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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-15 · 225 added, 123 removed, 308 unchanged (53% of the section changed)

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We do not undertake to update them to reflect changes that occur after the date they are made, except as may be required by applicable securities laws.

The following discussion of our financial condition as of March 31, 2024 and results of operations for the three months ended March 31, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K.

The following discussion of our financial condition as of June 30, 2024 and results of operations for the three and six months ended June 30, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K.

For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K and in Part II, Item 1A of this Quarterly Report.

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The phrase “ADR” represents average daily rate.

It is calculated as trailing three-month room revenue divided by the number of rooms occupied.

It is calculated as trailing six-month room revenue divided by the number of rooms occupied.

For sold properties, ADR is presented for the Company’s period of ownership only.

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The phrase “RevPAR” represents revenue per available room.

It is calculated as trailing three-month room revenue divided by the number of available rooms.

It is calculated as trailing six-month room revenue divided by the number of available rooms.

For sold properties, RevPAR is presented for the Company’s period of ownership only.

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Executive Summary

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CIM also maintains additional offices across the United States and in South Korea to support its platform.

As of March 31, 2024, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures.

As of June 30, 2024, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures.

Our Unconsolidated Joint Ventures contain two office properties (one of which is being partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site.

As of March 31, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 83.4% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $166.84 for the three months ended March 31, 2024, and our three multifamily properties were 86.2% occupied.

Additionally, as of March 31, 2024, we had nine development sites (three of which were being used as parking lots).

As of June 30, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 82.5% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $167.57 for the six months ended June 30, 2024, and our three multifamily properties were 92.5% occupied.

Additionally, as of June 30, 2024, we had nine development sites (three of which were being used as parking lots).

We are a Maryland corporation and REIT.

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Such review may result in dispositions when, among other things, we believe the proceeds generated from the sale of an asset can be redeployed in one or more assets that will generate better returns, or the market value of such asset is equal to or exceeds our view of its intrinsic value.

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CIM Group Operations

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The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods (includes 100% of our properties partially owned through Unconsolidated Joint Ventures):

As of March 31,

As of June 30,

Occupancy (1) 82.5 % 83.0 %

1 unchanged sentence

______________________

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(1) The information presented in this table represents historical information as of the date indicated without giving effect to any property sales occurring thereafter.

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Annualized rent for certain office properties includes rent attributable to retail.

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended March 31, 2024 and 2023 were approximately $2.7 million and $2.8 million, respectively.

Giving effect to abatements, net annualized rent per occupied square foot was $56.32 and $54.36 as of March 31, 2024 and 2023, respectively (See Definitions for more detail).

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended June 30, 2024 and 2023 were approximately $2.2 million and $2.8 million, respectively.

Giving effect to abatements, net annualized rent per occupied square foot was $58.34 and $54.56 as of June 30, 2024 and 2023, respectively (See Definitions for more detail).

Over the next four quarters, we expect to see expiring cash rents as set forth in the table below (includes 100% of our properties partially owned through Unconsolidated Joint Ventures):

For the Three Months Ended

June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025

September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025

Expiring Cash Rents:

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(1) Month-to-month tenants occupying a total of 6,670 square feet are included in the expiring leases in the first quarter listed.

(2) Represents gross monthly base rent, as of March 31, 2024, under leases expiring during the periods above, multiplied by 12.

(2) Represents gross monthly base rent, as of June 30, 2024, under leases expiring during the periods above, multiplied by 12.

This amount reflects total cash rent before abatements.

Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

During the three months ended March 31, 2024, we executed leases with terms longer than 12 months totaling 36,961 square feet.

The table below sets forth information on certain of our executed leases during the three months ended March 31, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

During the three and six months ended June 30, 2024, we executed leases with terms longer than 12 months totaling 52,346 and 89,307 square feet, respectively.

The table below sets forth information on certain of our executed leases during the three and six months ended June 30, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

Leases (1) Rentable

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Foot (2) Expiring

Three months ended March 31, 2024 9 35,742 $ 51.97 $ 52.11

Three months ended June 30, 2024 9 47,130 $ 48.53 $ 58.71

Six months ended June 30, 2024 18 82,872 $ 50.01 $ 55.86

______________________

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Additionally, decreased demand and other negative trends or unforeseeable events that impair our ability to timely renew or re lease space could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.

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Multifamily Statistics:

The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our property partially owned through an Unconsolidated Joint Venture):

As of March 31,

As of June 30,

Occupancy 92.5 % 83.9 %

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This amount reflects total cash rent before concessions.

Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,429 and $2,450 as of March 31, 2024 and 2023, respectively.

Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,469 and $2,336 as of June 30, 2024 and 2023, respectively.

Hotel Statistics:

The following table sets forth the occupancy, ADR and RevPAR for our hotel in Sacramento, California for the specified periods:

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Occupancy 79.5 % 80.9 %

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Property Concentration

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 29.5% of our annualized office rental income for the three months ended March 31, 2024.

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2024 Results of Operations

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

Net Loss and FFO

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2024 2023 $ %

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Net loss $ (852) $ (18,361) $ 17,509 (95.4) %

Net loss was $3.9 million for the three months ended March 31, 2024 compared to a net loss of $7.6 million for the three months ended March 31, 2023, a decrease of $3.7 million.

The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of $3.0 million, a $2.7 million decrease in transaction-related costs, and an increase of $655,000 in segment net operating income (discussed in more detail in the following Summary Segment Results) .

Net loss was $852,000 for the three months ended June 30, 2024 compared to a net loss of $18.4 million for the three months ended June 30, 2023, a decrease of $17.5 million.

The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of $14.0 million and an increase of $4.2 million in segment net operating income (discussed in more detail in the following Summary Segment Results) .

Funds from Operations

We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.

FFO represents net income (loss) attributable to common stockholders, computed in accordance with GAAP, which reflects the deduction of redeemable preferred stock dividends accumulated, excluding gains (or losses) from sales of real estate, impairment of real estate, and real estate depreciation and amortization.

We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (the “NAREIT”).

Like any metric, FFO should not be used as the only measure of our performance because it excludes depreciation and amortization and captures neither the changes in the value of our real estate properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our operating results.

Other REITs may not calculate FFO in accordance with the standards established by the NAREIT;

accordingly, our FFO may not be comparable to the FFOs of other REITs.

Therefore, FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a supplement to or substitute measure for cash flows from operating activities computed in accordance with GAAP.

FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):

Three Months Ended June 30,

Net loss attributable to common stockholders (1)

$ (9,667) $ (23,815)

Depreciation and amortization 6,456 20,472

Non-controlling interests’ proportionate share of depreciation and amortization

FFO attributable to common stockholders (1)

$ (3,279) $ (4,226)

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(1) During the three months ended June 30, 2024 and 2023, we recognized $567,000 and $315,000, respectively, of redeemable preferred stock redemptions.

Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.

FFO attributable to common stockholders, which is a non-GAAP measure, was $(3.3) million for the three months ended June 30, 2024, an increase of approximately $0.9 million compared to $(4.2) million for the three months ended June 30, 2023.

The increase in FFO was primarily due to an increase of $4.2 million in segment net operating income (discussed in more

detail in the following Summary Segment Results).

This was partially offset by an increase in interest expense not allocated to our operating segments of $952,000, an increase in redeemable preferred stock dividends of $1.7 million, and an increase in redeemable preferred stock redemptions of $252,000.

Summary Segment Results

During the three months ended June 30, 2024 and June 30, 2023, we operated in four segments:

office, hotel and multifamily properties and lending.

Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).

Three Months Ended June 30, Change

2024 2023 $ %

Office $ 14,101 $ 13,975 $ 126 0.9 %

Hotel $ 12,155 $ 11,668 $ 487 4.2 %

Multifamily $ 5,449 $ 4,078 $ 1,371 33.6 %

Lending $ 2,564 $ 2,963 $ (399) (13.5) %

Office $ 6,397 $ 6,426 $ (29) (0.5) %

Hotel $ 7,835 $ 7,555 $ 280 3.7 %

Multifamily $ 3,116 $ 3,362 $ (246) (7.3) %

Lending $ 1,821 $ 2,439 $ (618) (25.3) %

Income (Loss) From Unconsolidated Entities:

Office $ 1,204 $ (710) $ 1,914 NM*

Multifamily $ (81) $ (194) $ 113 (58.2) %

Non-Segment Revenue and Expenses:

Interest and other income $ 170 $ 76 $ 94 NM*

Asset management and other fees to related parties $ (425) $ (627) $ 202 (32.2) %

Expense reimbursements to related parties - corporate $ (612) $ (677) $ 65 (9.6) %

Interest expense $ (8,346) $ (7,394) $ (952) 12.9 %

General and administrative $ (983) $ (1,106) $ 123 (11.1) %

Transaction-related costs $ (135) $ — $ (135) N/A

Depreciation and amortization $ (6,456) $ (20,472) $ 14,016 (68.5) %

Provision for income taxes $ (288) $ (159) $ (129) 81.1 %

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(*) Percentage changes in excess of 100% are deemed to be not meaningful (“NM”)

Office Revenue:

Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.

Office revenue was $14.1 million for the three months ended June 30, 2024, consistent with $14.0 million for the three months ended June 30, 2023.

Hotel Revenue:

Hotel revenue increased to $12.2 million for the three months ended June 30, 2024, compared to $11.7 million for the three months ended June 30, 2023.

The increase was due to an increase in average daily rate and revenue per available room during the three months ended June 30, 2024.

Multifamily Revenue:

Multifamily revenue was $5.4 million for the three months ended June 30, 2024, compared to $4.1 million for the three months ended June 30, 2023.

The increase was primarily attributed to higher rental revenues at our

multifamily properties in Oakland, California due to increased occupancy and increased monthly rent per occupied unit, net of rent concessions, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Lending Revenue:

Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.

Lending revenue was $2.6 million for the three months ended June 30, 2024, compared to $3.0 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in premium income as a result of lower loan sale volume and decreased interest income due to higher loan payoff volume during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Income (loss) From Unconsolidated Office Entities:

The income from our Unconsolidated Joint Ventures included in office segment net operating income increased to $1.2 million for the three months ended June 30, 2024, compared to a loss of $710,000 for the three months ended June 30, 2023.

The increase was primarily due to an unrealized gain on the value of real estate at one of the unconsolidated office entities recognized during the three months ended June 30, 2024.

Loss From Unconsolidated Multifamily Entity:

The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $81,000 for the three months ended June 30, 2024, compared to a loss of $194,000 for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in the unrealized loss on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Interest and Other Income:

Interest and other income, which has not been allocated to our operating segments, increased to $170,000 for the three months ended June 30, 2024, compared to $76,000 for the three months ended June 30, 2023.

The increase was primarily related to interest earned on money market accounts during the three months ended June 30, 2024.

Office Expenses:

Office expenses were $6.4 million for the three months ended June 30, 2024, the same as for the three months ended June 30, 2023.

Hotel Expenses:

Hotel expenses increased to $7.8 million for the three months ended June 30, 2024, compared to $7.6 million for the three months ended June 30, 2023.

The increase was primarily due to increased wage expenses during the three months ended June 30, 2024.

Multifamily Expenses:

Multifamily expenses decreased to $3.1 million for the three months ended June 30, 2024 compared to $3.4 million for the three months ended June 30, 2023.

The decrease was primarily attributable to lower property-level general and administrative expenses at multifamily properties in Oakland, California for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Lending Expenses:

Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties.

Lending expenses decreased to $1.8 million, for the three months ended June 30, 2024, compared to $2.4 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes as well as a decrease in allocated payroll expenses, primarily as a result of lower loan origination volume.

Asset Management and Other Fees to Related Parties:

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $425,000 for the three months ended June 30, 2024 compared to $627,000 for the three months ended June 30, 2023.

The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.

Expense Reimbursements to Related Parties — Corporate:

The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries.

Expense reimbursements to related parties-corporate were $612,000 for the three months ended June 30, 2024, generally consistent with expenses of $677,000 for the three months ended June 30, 2023.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, increased to $8.3 million for the three months ended June 30, 2024, compared to $7.4 million for the three months ended June 30, 2023.

The increase was attributable a higher average outstanding principal balances on our 2022 Credit Facility Revolver for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

General and Administrative Expenses:

General and administrative expenses, which have not been allocated to our operating segments, were $1.0 million for the three months ended June 30, 2024, generally consistent with $1.1 million for the three months ended June 30, 2023.

Transaction-Related Costs:

Transaction costs, which related to potential real estate transactions, were $135,000 for the three months ended June 30, 2024, compared with no such costs for the three months ended June 30, 2023.

Depreciation and Amortization Expense:

Depreciation and amortization expense decreased to $6.5 million for the three months ended June 30, 2024, compared to $20.5 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.

Provision for Income Taxes:

Provision for income taxes was $288,000 for the three months ended June 30, 2024, compared to $159,000 for the three months ended June 30, 2023.

The increase is due to higher taxable income at our taxable REIT subsidiaries compared to the prior year period.

2024 Results of Operations

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Net Loss and FFO

Six Months Ended June 30, Change

2024 2023 $ %

(dollars in thousands)

Total revenues $ 68,437 $ 61,672 $ 6,765 11.0 %

Total expenses $ 73,433 $ 88,162 $ (14,729) (16.7) %

Net loss $ (4,757) $ (25,937) $ 21,180 (81.7) %

Net loss was $4.8 million for the six months ended June 30, 2024 compared to a net loss of $25.9 million for the six months ended June 30, 2023, a decrease of $21.2 million.

The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of $17.0 million , a $2.5 million decrease in transaction-related costs, and an increase of $4.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) .

These were partially offset by a $3.0 million increase in interest expense not allocated to our operating segments .

Additionally, during the three months ended March 31, 2023, there was a $1.1 million gain on sale of real estate recognized in connection with the sale of 80% of our interest in an office property.

Funds from Operations

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The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net loss attributable to common stockholders (1)

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Non-controlling interests’ proportionate share of depreciation and amortization

(172) (1,360)

Gain on sale of real estate — (1,104)

2 unchanged sentences

______________________

(1) During the three months ended March 31, 2024 and 2023, we recognized $806,000 and $373,000, respectively, of redeemable preferred stock redemptions.

(1) During the six months ended June 30, 2024 and 2023, we recognized $1.4 million and $688,000, respectively, of redeemable preferred stock redemptions.

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FFO attributable to common stockholders, which is a non-GAAP measure, was $(5.9) million for the three months ended March 31, 2024, a decrease of $1.1 million compared to $(4.8) million for the three months ended March 31, 2023.

The decrease in FFO was primarily due to an increase in interest expense not allocated to our operating segments of $2.1 million, an increase in redeemable preferred stock dividends of $2.4 million, and an increase in redeemable preferred stock redemptions of $433,000.

These were partially offset by a $2.7 million decrease in transaction-related costs and an increase of $655,000 in segment net operating income (discussed in more detail in the following Summary Segment Results).

FFO attributable to common stockholders, which is a non-GAAP measure, was $(9.2) million for the six months ended June 30, 2024, a decrease of $180,000 compared to $(9.0) million for the six months ended June 30, 2023.

The decrease in FFO was primarily due to a $3.0 million increase in interest expense not allocated to our operating segments and a $4.1 million and $685,000 increase in redeemable preferred stock dividends and redemptions, respectively.

These were partially offset by an increase of $4.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) as well as a $2.5 million decrease in transaction-related costs.

Summary Segment Results

During the three months ended March 31, 2024 and March 31, 2023, we operated in four segments:

During the six months ended June 30, 2024 and June 30, 2023, we operated in four segments:

office, hotel and multifamily properties and lending.

Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).

Three Months Ended March 31, Change

Six Months Ended June 30, Change

2024 2023 $ %

1 unchanged sentence

Hotel $ 24,009 $ 23,160 $ 849 3.7 %

Multifamily $ 4,749 $ 1,223 $ 3,526 NM*

Multifamily $ 10,198 $ 5,301 $ 4,897 92.4 %

Lending $ 5,204 $ 5,673 $ (469) (8.3) %

1 unchanged sentence

Hotel $ 15,627 $ 14,902 $ 725 4.9 %

Multifamily $ 3,389 $ 1,380 $ 2,009 NM*

Multifamily $ 6,505 $ 4,742 $ 1,763 37.2 %

Lending $ 3,672 $ 3,791 $ (119) (3.1) %

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Non-Segment Revenue and Expenses:

Interest and other income $ 144 $ — $ 144 100.0 %

Interest and other income $ 314 $ 76 $ 238 NM*

Asset management and other fees to related parties $ (819) $ (1,347) $ 528 (39.2) %

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Depreciation and amortization $ (12,934) $ (29,974) $ 17,040 (56.8) %

Gain on sale of real estate $ — $ 1,104 $ (1,104) (100.0) %

Gain on sale of real estate $ — $ 1,104 $ (1,104) N/A

Provision for income taxes $ (558) $ (415) $ (143) 34.5 %

3 unchanged sentences

Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.

Office revenue increased by 8.3% to $14.6 million for the three months ended March 31, 2024, compared to

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$13.5 million for the three months ended March 31, 2023.

The increase was primarily due to higher rental revenues at an office property in Beverly Hills, California and an office property in Los Angeles, California due to increased occupancy.

Office revenue increased to $28.7 million for the six months ended June 30, 2024, compared to $27.5 million for the six months ended June 30, 2023.

The increase was primarily due to higher rental revenues at an office property in Beverly Hills, California due to increased occupancy.

Hotel Revenue:

Hotel revenue increased to $11.9 million, or by 3.2%, for the three months ended March 31, 2024, compared to $11.5 million for the three months ended March 31, 2023.

The increase was due to an increase in average daily rate and revenue per occupied room during the three months ended March 31, 2024.

Hotel revenue increased to $24.0 million for the six months ended June 30, 2024, compared to $23.2 million for the six months ended June 30, 2023.

The increase was due to an increase in average daily rate and revenue per available room during the six months ended June 30, 2024.

Multifamily Revenue:

Multifamily revenue was $4.7 million for the three months ended March 31, 2024, compared to $1.2 million for the three months ended March 31, 2023.

The increase was primarily due to the fact that the three months ended March 31, 2024 benefited from a full quarter of income from properties acquired during the three months ended March 31, 2023.

Multifamily revenue was $10.2 million for the six months ended June 30, 2024, compared to $5.3 million for the six months ended June 30, 2023.

The increase was primarily attributable to the six months ended June 30, 2024 benefiting from two full quarters of income from properties acquired during the three months ended March 31, 2023.

Lending Revenue:

Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.

Lending revenue was $2.6 million for the three months ended March 31, 2024, compared to $2.7 million for the three months ended March 31, 2023.

The decrease was primarily due to a decrease in premium income as a result of lower loan sale volume, partially offset by increased interest income from an increase in interest rates during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Lending revenue was $5.2 million for the six months ended June 30, 2024, compared to $5.7 million for the six months ended June 30, 2023.

The decrease was primarily due to a decrease in premium income and a decrease in interest income as a result of lower loan originations and loan sale volume during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Income (loss) From Unconsolidated Office Entities:

The income from our Unconsolidated Joint Ventures included in office segment net operating income increased to $117,000 for the three months ended March 31, 2024, compared to a loss of $64,000 for the three months ended March 31, 2023.

The increase was primarily due to an unrealized gain on the value of real estate at one of the unconsolidated office entities recognized during the three months ended March 31, 2024.

The income from our Unconsolidated Joint Ventures included in office segment net operating income increased to $1.3 million for the six months ended June 30, 2024, compared to a loss of $774,000 for the six months ended June 30, 2023.

The increase was primarily due to an unrealized gain on the value of real estate at one of the unconsolidated office entities recognized during the six months ended June 30, 2024.

(Loss) income From Unconsolidated Multifamily Entity:

The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $443,000 for the three months ended March 31, 2024, compared to income of $832,000 for the three months ended March 31, 2023.

The decrease was primarily due to an unrealized loss on the value of real estate at the Unconsolidated Joint Venture included in multifamily during the three months ended March 31, 2024.

The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating loss was $524,000 for the six months ended June 30, 2024, compared to income of $638,000 for the six months ended June 30, 2023.

The decrease was primarily due to an unrealized loss on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the six months ended June 30, 2024.

Interest and Other Income:

Interest and other income, which has not been allocated to our operating segments, increased to $144,000 for the three months ended March 31, 2024, compared to $0 for the three months ended March 31, 2023.

The increase was primarily related to interest earned on money market accounts during the three months ended March 31, 2024.

Interest and other income, which has not been allocated to our operating segments, increased to $314,000 for the six months ended June 30, 2024, compared to $76,000 for the six months ended June 30, 2023.

The increase was primarily related to interest earned on money market accounts during the six months ended June 30, 2024.

Office Expenses:

Office expenses increased to $6.9 million, or by 3.6%, for the three months ended March 31, 2024, compared to $6.6 million for the three months ended March 31, 2023.

The increase was primarily due to higher operating expenses at our office properties in Beverly Hills, California and Los Angeles, California resulting from increased occupancy.

Office expenses increased to $13.3 million for the six months ended June 30, 2024, compared to $13.0 million for the six months ended June 30, 2023.

The increase was primarily due to higher operating expenses at our office properties in Beverly Hills, California, and Los Angeles, California as a result of increased occupancy, and our office property in Oakland, California from increased utilities and repairs and maintenance expense.

These were partially offset by lower real estate tax expense at our office property in Austin, Texas.

Hotel Expenses:

Hotel expenses increased by 6.1% to $7.8 million for the three months ended March 31, 2024, compared to $7.3 million for the three months ended March 31, 2023.

The increase was primarily due to increased wage expenses during the three months ended March 31, 2024.

Hotel expenses increased by 4.9% to $15.6 million for the six months ended June 30, 2024, compared to $14.9 million for the six months ended June 30, 2023.

The increase was primarily due to increased wage expenses during the six months ended June 30, 2024.

Multifamily Expenses:

Multifamily expenses increased to $3.4 million for the three months ended March 31, 2024 compared to $1.4 million for the three months ended March 31, 2023.

The increase was primarily due to the fact that the three months ended March 31, 2024 included a full quarter of expense from properties acquired during the three months ended March 31, 2023.

Multifamily expenses increased to $6.5 million for the six months ended June 30, 2024 compared to $4.7 million for the six months ended June 30, 2023.

The increase was primarily attributable to the six months ended June 30, 2024 including two full quarters of expense from properties acquired during the six months ended June 30, 2023.

Lending Expenses:

Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties.

Lending expenses increased to $1.9 million, for the three months ended March 31, 2024, compared to $1.4 million for the three months ended March 31, 2023.

The increase was primarily due to an increase in interest expense related to the issuance of new SBA 7(a) loan-backed notes in connection with the securitization that closed in March 2023.

Lending expenses were $3.7 million, for the six months ended June 30, 2024, largely consistent with expenses of $3.8 million for the six months ended June 30, 2023.

Asset Management and Other Fees to Related Parties:

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $394,000 for the three months ended March 31, 2024, a decrease of 45.3%, compared to $720,000 for the three months ended March 31, 2023.

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $819,000 for the six months ended June 30, 2024 compared to $1.3 million for the six months ended June 30, 2023.

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The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries.

Expense reimbursements to related parties-corporate were $605,000 for the three months ended March 31, 2024, consistent with expenses of $528,000 for the three months ended March 31, 2023.

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Expense reimbursements to related parties-corporate were $1.2 million for the six months ended June 30, 2024, the same as for the six months ended June 30, 2023.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, increased by 34.5% to $8.1 million for the three months ended March 31, 2024, compared to $6.0 million for the three months ended March 31, 2023.

The increase was attributable to mortgages assumed in connection with our multifamily acquisitions during the first quarter of 2023, higher average outstanding principal balances on our 2022 Credit Facility Revolver for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Interest expense, which has not been allocated to our operating segments, increased to $16.4 million for the six months ended June 30, 2024, compared to $13.4 million for the six months ended June 30, 2023.

The increase was attributable to mortgages assumed in connection with our multifamily acquisitions during the first quarter of 2023, higher average outstanding principal balances on our 2022 Credit Facility Revolver for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

General and Administrative Expenses:

General and administrative expenses, which have not been allocated to our operating segments, were $1.2 million for the three months ended March 31, 2024, consistent with $1.3 million for the three months ended March 31, 2023.

General and administrative expenses, which have not been allocated to our operating segments, were $2.2 million for the six months ended June 30, 2024, generally consistent with $2.4 million for the six months ended June 30, 2023.

Transaction-Related Costs:

Transaction costs were $690,000 for the three months ended March 31, 2024, compared with $3.4 million for the three months ended March 31, 2023.

Transaction costs were $825,000 for the six months ended June 30, 2024, compared with $3.4 million for the six months ended June 30, 2023.

The decrease was related to costs incurred in connection with the acquisition of two multifamily properties in Oakland, California in the first quarter of 2023, which increased these costs in the prior year period.

Depreciation and Amortization Expense:

Depreciation and amortization expense decreased by 31.8% to $6.5 million for the three months ended March 31, 2024, compared to $9.5 million for the three months ended March 31, 2023.

Depreciation and amortization expense decreased to $12.9 million for the six months ended June 30, 2024, compared to $30.0 million for the six months ended June 30, 2023.

Gain on Sale of Real Estate:

Gain on sale of real estate of $1.1 million for the three months ended March 31, 2023 was related to the sale of 80% of our interest in an office property in Los Angeles, California.

There were no dispositions during the three months ended March 31, 2024.

Gain on sale of real estate of $1.1 million for the six months ended June 30, 2023 was related to the sale of 80% of our interest in an office property in Los Angeles, California.

There were no dispositions during the six months ended June 30, 2024.

Provision for Income Taxes:

Provision for income taxes was $270,000 for the three months ended March 31, 2024, consistent with $256,000 for the three months ended March 31, 2023.

Provision for income taxes was $558,000 for the six months ended June 30, 2024, consistent with $415,000 for the six months ended June 30, 2023.

Cash Flow Analysis

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Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs.

Net cash provided by operating activities decreased by $1.2 million for the three months ended March 31, 2024, as compared to the same period in 2023.

The decrease was primarily due to a $5.4 million decrease resulting from a higher level of net working capital used compared to the prior period, partially offset by an increase in reduction in net loss adjusted for depreciation and amortization expense and other non-cash items of $3.1 million and an increase in net proceeds from the sale of loans of $1.2 million.

Net cash provided by operating activities decreased by $3.9 million for the six months ended June 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to a $7.2 million decrease resulting from a higher level of net working capital used compared to the prior period and a decrease in net proceeds from the sale of loans of $1.8 million, partially offset by a reduction in net loss adjusted for depreciation and amortization expense and other non-cash items of $5.2 million.

Our cash flows from investing activities are primarily related to property acquisitions and dispositions, expenditures for the development or repositioning of properties, capital expenditures and cash flows associated with loans originated at our lending segment.

Net cash used in investing activities decreased by $90.7 million for the three months ended March 31, 2024, as compared to the same period in 2023.

The decrease in cash used in investing activities was primarily due to an decrease in acquisitions of real estate of $96.7 million and a decrease in cash outlays of $6.1 million related to our investments in Unconsolidated Joint Ventures during the three months ended March 31, 2024, compared to the same period in 2023.

Partially offsetting the decrease in net cash used in investing activities are $16.7 million in proceeds from the sale of a property to the 4750 Wilshire JV during the three months ended March 31, 2023.

Net cash used in investing activities decreased by $76.3 million for the six months ended June 30, 2024, as compared to the same period in 2023.

The decrease in cash used in investing activities was primarily due to an decrease in acquisitions of real estate of $96.7 million and a decrease in cash outlays of $6.2 million related to our investments in Unconsolidated Joint Ventures during the six months ended June 30, 2024, compared to the same period in 2023.

Partially offsetting the decrease in net cash used in investing activities are $29.5 million in proceeds from the sale of a property to the 4750 Wilshire JV during the six months ended June 30, 2023.

Our cash flows from financing activities are generally impacted by borrowings and capital activities.

Net cash provided by financing activities decreased by $77.5 million for the three months ended March 31, 2024, as compared to the same period in 2023, primarily as a result of net proceeds from our 2022 Credit Facility and mortgages of $1.4 million during the three months ended March 31, 2024 compared to $103.8 million during the three months ended March 31, 2023 and the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million during the three months ended March 31, 2023.

The aforementioned amounts decreasing net cash provided by financing activities were partially offset by a decrease in redemption of preferred stock of $78.7 million, a decrease in the payment of deferred debt origination costs of $2.4 million, and an decrease in preferred dividend payments of $2.2 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

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Net cash provided by financing activities decreased by $56.7 million for the six months ended June 30, 2024, as compared to the same period in 2023, primarily as a result of net proceeds from our 2022 Credit Facility and mortgages of $13.6 million during the six months ended June 30, 2024 compared to $71.3 million during the six months ended June 30, 2023, the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million during the six months ended June 30, 2023, and a $23.2 million decrease in net proceeds from the issuance of preferred stock.

The aforementioned amounts decreasing net cash provided by financing activities were partially offset by a decrease in redemption of preferred stock of $75.3 million and a decrease in the payment of deferred debt origination costs of $3.0 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Liquidity and Capital Resources

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(iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio;

(v) the sale of existing assets;

(v) the sale of

existing assets;

(vi) partnering with co-investors;

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Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and/or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock.

Additionally, our outstanding commitments to fund loans were $8.2 million as of March 31, 2024, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.

Additionally, our outstanding commitments to fund loans were $19.6 million as of June 30, 2024, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.

A majority of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans.

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Further, we have earned and will continue to earn management fees from co-investors in connection with their co-investment in the 4750 Wilshire Project.

As of March 31, 2024, total costs of $17.3 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project.

The 4750 Wilshire Project is expected to be completed by the 4th quarter of 2024.

As of June 30, 2024, total costs of $23.6 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project.

The 4750 Wilshire Project is expected to be completed by the third quarter of 2024.

In addition to the 4750 Wilshire Project, our long-term liquidity needs include our plan to renovate the Sheraton Grand Hotel in Sacramento, California (the “Hotel Renovation”), which primarily entails renovating the hotel’s guest rooms and corridors and is expected to cost approximately $20.9 million.

As of March 31, 2024, $1.6 million of pre-construction costs had been incurred with respect to the Hotel Renovation;

the Company plans to start construction in the second half of 2024, with anticipated completion by the third quarter of 2025.

As of June 30, 2024, $2.0 million of pre-construction costs had been incurred with respect to the Hotel Renovation, which the Company has started construction as of July 2024, with anticipated completion by the end of of 2024.

Additionally, an Unconsolidated Joint Venture (the “1910 Sunset JV”), in which we have approximately a 44% ownership interest, has begun construction to develop a multifamily apartment building with 36 multifamily units at 1915 Park Avenue in Los Angeles, California (the “1915 Park Project), which development is expected to be completed by the third quarter of 2025 and with an estimated cost of approximately $19.3 million (our share of which will be $8.5 million).

The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution

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requirements which have not yet been met).

As of March 31, 2024, the 1910 Sunset JV had incurred total costs of $2.3 million in connection with the 1915 Park Project.

As of June 30, 2024, the 1910 Sunset JV had incurred total costs of $3.9 million in connection with the 1915 Park Project.

We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements.

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Sources and Uses of Funds

We have mortgage loan agreements with an outstanding balances of $250.7 million as of March 31, 2024.

Our mortgage loans mature on various dates from June 7, 2024 through July 1, 2026.

In regards to our fixed rate mortgage loan maturing on June 7, 2024, we exercised its one-year extension option in April 2024, extending the maturity of the mortgage by one year.

We have mortgage loan agreements with an outstanding balances of $250.7 million as of June 30, 2024.

Our mortgage loans mature on various dates from June 7, 2025 through July 1, 2026, with the two mortgage loans with maturity dates in 2025, each including a 1-year extension option, one of them at the Company’s discretion and one subject to certain conditions being met.

The Company has been in discussions with the lender under the variable rate mortgage to restructure the terms of the mortgage, as rent payments from the property will likely be insufficient to meet debt service payments under the mortgage.

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The 2022 Credit Facility bears interest at (A) the base rate plus 1.50% or (B) SOFR plus 2.60%.

As of March 31, 2024, the variable interest rate was 7.93%.

As of June 30, 2024, the variable interest rate was 7.93%.

The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments.

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The 2022 Credit Facility matures in December 2025 and provides for two one-year extension options, subject to certain conditions being satisfied, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension.

As of May 14, 2024, March 31, 2024, and December 31, 2023, $173.2 million, $158.2 million, and $153.2 million, respectively, was outstanding under the 2022 Credit Facility and approximately $0.0, $48.0 million and $53.0 million, respectively, was available for future borrowings.

As of March 31, 2024, the Company was not in compliance with a financial covenant under the 2022 credit facility.

As of August 1, 2024, June 30, 2024, and December 31, 2023, $173.2 million, $173.2 million, and $153.2 million, respectively, was outstanding under the 2022 Credit Facility and approximately $0.0, $0.0 and $53.0 million, respectively, was available for future borrowings.

As of each of March 31, 2024 and June 30, 2024, the Company was not in compliance with a financial covenant under the 2022 credit facility.

Such non-compliance constituted an event of default under the 2022 credit facility.

On May 14, 2024, lenders under the 2022 credit facility and the Company entered into an agreement (the “Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024.

Pursuant to the Modification Agreement, the Company will not be able to borrow under the 2022 credit facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant.

On May 14, 2024, lenders under the 2022 credit facility and the Company entered into an agreement (the “First Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024.

On August 7, 2024, lenders under the 2022 credit facility and the Company entered into an agreement (the “Second Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending June 30, 2024.

Pursuant to the Second Modification Agreement, the Company will not be able to borrow under the 2022 credit facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant.

There can be no assurance as to when or if such conditions will be satisfied.

The Company believes that it could rely on other sources for its liquidity needs, including (i) obtaining new or modifying existing credit facilities and term loans;

The Company believes that it could rely on other sources for its liquidity needs, including, among other things, (i) obtaining new or modifying existing credit facilities and term loans;

(ii) offerings of shares of Common Stock, preferred stock or other equity and or debt securities of the Company;

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(iv) the sale of existing assets;

(v) partnering

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with co-investors;

(v) partnering with co-investors;

and or (vi) cash flows from operations.

Among other restrictions, the Modification Agreement also prohibits subsidiaries of the Company that own properties that secured the 2022 credit facility from making any distributions to its parent entities.

The Modification Agreement did not waive compliance with the financial covenant for the test period ending June 30, 2024 or any future period.

The Company has been in discussion with the administrative agent of the 2022 credit facility to obtain a long-term amendment to the terms of the 2022 credit facility.

While the Company believes that it will be able to obtain such amendment, there can be no assurance that such amendment will be executed.

If the Company is unsuccessful in amending the 2022 credit facility, and is not able to re-establish compliance with the financial covenant for the test period ending June 30, 2024 or any future period, lenders thereunder may, among other remedies, declare their commitment thereunder to be terminated and/or declare the unpaid principal amount of all outstanding loans, all interest accrued and unpaid thereon, to be immediately due and payable, and foreclose on or take other secured creditor remedies with respect to the properties that secure the 2022 credit facility.

Among other restrictions, the Second Modification Agreement also prohibits subsidiaries of the Company that own properties that secured the 2022 credit facility from making any distributions to its parent entities.

The Second Modification Agreement did not waive compliance with the financial covenant for the test period ending September 30, 2024 or any future period.

Simultaneously with the execution of the Second Modification Agreement, the Company made a $4.0 million repayment under the 2022 credit facility.

While the Company has been in discussions with the administrative agent of the 2022 credit facility to come to a satisfactory solution to the Company’s non-compliance with a financial covenant, there can be no assurance that such resolution will be achieved.

If the Company is unsuccessful in coming to a resolution with the administrative agent of the 2022 credit facility, and is not able to re-establish compliance with the financial covenant for the test period ending September 30, 2024 or any future period, lenders thereunder may, among other remedies, declare their commitment thereunder to be terminated and/or

declare the unpaid principal amount of all outstanding loans, all interest accrued and unpaid thereon, to be immediately due and payable, and foreclose on or take other secured creditor remedies with respect to the properties that secure the 2022 credit facility.

Other Financing Activity

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The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-Day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%.

As of March 31, 2024, the variable interest rate was 8.15%.

As of June 30, 2024, the variable interest rate was 8.15%.

We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet.

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The junior subordinated notes may be redeemed at par at our option.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of March 31, 2024.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of June 30, 2024.

Securities Offerings

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However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the reverse stock split in 2019 (the “Reverse Stock Split”) was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of our Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the special dividend in 2019 was adjusted to reflect the effect of the Special Dividend.

As of March 31, 2024, there were 1,444,258 Series A Preferred Warrants to purchase 369,653 shares of Common Stock outstanding.

As of June 30, 2024, there were 988,794 Series A Preferred Warrants to purchase 250,777 shares of Common Stock outstanding.

From February 2020 through June 2022, we conducted a continuous public offering of our Series A Preferred Stock and Series D Preferred Stock.

Commencing in June 2022, the Company has conducted a public offering with respect to shares of its Series A1 Preferred Stock of up to approximately $692.3 million, par value $0.001 per share with an initial stated value of $25.00 per share, subject to adjustment.

The Company has filed a Registration Statement on Form S-11 in respect of such offering and anticipates continuing the offering upon effectiveness of such Registration Statement on Form S-11.

Nothing contained in this Quarterly Report on Form 10-Q is or shall be deemed to be an offer to sell any securities of the Company, or

the solicitation of any offer to buy any securities of the Company, in any jurisdiction, which may only be made pursuant to appropriate offering documentation.

Since June 2022, the Company has been conducting a public offering with respect to shares of its Series A1 Preferred Stock.

We intend to use the net proceeds from the offerings for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies.

As of March 31, 2024, we had issued 11,127,248 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $439.0 million after commissions, fees and allocated costs.

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As of June 30, 2024, we had issued 11,492,002 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $446.9 million after commissions, fees and allocated costs.

Dividends on and Redemptions of Preferred Stock

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We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.

The timing and amount of dividends

declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.

Holders of our Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by us out of legally available funds.

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The redemption price in respect of any share of Preferred Stock, whether redeemed at our option or at the option of a holder, may be paid in cash or in shares of Common Stock in our sole discretion.

As of March 31, 2024, we redeemed 1,778,005 shares of Series A Preferred Stock, 119,072 shares of Series A1 Preferred Stock, and 8,410 shares of Series D Preferred Stock.

As of June 30, 2024, we redeemed 2,065,479 shares of Series A Preferred Stock, 151,074 shares of Series A1 Preferred Stock, and 8,410 shares of Series D Preferred Stock.

Off-Balance Sheet Arrangements

As of March 31, 2024, we did not have any off-balance sheet arrangements.

As of June 30, 2024, we did not have any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

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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