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The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the notes thereto and Management’s Discussion and Analysis included in our 2023 Annual Report on Form 10-K and our Condensed Consolidated Financial Statements and the notes thereto included elsewhere in this document.
−Removed: Unless otherwise indicated, references to “2024” refer to the three and six months ended June 30, 2024 and references to “2023” refer to the three and six months ended June 30, 2023.
+Added: Unless otherwise indicated, references to “2024” refer to the three and nine months ended September 30, 2024 and references to “2023” refer to the three and nine months ended September 30, 2023.
The following discussion may contain forward-looking statements that reflect our plans and expectations.
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We primarily operate under long-term asset management and property management agreements that provide recurring, fee-based revenue streams.
−Removed: Our asset management services platform is anchored by a long-term, full-service asset management agreement with an affiliate that includes a cost-plus fee structure and covers all of the properties in our Anchor Portfolio (the "2022 AMA" - see below for additional details).
+Added: Our asset management services platform is anchored by a long-term, full-service asset management agreement with Comstock Partners, LC ("CP"), an affiliate entity controlled by our Chief Executive Officer Christopher Clemente, which includes a cost-plus fee structure and covers all of the properties in our Anchor Portfolio (the "2022 AMA" - See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
As a vertically integrated real estate services company, we perform all property management services through three wholly owned subsidiaries:
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Managed Portfolio
−Removed: The following table summarizes the operating assets that are included in our managed portfolio:
+Added: The following table summarizes the operating assets that were included in our managed portfolio as of September 30, 2024:
Type # of Assets Size/Scale % Leased (1)
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ParkX - Security & Other 20 ~1,700 hrs/week
+Added: Includes terminated leases that have been substantially prepaid or prepaid in full
% leased reflects Q124 delivery of a new office tower located in The Row at Reston Station.
−Removed: Excluding this recently delivered property, the % leased for the Commercial portfolio is 93%.
+Added: Excluding this recently delivered property, the % leased for stabilized assets the Commercial portfolio is 94%.
In addition, we manage the following assets that are under construction and scheduled for delivery in the next 12 to 24 months:
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Given its proximity to BLVD 44, we plan to explore rezoning opportunities at Comstock 41 that would allow for potential relocation of moderately-priced dwelling units from BLVD 44 to Comstock 41 as well as utilization of excess parking capacity at both BLVD 44 and BLVD Ansel.
−Removed: In conjunction with the acquisition, we entered into a contingent fee agreement with BLVD 44 should these pursuits prove successful (See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
+Added: In conjunction with the acquisition, we entered into a contingent fee agreement with BLVD 44 should these pursuits prove successful.
+Added: (See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
We intend to maintain a limited financial role in any future development activities that may occur at this site and plan to only offer fee-based development and asset management services to any affiliate or suitable third-party financial sponsor of any potential future developments.
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The following tables set forth consolidated statement of operations data for the periods presented (in thousands):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
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Net income (loss) $ 2,377 $ 4,685 $ 4,233 $ 5,914
−Removed: Comparison of the Three Months Ended June 30, 2024 and 2023
+Added: Comparison of the Three Months Ended September 30, 2024 and 2023
The following table summarizes revenue by line of business (in thousands):
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2024 2023 Change
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Total revenue $ 12,995 100.0 % $ 14,463 100.0 % $ (1,468) (10.2) %
−Removed: Revenue increased 19.9% in 2024.
−Removed: The $1.8 million comparative increase was primarily driven by a $1.2 million, or 103.3%, increase in recurring fee-based revenue from our property and parking management subsidiaries that stemmed from the continued expansion of our managed portfolio.
−Removed: Also contributing to the increase was a $0.3 million net increase in supplemental leasing and development fees due to increased activity compared to 2023.
+Added: Revenue decreased 10.2% in 2024.
+Added: The $1.5 million comparative decrease was primarily driven by a $4.8 million decrease in incentive fees earned.
+Added: A previously scheduled October 1, 2024 incentive fee trigger event date for seven specified managed portfolio assets was deferred.
+Added: (See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
+Added: Partially offsetting the decrease was a $1.8 million, or 154%, increase in recurring, fee-based revenue from our property and parking management subsidiaries that was driven by the continued expansion of our managed portfolio, as well as a $1.1 million increase in supplemental lease termination fees.
Operating costs and expenses
The following table summarizes operating costs and expenses (in thousands):
−Removed: Three Months Ended June 30, Change
+Added: Three Months Ended September 30, Change
2024 2023 $ %
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Operating costs and expenses increased 10.4% in 2024.
−Removed: The $1.2 million comparative increase was primarily due to a $0.9 million net increase in personnel expenses stemming from increased headcount and employee compensation and a $0.2 million increase in reimbursable expenses.
+Added: The $1.0 million comparative increase was primarily due to a $0.9 million net increase in personnel-related expenses stemming from increased headcount and employee compensation.
Other income (expense)
The following table summarizes other income (expense) (in thousands):
−Removed: Three Months Ended June 30, Change
+Added: Three Months Ended September 30, Change
2024 2023 $ %
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Gain (loss) on real estate ventures (75) (241) 166 (68.9) %
−Removed: Other income (expense), net 11 47 (36) (76.6) %
+Added: Other income (expense), net 23 1 22 N/M
Total other income (expense) $ 117 $ (240) $ 357 (148.8) %
−Removed: Other income (expense) changed by $0.1 million in 2024, primarily driven by a $0.2 million net increase in interest income stemming from interest earned on money market sweep accounts that were not active in 2023, partially offset by a combined $0.1 million increase in expense stemming from a net mark-to-market valuation decrease from equity method investments in real estate ventures and a comparative decrease in other income.
+Added: Other income (expense) changed by $0.4 million in 2024, primarily driven by a $0.2 million net increase in interest income stemming from interest earned on money market sweep accounts that were not active in 2023 and a combined net $0.2 million improvement in mark-to-market valuation impacts of equity method investments in real estate ventures.
Provision for income tax was $0.6 million in 2024, compared to $0.3 million in 2023.
−Removed: The $0.3 million increase primarily stems from a $0.7 million increase in pre-tax income as well as a slightly higher annualized estimated tax rate in the current period.
−Removed: Comparison of the Six Months Ended June 30, 2024 and 2023
+Added: The $0.3 million increase primarily stems from a significantly higher annualized estimated tax rate in the current period due to the impact of approximately $1.0 million of additional valuation allowance reversals that occurred in 2023.
+Added: The impact of the rate increase was partially offset by a decrease in taxable income.
+Added: Comparison of the Nine Months Ended September 30, 2024 and 2023
The following table summarizes revenue by line of business (in thousands):
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2024 2023 Change
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Revenue increased 2.0% in 2024.
−Removed: The $2.1 million comparative increase was primarily driven by a $1.7 million, or 73.5%, increase in recurring fee-based revenue from our property and parking management subsidiaries that stemmed primarily from the continued expansion of our managed portfolio.
+Added: The $0.7 million comparative increase was primarily driven by a $3.5 million, or 100%, increase in recurring, fee-based revenue from our property and parking management subsidiaries that was driven by the continued expansion of our managed portfolio.
+Added: Also contributing to the increase was $1.1 million of additional supplemental lease termination fees and a $0.5 million increase in reimbursable staffing charges.
+Added: Partially offsetting these increases was a $4.8 million decrease in incentive fees earned.
+Added: A previously scheduled October 1, 2024 incentive fee trigger event date for seven specified managed portfolio assets was deferred.
+Added: (See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
Operating costs and expenses
The following table summarizes operating costs and expenses (in thousands):
−Removed: Six Months Ended June 30, Change
+Added: Nine Months Ended September 30, Change
2024 2023 $ %
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Operating costs and expenses increased 10.2% in 2024.
−Removed: The $1.7 million increase was primarily due to a $1.2 million net increase in personnel expenses stemming from increased headcount and employee compensation and a $0.3 million increase in reimbursable expenses.
+Added: The $2.7 million increase was primarily due to a $1.7 million net increase in personnel expenses stemming from increased headcount and employee compensation and a net $1.0 million increase in reimbursable/billable expenses.
Other income (expense)
The following table summarizes other income (expense) (in thousands):
−Removed: Six Months Ended June 30, Change
+Added: Nine Months Ended September 30, Change
2024 2023 $ %
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Other income (expense), net 56 48 8 16.7%
−Removed: Total other income (expense) $ 46 $ (432) $ 478 N/M
−Removed: Other income (expense) changed by $0.5 million in 2024, primarily due to a $0.3 million increase in interest income stemming from interest earned on money market sweep accounts that were not active in 2023 and a $0.2 million improvement in mark-to-market valuation impacts from equity method investments in real estate ventures.
+Added: Total other income (expense) $ 163 $ (672) $ 835 (124.3)%
+Added: Other income (expense) changed by $0.8 million in 2024, primarily due to a $0.5 million increase in interest income stemming from interest earned on money market sweep accounts that were not active in 2023 and a combined net $0.4 million improvement in mark-to-market valuation impacts of equity method investments in real estate ventures.
Provision for income tax was $1.1 million in 2024, compared to $0.6 million in 2023.
−Removed: The $0.3 million increase primarily stems from a $0.9 million increase in pre-tax income as well as a slightly higher annualized estimated tax rate in the current period.
+Added: The $0.5 million increase primarily stems from a significantly higher annualized estimated tax rate in the current period due to the impact of approximately $1.0 million of additional valuation allowance reversals that occurred in 2023.
+Added: The impact of the rate increase was partially offset by a decrease in taxable income.
Non-GAAP Financial Measures
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The following table presents a reconciliation of net income (loss), the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA (in thousands):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
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Adjusted EBITDA $ 3,133 $ 5,605 $ 6,220 $ 8,258
−Removed: The increases in Adjusted EBITDA for the three and six months ended June 30, 2024 are primarily driven by the significant increases in recurring fee-based property and parking management revenue in 2024.
+Added: The decreases in Adjusted EBITDA for the three and nine months ended September 30, 2024 are primarily driven by higher net income in 2023 due to the recognition of material supplemental incentive fee revenue, which was partially offset by the significant increases in recurring fee-based property and parking management revenue in 2024.
Liquidity and Capital Resources
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We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating activities.
−Removed: Our principal sources of liquidity as of June 30, 2024 were our cash and cash equivalents of $17.4 million and our $10.0 million of available borrowings on our credit facility.
+Added: Our principal sources of liquidity as of September 30, 2024 were our cash and cash equivalents of $21.1 million and our $10.0 million of available borrowings on our credit facility.
Significant factors which could affect future liquidity include the adequacy of available lines of credit, cash flows generated from operating activities, working capital management and investments.
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The following table summarizes our cash flows for the periods indicated (in thousands):
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2024 2023 Change ($)
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Operating Activities
−Removed: The $1.4 million decrease in net cash used in operating activities was primarily driven by a $0.7 million increase in net income after adjustments for non-cash items and a $0.7 million incremental cash inflow stemming from changes to our net working capital.
−Removed: The net working capital increase was primarily influenced by increased accounts receivable collections and non-qualified deferred compensation accruals.
−Removed: Our operating cash activity in both periods presented resulted in a net use of cash due primarily to the scheduled first quarter payout of year-end bonus accruals.
+Added: The $3.3 million increase in net operating cash activity was primarily driven by a $4.9 million incremental cash inflow stemming from changes to our net working capital, partially offset by $1.6 million decrease in net income after adjustments for non-cash items.
+Added: The net working capital increase was primarily influenced by increased accounts receivable collections.
Investing Activities
−Removed: Net cash provided by investing activities was relatively flat in 2024 due to a $0.3 million increase in purchases of securities to fund non-qualified deferred compensation plan liabilities that was offset by a $0.3 million increase in distributions received from investments in real estate ventures.
+Added: The 0.1 million increase in net cash used in investing activities was primarily driven by a $0.4 million increase in purchases of securities to fund non-qualified deferred compensation plan liabilities, partially offset by a $0.3 million increase in distributions received from investments in real estate ventures.
Financing Activities
−Removed: The $0.1 million increase in n et cash used in financing activities was due to a $0.1 million increase in cash paid for taxes related to the net share settlement of equity awards.
+Added: The $0.1 million increase in n et cash used in financing activities was due to a $0.2 million increase in cash paid for taxes related to the net share settlement of equity awards, partially offset by $0.1 million of collected proceeds stemming from the issuance of common stock related to equity awards.
Quantitative and Qualitative Disclosures About Market Risk
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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.