Highlands REIT (HHDS) 10-Q 7 Nov 24 2024 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2024	Nov. 06, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
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		721,950,814
Entity Central Index Key	0001661458
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
No Trading Symbol Flag	true

Consolidated Balance Sheets (un

Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Investment properties
Land	$ 83,792	$ 88,582
Building and other improvements	288,744	296,786
Construction in progress	454	10,850
Total	372,990	396,218
Less accumulated depreciation	(84,469)	(87,216)
Net investment properties	288,521	309,002
Cash and cash equivalents	35,936	17,078
Restricted cash and escrows	2,050	2,406
Accounts receivable (net of allowance of $158 and $125 as of September 30, 2024 and December 31, 2023, respectively)	6,446	6,255
Intangible assets, net	215	537
Deferred costs and other assets, net	6,108	5,874
Total assets	339,276	341,152
Liabilities
Debt, net	120,773	120,931
Accounts payable and accrued expenses	11,642	13,335
Other liabilities	2,293	2,674
Total liabilities	134,708	136,940
Commitments and contingencies (see Note 13)
Stockholders’ Equity
Common stock, $0.01 par value, 1,000,000 shares authorized, 721,951 and 721,671 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	7,220	7,217
Additional paid-in capital	1,389,824	1,389,951
Accumulated distributions in excess of net income	(1,191,270)	(1,191,868)
Accumulated other comprehensive income	(98)	20
Total Highlands REIT, Inc. stockholders’ equity	205,676	205,320
Non-controlling interests	(1,108)	(1,108)
Total equity	204,568	204,212
Total liabilities and equity	$ 339,276	$ 341,152

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for accounts and rent receivables	$ 158	$ 125
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	721,951,000	721,671,000
Common stock, shares outstanding	721,951,000	721,671,000

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues
Total revenues	$ 9,021	$ 7,873	$ 27,081	$ 23,185
Expenses
Property operating expenses	2,505	2,307	7,156	6,614
Real estate taxes	1,453	1,449	4,326	4,374
Depreciation and amortization	2,975	2,628	8,983	7,807
General and administrative expenses	2,592	2,474	8,069	7,755
Total expenses	9,525	8,858	28,534	26,550
Loss from operations	(504)	(985)	(1,453)	(3,365)
Gain on sale of investment properties, net	0	0	6,869	0
Interest income	330	459	918	974
Interest expense	(1,919)	(1,268)	(5,741)	(3,228)
Net income (loss)	(2,093)	(1,794)	593	(5,619)
Net (income) loss attributable to non-controlling interests	1	11	5	(10)
Net income (loss) attributable to Highlands REIT, Inc. common stockholders	$ (2,092)	$ (1,783)	$ 598	$ (5,629)
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)	721,951,000	888,600,000	721,817,000	888,393,000
Weighted average number of common shares outstanding, diluted (in shares)	721,951,000	888,600,000	721,817,000	888,393,000
Comprehensive loss
Net income	$ (2,093)	$ (1,794)	$ 593	$ (5,619)
Unrealized gain (loss) on derivatives	(345)	(37)	(113)	37
Total other comprehensive income	(345)	(37)	(113)	37
Comprehensive income (loss)	(2,438)	(1,831)	480	(5,582)
Comprehensive loss attributable to non-controlling interests	1	33	0	54
Comprehensive income (loss) attributable to Highlands REIT, Inc. common stockholders	(2,437)	(1,798)	480	(5,528)
Rental income
Revenues
Total revenues	8,713	7,574	26,294	22,452
Other property income
Revenues
Total revenues	$ 308	$ 299	$ 787	$ 733

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, 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 income	(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 income	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 income	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 income	(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
Beginning balance at Dec. 31, 2023	204,212	$ 7,217	1,389,951	(1,191,868)	20	205,320	(1,108)
Beginning balance (in shares) at Dec. 31, 2023		721,671
Net income (loss)	5,042			5,043		5,043
Net (income) loss attributable to non-controlling interests							(1)
Other comprehensive income	217				213	213	4
Costs for repurchase of shares	(220)		(220)			(220)
Ending balance (in shares) at Mar. 31, 2024		721,671
Ending balance at Mar. 31, 2024	209,251	$ 7,217	1,389,731	(1,186,825)	233	210,356	(1,105)
Beginning balance at Dec. 31, 2023	204,212	$ 7,217	1,389,951	(1,191,868)	20	205,320	(1,108)
Beginning balance (in shares) at Dec. 31, 2023		721,671
Net income (loss)	593
Net (income) loss attributable to non-controlling interests	(5)
Other comprehensive income	(113)
Repurchase of shares (shares)		(169,391,000)
Ending balance (in shares) at Sep. 30, 2024		721,951
Ending balance at Sep. 30, 2024	204,568	$ 7,220	1,389,824	(1,191,270)	(98)	205,676	(1,108)
Beginning balance at Mar. 31, 2024	209,251	$ 7,217	1,389,731	(1,186,825)	233	210,356	(1,105)
Beginning balance (in shares) at Mar. 31, 2024		721,671
Net income (loss)	(2,356)			(2,353)		(2,353)
Net (income) loss attributable to non-controlling interests							(3)
Other comprehensive income	15				14	14	1
Share-based compensation (in shares)		313
Share-based compensation	100	$ 3	97			100
Repurchase of shares (shares)		(33)
Costs for repurchase of shares	(4)		(4)			(4)
Ending balance (in shares) at Jun. 30, 2024		721,951
Ending balance at Jun. 30, 2024	207,006	$ 7,220	1,389,824	(1,189,178)	247	208,113	(1,107)
Net income (loss)	(2,093)			(2,092)		(2,092)
Net (income) loss attributable to non-controlling interests	(1)						(1)
Other comprehensive income	(345)				(345)	(345)
Ending balance (in shares) at Sep. 30, 2024		721,951
Ending balance at Sep. 30, 2024	$ 204,568	$ 7,220	$ 1,389,824	$ (1,191,270)	$ (98)	$ 205,676	$ (1,108)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net income (loss)	$ 593	$ (5,619)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	8,983	7,807
Amortization of market leases	1	(8)
Amortization of debt discounts and financing costs	539	282
Straight-line rental income	(633)	(526)
Gain on sale of investment properties, net	(6,869)	0
Non-cash stock-based compensation expense	100	100
Changes in assets and liabilities:
Accounts and rents receivable, net	442	208
Deferred costs and other assets, net	(372)	(540)
Accounts payable and accrued expenses	1,420	1,693
Other liabilities	(425)	326
Net cash flows provided by operating activities	3,779	3,723
Cash flows from investing activities:
Capital expenditures and tenant improvements	(4,177)	(3,095)
Acquisition of investment properties, net	0	(21,288)
Proceeds from sale of investment properties, net	20,071	0
Payment of leasing fees	(250)	(307)
Net cash flows provided by (used in) investing activities	15,644	(24,690)
Cash flows from financing activities:
Payment of debt issuance costs	(3)	(1,001)
Proceeds from debt	0	30,250
Repurchase of shares	(224)	0
Principal payments of debt	(694)	(838)
Net cash flows provided by (used in) financing activities	(921)	28,411
Net increase in cash and cash equivalents and restricted cash and escrows	18,502	7,444
Cash and cash equivalents and restricted cash and escrows, at beginning of period	19,484	27,918
Cash and cash equivalents and restricted cash and escrows, at end of period	37,986	35,362
Restricted Cash [Abstract]
Cash and cash equivalents	35,936	33,561
Restricted cash	2,050	1,801
Total cash, cash equivalents and restricted cash	37,986	35,362
Supplemental disclosure of cash flows information:
Cash paid for interest	5,227	2,716
Supplemental schedule of non-cash investing and financing activities:
Non-cash accruals for capital expenditures and tenant improvements	1,085	2,389
Assumption of mortgage debt on acquired properties, net of debt discount	$ 0	$ 11,258

Organization

Organization	9 Months Ended
	Sep. 30, 2024
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 and office 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, 2024, we have an approximate 95% interest in the Corvue Venture and have funded equity contributions to the Corvue Venture in the approximate amount of $10,200. 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, 2024
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, 2023, included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on March 14, 2024, 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, 2024 and December 31, 2023, 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, 2024 is $23,155 of assets and $18,134 of liabilities related to the Corvue Venture. Included in total assets and liabilities on the Company’s consolidated balance sheets as of December 31, 2023 is $23,740 of assets and $18,116 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 November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this update require additional detailed and enhanced information about reportable segments’ expense, including significant segment expenses and other segment items that bridge segment revenue, significant expenses to segment profit or loss. The ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) on an annual basis as well as an explanation of how the CODM uses the reported measures and other disclosures. The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is continuing to evaluate this guidance, but expects the standard to impact our disclosures around our segments and is not anticipated to 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, 2024
Asset Acquisition [Abstract]
Acquired Properties	Acquired Properties The Company records identifiable assets and liabilities acquired at fair value. There were no investment property acquisitions during the nine months ended September 30, 2024. 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	9 Months Ended
	Sep. 30, 2024
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, 2024. The Company recognized a net gain on sale of investment properties of $6,869. Property Location Disposition Date Gross Disposition Price Sale Proceeds, Net Gain on Sale Versacold USA New Ulm, MN February 5, 2024 $ 7,175 $ 6,995 $ 2,052 Versacold USA St. Paul, MN February 5, 2024 $ 13,325 $ 13,076 $ 4,817 $ 20,500 $ 20,071 $ 6,869 There were no investment property dispositions during the nine months ended September 30, 2023.

Leases

Leases	9 Months Ended
	Sep. 30, 2024
Leases [Abstract]
Leases	Leases Leasing as a lessor We lease multi-family 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, 2024. Lease income related to the Company’s operating leases is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Lease income related to fixed lease payments $ 7,445 $ 6,474 $ 22,460 $ 19,062 Lease income related to variable lease payments (1) 1,268 1,100 3,834 3,390 Other 308 299 787 733 Total revenues $ 9,021 $ 7,873 $ 27,081 $ 23,185 (1) Variable lease payments are comprised of tenant recovery income. Future Minimum Rental Income As of September 30, 2024, commercial operating leases provide for future minimum rental income, assuming no expiring leases are renewed, as follows. Multi-family residential leases are not included as the terms are generally for one year or less. 2024 (remaining) $ 2,845 2025 12,308 2026 12,609 2027 12,441 2028 12,046 Thereafter 92,435 Total $ 144,684

Accounts Payable and Accrued Ex

Accounts Payable and Accrued Expenses	9 Months Ended
	Sep. 30, 2024
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, 2024 December 31, 2023 Accrued real estate taxes $ 5,903 $ 6,300 Accrued compensation 3,106 979 Accrued interest payable 546 570 Other accrued expenses 2,087 5,486 Total accounts payable and accrued expenses $ 11,642 $ 13,335

Debt

Debt	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Debt	Debt Total debt outstanding as of September 30, 2024 and December 31, 2023 was as follows: September 30, 2024 December 31, 2023 Debt, gross $ 124,124 $ 124,817 Mortgage discount (1,910) (2,074) Deferred financing costs, net (1,441) (1,812) Total Debt, Net $ 120,773 $ 120,931 As of September 30, 2024, the Company’s outstanding mortgage indebtedness included 11 mortgage loans with various maturities through January 2036, as follows: Debt maturing during the year As of September 30, 2024 Weighted average interest rate 2024 (remaining) $ — — % 2025 20,000 5.86 % (1) 2026 23,346 4.56 % 2027 11,051 3.99 % 2028 — — % Thereafter 69,727 5.92 % (1) Total $ 124,124 5.48 % (1) See below for discussion of the derivative agreements entered into with the mortgage loans obtained on Trimble and The Muse. For Trimble (2025), the interest rate in the table above is the fixed rate. For The Muse (thereafter), the interest rate is the rate in effect on September 30, 2024. The Company obtained a loan on November 9, 2023, which was secured by a mortgage encumbering The Muse, one of the Company's multi-family investment properties. The loan has a principal balance of $19,496, matures on November 1, 2033 and requires interest-only payments through December 1, 2028 and principal and interest payments thereafter. The interest rate is variable and was 7.41% and 7.39% on September 30, 2024 and December 31, 2023, respectively. In conjunction with the loan closing, the Company purchased an interest rate cap contract to cap the interest at 7.44% through its November 1, 2026 expiration at which point the Company is required by the terms of the loan agreement to purchase a new cap contract. The Company’s mortgage and the related swap agreement on The Locale had an initial maturity date of September 1, 2023. 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. On November 8, 2023, the Company placed permanent financing on The Locale and simultaneously repaid the $17,112 outstanding balance on the extended loan and terminated the swap agreement. The new loan matures on December 1, 2030, has a principal balance of $17,700, bears interest at a fixed rate of 6.49% and requires interest-only payments for the duration of its 7-year term. On September 20, 2023, the Company assumed two mortgage loans in the total principal amount of $11,258, net of a debt discount of $1,951. The carrying value of the assumed debt was 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%, require payments of principal and interest and the maturity date of both loans is January 1, 2036. The debt discount will be amortized to interest expense over the life of the loans. 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, which requires, among other criteria, that at the time of extension, the mortgage is not in default, a minimum debt service coverage ratio is met and the extension fee is paid. 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 expects to exercise its extension option or place permanent financing on Trimble at maturity. 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’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 investment property. With respect to each mortgage loan, if the applicable wholly-owned property-owning subsidiary is unable to refinance or sell the related investment property, or in the event that the estimated 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 investment property to the lender or permitting a lender to foreclose. As of September 30, 2024 and December 31, 2023, the Company guaranteed one mortgage loan up to $4,000. 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. 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, 2024 and December 31, 2023, the Company was in compliance with such covenants.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2024
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 risks 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 or caps 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, 2024, we had two derivative financial instruments designated as cash flow hedges. The interest rate swap on Trimble (also outstanding at September 30, 2023) had an original notional amount of $20,000 and a maturity date of April 6, 2026. The interest rate cap on The Muse had an original notional amount of $19,496 and a maturity date of November 1, 2026. As of September 30, 2023, we had one additional derivative financial instrument designated as a cash flow hedge, with a notional amount of $18,750 and a maturity date of September 1, 2024. These derivatives 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 amounts recorded as other comprehensive loss related to our derivative financial instruments was $345 and $113 for the three and nine months ended September 30, 2024, respectively and a loss of $37 and income of $37 for the three and nine months ended September 30, 2023, respectively. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. The Company estimates that $1 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, 2024 and December 31, 2023, respectively. September 30, 2024 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 3 $ — $ 3 Classified as “Other liabilities” $ — $ 56 $ — $ 56 December 31, 2023 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Deferred costs and other assets, net” $ — $ 97 $ — $ 97 The fair value of our derivative financial instruments 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, 2024, 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, 2024 and 2023, events and circumstances indicated that certain investment properties might be impaired. However, the Company’s estimate of undiscounted cash flows indicated that such carrying values 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 presents the fair value of financial instruments that are presented at carrying values in the consolidated financial statements as of September 30, 2024 and December 31, 2023. September 30, 2024 December 31, 2023 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 124,124 $ 120,700 $ 124,817 $ 119,242 The Company estimates the fair value of its debt instruments using a weighted average market effective interest rate of 6.32% and 6.69% per annum as of September 30, 2024 and December 31, 2023, 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 5.12% to 9.06% and 5.52% to 9.66% as of September 30, 2024 and December 31, 2023, 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, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The 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.

