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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-07 · 60 added, 40 removed, 177 unchanged (36% of the section changed)

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The following discussion and analysis should be read in conjunction with our consolidated financial statements, the related notes thereto, and Management’s Discussion and Analysis included in our 2024 Annual Report on Form 10-K, as well as our condensed consolidated financial statements and the related notes thereto included elsewhere in this document.

Unless otherwise indicated, references to “2025” refer to the three and six months ended June 30, 2025 and references to “2024” refer to the three and six months ended June 30, 2024.

Unless otherwise indicated, references to “2025” refer to the three and nine months ended September 30, 2025 and references to “2024” refer to the three and nine months ended September 30, 2024.

The following discussion may contain forward-looking statements that reflect our plans and expectations.

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The focus of our managed portfolio revolves primarily around high quality, mixed-use real estate properties and developments that are strategically located adjacent to Metro rail stations, providing convenient access to public transportation.

Our Anchor Portfolio (see below for details) includes, or will soon include, millions of square feet of Trophy and Class A office towers, luxury multi-family residential buildings, luxury hotels with branded condominium residences, high-end retail and entertainment options, associated public spaces, and commercial parking garages to serve all the properties.

Our Anchor Portfolio (see below for details) includes, or will soon include, millions of square feet of Trophy and Class A office towers, luxury multi-family residential buildings, luxury hotels with branded condominium residences, high-end retail and entertainment options, amenity-rich public spaces, and commercial parking garages to serve all the properties.

Over the twelve months of fiscal year 2024, Anchor Portfolio assets generated well over $100.0 million of gross revenue for the property owners.

The following table summarizes the operating assets that were included in our managed portfolio as of June 30, 2025:

The following table summarizes the operating assets, categorized by asset type, that were included in our managed portfolio as of September 30, 2025:

Type # of Assets Size/Scale % Leased

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14 2.3 million sqft.

Residential 6 1.8 million sqft.

Residential (2)

7 2.0 million sqft.

/ 1,700+ units 96%

ParkX - Garages 31 ~25,000 spaces

Hospitality (3)

1 290,000+ sqft.

ParkX - Garages (4)

32 ~24,000 spaces

ParkX - Security & Other (5)

37 ~5,500 hrs/week

Commercial % leased includes Q1 2024 delivery of a new office tower located in The Row at Reston Station.

Excluding that impact, the % leased for stabilized assets is 93%.

# of assets total excludes 24 properties where both parking & other services are provided to avoid double-counting.

Commercial % leased includes 2024 delivery of a new office tower located in The Row at Reston Station, which is not yet stabilized.

Our % leased for stabilized commercial assets is 93%.

# of Assets includes JW Marriott-branded luxury condominiums, newly added in September 2025 and for which we are providing property management services

Represents Virginia's only and first-ever JW Marriott Hotel, newly added in September 2025.

# of Assets includes 16 garages owned by unaffiliated third-party asset-owners

Includes parking/janitorial;

# of Assets excludes 26 properties where parking management services are also provided to avoid double-counting;

hours/week total is representative of all security & other locations, including duplicates.

In addition, we manage the following assets that are under construction and scheduled for delivery in the next 12 months:

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• 1 residential asset with 419 units representing approximately 430,000 square feet;

• 1 JW Marriott-branded hotel/condominium with 247 keys and 94 residential units representing a total of approximately 520,000 square feet;

• 1 commercial parking garage with approximately 1,200 spaces.

Our development pipeline currently includes 5 commercial assets that represent approximately 1.5 million square feet, 5 residential assets with 2,326 units that represent approximately 2.5 million square feet, and 1 hotel that will include 140 keys.

Our development pipeline currently includes 5 commercial assets that represent approximately 1.5 million square feet, 5 residential assets with more than 2,300 units that represent approximately 2.5 million square feet, and 1 dual-use hotel with 240 keys that represents approximately 220,000 square feet.

At full build out, our managed portfolio of assets is currently projected to total 106 assets representing nearly 10 million square feet.

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and Dulles International Airport on Metro's Silver Line (Fairfax County, Va.).

Nearing completion of Phase II of five planned development phases.

Includes Trophy-class office towers, luxury residential buildings and JW Marriott-brand luxury condominiums, premier retail offerings, and Virginia's first and only JW Marriott Hotel.

Loudoun Station Operating +

In Development Loudoun County’s first and only mixed-use, Metro-connected development that is located adjacent to Ashburn Station at the terminus of Metro's Silver Line in Ashburn, Va (Loudoun County, Va.)

In Development Loudoun County’s first and only mixed-use, Metro-connected development that is located adjacent to Ashburn Station at the terminus of Metro's Silver Line in Ashburn, Va.

Includes premier office and residential buildings as well as a diverse array of retail and entertainment options.

Other Portfolio Assets

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provides an excellent opportunity for significant value enhancement through by-right entitlements for approximately 117 residential units.

Investors X Operating Investment in Comstock Investors X, LC that owns legacy homebuilding assets that were monetized through market-rate sales that were completed in March 2024

ParkX Operating Commercial parking garages & spaces managed by ParkX Management that are located at/around affiliated managed properties as well as a growing number of third-party locations

ParkX Operating Parking garages & buildings/public spaces for which ParkX Management provides supplemental property management services that include parking management, security, porter/janitorial, and more.

Comstock 41 - Additional Information

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The following tables set forth consolidated statement of operations data for the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Net income (loss) $ 541 $ 2,377 $ 3,576 $ 4,233

Comparison of the Three Months Ended June 30, 2025 and 2024

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table summarizes revenue by line of business (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

2025 2024 Change

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Property management (1)

Parking management 3,200 24.7 % 2,059 19.2 % 1,141 55.4 %

2,887 21.7 % 3,253 25.0 % (366) (11.3) %

ParkX management 3,870 29.1 % 2,362 18.2 % 1,508 63.8 %

Total revenue $ 13,317 100.0 % $ 12,995 100.0 % $ 322 2.5 %

CHCI Commercial and CHCI Residential

Revenue increased 2.5% in 2025.

The $2.2 million comparative increase was primarily driven by a $1.0 million, or 42.4%, increase in recurring, fee-based revenue from our property and parking management subsidiaries that was driven by the continued expansion of our managed portfolio.

Also contributing to the variance was a $0.8 million net increase in supplemental fee revenue earned, stemming from a $1.0 million loan origination fee earned in the current period that was partially offset by a $0.2 million comparative decrease in leasing fee revenue.

The $0.3 million comparative increase was driven by the continued expansion of our managed portfolio, resulting in a $0.9 million, or 29.6%, increase in recurring, fee-based property management services revenue from our Commercial, Residential, and ParkX operating subsidiaries and a $0.3 million increase in reimbursable expense revenue.

In 2025, ParkX alone executed 11 new service contracts, 7 of which were with third-party customers.

Partially offsetting our revenue growth was a $0.9 million comparative decrease in supplemental fee revenue stemming from a $1.0 million lease termination fee earned in the prior period.

This same termination fee also drove a one-time $0.5 million property management fee in the prior period, resulting in the comparative $0.4 million decrease in property management revenue.

Operating costs and expenses

The following table summarizes operating costs and expenses (in thousands):

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

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Operating costs and expenses increased 24.5% in 2025.

The $1.7 million comparative increase was primarily due to a $1.5 million net increase in personnel-related expenses stemming from increased headcount and employee compensation.

The $2.5 million comparative increase was primarily due to a $1.7 million net increase in personnel-related expenses, $1.5 million of which was directly related to payroll and onboarding costs for 139 new ParkX employees hired in the period to meet required staffing for a new porter/janitorial service offering.

Other income (expense)

The following table summarizes other income (expense) (in thousands):

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

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Provision for income tax was $0.5 million in 2025, compared to $0.6 million in 2024.

The $0.2 million increase primarily stems from a slightly higher annualized estimated tax rate in the current period as well as higher taxable income.

Comparison of the Six Months Ended June 30, 2025 and 2024

The $0.1 million decrease stems from a $0.4 million tax benefit stemming from lower taxable income and the impact of an additional $1.0 million valuation allowance release in the current period.

Partially offsetting the decrease was an incremental $0.3 million tax provision related to finalizing the fiscal year 2024 tax return.

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table summarizes revenue by line of business (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2025 2024 Change

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Property management (1)

Parking management 5,754 22.5 % 3,697 17.3 % 2,057 55.6 %

8,748 22.5 % 8,701 25.3 % 47 0.5 %

ParkX management 9,624 24.7 % 6,059 17.6 % 3,565 58.8 %

Total revenue $ 38,928 100.0 % $ 34,386 100.0 % $ 4,542 13.2 %

CHCI Commercial and CHCI Residential

Revenue increased 13.2% in 2025.

