Highlands REIT (HHDS) 10-Q 8 Nov 23 2023 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2023	Nov. 08, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
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		888,599,872
Entity Central Index Key	0001661458
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
No Trading Symbol Flag	true

Consolidated Balance Sheets (un

Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Investment properties
Land	$ 88,582	$ 79,726
Building and other improvements	296,304	272,232
Construction in progress	3,617	484
Total	388,503	352,442
Less accumulated depreciation	(84,468)	(76,888)
Net investment properties	304,035	275,554
Cash and cash equivalents	33,561	26,025
Restricted cash and escrows	1,801	1,893
Accounts receivable (net of allowance of $169 and $104 as of September 30, 2023 and December 31, 2022, respectively)	6,583	6,265
Intangible assets, net	645	0
Deferred costs and other assets, net	6,266	5,377
Total assets	352,891	315,114
Liabilities
Debt, net	101,609	61,658
Accounts payable and accrued expenses	14,011	11,084
Other liabilities	2,396	2,015
Total liabilities	118,016	74,757
Commitments and contingencies (see Note 12)
Stockholders’ Equity
Common stock, $0.01 par value, 1,000,000 shares authorized, 888,600 and 888,243 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	8,886	8,882
Additional paid-in capital	1,412,733	1,412,637
Accumulated distributions in excess of net income	(1,187,196)	(1,181,567)
Accumulated other comprehensive income	427	326
Total Highlands REIT, Inc. stockholders’ equity	234,850	240,278
Non-controlling interests	25	79
Total equity	234,875	240,357
Total liabilities and equity	$ 352,891	$ 315,114

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for accounts and rent receivables	$ 169	$ 104
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	888,600,000	888,243,000
Common stock, shares outstanding	888,600,000	888,243,000

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues
Total revenues	$ 7,873	$ 7,604	$ 23,185	$ 23,353
Expenses
Property operating expenses	2,307	2,229	6,614	6,573
Real estate taxes	1,449	1,400	4,374	3,836
Depreciation and amortization	2,628	2,596	7,807	7,829
General and administrative expenses	2,474	2,325	7,755	7,259
Total expenses	8,858	8,550	26,550	25,497
Loss on sale of investment properties, net	0	0	0	(6)
Loss from operations	(985)	(946)	(3,365)	(2,150)
Interest income	459	46	974	55
Interest expense	(1,268)	(705)	(3,228)	(1,982)
Net loss	(1,794)	(1,605)	(5,619)	(4,077)
Net (income) loss attributable to non-controlling interests	11	3	(10)	1
Net loss attributable to Highlands REIT, Inc. common stockholders	$ (1,783)	$ (1,602)	$ (5,629)	$ (4,076)
Net income per common share, basic (in dollars per share)	$ 0	$ 0	$ (0.01)	$ 0
Net income per common share, diluted (in dollars per share)	$ 0	$ 0	$ (0.01)	$ 0
Weighted average number of common shares outstanding, basic (in shares)	888,600,000	885,567,000	888,393,000	885,365,000
Weighted average number of common shares outstanding, diluted (in shares)	888,600,000	885,567,000	888,393,000	885,365,000
Comprehensive loss
Net income	$ (1,794)	$ (1,605)	$ (5,619)	$ (4,077)
Unrealized gain (loss) on derivatives	(37)	112	37	679
Total other comprehensive income (loss)	(37)	112	37	679
Comprehensive loss	(1,831)	(1,493)	(5,582)	(3,398)
Comprehensive (income) loss attributable to non-controlling interests	33	(14)	54	(101)
Comprehensive loss attributable to Highlands REIT, Inc. common stockholders	(1,798)	(1,507)	(5,528)	(3,499)
Rental income
Revenues
Total revenues	7,574	7,321	22,452	22,626
Other property income
Revenues
Total revenues	$ 299	$ 283	$ 733	$ 727

