What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-21 · 50 added, 50 removed, 165 unchanged (38% of the section changed)

13 unchanged sentences

Acquisitions and Dispositions

• On March 30, 2021, we sold a 50% ownership interest in Overlook at Allensville Phase II, a 144 unit multifamily property in Sevierville, Tennessee to Macquarie, for $2.6 million, resulting in a gain on sale of $1.4 million.

Concurrent with the sale, we each contributed our 50% ownership interests in the property into VAA.

• On August 26, 2021, we sold 600 Las Colinas, a 512,173 square foot office building in Irving, Texas for $74.8 million, resulting in a gain on sale of $27.3 million.

We used the proceeds from the sale to pay off the mortgage note payable on the property (See "Financing Activities") and for general corporate purposes.

• During the year ended December 31, 2021, we sold a total of 134.7 acres of land from our holdings in Windmill Farms for $20.2 million in aggregate, resulting in gains on sale of $10.3 million .

In addition, we sold 14.1 acres of land from our holdings in Mercer Crossing for $9.0 million , resulting in a gain on sale of $6.4 million .

• On January 14, 2022, we sold Toulon, a 240 unit multifamily property in Gautier, Mississippi for $26.8 million, resulting in a gain on sale of $9.4 million.

7 unchanged sentences

In addition, we sold 0.9 acres of land from our holdings in Mercer Crossing for $0.7 million, resulting in a gain on sale of $0.2 million.

• On December 13, 2024 , we sold 30 single family lots from our holdings in Windmill Farms for $1.4 million, resulting in a gain on sale of $1.1 million.

Financing Activities

• On March 2, 2021 , we extended our loan on Athens to August 28, 2022 .

• On March 4, 2021 , we extended the maturity of our loan on Windmill Farms until February 28, 2023 at a reduced interest rate of 5%.

• On August 25, 2021, we replaced the existing loan on Villas at Bon Secour with a new $20.0 million loan that bears interest at 3.08% and matures on September 1, 2031.

• On August 26, 2021, we paid off the $35.9 million loan on 600 Las Colinas in connection with the sale of the underlying property (See "Acquisitions and Dispositions").

• On January 14, 2022, we paid off the $14.7 million loan on Toulon in connection with the sale of the underlying property (See "Acquisitions and Dispositions").

6 unchanged sentences

• On February 28, 2023 , we extended the maturity of our loan on Windmill Farms until February 28, 2024 at a revised interest rate of 7.75%.

• On March 15, 2023 , we entered into a $33.0 million construction loan to finance the development of Lake Wales (See "Development Activities") that bears interest at SOFR plus 3% and matures on March 15, 2026 , with two one-year extension options.

• On March 15, 2023 , we entered into a $33.0 million construction loan to finance the development of Alera (See "Development Activities") that bears interest at SOFR plus 3% and matures on March 15, 2026 , with two one-year extension options.

• On May 4, 2023, we paid off the remaining $14.0 million of our Series A Bonds and $28.9 million of our Series B Bonds, which resulted in a loss on early extinguishment of debt of $1.7 million.

4 unchanged sentences

• On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.

• On January 1, 2024, we amended our cash management agreement with Pillar .

As a result, the interest rate on the related party receivable (" Pillar Receivable ") changed from prime plus one to SOFR.

• On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.

• On July 10, 2024, we replaced the existing loan on Forest Grove with a $6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031.

• On October 21, 2024 , we entered into a $27.5 million construction loan to finance the development of Mountain Creek (See "Development Activities") that bears interest at SOFR plus 3.45% and matures on October 20, 2026.

Development Activities

During 2023, we spent $5.0 million on our ongoing development of Windmill Farms .

Our expenditure included $0.5 million on the development of land lots for sale to single family home developers and $4.5 million on reimbursable infrastructure investments.

In connection with the project, we entered into an agreement to sell 276 lots for a total of $13.1 million.