Segment Reporting

Segment Reporting	9 Months Ended
	Sep. 30, 2024
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 tables summarize net operating income by segment for the three and nine months ended September 30, 2024 and 2023. Three Months Ended Three Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 8,713 $ 4,755 $ 3,958 $ 7,574 $ 4,113 $ 3,461 Other property income 308 308 — 299 299 — Total revenues 9,021 5,063 3,958 7,873 4,412 3,461 Property operating expenses 2,505 1,796 709 2,307 1,663 644 Real estate taxes 1,453 514 939 1,449 487 962 Net operating income $ 5,063 $ 2,753 $ 2,310 $ 4,117 $ 2,262 $ 1,855 Non-allocated expenses (1) (5,567) (5,102) Other income and expenses (3) (1,589) (809) Net income attributable to non-controlling interests 1 11 Net loss attributable to Highlands REIT, Inc. common stockholders $ (2,092) $ (1,783) Nine Months Ended Nine Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 26,294 $ 14,225 $ 12,069 $ 22,452 $ 12,057 $ 10,395 Other property income 787 787 — 733 733 — Total income 27,081 15,012 12,069 23,185 12,790 10,395 Property operating expenses 7,156 5,032 2,124 6,614 4,563 2,051 Real estate taxes 4,326 1,710 2,616 4,374 1,465 2,909 Net operating income $ 15,599 $ 8,270 $ 7,329 $ 12,197 $ 6,762 $ 5,435 Non-allocated expenses (1) (17,052) (15,562) Gain on sale of investment properties, net (2) 6,869 — Other income and expenses (3) (4,823) (2,254) Net income (loss) attributable to non-controlling interests 5 (10) Net income (loss) attributable to Highlands REIT, Inc. common stockholders $ 598 $ (5,629) Balance Sheet Data Real estate assets, net (4) $ 288,736 $ 193,315 $ 95,421 $ 304,680 $ 199,941 $ 104,739 Non-segmented assets (5) 50,540 48,211 Total assets $ 339,276 $ 352,891 Capital expenditures $ 4,177 $ 494 $ 3,683 $ 3,095 $ 1,051 $ 2,044 (1) Non-allocated expenses consist of general and administrative expenses and depreciation and amortization. (2) Gain on sale of investment properties is related to two other properties. (3) Other income and expenses consists of interest income and interest expense. (4) Real estate assets include intangible lease assets, net of amortization. (5) 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, 2024
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, 2024, the Company granted 313 shares of common stock with an aggregate value of $100 based on an estimated net asset value per share of $0.32. 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. 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, 2024, 11,304 shares were available for future issuance under the Incentive Award Plan. On October 24, 2023, we launched a modified “Dutch Auction” self-tender offer in an effort to provide a liquidity option for certain of our stockholders who elected to tender their stock while at the same time balancing the best interests of the Company and of those stockholders who wished to remain invested in the Company. We believe that the tender offer provided an efficient mechanism to provide our stockholders who desired immediate liquidity with the opportunity to tender shares, while also providing a benefit to those stockholders who did not participate, as such stockholders automatically increased their relative percentage ownership interest in the Company and our future operations, including any liquidity events that we may have in the future. On December 8, 2023, the tender offer closed with the repurchase of 169,391 shares of common stock at a price per share of $0.14. Total cash required to complete the tender offer was $25,239, including all costs and fees of the tender offer. Subsequent to the close of the tender offer, the Company discovered an administrative error in which certain tender requests were not processed. We honored all such tender requests in April 2024, and accordingly another 33 shares were repurchased. During the nine months ended September 30, 2024, the Company incurred $224 of additional costs related to this previously executed tender offer.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2024
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 leasing commission. The total cost commitment was estimated to be approximately $9,100. The tenant began paying cash rent on January 1, 2023. The final payment to the tenant of $673 was made in September 2024 and, as of September 30, 2024, no additional amounts are due to the 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 commenced in January 2024. The lease required significant landlord work, a tenant allowance, which is being accounted for as lessor-owned improvements, and leasing commission. The total cost commitment is estimated to be approximately $13,200. As of September 30, 2024, we estimate that remaining costs to be paid under this commitment are approximately $1,085. The remainder of the tenant allowance will be paid by the Company upon final request by the tenant. In April 2024, the Company executed a lease with LTF Lease Company, LLC, for an approximately 61,000 square foot Life Time Fitness at Sherman Plaza, located in Evanston, Illinois. Rental payments under this lease are expected to commence in the second quarter of 2025 although the tenant is required to begin reimbursing for its share of common area maintenance upon taking possession of the space, which occurred in July 2024. The total cost commitment is estimated to be approximately $9,200. As of September 30, 2024, we estimate that remaining costs to be paid under this commitment are approximately $8,800.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events We have evaluated subsequent events through the date that the condensed consolidated financial statements were issued, noting none.

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ (2,092)	$ (1,783)	$ 598	$ (5,629)

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Sum_2

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
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 for under appropriate GAAP. Highlands’ subsidiaries generally consist of limited liability companies (“LLCs”). The effects of all significant intercompany transactions have been eliminated.
Consolidation	Consolidation
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this update require additional detailed and enhanced information about reportable segments’ expense, including significant segment expenses and other segment items that bridge segment revenue, significant expenses to segment profit or loss. The ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) on an annual basis as well as an explanation of how the CODM uses the reported measures and other disclosures. The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is continuing to evaluate this guidance, but expects the standard to impact our disclosures around our segments and is not anticipated to 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, 2024
Asset Acquisition [Abstract]
Asset Acquisition	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, 2024
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, 2024. The Company recognized a net gain on sale of investment properties of $6,869. Property Location Disposition Date Gross Disposition Price Sale Proceeds, Net Gain on Sale Versacold USA New Ulm, MN February 5, 2024 $ 7,175 $ 6,995 $ 2,052 Versacold USA St. Paul, MN February 5, 2024 $ 13,325 $ 13,076 $ 4,817 $ 20,500 $ 20,071 $ 6,869

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2024
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, 2024 2023 2024 2023 Lease income related to fixed lease payments $ 7,445 $ 6,474 $ 22,460 $ 19,062 Lease income related to variable lease payments (1) 1,268 1,100 3,834 3,390 Other 308 299 787 733 Total revenues $ 9,021 $ 7,873 $ 27,081 $ 23,185 (1) Variable lease payments are comprised of tenant recovery income.
Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity	As of September 30, 2024, commercial operating leases provide for future minimum rental income, assuming no expiring leases are renewed, as follows. Multi-family residential leases are not included as the terms are generally for one year or less. 2024 (remaining) $ 2,845 2025 12,308 2026 12,609 2027 12,441 2028 12,046 Thereafter 92,435 Total $ 144,684

Accounts Payable and Accrued _2

Accounts Payable and Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2024
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses consist of the following: September 30, 2024 December 31, 2023 Accrued real estate taxes $ 5,903 $ 6,300 Accrued compensation 3,106 979 Accrued interest payable 546 570 Other accrued expenses 2,087 5,486 Total accounts payable and accrued expenses $ 11,642 $ 13,335

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Schedule of Debt Outstanding	Total debt outstanding as of September 30, 2024 and December 31, 2023 was as follows: September 30, 2024 December 31, 2023 Debt, gross $ 124,124 $ 124,817 Mortgage discount (1,910) (2,074) Deferred financing costs, net (1,441) (1,812) Total Debt, Net $ 120,773 $ 120,931
Scheduled Maturities of Mortgage Indebtedness	As of September 30, 2024, the Company’s outstanding mortgage indebtedness included 11 mortgage loans with various maturities through January 2036, as follows: Debt maturing during the year As of September 30, 2024 Weighted average interest rate 2024 (remaining) $ — — % 2025 20,000 5.86 % (1) 2026 23,346 4.56 % 2027 11,051 3.99 % 2028 — — % Thereafter 69,727 5.92 % (1) Total $ 124,124 5.48 % (1) See below for discussion of the derivative agreements entered into with the mortgage loans obtained on Trimble and The Muse. For Trimble (2025), the interest rate in the table above is the fixed rate. For The Muse (thereafter), the interest rate is the rate in effect on September 30, 2024.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2024
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, 2024 and December 31, 2023, respectively. September 30, 2024 Level 1 Level 2 Level 3 Total Derivative financial instruments designated as cash flow hedges: Classified as “Deferred costs and other assets, net” $ — $ 3 $ — $ 3 Classified as “Other liabilities” $ — $ 56 $ — $ 56 December 31, 2023 Derivative financial instruments designated as cash flow hedges: Level 1 Level 2 Level 3 Total Classified as “Deferred costs and other assets, net” $ — $ 97 $ — $ 97
Schedule of the Fair Value of Financial Instruments	The table below presents the fair value of financial instruments that are presented at carrying values in the consolidated financial statements as of September 30, 2024 and December 31, 2023. September 30, 2024 December 31, 2023 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Debt $ 124,124 $ 120,700 $ 124,817 $ 119,242

Segment Reporting (Tables)

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2024
Segment Reporting [Abstract]
Summary of Net Property Operations	The following tables summarize net operating income by segment for the three and nine months ended September 30, 2024 and 2023. Three Months Ended Three Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 8,713 $ 4,755 $ 3,958 $ 7,574 $ 4,113 $ 3,461 Other property income 308 308 — 299 299 — Total revenues 9,021 5,063 3,958 7,873 4,412 3,461 Property operating expenses 2,505 1,796 709 2,307 1,663 644 Real estate taxes 1,453 514 939 1,449 487 962 Net operating income $ 5,063 $ 2,753 $ 2,310 $ 4,117 $ 2,262 $ 1,855 Non-allocated expenses (1) (5,567) (5,102) Other income and expenses (3) (1,589) (809) Net income attributable to non-controlling interests 1 11 Net loss attributable to Highlands REIT, Inc. common stockholders $ (2,092) $ (1,783) Nine Months Ended Nine Months Ended Total Multi-family Other Total Multi-family Other Rental income $ 26,294 $ 14,225 $ 12,069 $ 22,452 $ 12,057 $ 10,395 Other property income 787 787 — 733 733 — Total income 27,081 15,012 12,069 23,185 12,790 10,395 Property operating expenses 7,156 5,032 2,124 6,614 4,563 2,051 Real estate taxes 4,326 1,710 2,616 4,374 1,465 2,909 Net operating income $ 15,599 $ 8,270 $ 7,329 $ 12,197 $ 6,762 $ 5,435 Non-allocated expenses (1) (17,052) (15,562) Gain on sale of investment properties, net (2) 6,869 — Other income and expenses (3) (4,823) (2,254) Net income (loss) attributable to non-controlling interests 5 (10) Net income (loss) attributable to Highlands REIT, Inc. common stockholders $ 598 $ (5,629) Balance Sheet Data Real estate assets, net (4) $ 288,736 $ 193,315 $ 95,421 $ 304,680 $ 199,941 $ 104,739 Non-segmented assets (5) 50,540 48,211 Total assets $ 339,276 $ 352,891 Capital expenditures $ 4,177 $ 494 $ 3,683 $ 3,095 $ 1,051 $ 2,044 (1) Non-allocated expenses consist of general and administrative expenses and depreciation and amortization. (2) Gain on sale of investment properties is related to two other properties. (3) Other income and expenses consists of interest income and interest expense. (4) Real estate assets include intangible lease assets, net of amortization. (5) 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, 2024 parcel property $ / shares	Dec. 31, 2023 parcel property $ / 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			18	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	95%
Equity investment contributions | $	$ 10,200

Basis of Presentation and Sum_3

Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)	Sep. 30, 2023 USD ($)	Apr. 28, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Percentage of shraes				1
Assets	$ 339,276	$ 341,152	$ 352,891
Liabilities	134,708	136,940
Variable Interest Entity, Primary Beneficiary
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Assets	23,155	23,740
Liabilities	$ 18,134	$ 18,116

Acquired Properties - Additiona

Acquired Properties - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($) building	Sep. 30, 2023 USD ($)
Schedule of Asset Acquisitions, by Acquisition [Line Items]
Number of properties acquired | building	0
Acquisition of investment properties	$ 0	$ 21,288
Multi-family
Schedule of Asset Acquisitions, by Acquisition [Line Items]
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, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]
Gain on sale of investment properties, net	$ 0	$ 0	$ 6,869	$ 0

Disposed Investment Propertie_3

Disposed Investment Properties - Disposals (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale Proceeds, Net			$ 20,071	$ 0
Gain on Sale	$ 0	$ 0	$ 6,869	0
Versacold USA, New Ulm, MN
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross Disposition Price					$ 7,175
Sale Proceeds, Net				6,995
Gain on Sale				2,052
Versacold USA, St Paul, MN
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross Disposition Price					13,325
Sale Proceeds, Net				13,076
Gain on Sale				4,817
Versacold USA
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gross Disposition Price					$ 20,500
Sale Proceeds, Net				20,071
Gain on Sale				$ 6,869

Leases - Narrative (Details)

Leases - Narrative (Details)	Sep. 30, 2024
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, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases [Abstract]
Lease income related to fixed lease payments	$ 7,445	$ 6,474	$ 22,460	$ 19,062
Lease income related to variable lease payments	1,268	1,100	3,834	3,390
Other	308	299	787	733
Total revenues	$ 9,021	$ 7,873	$ 27,081	$ 23,185

Leases - Receivable Maturity (D

Leases - Receivable Maturity (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Leases [Abstract]
2024 (remaining)	$ 2,845
2025	12,308
2026	12,609
2027	12,441
2028	12,046
Thereafter	92,435
Total	$ 144,684

Accounts Payable and Accrued _3

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued real estate taxes	$ 5,903	$ 6,300
Accrued compensation	3,106	979
Accrued interest payable	546	570
Other accrued expenses	2,087	5,486
Total accounts payable and accrued expenses	$ 11,642	$ 13,335

Debt - Outstanding Debt (Detail

Debt - Outstanding Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Debt, gross	$ 124,124	$ 124,817
Mortgage discount	(1,910)	(2,074)
Deferred financing costs, net	(1,441)	(1,812)
Total Debt, Net	$ 120,773	$ 120,931

Debt - Scheduled Maturities (De

Debt - Scheduled Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Total	$ 124,124	$ 124,817
Mortgages
Debt Instrument [Line Items]
2024 (remaining)	0
2025	20,000
2026	23,346
2027	11,051
2028	0
Thereafter	69,727
Total	$ 124,124
Weighted average interest rate
2024 (remaining)	0%
2025	5.86%
2026	4.56%
2027	3.99%
2028	0%
Thereafter	5.92%
Total	5.48%

Debt - Additional Information (

Debt - Additional Information (Details) $ in Thousands		9 Months Ended
	Nov. 08, 2023 USD ($)	Sep. 30, 2024 USD ($) loan	Dec. 31, 2023 USD ($)	Nov. 09, 2023 USD ($)	Sep. 30, 2023 USD ($)	Apr. 06, 2023 USD ($) ft²	Jan. 24, 2023 USD ($)
Debt Instrument [Line Items]
Number of mortgage loan | loan		11
Number of loans assumed | loan		2
Restricted cash		$ 2,050	$ 2,406		$ 1,801
Mortgages
Debt Instrument [Line Items]
2024 (remaining)		$ 0
Number of loans guaranteed | loan		1
2024 (remaining)		0%
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
Secured Debt | Mortgage Loan in Connection with Acquisition of The Locale
Debt Instrument [Line Items]
Principal amount		$ 17,700
Fixed rate	7.34%	6.49%
Loan term		7 years
Payoff of debt	$ 17,112
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%
Secured Debt | Loan Secured By Mortgage Encumbering The Muse
Debt Instrument [Line Items]
Principal amount				$ 19,496
Fixed rate		7.41%	7.39%
Interest rate, cap				7.44%

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($) derivative_instrument	Sep. 30, 2023 USD ($) derivative_instrument	Sep. 30, 2024 USD ($) derivative_instrument	Sep. 30, 2023 USD ($) derivative_instrument	Dec. 31, 2023
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unrealized gain (loss) on derivatives	$ (345)	$ (37)	$ (113)	$ 37
Cash flow hedges to be reclassified in the next twelve months			$ 1
Discount rate | Long-term debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0632		0.0632		0.0669
Discount rate | Long-term debt | Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0512		0.0512		0.0552
Discount rate | Long-term debt | Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Measurement input percentage	0.0906		0.0906		0.0966
Cash Flow Hedging | Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of derivative instruments | derivative_instrument	2	1	2	1
Notional amount	$ 20,000	$ 18,750	$ 20,000	$ 18,750
Cash Flow Hedging | Interest Rate Cap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notional amount	$ 19,496		$ 19,496

Fair Value Measurements - Deriv

Fair Value Measurements - Derivative Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
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	$ 3	$ 97
Derivative liabilities	56
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	3	97
Derivative liabilities	56
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, 2024	Dec. 31, 2023
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 124,124	$ 124,817
Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt	$ 120,700	$ 119,242

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 0	$ 0	$ 0	$ 0

Segment Reporting - Narrative (

Segment Reporting - Narrative (Details)	9 Months Ended
	Sep. 30, 2024 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, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Segment Reporting Information [Line Items]
Total revenues	$ 9,021	$ 7,873	$ 27,081	$ 23,185
Property operating expenses	2,505	2,307	7,156	6,614
Real estate taxes	1,453	1,449	4,326	4,374
Net operating income (loss)	5,063	4,117	15,599	12,197
Other income and expenses (3)	(1,589)	(809)
Gain on sale of investment properties, net	0	0	6,869	0
Net (income) loss attributable to non-controlling interests	1	11	5	(10)
Net income (loss) attributable to Highlands REIT, Inc. common stockholders	(2,092)	(1,783)	598	(5,629)
Total assets	339,276	352,891	339,276	352,891	$ 341,152
Capital expenditures			4,177	3,095
Rental income
Segment Reporting Information [Line Items]
Total revenues	8,713	7,574	26,294	22,452
Other property income
Segment Reporting Information [Line Items]
Total revenues	308	299	787	733
Other
Segment Reporting Information [Line Items]
Total revenues	3,958	3,461	12,069	10,395
Property operating expenses	709	644	2,124	2,051
Real estate taxes	939	962	2,616	2,909
Net operating income (loss)	2,310	1,855	7,329	5,435
Other | Rental income
Segment Reporting Information [Line Items]
Total revenues	3,958	3,461	12,069	10,395
Other | Other property income
Segment Reporting Information [Line Items]
Total revenues	0	0	0	0
Reconciling items
Segment Reporting Information [Line Items]
Non-allocated expenses	(5,567)	(5,102)	(17,052)	(15,562)
Other income and expenses (3)			4,823	2,254
Other income and expenses	1	11
Total assets	50,540	48,211	50,540	48,211
Operating Segments And Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total assets	288,736	304,680	288,736	304,680
Net Lease | Operating segments
Segment Reporting Information [Line Items]
Total assets	193,315	199,941	193,315	199,941
Capital expenditures			494	1,051
Retail | Operating segments
Segment Reporting Information [Line Items]
Total assets	95,421	104,739	95,421	104,739
Capital expenditures			3,683	2,044
Multi-family | Operating segments
Segment Reporting Information [Line Items]
Total revenues	5,063	4,412	15,012	12,790
Property operating expenses	1,796	1,663	5,032	4,563
Real estate taxes	514	487	1,710	1,465
Net operating income (loss)	2,753	2,262	8,270	6,762
Multi-family | Operating segments | Rental income
Segment Reporting Information [Line Items]
Total revenues	4,755	4,113	14,225	12,057
Multi-family | Operating segments | Other property income
Segment Reporting Information [Line Items]
Total revenues	$ 308	$ 299	$ 787	$ 733

Share Based Compensation (Detai

Share Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	Dec. 08, 2023	Apr. 30, 2024	Jun. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Aug. 12, 2021	Apr. 28, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments for Repurchase of Common Stock	$ (25,239)			$ (224)
Repurchased price per share (in dollars per share)	$ 0.14
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				313	357
Aggregate value of shares granted				$ 100	$ 100
Granted (in dollars per share)				$ 0.32	$ 0.28
Repurchase of shares (shares)		33	33	169,391,000
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)				11,304,000

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Thousands	Feb. 28, 2021 USD ($) ft²	Sep. 30, 2024 USD ($)	Apr. 30, 2024 USD ($) ft²	Nov. 30, 2022 USD ($) ft²
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
Trimble
Loss Contingencies [Line Items]
Leased area | ft²				80,000
Estimated cost commitment				$ 13,200
Estimated remaining cost		1,085
LTF Lease Company LLC
Loss Contingencies [Line Items]
Leased area | ft²			61,000
Estimated cost commitment			$ 9,200
Estimated remaining cost		$ 8,800