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, 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)
Net (income) loss attributable to non-controlling interests							2
Other comprehensive loss	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)
Net (income) loss attributable to non-controlling interests	(1)
Other comprehensive loss	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 loss	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)
Net (income) loss attributable to non-controlling interests	(3)						(3)
Other comprehensive loss	112				95	95	17
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 Dec. 31, 2022	240,357	$ 8,882	1,412,637	(1,181,567)	326	240,278	79
Beginning balance (in shares) at Dec. 31, 2022		888,243
Net income (loss)	(1,710)			(1,716)		(1,716)
Net (income) loss attributable to non-controlling interests							6
Other comprehensive loss	(135)				(115)	(115)	(20)
Ending balance (in shares) at Mar. 31, 2023		888,243
Ending balance at Mar. 31, 2023	238,512	$ 8,882	1,412,637	(1,183,283)	211	238,447	65
Beginning balance at Dec. 31, 2022	240,357	$ 8,882	1,412,637	(1,181,567)	326	240,278	79
Beginning balance (in shares) at Dec. 31, 2022		888,243
Net income (loss)	(5,619)
Net (income) loss attributable to non-controlling interests	10
Other comprehensive loss	37
Ending balance (in shares) at Sep. 30, 2023		888,600
Ending balance at Sep. 30, 2023	234,875	$ 8,886	1,412,733	(1,187,196)	427	234,850	25
Beginning balance at Mar. 31, 2023	238,512	$ 8,882	1,412,637	(1,183,283)	211	238,447	65
Beginning balance (in shares) at Mar. 31, 2023		888,243
Net income (loss)	(2,115)			(2,129)		(2,129)
Net (income) loss attributable to non-controlling interests							14
Other comprehensive loss	209				230	230	(21)
Share-based compensation (in shares)		357
Share-based compensation	100	$ 4	96			100
Ending balance (in shares) at Jun. 30, 2023		888,600
Ending balance at Jun. 30, 2023	236,706	$ 8,886	1,412,733	(1,185,412)	441	236,648	58
Net income (loss)	(1,794)			(1,784)		(1,784)
Net (income) loss attributable to non-controlling interests	(11)						(10)
Other comprehensive loss	(37)				(14)	(14)	(23)
Ending balance (in shares) at Sep. 30, 2023		888,600
Ending balance at Sep. 30, 2023	$ 234,875	$ 8,886	$ 1,412,733	$ (1,187,196)	$ 427	$ 234,850	$ 25

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (5,619)	$ (4,077)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	7,807	7,829
Amortization of below market leases	(8)	(22)
Amortization of debt discounts and financing costs	282	118
Straight-line rental income	(526)	(2,140)
Loss on sale of investment properties, net	0	6
Non-cash stock-based compensation expense	100	100
Changes in assets and liabilities:
Accounts and rents receivable, net	208	(48)
Deferred costs and other assets, net	(540)	(660)
Accounts payable and accrued expenses	1,693	1,270
Other liabilities	326	607
Net cash flows provided by operating activities	3,723	2,983
Cash flows from investing activities:
Capital expenditures and tenant improvements	(3,095)	(392)
Acquisition of investment properties, net	(21,288)	0
Proceeds from sale of investment properties, net	0	8,938
Payment of leasing fees	(307)	(709)
Net cash flows provided by (used in) investing activities	(24,690)	7,837
Cash flows from financing activities:
Payment of debt issuance costs	(1,001)	(222)
Payoff of debt	0	(8,677)
Proceeds from debt	30,250	9,265
Principal payments of debt	(838)	(723)
Net cash flows provided by (used in) financing activities	28,411	(357)
Net increase in cash and cash equivalents and restricted cash and escrows	7,444	10,463
Cash and cash equivalents and restricted cash and escrows, at beginning of period	27,918	22,010
Cash and cash equivalents and restricted cash and escrows, at end of period	35,362	32,473
Restricted Cash [Abstract]
Cash and cash equivalents	33,561	30,680
Restricted cash	1,801	1,793
Total cash, cash equivalents and restricted cash	35,362	32,473
Supplemental disclosure of cash flows information:
Cash paid for interest	2,716	1,874
Supplemental schedule of non-cash investing and financing activities:
Non-cash accruals for capital expenditures and tenant improvements	2,389	414
Assumption of mortgage debt on acquired properties, net of debt discount	$ 11,258	$ 0

Organization

Organization	9 Months Ended
	Sep. 30, 2023
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 investment properties 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-listed 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 investment property 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. With the exception of one investment property 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, 2023, 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.

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2023
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, 2022, included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 15, 2023, as certain note disclosures contained in such audited financial statements have been condensed or omitted from these interim consolidated financial statements. Consolidation As of September 30, 2023 and December 31, 2022, 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, 2023 is $24,236 of assets and $17,966 of liabilities related to the Corvue Venture. Included in total assets and liabilities on the Company’s consolidated balance sheets as of December 31, 2022 is $24,926 of assets and $18,028 of liabilities 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. Recently Issued Accounting Pronouncements In December 2022, the FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”) which was issued to defer the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 did not have an impact on the Company’s consolidated financial statements. 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.

Acquired Properties

Acquired Properties	9 Months Ended
	Sep. 30, 2023
Asset Acquisition [Abstract]
Acquired Properties	Acquired Properties The Company records identifiable assets and liabilities acquired at fair value. During the nine months ended September 30, 2023, the Company acquired one multi-family investment property for a gross acquisition price of $34,497. Under ASU 2017-01, the Company determined this transaction should be accounted for as an asset acquisition. Accordingly, the Company capitalized transaction costs of approximately $297. Property Location Acquisition Date Acquisition Price The Q Lofts San Diego, California September 20, 2023 $ 34,497 The purchase price has been allocated as follows: Land $ 8,856 Building and other improvements 22,876 Intangible assets, net 645 Deferred costs and other assets 190 Total assets 32,567 Intangible liabilities, net (21) Debt discount on mortgage assumption 1,951 Total liabilities 1,930 Total acquisition price $ 34,497 There were no investment property acquisitions during the nine months ended September 30, 2022.

Disposed Investment Properties

Disposed Investment Properties	9 Months Ended
	Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]
Disposed Investment Properties	Disposed Investment Properties There were no investment property dispositions during the nine months ended September 30, 2023. 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

Leases	9 Months Ended
	Sep. 30, 2023
Leases [Abstract]
Leases	Leases Leasing as a lessor We lease multifamily investment 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 fourteen years as of September 30, 2023. Lease income related to the Company’s operating leases is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Lease income related to fixed lease payments $ 6,474 $ 6,248 $ 19,062 $ 19,260 Lease income related to variable lease payments (1) 1,100 1,073 3,390 3,266 Other 299 283 733 727 Total revenues $ 7,873 $ 7,604 $ 23,185 $ 23,253 (1) Variable lease payments are comprised of tenant recovery income. Future Minimum Rental Income As of September 30, 2023, 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. 2023 (remaining) $ 2,572 2024 12,796 2025 11,883 2026 11,638 2027 10,888 Thereafter 72,069 Total $ 121,846

Accounts Payable and Accrued Ex

Accounts Payable and Accrued Expenses	9 Months Ended
	Sep. 30, 2023
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, 2023 December 31, 2022 Accrued real estate taxes $ 7,013 $ 6,430 Accrued compensation 2,790 742 Accrued interest payable 438 208 Other accrued expenses 3,770 3,704 Total accounts payable and accrued expenses $ 14,011 $ 11,084

Debt

Debt	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Debt	Debt Total debt outstanding as of September 30, 2023 and December 31, 2022 was as follows: September 30, 2023 December 31, 2022 Debt, gross $ 105,032 $ 62,411 Mortgage discount (2,129) (212) Deferred financing costs, net (1,294) (541) Total Debt, Net $ 101,609 $ 61,658 As of September 30, 2023, the Company’s outstanding mortgage indebtedness included ten mortgage loans with various maturities through December 2034, as follows: Debt maturing during the year As of September 30, 2023 Weighted average interest rate 2023 (remaining) $ — — % 2024 17,182 7.34 % (1) 2025 20,000 5.86 % (1) 2026 23,873 4.56 % 2027 11,253 3.99 % Thereafter 32,724 4.71 % Total $ 105,032 5.25 % (1) See below for discussion of the swap agreements entered into with the mortgage loans obtained on The Locale and Trimble. The weighted average interest rate reflected is the fixed swap rate. On September 20, 2023, in connection with the acquisition of The Q Lofts, the Company assumed two mortgage loans with an aggregate principal amount of $11,258, net of a debt discount of $1,951. The contractual interest rate and terms of the assumed mortgage loans were marked to market as of the acquisition date. According to the terms of the loan agreements, the contractual fixed interest rates are 4.61% and 4.50% and each of the loans require payment of principal and interest through their December 31, 2032 maturity date. The Company obtained a loan on April 6, 2023 which was secured by a mortgage encumbering one of the buildings comprising the Trimble office investment property. The building is approximately 97,000 square feet and is currently occupied by Veeco Instruments, Inc. The loan secured by a mortgage on this Trimble building has a principal amount of $20,000, $4,000 of which is guaranteed by the Company. The loan matures on April 6, 2025, with a 12-month extension option, provided certain criteria are met at the time of extension. Simultaneously with the loan closing, we entered into a swap arrangement to fix the interest rate at 5.86% for the term of the loan. The Company obtained a loan on January 24, 2023 which was secured by a mortgage encumbering Tennyson, one of the Company’s multi-family investment properties. The loan has a principal balance of $10,250. The loan matures on February 1, 2030, bears interest at a rate of 4.84% and requires interest-only payments for the duration of its 7-year term. The Company obtained two loans on June 30, 2022 which were each secured by a mortgage encumbering one of the Company’s multi-family investment properties. 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 and the related swap agreement on The Locale had an initial maturity date of September 1, 2023. As previously disclosed, prior to the initial maturity date, the Company exercised the one-year extension option provided for in the loan documents and entered into a new swap agreement to fix the interest rate at 7.34% and extend the maturity date to September 1, 2024. The principal balance of this mortgage was $17,182 at September 30, 2023. 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, 2023, the Company guaranteed one mortgage loan up to $4,000 and as of December 31, 2022, none of our mortgage debt was recourse to the Company. However, 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 State Street Market on March 10, 2022 and the mortgage, with an outstanding principal balance of $8,677 at the time of sale, was simultaneously repaid. The funds previously trapped and held by the lender, along with all required lender escrows, totaling $2,000, 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, 2023 and December 31, 2022, the Company was in compliance with such covenants.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2023
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, 2023, we had two derivative financial instruments designated as cash flow hedges, with original notional amounts of $18,750 (also outstanding as of December 31, 2022) and $20,000 and with maturity dates of September 1, 2024 and April 6, 2025, respectively. These derivatives are interest rate swaps that are 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 amount recorded as other comprehensive income (loss) related to our derivative financial instruments was $(37) and $37 for the three and nine months ended September 30, 2023, respectively, and $112 and $679 for the three and nine months ended September 30, 2022, 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 $230 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, 2023 and December 31, 2022, respectively. September 30, 2023 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 462 $ — $ 462 Classified as “Other liabilities” $ — $ (41) $ — $ (41) December 31, 2022 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Deferred costs and other assets, net” $ — $ 383 $ — $ 383 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, 2023, 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, 2023 and 2022, 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, 2023 and December 31, 2022. September 30, 2023 December 31, 2022 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 105,032 $ 96,957 $ 62,411 $ 57,474 The Company estimates the fair value of its debt instruments using a weighted average market effective interest rate of 7.62% and 7.44% per annum as of September 30, 2023 and December 31, 2022, 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 6.35% to 9.49% and 5.76% to 8.83% as of September 30, 2023 and December 31, 2022, respectively. The assumptions reflect the terms currently available on similar borrowing terms to borrowers with credit profiles similar to the Company’s. The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2023
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, 2023 and 2022, 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, 2023
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, 2023 and 2022. Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Total Multi-family Other Total Multi-family Other Lease income $ 7,574 $ 4,113 $ 3,461 $ 7,321 $ 3,918 $ 3,403 Other property income 299 299 — 283 283 — Total revenues 7,873 4,412 3,461 7,604 4,201 3,403 Property operating and real estate tax expenses 3,756 2,150 1,606 3,629 1,996 1,633 Net operating income $ 4,117 $ 2,262 $ 1,855 $ 3,975 $ 2,205 $ 1,770 Non-allocated expenses (1) (5,102) (4,921) Other income and expenses (2) (809) (659) Net income attributable to non-controlling interests 11 3 Net loss attributable to Highlands REIT, Inc. common stockholders $ (1,783) $ (1,602) (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 Nine Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 22,452 $ 12,057 $ 10,395 $ 22,626 $ 11,743 $ 10,883 Other property income 733 733 — 727 713 14 Total income 23,185 12,790 10,395 23,353 12,456 10,897 Property operating and real estate tax expenses 10,988 6,028 4,960 10,409 5,761 4,648 Net operating income $ 12,197 $ 6,762 $ 5,435 $ 12,944 $ 6,695 $ 6,249 Non-allocated expenses (1) (15,562) (15,088) Loss on sale of investment properties, net — (6) Other income and expenses (2) (2,254) (1,927) Net income attributable to non-controlling interests (10) 1 Net loss attributable to Highlands REIT, Inc. common stockholders $ (5,629) $ (4,076) Balance Sheet Data Real estate assets, net (3) $ 304,680 $ 199,941 $ 104,739 $ 275,836 $ 172,353 $ 103,483 Non-segmented assets (4) 48,211 42,208 Total assets $ 352,891 $ 318,044 Capital expenditures $ 3,095 $ 1,051 $ 2,044 $ 392 $ 285 $ 107 (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) Real estate assets include intangible lease assets, net of amortization. (4) 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, 2023
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, 2023, the Company granted 357 shares of common stock with an aggregate value of $100 based on an estimated net asset value per share of $0.28. 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.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2023
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 February 2021, the Company executed a lease with Veeco Instruments, Inc. for approximately 97,000 square feet at Trimble. The lease required a significant tenant allowance, which is being accounted for as lessor-owned improvements, and broker commission. The total cost commitment was estimated to be approximately $9,100. As of September 30, 2023, we estimate that remaining costs to be paid under this commitment are approximately $673. The tenant began paying cash rent on January 1, 2023. The remainder of the tenant allowance will be paid by the Company upon final request by tenant. In November 2022, the Company executed a lease with XP Power, LLC for approximately 80,000 square feet at Trimble. Rental payments under this lease are expected to commence in January 2024. The lease requires significant landlord work, a tenant allowance, which will be accounted for as lessor-owned improvements, and leasing commission. The total cost commitment is estimated to be approximately $13,200. As of September 30, 2023, we estimate remaining costs under this commitment are approximately $9,000. On October 24, 2023, the Company announced that it had commenced a modified “Dutch Auction” self-tender offer to purchase up to $20,000 in value of shares of the Company’s common stock (the “Offer”). If more than $20,000 in value of shares are properly tendered in the Offer and not properly withdrawn, the Company will have the ability to increase the number of shares accepted for payment in the Offer by up to 2% of the Company’s outstanding shares (resulting in a proportionate increase in the dollar volume purchased by up to approximately $2,100 assuming a purchase price at the low end of the anticipated purchase price range or $3,000 assuming a purchase price at the high end of the range) without amending or extending the offer in accordance with rules promulgated by the Securities and Exchange Commission. The Offer expires on November 21, 2023. Highlands expects to fund the Offer with cash on hand. The terms and conditions of the Offer are further described in the Tender Offer Statement on Schedule TO filed by the Company on October 24, 2023.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events On October 17, 2023, the Company obtained a loan which is secured by a mortgage encumbering The Muse, one of the Company’s multi-family investment properties. The loan secured by this mortgage has a principal amount of approximately $19,500, bears interest at a rate equal to 2.06% over the 30-day average SOFR and matures on November 1, 2033. We are required to maintain an interest rate cap contract throughout the term of the loan, capping interest at 7.44%. On October 24, 2023, the Company announced that it had commenced a modified “Dutch Auction” self-tender offer to purchase for cash up to $20,000 in value of shares of the Company’s common stock (the “Offer”). The Offer expires on November 21, 2023. Highlands expects to fund the Offer with cash on hand.

Basis of Presentation and Sum_2

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
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
Consolidation	ConsolidationAs of September 30, 2023 and December 31, 2022, 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.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In December 2022, the FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”) which was issued to defer the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 did not have an impact on the Company’s consolidated financial statements. 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.

Acquired Properties (Tables)

Acquired Properties (Tables)	9 Months Ended
	Sep. 30, 2023
Asset Acquisition [Abstract]
Asset Acquisition	The Company records identifiable assets and liabilities acquired at fair value. During the nine months ended September 30, 2023, the Company acquired one multi-family investment property for a gross acquisition price of $34,497. Under ASU 2017-01, the Company determined this transaction should be accounted for as an asset acquisition. Accordingly, the Company capitalized transaction costs of approximately $297. Property Location Acquisition Date Acquisition Price The Q Lofts San Diego, California September 20, 2023 $ 34,497 The purchase price has been allocated as follows: Land $ 8,856 Building and other improvements 22,876 Intangible assets, net 645 Deferred costs and other assets 190 Total assets 32,567 Intangible liabilities, net (21) Debt discount on mortgage assumption 1,951 Total liabilities 1,930 Total acquisition price $ 34,497

Disposed Investment Properties

Disposed Investment Properties (Tables)	9 Months Ended
	Sep. 30, 2023
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, 2023
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, 2023 2022 2023 2022 Lease income related to fixed lease payments $ 6,474 $ 6,248 $ 19,062 $ 19,260 Lease income related to variable lease payments (1) 1,100 1,073 3,390 3,266 Other 299 283 733 727 Total revenues $ 7,873 $ 7,604 $ 23,185 $ 23,253 (1) Variable lease payments are comprised of tenant recovery income.
Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity	As of September 30, 2023, 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. 2023 (remaining) $ 2,572 2024 12,796 2025 11,883 2026 11,638 2027 10,888 Thereafter 72,069 Total $ 121,846

Accounts Payable and Accrued _2

Accounts Payable and Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses consist of the following: September 30, 2023 December 31, 2022 Accrued real estate taxes $ 7,013 $ 6,430 Accrued compensation 2,790 742 Accrued interest payable 438 208 Other accrued expenses 3,770 3,704 Total accounts payable and accrued expenses $ 14,011 $ 11,084

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Schedule of Debt Outstanding	Total debt outstanding as of September 30, 2023 and December 31, 2022 was as follows: September 30, 2023 December 31, 2022 Debt, gross $ 105,032 $ 62,411 Mortgage discount (2,129) (212) Deferred financing costs, net (1,294) (541) Total Debt, Net $ 101,609 $ 61,658
Scheduled Maturities of Mortgage Indebtedness	As of September 30, 2023, the Company’s outstanding mortgage indebtedness included ten mortgage loans with various maturities through December 2034, as follows: Debt maturing during the year As of September 30, 2023 Weighted average interest rate 2023 (remaining) $ — — % 2024 17,182 7.34 % (1) 2025 20,000 5.86 % (1) 2026 23,873 4.56 % 2027 11,253 3.99 % Thereafter 32,724 4.71 % Total $ 105,032 5.25 % (1) See below for discussion of the swap agreements entered into with the mortgage loans obtained on The Locale and Trimble. The weighted average interest rate reflected is the fixed swap rate.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2023
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, 2023 and December 31, 2022, respectively. September 30, 2023 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 462 $ — $ 462 Classified as “Other liabilities” $ — $ (41) $ — $ (41) December 31, 2022 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Deferred costs and other assets, net” $ — $ 383 $ — $ 383
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, 2023 and December 31, 2022. September 30, 2023 December 31, 2022 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 105,032 $ 96,957 $ 62,411 $ 57,474

Segment Reporting (Tables)

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2023
Segment Reporting [Abstract]
Summary of Net Property Operations	The following table summarizes net operating income by segment for the three months ended September 30, 2023 and 2022. Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Total Multi-family Other Total Multi-family Other Lease income $ 7,574 $ 4,113 $ 3,461 $ 7,321 $ 3,918 $ 3,403 Other property income 299 299 — 283 283 — Total revenues 7,873 4,412 3,461 7,604 4,201 3,403 Property operating and real estate tax expenses 3,756 2,150 1,606 3,629 1,996 1,633 Net operating income $ 4,117 $ 2,262 $ 1,855 $ 3,975 $ 2,205 $ 1,770 Non-allocated expenses (1) (5,102) (4,921) Other income and expenses (2) (809) (659) Net income attributable to non-controlling interests 11 3 Net loss attributable to Highlands REIT, Inc. common stockholders $ (1,783) $ (1,602) (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 Nine Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 22,452 $ 12,057 $ 10,395 $ 22,626 $ 11,743 $ 10,883 Other property income 733 733 — 727 713 14 Total income 23,185 12,790 10,395 23,353 12,456 10,897 Property operating and real estate tax expenses 10,988 6,028 4,960 10,409 5,761 4,648 Net operating income $ 12,197 $ 6,762 $ 5,435 $ 12,944 $ 6,695 $ 6,249 Non-allocated expenses (1) (15,562) (15,088) Loss on sale of investment properties, net — (6) Other income and expenses (2) (2,254) (1,927) Net income attributable to non-controlling interests (10) 1 Net loss attributable to Highlands REIT, Inc. common stockholders $ (5,629) $ (4,076) Balance Sheet Data Real estate assets, net (3) $ 304,680 $ 199,941 $ 104,739 $ 275,836 $ 172,353 $ 103,483 Non-segmented assets (4) 48,211 42,208 Total assets $ 352,891 $ 318,044 Capital expenditures $ 3,095 $ 1,051 $ 2,044 $ 392 $ 285 $ 107 (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) Real estate assets include intangible lease assets, net of amortization. (4) 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, 2023 parcel property $ / shares	Dec. 31, 2022 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			20	19
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, 2023	Dec. 31, 2022	Sep. 30, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	$ 352,891	$ 315,114	$ 318,044
Liabilities	118,016	74,757
Variable Interest Entity, Primary Beneficiary | Corvue Venture
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	24,236	24,926
Liabilities	$ 17,966	$ 18,028

Acquired Properties - Additiona

Acquired Properties - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) building	Sep. 30, 2022 USD ($) building
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Number of properties acquired | building		0
Acquisition of investment properties	$ 21,288	$ 0
Multi-family
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Number of properties acquired | building	1
Acquisition of investment properties	$ 34,497
Capitalized transaction costs	$ 297

Acquired Properties - Purchase

Acquired Properties - Purchase Price Allocation (Details) - The Q Lofts $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Land	$ 8,856
Building and other improvements	22,876
Intangible assets, net	645
Deferred costs and other assets	190
Total assets	32,567
Intangible liabilities, net	(21)
Debt discount on mortgage assumption	1,951
Total liabilities	1,930
Total acquisition price	$ 34,497

Disposed Investment Propertie_2

Disposed Investment Properties - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
Gross Disposition Price	$ 0		$ 0
Loss on sale of investment properties, net	$ 0	$ 0	$ 0	$ (6)

Disposed Investment Propertie_3

Disposed Investment Properties - Disposals (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross Disposition Price	$ 0		$ 0
Sale Proceeds, Net			0	$ 8,938
Loss on Sale	$ 0	$ 0	0	(6)
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		$ 9,000
Sale Proceeds, Net			$ 0

Leases - Narrative (Details)

Leases - Narrative (Details)	Sep. 30, 2023
Minimum
Lessor, Lease, Description [Line Items]
Lease terms	1 year
Maximum
Lessor, Lease, Description [Line Items]
Lease terms	14 years

Leases - Lease Income (Details)

Leases - Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Lease income related to fixed lease payments	$ 6,474	$ 6,248	$ 19,062	$ 19,260
Lease income related to variable lease payments	1,100	1,073	3,390	3,266
Other	299	283	733	727
Total revenues	$ 7,873	$ 7,604	$ 23,185	$ 23,253

Leases - Receivable Maturity (D

Leases - Receivable Maturity (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
2023 (remaining)	$ 2,572
2024	12,796
2025	11,883
2026	11,638
2027	10,888
Thereafter	72,069
Total	$ 121,846

Accounts Payable and Accrued _3

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued real estate taxes	$ 7,013	$ 6,430
Accrued compensation	2,790	742
Accrued interest payable	438	208
Other accrued expenses	3,770	3,704
Total accounts payable and accrued expenses	$ 14,011	$ 11,084

Debt - Outstanding Debt (Detail

Debt - Outstanding Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Debt, gross	$ 105,032	$ 62,411
Mortgage discount	(2,129)	(212)
Deferred financing costs, net	(1,294)	(541)
Total Debt, Net	$ 101,609	$ 61,658

Debt - Scheduled Maturities (De

Debt - Scheduled Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total	$ 105,032	$ 62,411
Mortgages
Debt Instrument [Line Items]
2023 (remaining)	0
2024	17,182
2025	20,000
2026	23,873
2027	11,253
Thereafter	32,724
Total	$ 105,032
Weighted average interest rate
2023 (remaining)	0%
2024	7.34%
2025	5.86%
2026	4.56%
2027	3.99%
Thereafter	4.71%
Total	5.25%

Debt - Additional Information (

Debt - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($)	Apr. 06, 2023 USD ($) ft²	Jan. 24, 2023 USD ($)	Dec. 31, 2022 USD ($)	Apr. 30, 2022 USD ($)
Debt Instrument [Line Items]
Number of mortgage loan | loan	10
Number of loans assumed | loan	2
Number of loans | loan	2
Repayments of notes payable, paid off	$ 8,677
Restricted cash	1,801	$ 1,793			$ 1,893
Payoff of debt	0	$ 8,677
Mortgages
Debt Instrument [Line Items]
2023 (remaining)	$ 0
Number of loans guaranteed | loan	1
Restricted cash						$ 2,000
2023 (remaining)	0%
Mortgages | Mortgage Loan in Connection with Acquisition of The Locale
Debt Instrument [Line Items]
Fixed rate	7.34%
Extension term	1 year
Mortgages | Loan Secured by Mortgage Encumbering Trimble
Debt Instrument [Line Items]
Extension term			12 months
Mortgages | Mortgage Loans Acquired In Acquisition Of The Q Lofts
Debt Instrument [Line Items]
Debt discount	$ 1,951
Principal amount	$ 11,258
Mortgages | The Q Lofts Mortgage Loan 1
Debt Instrument [Line Items]
Fixed rate	4.61%
Mortgages | The Q Lofts Mortgage Loan 2
Debt Instrument [Line Items]
Fixed rate	4.50%
Secured Debt
Debt Instrument [Line Items]
Guarantor obligations, current carrying value	$ 4				$ 0
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
Secured Debt | Loan Secured by Mortgage Encumbering Tennyson
Debt Instrument [Line Items]
Principal amount				$ 10,250
Fixed rate				4.84%
Loan term	7 years
Secured Debt | Loan Secured by Mortgage Encumbering Trimble
Debt Instrument [Line Items]
Mortgage building area | ft²			97,000
Principal amount			$ 20,000
Guarantor obligations, current carrying value			$ 4,000
Fixed rate			5.86%

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) derivative_instrument	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) derivative_instrument	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) derivative_instrument
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unrealized gain (loss) on derivatives	$ (37)	$ 112	$ 37	$ 679
Cash flow hedges to be reclassified in the next twelve months			$ 230
Discount rate | Long-term debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0762		0.0762		0.0744
Discount rate | Long-term debt | Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0635		0.0635		0.0576
Discount rate | Long-term debt | Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0949		0.0949		0.0883
Cash Flow Hedging | Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of derivative instruments | derivative_instrument	2		2		2
Notional amount	$ 18,750		$ 18,750		$ 20

Fair Value Measurements - Deriv

Fair Value Measurements - Derivative Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Deferred costs and other assets, net	Deferred costs and other assets, net
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other liabilities
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	$ 462	$ 383
Derivative liabilities	(41)
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	0
Derivative liabilities	0
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	462	383
Derivative liabilities	(41)
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0	$ 0
Derivative liabilities	$ 0

Fair Value Measurements - Not M

Fair Value Measurements - Not Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Carrying  Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 105,032	$ 62,411
Estimated  Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 96,957	$ 57,474

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 0	$ 0	$ 0	$ 0

Segment Reporting - Narrative (

Segment Reporting - Narrative (Details)	9 Months Ended
	Sep. 30, 2023 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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Segment Reporting Information [Line Items]
Total revenues	$ 7,873	$ 7,604	$ 23,185	$ 23,353
Operating expenses	3,756	3,629	10,988	10,409
Net operating income (loss)	4,117	3,975	12,197	12,944
Loss on sale of investment properties, net	0	0	0	(6)
Net (income) loss attributable to non-controlling interests	11	3	(10)	1
Net loss attributable to Highlands REIT, Inc. common stockholders	(1,783)	(1,602)	(5,629)	(4,076)
Total assets	352,891	318,044	352,891	318,044	$ 315,114
Capital expenditures			3,095	392
Rental income
Segment Reporting Information [Line Items]
Total revenues	7,574	7,321	22,452	22,626
Other property income
Segment Reporting Information [Line Items]
Total revenues	299	283	733	727
Other
Segment Reporting Information [Line Items]
Total revenues	3,461	3,403	10,395	10,897
Operating expenses	1,606	1,633	4,960	4,648
Net operating income (loss)	1,855	1,770	5,435	6,249
Other | Rental income
Segment Reporting Information [Line Items]
Total revenues	3,461	3,403	10,395	10,883
Other | Other property income
Segment Reporting Information [Line Items]
Total revenues	0	0	0	14
Reconciling items
Segment Reporting Information [Line Items]
Non-allocated expenses	(5,102)	(4,921)	(15,562)	(15,088)
Other income and expenses	(809)	(659)	(2,254)	(1,927)
Total assets	48,211	42,208	48,211	42,208
Operating Segments And Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total assets	304,680	275,836	304,680	275,836
Net Lease | Operating segments
Segment Reporting Information [Line Items]
Total assets	199,941	172,353	199,941	172,353
Capital expenditures			1,051	285
Retail | Operating segments
Segment Reporting Information [Line Items]
Total assets	104,739	103,483	104,739	103,483
Capital expenditures			2,044	107
Multi-family | Operating segments
Segment Reporting Information [Line Items]
Total revenues	4,412	4,201	12,790	12,456
Operating expenses	2,150	1,996	6,028	5,761
Net operating income (loss)	2,262	2,205	6,762	6,695
Multi-family | Operating segments | Rental income
Segment Reporting Information [Line Items]
Total revenues	4,113	3,918	12,057	11,743
Multi-family | Operating segments | Other property income
Segment Reporting Information [Line Items]
Total revenues	$ 299	$ 283	$ 733	$ 713

Share Based Compensation (Detai

Share Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Aug. 12, 2021	Apr. 28, 2016
Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	357,000
Aggregate value of shares granted	$ 100
Granted (in dollars per share)	$ 280
Incentive awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		345
Aggregate value of shares granted		$ 100
Granted (in dollars per share)		$ 0.29
Number of shares authorized to grant (up to) (in shares)			67,000,000	43,000,000
Shares available for future issuance (in shares)	16,038,000

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Thousands	Feb. 28, 2021 USD ($) ft²	Oct. 24, 2023 USD ($)	Sep. 30, 2023 USD ($)	Nov. 30, 2022 USD ($) ft²
Loss Contingencies [Line Items]
Leased area | ft²				80,000
Estimated cost commitment				$ 13,200
Estimated remaining cost			$ 9,000
Dutch Auction Self-Tender Offer | Subsequent event
Loss Contingencies [Line Items]
Dutch auction authorized amount		$ 20,000
Number of shares additional authorized to be repurchased		2%
Dutch Auction Self-Tender Offer | Subsequent event | Minimum
Loss Contingencies [Line Items]
Additional authorized amount to be repurchased		$ 2,100
Dutch Auction Self-Tender Offer | Subsequent event | Maximum
Loss Contingencies [Line Items]
Additional authorized amount to be repurchased		$ 3,000
Veeco Instrument, Inc. Lease
Loss Contingencies [Line Items]
Leased area (in square feet) | ft²	97,000
Current estimated commitment	$ 9,100
Re-estimated remaining obligation			$ 673

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent event - USD ($) $ in Thousands	Oct. 24, 2023	Oct. 17, 2023
Dutch Auction Self-Tender Offer
Subsequent Event [Line Items]
Dutch auction authorized amount	$ 20,000
Loan Secured By Mortgage Encumbering The Muse | Secured Debt
Subsequent Event [Line Items]
Principal amount		$ 19,500
Fixed rate		2.06%
Interest rate, cap		7.44%