The agreement provides for the lots to be delivered over a two-year period.

We expect the first installment to be completed in June 2024.

On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida (" Lake Wales ") that is expected to be completed in 2025 for a total cost of approximately $55.3 million.

We have agreements to develop two parcels of land (" PODs") from our land holdings in Windmill Farms .

The agreements provide for the development of 125 acres of raw land into approximately 470 land lots to be used for single family homes for a total of $24.3 million.

We estimate that we will complete the development of these PODs over a two-year period starting during the fourth quarter of 2024.

During 2024, we spent $3.6 million on reimbursable infrastructure investments.

On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida (" Alera ") that is expected to be completed in 2025 for a total cost of approximately $55.3 million.

The cost of construction will be funded in part by a $33.0 million construction loan (See "Financing Activities") .

11 unchanged sentences

As of December 31, 2024, we have incurred a total of $26.3 million in development costs.

In 2021, Landing on Bayou Cane, a 240 unit multifamily property in Houma , Louisiana suffered extensive damage from Hurricane Ida and required extensive renovation.

As of December 31, 2023, we completed the restoration and lease-up of the property for a total cost of $16.7 million, which was primarily funded by insurance proceeds.

On October 21, 2024, we entered into a development agreement with Pillar to build a 234 unit multifamily property in Dallas , Texas (" Mountain Creek ") that is expected to be completed in 2026 for a total cost of approximately $49.8 million.

The cost of construction will be funded in part by a $27.5 million construction loan (See "Financing Activities") .

The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period.

As of December 31, 2024, we have incurred a total of $5.0 million in development costs.

Other Developments

10 unchanged sentences

On March 23, 2023, we received $18.0 million from VAA, which represented the remaining distribution of the proceeds from the sale of the VAA Sale Portfolio.

In December 2024, we dissolved VAA.

We used our share of the proceeds from the sale of the VAA Sale Portfolio to invest in short-term investments and real estate, pay down our debt and for general corporate purposes.

We had been engaged in litigation with David Clapper and entities related to Mr.

Clapper (collectively, “Clapper") since 1999.

The matter originally involved a transaction in 1998 in which we were to acquire eight multifamily properties from the Clapper.

Through the years, several rulings, both for and against us, were issued with a range of settlement from zero to $148.0 million .

On October 31, 2024, we executed a Settlement Agreement and General Release (the “Settlement Agreement”) and paid $23.4 million to resolve all claims.

Critical Accounting Policies

30 unchanged sentences

For the comparison of the year ended December 31, 2024 to the year ended December 31, 2023 , the Redevelopment Property is Landing on Bayou Cane.

The Acquisition Properties are Blue Lake Villas, Blue Lake Villas Phase II, Northside on Travis, Parc at Denham Springs, Residences at Holland Lake, Villas of Park West I and Villas of Park West II.

The Disposition Properties are Fruitland Park, Sugar Mill Phase III and Toulon.

The change in revenues and expenses of the Redevelopment Property from 2023 to 2024 is primarily due to the lease-up of the property in 2023 as the restored units were placed in service.

There were no Acquisition Properties or Disposition Properties f or the comparison of the year ended December 31, 2024 to the year ended December 31, 2023 .

The following table (amounts in thousands) provides a summary of the results of operations of 2024 and 2023:

16 unchanged sentences

Gain on foreign currency transactions — 993 (993)

(Loss) gain sale, remeasurement or write down of assets (1,923) 87,132 (89,055)

Loss on real estate transactions (23,989) (1,923) (22,066)

Income from joint ventures 1,449 3,242 (1,793)

Other income (expense) 3,855 (861) 4,716

Net income $ 5,251 $ 475,317 $ (470,066)

Net (loss) income $ (13,439) $ 5,251 $ (18,690)

Comparison of the year ended December 31, 2024 to the year ended December 31, 2023:

Our $18.7 million decrease in net income in 2024 is primarily attributed to the following:

• The $6.6 million increase in profit from the multifamily properties is due to increases of $5.6 million from the Acquisition Properties and $2.3 million from the Redevelopment Property offset in part by decreases of $1.0 million from the Same Properties and $0.3 million from the Disposition Properties .

