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Item 7. Management’s Discussion and Analysis

2026-03-17 compared with 2025-03-21 · 52 added, 40 removed, 184 unchanged (33% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K.

All references to “2024” and “2023” are referring to the twelve-month period ended December 31 for each of those respective fiscal years.

This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

The following discussion and analysis should be read in conjunction with our consolidated financial statements, the related notes thereto, and other financial information appearing elsewhere in this Annual Report on Form 10-K.

Unless otherwise indicated, references to “2025” and “2024” are referring to the twelve-month period ended December 31 for each of those respective fiscal years.

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

Our actual results could differ materially from those anticipated by these forward-looking statements due to the factors discussed elsewhere in this Annual Report on Form 10-K.

Our actual results could differ materially from those anticipated by these forward-looking statements.

We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

We are a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C.

We have become the area’s premier real estate service company by creating extraordinary places, delivering exceptional experiences, and generating excellent results for all stakeholders.

We have become one of the area’s premier real estate services companies by creating extraordinary places, delivering exceptional experiences, and generating excellent results for all stakeholders.

We provide a comprehensive suite of real estate services to our asset-owning clients, including asset management, property management, development and construction management, and more.

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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.

In 2024, Anchor portfolio assets generated a well over $100.0 million of gross revenue for the property owners.

The following table summarizes the operating assets that are included in our managed portfolio as of December 31, 2024:

In 2025, Anchor portfolio assets generated over $120.0 million of gross revenue for the property owners.

The following table summarizes the operating assets, categorized by asset type, that were included in our managed portfolio as of December 31, 2025:

Type # of Assets Size/Scale % Leased

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15 2.6 million sqft.

Residential 6 1.8 million sqft.

Residential (2)

7 2.0 million sqft.

/ 1,700+ units 93%

ParkX - Garages 32 22,000+ spaces

Hospitality (3)

1 290,000+ sqft.

ParkX - Garages (4)

34 ~26,000 spaces

ParkX - Security & Other (5)

35 ~8,000 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 12 properties where both parking & other services are provided to avoid double-counting.

Commercial % leased includes 2024 delivery of a new Trophy-class office tower located in The Row at Reston Station that is not yet stabilized.

The % leased for stabilized commercial assets is 93%.

Includes JW Marriott Residences - Reston Station, luxury condominiums that were delivered in September 2025 for which we are providing property management services.

JW Marriott Reston Station, Virginia's only and first-ever JW Marriott Hotel, delivered in September 2025.

# of Assets includes 17 garages owned by unaffiliated third-party asset-owners

Includes parking/janitorial;

# of assets excludes 41 properties already counted in the categories above to avoid double-counting, therefore total # of assets where Security & Other services are provided is 76;

hours/week statistic represents estimated total amount billed across all managed properties.

In addition, we manage the following assets that are under construction and scheduled for delivery in the next 6 to 12 months:

• 2 commercial assets that represent approximately 266,000 square feet;

• 1 commercial asset that represents approximately 6,000 square feet;

• 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 garages with approximately 1,300 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.

At full build out, our managed portfolio of assets is currently projected to total 88 assets representing nearly 10 million square feet.

The following tables provide further details on our managed portfolio:

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 105 assets representing approximately 10 million square feet.

The following tables provide further details on the operating assets included in our managed portfolio:

Anchor Portfolio

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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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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

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.

In conjunction with the acquisition, we entered into a contingent fee agreement with BLVD 44 should these pursuits prove successful (See Note 13 in the Notes to Consolidated Financial Statements for additional information).

In November 2024, we entered into a definitive purchase agreement for Comstock 41 with SCG Development Holdings, LLC ("SCG") that is contingent upon the successful rezoning of the property to allow for the development of an affordable housing project at the site.

Upon closing, we will enter into an operating agreement and a development agreement with SCG, under which we will provide construction management services for the affordable housing project that will be fully financed by SCG.

We will also be entitled to provide property management services once the development is ready for occupancy.

We will also be given the opportunity to provide property management services upon delivery.

In December 2025, we received legislative approval from the City of Rockville for the affordable housing development and the relocation of certain moderately-priced dwelling units (MPDUs) from BLVD Forty Four to Comstock 41.

The rezoning approval triggered an entitlement success fee based on a contingent fee agreement with BLVD Forty Four that was recognized as revenue for the year ended December 31, 2025.

(See Note 13 in the Notes to Consolidated Financial Statements for additional information).

Our management team is committed to executing our goal to provide exceptional experiences to those we do business with while maximizing shareholder value.

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Property management (1)

Parking management 8,185 16.0 % 4,839 10.8 % 3,346 69.1 %

11,879 18.9 % 11,612 22.6 % 267 2.3 %

ParkX management 14,362 22.8 % 8,185 16.0 % 6,177 75.5 %

Total revenue $ 62,861 100.0 % $ 51,294 100.0 % $ 11,567 22.6 %

CHCI Commercial and CHCI Residential

Revenue increased 22.6% in 2025.

The $6.6 million comparative increase was primarily driven by a $4.8 million, or 101.4%, increase in recurring, fee-based revenue from our property and parking management services due to the continued expansion of our managed portfolio.

Also contributing to the increase was $3.1 million of additional supplemental fees stemming from leasing activity and refinancing fees, as well as a $1.8 million increase in fee-based asset management services.

Partially offsetting these increases was a $3.3 million decrease in incentive fees earned.