The $4.2 million comparative increase was primarily driven by a $1.8 million, or 41.6%, increase in recurring, fee-based revenue from our property and parking management subsidiaries that was driven by the continued expansion of our managed portfolio.

Also contributing to the variance was a $1.4 million increase in supplemental fee revenue earned, stemming from a $1.0 million loan origination fee earned in the current period and a $0.4 million comparative increase in leasing fee revenue.

The $4.5 million comparative increase was primarily driven by the continued expansion of our managed portfolio, resulting in a $2.7 million, or 36.8%, increase in recurring, fee-based property management services revenue and a $0.8 million increase in reimbursable expense revenue from our Commercial, Residential, and ParkX operating subsidiaries.

In 2025, ParkX alone executed 33 new service contracts, 20 of which were with third-party customers.

Also contributing to the variance was a $0.5 million increase in supplemental fee revenue, stemming from a $1.0 million loan origination fee earned in the current period and a $0.5 million increase in leasing fee revenue.

Operating costs and expenses

The following table summarizes operating costs and expenses (in thousands):

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 $ %

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Operating costs and expenses increased 19.1% in 2025.

The $3.1 million increase was primarily due to a $2.7 million net increase in personnel expenses stemming from increased headcount and employee compensation.

The $5.6 million increase was primarily due to a $4.4 million net increase in personnel expenses, $2.9 million of which was directly related to payroll and onboarding costs for 221 additional ParkX employees, 139 of which were hired in Q3 2025 to meet required staffing for a new porter and janitorial service offering.

Other income (expense)

The following table summarizes other income (expense) (in thousands):

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 $ %

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Provision for income tax was $1.4 million in 2025, compared to $1.1 million in 2024.

The $0.4 million increase primarily stems from a slightly higher annualized estimated tax rate in the current period as well as higher taxable income.

The $0.3 million increase primarily stems from an incremental $0.3 million tax provision related to finalizing the fiscal year 2024 tax return.

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):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Adjusted EBITDA $ 1,066 $ 3,133 $ 5,338 $ 6,220

The increase in Adjusted EBITDA for the three and six months ended June 30, 2025 is primarily driven by significant increases in recurring fee-based property and parking management revenue and supplemental asset management fee revenue.

The decrease in Adjusted EBITDA for the three and nine months ended September 30, 2025 is primarily driven by lower net income due to a significant increase in operating costs from our ParkX subsidiary.

This cost increase stems directly from significant payroll and onboarding costs incurred to staff and setup a new porter/janitorial service offering.

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.

Our principal sources of liquidity as of June 30, 2025 were our cash and cash equivalents of $30.5 million and our $10.0 million of available borrowings on our Credit Facility.

Our principal sources of liquidity as of September 30, 2025 were our cash and cash equivalents of $26.2 million and our $10.0 million of available borrowings on our Credit Facility.

(See Note 5 in the Notes to Consolidated Financial Statements for additional information).

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The following table summarizes our cash flows for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2025 2024 Change

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Operating Activities

The $3.7 million variance in net operating cash activity was primarily driven by a $2.4 million incremental cash inflow stemming from changes to our net working capital and a $1.3 million increase in net income after adjustments for non-cash items.

The net working capital increase was primarily influenced by increased accounts receivable collections.

The $3.4 million variance in net operating cash activity was driven by a $2.6 million incremental cash outflow stemming from changes to our net working capital and a $0.7 million decrease in net income after adjustments for non-cash items.

The net working capital decrease was primarily influenced by a decrease in related party accounts receivable collections.

The cash net income decrease was primarily driven by higher operating expenses from our ParkX subsidiary due to payroll and onboarding costs incurred to staff and setup a new porter/janitorial service offering.

Investing Activities

The $0.6 million variance in net investing cash activity was primarily driven by a $0.6 million decrease in distributions received from investments in real estate ventures stemming from Investors X residential lot sales recognized in the prior period.

The $1.5 million variance in net investing cash activity was primarily driven by a $1.0 million refundable deposit made on a potential multifamily property acquisition and a $0.6 million decrease in distributions received from investments in real estate ventures stemming from Investors X residential lot sales recognized in the prior period.

Financing Activities

The immaterial variance in n et financing cash activity was due to a $0.1 million increase in cash paid for taxes related to the net share settlement of equity awards, partially offset by a $0.1 million increase equity award-related proceeds collected.

The immaterial variance in n et financing cash activity was due to a $0.1 million increase in equity award-related proceeds collected, partially offset by an immaterial increase in cash paid for taxes related to the net share settlement of 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis