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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-13 · 54 added, 91 removed, 146 unchanged (50% 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 2025 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 nine months ended September 30, 2025 and references to “2024” refer to the three and nine months ended September 30, 2024.

Unless otherwise indicated, references to “2026” refer to the three months ended March 31, 2026 and references to “2025” refer to the three months ended March 31, 2025.

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

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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 company 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, 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, categorized by asset type, that were included in our managed portfolio as of September 30, 2025:

Over the twelve months of fiscal year 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 March 31, 2026:

Type # of Assets Size/Scale % Leased

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Hospitality (3)

1 290,000+ sqft.

3 1 JW Marriott Hotel + 2 Food & Beverage

ParkX - Garages (4)

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40 9,500 hrs/week

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.

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 for which we provide property management services.

Includes JW Marriott Reston Station, Virginia's first and only JW Marriott Hotel, and two Starbucks locations managed by ParkX.

# of Assets includes 17 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.

Includes porter/janitorial;

# of assets excludes 46 properties where parking management services are also provided to avoid double-counting, therefore total # of assets where Security & Other services are provided is 86;

hours/week statistic represents estimated total amount billed across all managed properties where Security & Other services are provided.

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

• 2 commercial assets that represent approximately 260,000 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 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 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.

The following tables provide further details on the assets that comprise our managed portfolio:

At full build out, our managed portfolio of assets is currently projected to total 113 assets that represent over 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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The Hartford Operating Acquired in 2019, this 211,000 square foot mixed-use building is located adjacent to the Clarendon Station on Metro's Orange Line and is the subject of a joint venture with DivcoWest and Comstock Partners, LC.

The premier office tower in the Ballston Corridor submarket of Arlington County, Va.

BLVD Forty Four Operating Acquired in 2021, this 15-story, mixed-use 250-unit, luxury high-rise apartment tower is located adjacent to BLVD Ansel and just 1 block from the Rockville Station on Metro’s Red Line in Rockville, Md (Montgomery County) and is the subject of a joint venture with Comstock Partners, LC.

The two-building complex is the premier residential offering in Rockville Town Center.

BLVD Ansel Operating Acquired in 2022, this 18-story, mixed-use 250-unit, luxury high-rise apartment tower is located adjacent to BLVD Forty Four and just 1 block from the Rockville Station on Metro’s Red Line in Rockville, Md (Montgomery County) and is the subject of a joint venture with Comstock Partners, LC.

The two-building complex is the premier residential offering in Rockville Town Center.

BLVD Forty Four Operating Acquired in 2021, this 15-story, mixed-use 263-unit, luxury high-rise apartment tower is located adjacent to BLVD Ansel and just 1 block from the Rockville Station on Metro’s Red Line in Rockville, Md.

and is the subject of a joint venture with Comstock Partners, LC.

Comstock 41 Operating Acquired in 2023, this 18,150 square foot parcel located at 41 Maryland Ave.

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and is adjacent to BLVD Forty Four;

currently a surface parking lot operated by ParkX Management, LC;

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

currently a surface parking lot operated by ParkX Management, LC, the parcel is the subject of an executed purchase agreement with SCG Development Holdings, LLC to develop an affordable housing project on the site.

The Reed Operating Acquired in 2026, this 417-unit Class A multifamily building is located adjacent to the Shady Grove Station on Metro's Red Line in Rockville, Md.

and is the subject of a joint venture with Comstock Partners, LC and a third-party institutional fund advised by Benefit Street Partners, LLC.

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 Forty Four, we acquired Comstock 41 with the intention to explore rezoning opportunities for this property that would allow for potential relocation of moderately-priced dwelling units from BLVD Forty Four to Comstock 41 as well as utilization of excess parking capacity at both BLVD Forty Four and BLVD Ansel.

In conjunction with the acquisition, we entered into a contingent fee agreement with BLVD Forty Four should these pursuits prove successful.

(See Note 12 in the Notes to Condensed 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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area, where we believe our decades of experience provides us with the best opportunity to continue developing, managing, and investing in high-quality real estate assets and capitalizing on positive growth trends.

Our growth will continue to be fueled by our Anchor Portfolio, which will continue to generate revenue as development and construction efforts are completed for all the planned Anchor Portfolio assets, allowing us to then lease, stabilize, and arrange permanent financing for each property.

Importantly, the long-term asset management agreements covering the properties included in the Anchor Portfolio, when combined with our asset-light and debt-free business model, provide us with visibility to future revenue and earnings growth while mitigating the risk for potential losses.

Our growth will continue to be fueled by our Anchor Portfolio, which will continue to generate revenue as development and construction efforts are completed.

Importantly, the long-term asset management agreement covering the properties included in the Anchor Portfolio provides us with visibility to future revenue and earnings growth while mitigating the risk for potential losses.

Our fee-based, asset-light, debt-free business model will continue to generate cash and provide us with the flexibility and resources needed to capitalize on additional strategic growth opportunities as they arise.

We aspire to be among the most admired real estate asset managers, operators, and developers by creating extraordinary places, providing exceptional experiences, and generating excellent results for all stakeholders.

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

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

2025 2024 2025 2024

Three Months Ended March 31,

Revenue $ 17,446 $ 12,639

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Gain (loss) on real estate ventures 72 9

Gain (loss) on equity investments 435 —

Other income (expense), net 12 (18)

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Net income (loss) $ 1,989 $ 1,589

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 September 30,

2025 2024 Change

Amount % Amount % $ %

Asset management $ 6,560 49.2 % $ 7,380 56.8 % $ (820) (11.1) %

Property management (1)

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 $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 September 30, Change

2025 2024 $ %

Cost of revenue $ 11,858 $ 9,583 $ 2,275 23.7 %

Selling, general, and administrative 725 507 218 43.0 %

Depreciation and amortization 73 77 (4) (5.2) %

Total operating costs and expenses $ 12,656 $ 10,167 $ 2,489 24.5 %

Operating costs and expenses increased 24.5% in 2025.

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 September 30, Change

2025 2024 $ %

Interest income $ 218 $ 169 $ 49 29.0 %

Gain (loss) on real estate ventures 35 (75) 110 146.7 %

Other income (expense), net 77 23 54 234.8 %

Total other income (expense) $ 330 $ 117 $ 213 182.1 %

Other income (expense) changed by $0.2 million in 2025, primarily driven by a combined $0.1 million net improvement in mark-to-market valuation impacts of equity method investments in real estate ventures.

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

Comparison of the Three Months Ended March 31, 2026 and 2025

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

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 Change

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Revenue increased 38.0% in 2026.

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.

The $4.8 million comparative increase was driven by the continued expansion of our managed portfolio, resulting in a $2.6 million, or 89.6%, increase in recurring, fee-based property management services revenue from our Commercial, Residential, and ParkX operating subsidiaries and a $1.6 million increase in asset management services revenue.

ParkX alone executed 13 new service contracts in 2026, five of which were with third-party customers.

Operating costs and expenses

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

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2026 2025 $ %

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Operating costs and expenses increased 45.9% in 2026.

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.

The $5.0 million comparative increase was primarily due to a $3.5 million increase in personnel expenses from increased headcount and employee compensation, including a $0.9 million increase in annual bonus expense.

Other income (expense)

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

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2026 2025 $ %

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Gain (loss) on real estate ventures 72 9 63 700.0 %

Gain (loss) on equity investments 435 — 435 N/M

Other income (expense), net 12 (18) 30 166.7 %

Total other income (expense) $ 648 $ 175 $ 473 270.3 %

Other income (expense) changed by $0.6 million in 2025, primarily due to a combined $0.4 million net improvement in the valuations of our equity method investments in real estate ventures.

Other income (expense) changed by $0.5 million in 2026, primarily driven by a $0.4 million unrealized gain on equity investments stemming from the mark-to-market valuation of the initial $1.5 million investment in Jericho Energy Ventures, Inc.

equity securities (see Note 4 in the Notes to Consolidated Financial Statements for additional information).

Provision for income tax was $0.2 million in 2026, compared to $0.3 million in 2025.

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

The $0.1 million decrease is primarily the result of higher stock compensation windfall adjustments.

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), specifically Adjusted EBITDA.

We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and gain (loss) on equity method investments.

We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources.

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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 September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Three Months Ended March 31,

Net income (loss) $ 1,989 $ 1,589

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(Gain) loss on real estate ventures (72) (9)

(Gain) loss on equity investments $ (435) $ —

Adjusted EBITDA $ 2,170 $ 2,050

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.

The increase in Adjusted EBITDA for the three months ended March 31, 2026 is primarily driven by significant increases in recurring fee-based revenue from our three operating property management subsidiaries and higher asset management fee revenue from the continued expansion of our managed portfolio.

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 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.

Our principal sources of liquidity as of March 31, 2026 were our cash and cash equivalents of $19.6 million and our $10.0 million of available borrowings on our Credit Facility.

(See Note 6 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):

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 Change

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Operating Activities

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.

The $6.3 million variance in net operating cash activity was driven by a $6.4 million incremental cash outflow stemming from changes to our net working capital, partially offset by a $0.1 million increase 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 and annual bonus payouts in January 2026.

Investing Activities

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.

The $4.7 million variance in net investing cash activity was driven by a $3.4 million increase in investments in real estate ventures due to the completed acquisition of The Reed.

Also contributing to the increase was the initial $1.5 million investment in Jericho Energy Ventures, Inc.

equity securities.

Financing Activities

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.

The $0.2 million variance in n et financing cash activity was driven by a $0.2 million 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