A previously scheduled October 1, 2024 incentive fee trigger event for seven specified managed portfolio assets was deferred.

(See Note 13 in the Notes to Consolidated Financial Statements for additional information).

The $11.6 million variance was primarily driven by the growth of our managed portfolio, which expanded by net total of 20 assets.

This expansion resulted in a combined $5.0 million, or 51.1%, increase in recurring, fee-based revenue across our three operating property management subsidiaries and a $3.3 million, or 13.7%, increase in fee-based asset management revenue.

Also contributing to the increase was a $3.9 million, or 85.5%, net increase in supplemental fee revenue, stemming primarily from a $3.7 million increase in leasing fees earned.

Operating costs and expenses

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Operating costs and expenses increased 24.2% in 2025.

The $5.5 million comparative increase was primarily due to a $3.6 million increase in personnel expenses from increased headcount and employee compensation and a net $1.9 million increase in reimbursable/billable expenses.

The $9.9 million variance was primarily due to an $8.4 million increase in personnel expenses from increased headcount and employee compensation, which includes a $4.8 million increase in onboarding and payroll expenses from the 265 new ParkX employees that were hired in 2025 to meet the staffing needs for our expanding customer base.

Other income (expense)

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Total other income (expense) $ 947 $ 438 $ 509 116.2 %

Other income (expense) changed by $1.5 million in 2024, primarily driven by primarily driven by a combined $0.9 million improvement in mark-to-market valuation impacts of equity method investments in real estate ventures and a $0.6 million increase in interest income stemming from interest earned on money market sweep accounts that were not active for all of 2023.

We recorded a $3.8 million income tax benefit in 2024, compared to a provision for income tax of $0.4 million in 2023.

The $4.2 million net change was primarily driven by a $6.5 million valuation allowance release in the current period, partially offset by the impact of higher taxable income from operations.

Other income (expense) changed by $0.5 million in 2025, primarily driven by a combined $0.3 million improvement in mark-to-market valuation impacts of equity method investments in real estate ventures and a $0.1 million increase in interest income stemming from interest earned on money market sweep accounts.

We recorded a $4.2 million income tax benefit in 2025, compared to a $3.8 million tax benefit in 2024.

The $0.4 million net change was primarily driven by a valuation allowance release that was $1.0 million higher in the current period, partially offset by the impact of higher taxable income from operations.

As of December 31, 2025, we had $96.5 million of net operating loss (“NOL") carryforwards.

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Adjusted EBITDA $ 13,437 $ 11,597

The increases in Adjusted EBITDA for the year ended December 31, 2024 were primarily driven by significant increases in recurring fee-based property and parking management revenue and supplemental asset management fee revenue.

The increase in Adjusted EBITDA for the year ended December 31, 2025 was primarily driven by significant increases in recurring fee-based revenue from our three operating property management subsidiaries and supplemental fee revenue from leasing activity.

Seasonality and Quarterly Fluctuations

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Operating Activities

The $1.7 million variance in net operating cash activity was primarily driven by a $1.7 million increase in net income from continuing operations after adjustments for non-cash items.

The comparative net changes to our net working capital balances were immaterial.

The $5.9 million variance in net operating cash activity was driven by an $7.8 million incremental cash outflow stemming from changes to our net working capital, partially offset by a $1.9 million increase in net income from continuing operations after

adjustments for non-cash items.

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

Investing Activities

The $1.2 million variance in net investing cash activity was primarily driven by a $1.4 million decrease in investments in real estate ventures, partially offset by a $0.4 million increase in purchases of securities to fund non-qualified deferred compensation plan liabilities.

The $1.4 million variance in net investing cash activity was driven by $1.2 million of capitalized costs in 2025 related to a potential multifamily property acquisition.

Financing Activities

The immaterial variance in net financing cash activity was primarily driven by $0.2 million of proceeds in conjunction with the issuance of common stock related to equity awards, which was almost entirely offset by a $0.2 million increase in cash paid for taxes related to the net share settlement of equity awards.

The $0.2 million variance in n et financing cash activity was driven by a $0.1 million decrease in equity award-related proceeds collected and an immaterial increase in cash paid for taxes related to the net share settlement of equity awards.

Critical Accounting Policies and Estimates

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Due to the subjective and potentially volatile nature of this variable consideration, we only recognize revenue on Incentive Fees for each managed asset when 1) any material uncertainties associated with the valuation of real estate assets that drive Incentive Fees are substantially resolved and 2) it is probable that a significant reversal in the amount of related cumulative Incentive Fee revenue recognized will not occur.

As a result, we only recognize Incentive Fees at or near each asset's respective triggering event (as detailed in the 2022 AMA) when imputed profit could be reasonably calculated and relied upon to not materially change.

For the years ended December 31, 2024 and 2023, we recognized revenue from Incentive Fees of $1.5 million and $4.8 million, respectively.

As a result, we only recognize Incentive Fees at or near each asset's respective triggering event (as detailed in the 2022 AMA) when imputed profit can be reasonably calculated and the calculation has received consent from all parties, thereby confirming it can relied upon to not materially change.

We recognized no revenue from Incentive Fees for the year ended December 31, 2025.

For the year ended December 31, 2024, we recognized $1.5 million of revenue from Incentive Fees.

Income taxes are accounted for under the asset and liability method.

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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-K

Item 7. Management’s Discussion and Analysis