The increase in profit from the Redevelopment property is due to the completion of the restoration and lease-up of Landing on Bayou Cane in 2023.

The decrease in profit from the Same Properties is primarily due to an increase in insurance cost in 2023.

• The $3.2 million decrease in profit from the commercial properties is primarily due to a decline in occupancy and an increase in insurance cost .

• The $8.3 million increase in interest income, net is due to a $8.0 million decrease in interest expense and a $0.3 million increase in interest income.

The decrease in interest expense is primarily due to the pay down of our bonds payable in 2023 (See " Financing Activities " in Management's Overview).

The increase in interest income is primarily due to a $9.9 million increase in interest on short term investments offset in part by a $9.6 million decrease in interest income from notes receivable and receivable from related party.

The increase in short-term investments is primarily due to the $388.0 million in cash distributions received from VAA in 2022 (See " Other Developments" in Management's Overview ).

The decrease in interest income from notes receivable is primarily due to the forgiveness of $4.2 million in interest income in connection with the UHF loan modification in 2023.

• The decrease in gain on foreign currency transactions is due to a change in the U.S.

• The $1.4 million decrease in profit from the multifamily properties is due to a $1.0 million decrease from the Redevelopment Property.

The decrease in profit from the Redevelopment property is due to the receipt of $1.3 million of business interruption insurance proceeds in 2023.

• The $0.4 million decrease in profit from the commercial properties is primarily due to a decline in occupancy.

• The $5.6 million decrease in general, administrative and advisory expenses is primarily due to a reduction in legal cost associated with the Nixdorf litigation in 2023 and due to auditing and other administrative expenses associated with the bonds payable, which were repaid in 2023.

• The $22.1 million increase in loss on real estate transactions is primarily due to the settlement of the Clapper litigation in 2024 (See " Other Transactions " in Management's Overview).

• The $5.2 million decrease in interest income, net is due to a $6.9 million decrease in interest income offset in part by a $1.7 million decrease in interest expense.

The decrease in interest income is primarily due to a decrease in interest rates on the UHF notes in 2023 and a decrease in interest rates on the Pillar Receivable in 2024.

The decrease in interest expense is primarily due to the repayment of the bonds payable in 2023 (See " Financing Activities " in Management's Overview).

• The loss from early extinguishment of debt and the gain on foreign currency transactions are due to the bonds payable that were outstanding in 2023.

• The decrease in gain on foreign currency transactions is due to the change in the U.S.

Dollar and the New Israeli Shekel conversion rate in connection with the bonds that were listed on the Tel-Aviv Stock Exchange (See "Financing Activities") .

• (Loss) gain on sale, remeasurement or write down of assets changed $91.1 million from a gain of $89.2 million in 2022 to a loss of $1.9 million in 2023.

The decrease in gain is primarily due to the $73.2 million gain on remeasurement of the VAA Holdback Portfolio in 2022 (See "Other Developments" in Management's Overview) and property dispositions in 2022 (See "Acquisitions and Dispositions" in Management's Overview).

• The decrease in income from joint ventures is primarily due to our share of the gain on the sale of the VAA Sale Portfolio in 2022 (See "Other Developments" in Management's Overview).

• The $101.3 million change in other income (expense) is primarily due to the income tax expense incurred in connection with the sale of the VAA Sale Portfolio in 2022 (See "Other Developments" in Management's Overview).

Comparison of the year ended December 31, 2023 to the year ended December 31, 2022:

20 unchanged sentences

2024 2023 Variance

Net cash used in operating activities $ (31,054) $ (45,386) $ 14,332

Net cash provided by investing activities $ 26,813 $ 307,357 $ (280,544)

Net cash used in financing activities $ (139,020) $ (112,377) $ (26,643)

The decrease in cash used in operating activities is primarily due to an increase in interest income and an increase in rents provided by the Acquisition Properties (See "Acquisitions and Dispositions" in Management's Overview).

The increase in interest income is primarily due to an increase in short-term investments and cash equivalents and an increase in interest rates.

The decrease in cash provided by investing activities is primarily due to a $362.9 million decrease in distribution from joint venture (See "Other Developments" in Management's Overview) and a $44.4 million decrease in proceeds from the sale of real estate (See " Acquisitions and Dispositions " in Management's Overview), offset in part by a $131.7 million decrease in investment in short-term investments.

The decrease in distribution from joint venture is due to the sale of the VAA Sale Portfolio in 2022 (See "Other Developments" in Management's Overview) and the decrease in investment in short-term investments is due to the investment of those distributions in 2022.

The $26.6 million increase in cash used in financing activities is primarily due to an $87.4 million increase in the repayments of bond payable offset in part by a $60.8 million decrease in repayments of mortgage and other notes payable.

The increase in repayments of bonds payable is primarily due to the payoff of our bonds in 2023 (See " Financing Activities " in Management's Overview) and the decrease in the repayments of the mortgage and other notes payable is primarily due to the payoff of the mortgage notes on Toulon and Sugar Mill Phase III in 2022 in connection with the sales of the underlying properties.

Net cash provided by (used in) operating activities $ 1,089 $ (31,054) $ 32,143

Net cash (used in) provided by investing activities $ (41,340) $ 26,813 $ (68,153)

Net cash provided by (used in) financing activities $ 1,659 $ (139,020) $ 140,679

The increase in cash from operating activities is primarily due to a decrease in interest payments and insurance cost in comparison to prior year.

The $68.2 million increase in cash used in investing activities is primarily due to the $39.5 million increase in development and renovation of real estate, the $21.4 million decrease in distribution from joint venture and the $18.7 million decrease in net redemption of short term investments offset in part by the $6.5 million decrease in originations and advances on notes receivable and the $3.8 million increase in collection of notes receivable .

The increase in development and renovation of real estate relates to the construction start of Merano and Bandera Ridge in 2024.

The distribution from joint venture in 2023 relates to the final distribution of proceeds from the sale of the VAA Sale Portfolio in 2022.

The $140.7 million decrease in cash used in financing activities is primarily due to the $131.2 million repayment of our bonds in 2023.

Funds From Operations ("FFO")

We use FFO in addition to net income to report our operating and financial results and considers FFO and FFO-diluted as supplemental measures for the real estate industry and a supplement to GAAP measures.

We use FFO in addition to net income to report our operating and financial results and consider FFO and FFO-diluted as supplemental measures for the real estate industry and a supplement to GAAP measures.

The National Association of Real Estate Investment Trusts ("Nareit") defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of properties, plus real estate related depreciation and amortization, impairment write-downs of real estate and write-downs of investments in an affiliate where the write-downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures.

12 unchanged sentences

2024 2023 2022

Net income attributable to the Company $ 3,968 $ 373,349 $ 3,347

Net (loss) income attributable to the Company $ (14,703) $ 3,968 $ 373,349

Depreciation and amortization on consolidated assets 12,276 13,646 9,686

Loss (gain) on sale, remeasurement or write down of assets 1,923 (87,132) (24,647)

Loss (gain) on real estate transactions 23,989 1,923 (87,132)

Gain on sale of land 1,095 188 4,752

4 unchanged sentences

Loss on early extinguishment of debt from unconsolidated joint venture at our pro rata share — — 15,254

(Gain) loss on foreign currency transactions (993) (20,067) 6,175

Gain on foreign currency transactions — (993) (20,067)

FFO-adjusted $ 22,863 $ 20,714 $ 41,267

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Optional and not included.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis