting (“ASC 280”) to determine whether any changes have occurred that would impact its reportable segments. The Company currently has two business segments, consisting of multi-family and other. The following table summarizes net operating income by segment for the three months ended September 30, 2022 and 2021. Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Total Multi-family Other Total Multi-family Other Lease income $ 7,321 $ 3,918 $ 3,403 $ 6,842 $ 3,669 $ 3,173 Other property income 283 283 — 280 280 — Total revenues 7,604 4,201 3,403 7,122 3,949 3,173 Property operating and real estate tax expenses 3,629 1,996 1,633 3,530 1,921 1,609 Net operating income $ 3,975 $ 2,205 $ 1,770 $ 3,592 $ 2,028 $ 1,564 Non-allocated expenses (1) (4,921) (4,636) Other income and expenses (2) (659) (712) Net loss attributable to non-controlling interests 3 7 Net loss attributable to Highlands REIT, Inc. common stockholders $ (1,602) $ (1,749) (1) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (2) Other income and expenses consists of interest income and interest expense. Nine months ended September 30, 2022 Nine months ended September 30, 2021 Total Multi-family Other Total Multi-family Other Rental income $ 22,626 $ 11,743 $ 10,883 $ 20,498 $ 10,907 $ 9,591 Other property income 727 713 14 738 677 61 Total income 23,353 12,456 10,897 21,236 11,584 9,652 Property operating and real estate tax expenses 10,409 5,761 4,648 10,751 5,575 5,176 Net operating income $ 12,944 $ 6,695 $ 6,249 $ 10,485 $ 6,009 $ 4,476 Non-allocated expenses (1) (15,088) (16,448) Loss on sale of investment properties, net (6) — Other income and expenses (2) (1,927) (2,510) Net (income) loss attributable to non-controlling interests 1 17 Net loss attributable to Highlands REIT, Inc. common stockholders $ (4,076) $ (8,456) Balance Sheet Data Real estate assets, net $ 275,836 $ 172,353 $ 103,483 $ 296,113 $ 177,883 $ 118,230 Non-segmented assets (3) 42,208 30,571 Total assets $ 318,044 $ 326,684 Capital expenditures $ 392 $ 285 $ 107 $ 7,227 $ 473 $ 6,754 (1) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (2) Other income and expenses consists of interest income and interest expense. (3) Non-segmented assets include cash and cash equivalents, restricted cash and escrows, accounts receivable and deferred costs and other assets.

Share Based Compensation

Share Based Compensation	9 Months Ended
	Sep. 30, 2022
Share-Based Payment Arrangement, Noncash Expense [Abstract]
Share Based Compensation	Share Based Compensation Incentive Award Plan On April 28, 2016, the board of directors adopted, ratified and approved the Highlands REIT, Inc. 2016 Incentive Award Plan (the “Incentive Award Plan”) under which the Company may grant cash and equity-based incentive awards to eligible employees, directors, and consultants. Prior to the Company’s spin-off from InvenTrust, the board of directors of the Company (then a wholly-owned subsidiary of InvenTrust) adopted, and InvenTrust, as the sole stockholder of Highlands, approved, the Incentive Awards Plan. During the nine months ended September 30, 2022, the Company granted 345 shares of common stock with an aggregate value of $100 based on an estimated net asset value per share of $0.29. During the nine months ended September 30, 2021, the Company granted 6,875 of fully vested shares of common stock with an aggregate value of $1,925 based on an estimated net asset value per share of $0.28. Under the Incentive Award Plan, the Company was initially authorized to grant up to 43,000 shares of the Company's common stock pursuant to awards under the Incentive Award Plan. On August 12, 2021, the board of directors increased the authorized number of shares of its Common Stock under the Incentive Award Plan from 43,000 to 67,000 pursuant to that certain Second Amendment to Highlands REIT, Inc. 2016 Incentive Award Plan, dated as of August 12, 2021. As of September 30, 2022, 21,199 shares were available for future issuance under the Incentive Award Plan. For the nine months ended September 30, 2022, the Company incurred $100 compensation expense and had no required payment for tax withholding for share-based compensation. No tax withholding was required because the shares were granted to our non-employee directors. For the nine months ended September 30, 2021, the Company recognized share-based

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the financial statements of the Company. Highlands has also agreed to indemnify InvenTrust against all taxes related to the Company and its assets, including taxes attributable to periods prior to the separation and distribution. InvenTrust has agreed to indemnify the Company for any taxes attributable to the failure of InvenTrust or MB REIT (Florida), Inc., a subsidiary of the Company, to maintain its qualification as a REIT for any taxable year ending on or before December 31, 2016. In April 2020, the Company executed a lease with Northwestern Medical Group for approximately 29,000 square feet at our Sherman Plaza asset. The lease required a significant amount of landlord work, a tenant allowance and a broker commission. The total commitment is estimated to be approximately $3,900. As of September 30, 2022, we estimate that remaining costs under this commitment are approximately $1,300. Rent commenced on this lease in the third quarter of 2021 and payment of the outstanding tenant allowance will be made upon tenant's request and verification that all requirements for payment have been met. In February 2021, the Company executed a lease with Veeco Instruments, Inc. for approximately 97,000 square feet at our Trimble office asset. The lease requires a significant tenant allowance and broker commission. The total commitment is estimated to be approximately $9,100. As of September 30, 2022, we estimate that remaining costs under this commitment are approximately $1,000. The tenant was responsible for rent pursuant to this lease beginning January 1, 2022, however, the tenant has 12 months of rent abatement before any amounts are payable. A portion of the leasing commission related to this lease remains payable by the Company upon the date the tenant's rent abatement ends, which is January 1, 2023. The remainder of the tenant allowance will be paid by the Company upon the tenant receiving its final certificate of occupancy.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsIn November 2022, the Company executed a lease with XP Power, LLC. for approximately 80,000 square feet at our Trimble office asset. Rental payments under this lease are expected to commence in January 2024. The lease requires significant landlord work, a tenant allowance and broker commission. The total cost commitment is estimated to be approximately $12.4 million.

Basis of Presentation and Sum_2

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2022
Accounting Policies [Abstract]
Impact of COVID-19 Pandemic	Impact of COVID-19 Pandemic The impact of the COVID-19 pandemic was not as material during the three and nine months ended September 30, 2022 and 2021, as compared to prior periods, due to the reduced impact of government mandated business closures and the related improvement of our tenants' financial performance. The primary impact of the pandemic was and continues to be related to our tenants' ability to make rental payments in a timely fashion or at all. We have been working with our tenants to collect rental payments pursuant to our contractual rights under our lease agreements. At this time, given the uncertainty related to variants of the virus, we are unable to predict whether cases of COVID-19 in our markets will decrease, increase, or remain the same, whether additional COVID-19 vaccines will be available to the general public or will be effective against new variants of the virus, whether local governments will mandate closures of our tenants' businesses or implement other restrictive measures on their and our operations in the future in response to any future resurgence of the pandemic or the degree to which consumers will frequent our tenants' businesses. We have taken and will continue to take a number of measures to mitigate the impact of the pandemic on our business and financial condition.
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The accompanying consolidated financial statements include the accounts of Highlands and its consolidated subsidiaries. Highlands consolidates its wholly-owned subsidiaries and any other entities which it controls (i) through voting rights or similar rights or (ii) by means other than voting rights if Highlands is the primary beneficiary of a variable interest entity (“VIE”). The portions of the equity and net income of consolidated subsidiaries that are not attributable to the Company are presented separately as amounts attributable to non-controlling interests in our consolidated financial statements. Entities which Highlands does not control, and entities which are VIEs in which Highlands is not a primary beneficiary, if any, are accounted for under appropriate GAAP. Highlands' subsidiaries generally consist of limited liability companies (“LLCs”). The effects of all significant intercompany transactions have been eliminated.
Variable Interest Entities	Variable Interest EntitiesAs of September 30, 2022 and December 31, 2021, we have determined we are the primary beneficiary of one VIE, the Corvue Venture, and have consolidated the operations of this entity in the accompanying consolidated financial statements. We reviewed the operating agreement of the Corvue Venture in order to determine our rights and the rights of our third-party partner, including whether those rights are protective or participating. We have determined we are the primary beneficiary of the Corvue Venture because we have (a) the power to direct the activities that most significantly impact the economic performance of the Corvue Venture, (b) the obligation to absorb the losses that could be significant to the Corvue Venture and (c) the right to receive the benefits that could be significant to the Corvue Venture.
Reclassifications	Reclassifications The Company has made certain reclassifications to the consolidated statements of cash flows as of September 30, 2021, to conform to the 2022 presentation.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements Recently issued accounting standards or pronouncements not discussed herein have been excluded because they are either not relevant to the Company, or are not expected to have, or did not have, a material effect on the consolidated financial statements of the Company.

Disposed Investment Properties

Disposed Investment Properties (Tables)	9 Months Ended
	Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
Schedule of Disposal Group	The following table reflects the investment property dispositions during the nine months ended September 30, 2022. The Company recognized a net loss on sale of investment properties of $6. Property Location Disposition Date Gross Disposition Price Sale Proceeds, Net Loss on Sale State Street Market Rockford, Illinois March 10, 2022 $ 9,000 $ 8,938 $ (6)

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2022
Leases [Abstract]
Lease Income	Lease income related to the Company's operating leases is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Lease income related to fixed lease payments $ 6,248 $ 5,908 $ 19,260 $ 17,440 Lease income related to variable lease payments (1) 1,073 934 3,366 3,058 Other 283 280 727 738 Total revenues $ 7,604 $ 7,122 $ 23,353 $ 21,236 (1) Variable lease payments are comprised of tenant recovery income.
Payments to be received under Topic 842	As of September 30, 2022, commercial operating leases provide for future minimum rental income, assuming no expiring leases are renewed, as follows. Apartment leases are not included as the terms are generally for one year or less. 2022 (remaining) $ 1,879 2023 9,263 2024 9,158 2025 8,409 2026 8,139 Thereafter 52,207 Total $ 89,055

Accounts Payable and Accrued _2

Accounts Payable and Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2022
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses consist of the following: September 30, 2022 December 31, 2021 Accrued real estate taxes $ 6,629 $ 6,593 Accrued compensation 2,511 1,140 Accrued interest payable 205 215 Other accrued expenses 1,451 1,578 Total accounts payable and accrued expenses $ 10,796 $ 9,526

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2022
Debt Disclosure [Abstract]
Schedule of Debt Outstanding	Total debt outstanding as of September 30, 2022 and December 31, 2021 was as follows: September 30, 2022 December 31, 2021 Debt, gross $ 62,687 $ 62,821 Mortgage discount (224) (257) Deferred financing costs, net (572) (434) Total Debt, Net $ 61,891 $ 62,130
Scheduled Maturities of Mortgage Indebtedness	As of September 30, 2022, the Company’s outstanding mortgage indebtedness included six mortgage loans with various maturities through July 2032, as follows: Debt maturing during the year As of September 30, 2022 Weighted average interest rate 2022 (remaining) $ — — % 2023 17,594 3.28 % (1) 2024 — — % 2025 — — % 2026 24,379 4.56 % Thereafter 20,714 4.33 % Total $ 62,687 4.12 % (1) See below for discussion of the swap agreement entered into with the mortgage loan obtained in connection with the acquisition of The Locale. The weighted average interest rate reflected is the fixed swap rate.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2022
Fair Value Disclosures [Abstract]
Derivative Liabilities Measured On A Recurring Basis	The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively. September 30, 2022 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 441 $ — $ 441 December 31, 2021 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Other liabilities” $ — $ 238 $ — $ 238
Schedule of the Fair Value of Financial Instruments	The table below represents the fair value of financial instruments presented at carrying values in the consolidated financial statements as of September 30, 2022 and December 31, 2021. September 30, 2022 December 31, 2021 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 62,687 $ 57,749 $ 62,821 $ 61,052

Segment Reporting (Tables)

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2022
Segment Reporting [Abstract]
Summary of Net Property Operations	The following table summarizes net operating income by segment for the three months ended September 30, 2022 and 2021. Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Total Multi-family Other Total Multi-family Other Lease income $ 7,321 $ 3,918 $ 3,403 $ 6,842 $ 3,669 $ 3,173 Other property income 283 283 — 280 280 — Total revenues 7,604 4,201 3,403 7,122 3,949 3,173 Property operating and real estate tax expenses 3,629 1,996 1,633 3,530 1,921 1,609 Net operating income $ 3,975 $ 2,205 $ 1,770 $ 3,592 $ 2,028 $ 1,564 Non-allocated expenses (1) (4,921) (4,636) Other income and expenses (2) (659) (712) Net loss attributable to non-controlling interests 3 7 Net loss attributable to Highlands REIT, Inc. common stockholders $ (1,602) $ (1,749) (1) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (2) Other income and expenses consists of interest income and interest expense. Nine months ended September 30, 2022 Nine months ended September 30, 2021 Total Multi-family Other Total Multi-family Other Rental income $ 22,626 $ 11,743 $ 10,883 $ 20,498 $ 10,907 $ 9,591 Other property income 727 713 14 738 677 61 Total income 23,353 12,456 10,897 21,236 11,584 9,652 Property operating and real estate tax expenses 10,409 5,761 4,648 10,751 5,575 5,176 Net operating income $ 12,944 $ 6,695 $ 6,249 $ 10,485 $ 6,009 $ 4,476 Non-allocated expenses (1) (15,088) (16,448) Loss on sale of investment properties, net (6) — Other income and expenses (2) (1,927) (2,510) Net (income) loss attributable to non-controlling interests 1 17 Net loss attributable to Highlands REIT, Inc. common stockholders $ (4,076) $ (8,456) Balance Sheet Data Real estate assets, net $ 275,836 $ 172,353 $ 103,483 $ 296,113 $ 177,883 $ 118,230 Non-segmented assets (3) 42,208 30,571 Total assets $ 318,044 $ 326,684 Capital expenditures $ 392 $ 285 $ 107 $ 7,227 $ 473 $ 6,754 (1) Non-allocated expenses consists of general and administrative expenses and depreciation and amortization. (2) Other income and expenses consists of interest income and interest expense. (3) Non-segmented assets include cash and cash equivalents, restricted cash and escrows, accounts receivable and deferred costs and other assets.

Organization (Details)

Organization (Details) $ / shares in Units, $ in Thousands	Aug. 16, 2019 USD ($)	Apr. 28, 2016 $ / shares shares	Sep. 30, 2022 parcel property $ / shares	Dec. 31, 2021 property parcel $ / shares
Conversion of Stock [Line Items]
Common stock, par value (in dollars per share) | $ / shares		$ 0.01	$ 0.01	$ 0.01
Number of assets (in property) | property			19	20
Parcels of land | parcel			1	1
Common stock
Conversion of Stock [Line Items]
Shares issued for each share held at date of spin-off (in shares) | shares		1
Corvue Venture
Conversion of Stock [Line Items]
Ownership percentage	85%
Equity investment contributions | $	$ 9,000

Basis of Presentation and Sum_3

Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	$ 318,044	$ 321,013	$ 326,684
Liabilities	74,805	74,476
Variable Interest Entity, Primary Beneficiary | Corvue Venture
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	25,295	25,396
Liabilities	$ 18,143	$ 18,521

Disposed Investment Propertie_2

Disposed Investment Properties - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract]
Loss on sale of investment properties, net	$ 0	$ 0	$ (6)	$ 0

Disposed Investment Propertie_3

Disposed Investment Properties - Disposals (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale Proceeds, Net			$ 8,938	$ 0
Loss on Sale	$ 0	$ 0	(6)	0
State Street Market Rockford, IL
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross Disposition Price	$ 9,000	$ 0	9,000	$ 0
Sale Proceeds, Net			$ 8,938

Leases - Narrative (Details)

Leases - Narrative (Details)	Sep. 30, 2022
Minimum
Lessor, Lease, Description [Line Items]
Lease terms	1 year
Maximum
Lessor, Lease, Description [Line Items]
Lease terms	15 years

Leases - Lease Income (Details)

Leases - Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Lease income related to fixed lease payments	$ 6,248	$ 5,908	$ 19,260	$ 17,440
Lease income related to variable lease payments	1,073	934	3,366	3,058
Other	283	280	727	738
Total revenues	$ 7,604	$ 7,122	$ 23,353	$ 21,236

Leases - Receivable Maturity (D

Leases - Receivable Maturity (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
2022 (remaining)	$ 1,879
2023	9,263
2024	9,158
2025	8,409
2026	8,139
Thereafter	52,207
Total	$ 89,055

Accounts Payable and Accrued _3

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued real estate taxes	$ 6,629	$ 6,593
Accrued compensation	2,511	1,140
Accrued interest payable	205	215
Other accrued expenses	1,451	1,578
Total accounts payable and accrued expenses	$ 10,796	$ 9,526

Debt - Outstanding Debt (Detail

Debt - Outstanding Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Debt, gross	$ 62,687	$ 62,821
Mortgage discount	(224)	(257)
Deferred financing costs, net	(572)	(434)
Total Debt, Net	$ 61,891	$ 62,130

Debt - Scheduled Maturities (De

Debt - Scheduled Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total	$ 62,687	$ 62,821
Mortgages
Debt Instrument [Line Items]
2022 (remaining)	0
2023	17,594
2024	0
2025	0
2026	24,379
Thereafter	20,714
Total	$ 62,687
Weighted average interest rate
2022 (remaining)	0%
2023	3.28%
2024	0%
2025	0%
2026	4.56%
Thereafter	4.33%
Total	4.12%

Debt - Additional Information (

Debt - Additional Information (Details) $ in Thousands			9 Months Ended
	Mar. 29, 2021 USD ($)	Jan. 21, 2021 USD ($)	Sep. 30, 2022 USD ($) loan	Sep. 30, 2021 USD ($)	Apr. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Number of mortgage loan | loan			6
Number of loans | loan			2
Restricted cash			$ 1,793	$ 3,491		$ 3,689
Payoff of debt			$ 8,677	$ 0
Mortgages
Debt Instrument [Line Items]
Restricted cash					$ 2,000
Mortgages | Mortgage Loan in Connection with Acquisition of The Locale
Debt Instrument [Line Items]
Principal amount							$ 18,750
Debt Instrument, Extension Term			1 year
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Payoff of debt	$ 15,000	$ 5,000
Secured Debt | Loan Secured by Mortgage on Kenilworth Court
Debt Instrument [Line Items]
Principal amount			$ 3,784
Fixed rate			4.74%
Loan term			10 years
Secured Debt | Loan Secured by Mortgage on The Lafayette
Debt Instrument [Line Items]
Principal amount			$ 5,481
Fixed rate			4.74%
Loan term			10 years

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) derivative_instrument	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) derivative_instrument	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) derivative_instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unrealized gain on derivatives	$ 112	$ 56	$ 679	$ 230
Cash flow hedges to be reclassified in the next twelve months			$ 442
Discount rate | Long-term debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0715		0.0715		0.0505
Discount rate | Long-term debt | Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0552		0.0552		0.0338
Discount rate | Long-term debt | Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0881		0.0881		0.0687
Cash Flow Hedging | Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of derivative instruments | derivative_instrument	1		1		1
Notional amount	$ 18,750		$ 18,750		$ 18,750

Fair Value Measurements - Deriv

Fair Value Measurements - Derivative Liabilities (Details) - Recurring - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 441	$ 238
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	441	238
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 0	$ 0

Fair Value Measurements - Not M

Fair Value Measurements - Not Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Carrying  Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 62,687	$ 62,821
Estimated  Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 57,749	$ 61,052

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 0	$ 0	$ 0	$ 0

Segment Reporting - Narrative (

Segment Reporting - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of business segments (in segments)	2

Segment Reporting - Net Propert

Segment Reporting - Net Property Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Segment Reporting Information [Line Items]
Total revenues	$ 7,604	$ 7,122	$ 23,353	$ 21,236
Operating expenses	3,629	3,530	10,409	10,751
Net operating income (loss)	3,975	3,592	12,944	10,485
Loss on sale of investment properties, net	0	0	(6)	0
Net loss attributable to non-controlling interests	3	7	1	17
Net loss attributable to Highlands REIT, Inc. common stockholders	(1,602)	(1,749)	(4,076)	(8,456)
Total assets	318,044	326,684	318,044	326,684	$ 321,013
Capital expenditures			392	7,227
Rental income
Segment Reporting Information [Line Items]
Total revenues	7,321	6,842	22,626	20,498
Other property income
Segment Reporting Information [Line Items]
Total revenues	283	280	727	738
Other
Segment Reporting Information [Line Items]
Total revenues	3,403	3,173	10,897	9,652
Operating expenses	1,633	1,609	4,648	5,176
Net operating income (loss)	1,770	1,564	6,249	4,476
Other | Rental income
Segment Reporting Information [Line Items]
Total revenues	3,403	3,173	10,883	9,591
Other | Other property income
Segment Reporting Information [Line Items]
Total revenues	0	0	14	61
Reconciling items
Segment Reporting Information [Line Items]
Non-allocated expenses	(4,921)	(4,636)	(15,088)	(16,448)
Other income and expenses	(659)	(712)	(1,927)	(2,510)
Total assets	42,208	30,571	42,208	30,571
Operating Segments And Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total assets	275,836	296,113	275,836	296,113
Net Lease | Operating segments
Segment Reporting Information [Line Items]
Total assets	172,353	177,883	172,353	177,883
Capital expenditures			285	473
Retail | Operating segments
Segment Reporting Information [Line Items]
Total assets	103,483	118,230	103,483	118,230
Capital expenditures			107	6,754
Multi-family | Operating segments
Segment Reporting Information [Line Items]
Total revenues	4,201	3,949	12,456	11,584
Operating expenses	1,996	1,921	5,761	5,575
Net operating income (loss)	2,205	2,028	6,695	6,009
Multi-family | Operating segments | Rental income
Segment Reporting Information [Line Items]
Total revenues	3,918	3,669	11,743	10,907
Multi-family | Operating segments | Other property income
Segment Reporting Information [Line Items]
Total revenues	$ 283	$ 280	$ 713	$ 677

Share Based Compensation (Detai

Share Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Aug. 12, 2021	Apr. 28, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payment for tax withholding for share-based compensation	$ 0	$ 883
Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	345,000	6,875
Granted (in dollars per share)	$ 290	$ 0.28
Aggregate value of shares granted	$ 100	$ 1,925
Incentive awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant (up to) (in shares)			67,000,000	43,000,000
Shares available for future issuance (in shares)	21,199,000
Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 100	$ 1,979

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions		1 Months Ended	9 Months Ended
	Feb. 28, 2021 USD ($) ft²	Apr. 30, 2020 ft²	Sep. 30, 2022 USD ($)	Apr. 30, 2021 USD ($)
Northwestern Medical Group Lease
Loss Contingencies [Line Items]
Leased area (in square feet) | ft²		29,000
Current estimated commitment				$ 3.9
Re-estimated remaining obligation			$ 1.3
Veeco Instrument, Inc. Lease
Loss Contingencies [Line Items]
Leased area (in square feet) | ft²	97,000
Current estimated commitment	$ 9.1
Re-estimated remaining obligation			$ 1
Rent abatement			12 months

Subsequent Events (Details)

Subsequent Events (Details) $ in Millions	Nov. 10, 2022 USD ($) ft²
Forecast
Subsequent Event [Line Items]
Estimated cost commitment | $	$ 12.4
Subsequent event
Subsequent Event [Line Items]
Leased area | ft²	80,000