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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-09 · 256 added, 117 removed, 291 unchanged (56% of the section changed)

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slowdown in economic growth.

Additional important factors that could cause our actual results to differ materially from our expectations are discussed in “Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 7, 2025 (the “2024 Form 10-K”) and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained.

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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, 2025 and results of operations for the three months ended March 31, 2025 and 2024 should be read in conjunction with the 2024 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 2024 Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

The following discussion of our financial condition as of June 30, 2025 and results of operations for the three and six months ended June 30, 2025 and 2024 should be read in conjunction with the 2024 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 2024 Form 10-K.

Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the consolidated financial statements contained therein.

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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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CIM also maintains additional offices with distribution staff and JV partnerships.

As of March 31, 2025, 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, 2025, 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 one office property, one multifamily site currently under development, two multifamily properties (one of which has been partially converted from office into multifamily units and is now being classified as a multifamily property) and one commercial development site.

As of March 31, 2025, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 70.2% occupied, and our one 505-room hotel with an ancillary parking garage, had RevPAR of $176.47 for the three months ended March 31, 2025 and our four multifamily properties were 80.2% occupied.

Additionally, as of March 31, 2025, we had nine development sites (three of which were being used as parking lots).

As of June 30, 2025, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 68.1% occupied, and our one 505-room hotel with an ancillary parking garage, had RevPAR of $171.63 for the six months ended June 30, 2025 and our four multifamily properties were 83.4% occupied.

Additionally, as of June 30, 2025, 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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Further, as a matter of prudent management, we regularly evaluate each asset within our portfolio as well as our strategy.

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.

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.

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)(2) 68.1 % 82.5 %

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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.

(2) The decrease in office portfolio occupancy from June 30, 2024 to June 30, 2025 is primarily due to a tenant exercising a partial termination option at an office property in Oakland, California.

(3) Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12.

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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, 2025 and 2024 were approximately $1.0 million and $2.7 million, respectively.

Giving effect to abatements, net annualized rent per occupied square foot was $58.00 and $56.32 as of March 31, 2025 and 2024, respectively (See Definitions for more detail).

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended June 30, 2025 and 2024 were approximately $1.1 million and $2.2 million, respectively.

Giving effect to abatements, net annualized rent per occupied square foot was $60.05 and $58.34 as of June 30, 2025 and 2024, 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, 2025 September 30, 2025 December 31, 2025 March 31, 2026

September 30, 2025 December 31, 2025 March 31, 2026 June 30, 2026

Expiring Cash Rents:

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(1) Month-to-month tenants occupying a total of 4,193 square feet are included in the expiring leases in the first quarter listed.

(2) Represents gross monthly base rent, as of March 31, 2025, under leases expiring during the periods above, multiplied by 12.

(2) Represents gross monthly base rent, as of June 30, 2025, 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, 2025, we executed leases with terms longer than 12 months totaling 30,333 square feet.

The table below sets forth information on certain of our executed leases during the three months ended March 31, 2025, 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, 2025, we executed leases with terms longer than 12 months totaling 47,859 and 78,192 square feet, respectively.

The table below sets forth information on certain of our executed leases during the three and six months ended June 30, 2025, 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, 2025 7 21,581 $ 54.93 $ 56.27

Three Months Ended June 30, 2025 7 30,845 $ 45.26 $ 57.22

Six Months Ended June 30, 2025 14 52,426 $ 49.24 $ 56.83

______________________

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Our rental and occupancy rates are impacted by general economic conditions, including the pace of regional and economic growth, and access to capital.

Therefore, we cannot give any assurance

that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.

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.

Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates.

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 properties partially owned through an Unconsolidated Joint Venture):

As of March 31,

As of June 30,

Occupancy 83.4 % 92.5 %

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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 $2,341 and $2,429 as of March 31, 2025 and 2024, respectively.

Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,284 and $2,469 as of June 30, 2025 and 2024, 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 79.2 % 79.5 %

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Property Concentration

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 23.6% of our annualized office rental income for the three months ended March 31, 2025.

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 24.8% of our annualized office rental income for the three months ended June 30, 2025.

2025 Results of Operations

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such the effects of high unemployment rates, continued or renewed inflation, heightened interest rates, and any recession or slowdown in economic growth and any proposed or imposed tariffs by the U.S.

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as the effects of high unemployment rates, continued or renewed inflation, heightened interest rates, and any recession or slowdown in economic growth and any proposed or imposed tariffs by the U.S.

government and retaliatory tariffs proposed or imposed by U.S.

trading partners, that may reasonably be expected to have a material impact on our results from operations other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024

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

Net Loss and FFO

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2025 2024 $ %

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Total expenses $ 38,245 $ 36,126 $ 2,119 5.9 %

Net loss $ (6,272) $ (3,905) $ (2,367) 60.6 %

Net loss was $6.3 million for the three months ended March 31, 2025, compared to a net loss of $3.9 million for the three months ended March 31, 2024, an increase of $2.4 million .

The increase in net loss was primarily due to a decrease of $1.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $1.1 million, partially offset by a decrease in transaction-related costs of $664,000.

Net loss $ (9,151) $ (852) $ (8,299) NM*

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

Net loss was $9.2 million for the three months ended June 30, 2025, compared to a net loss of $852,000 for the three months ended June 30, 2024, an increase of $8.3 million .

The increase in net loss was primarily due to a decrease of $6.4 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $1.3 million.

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,

Three Months Ended June 30,

Net loss attributable to common stockholders (1)

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Non-controlling interests’ proportionate share of depreciation and amortization (59) (68)

Impairment of real estate 221 —

FFO attributable to common stockholders (1)

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______________________

(1) During the three months ended March 31, 2025 and 2024, we recognized $300,000 and $806,000, respectively, of redeemable preferred stock redemptions.

(1) During the three months ended June 30, 2025 and 2024, we recognized $0 and $567,000, 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 $(5.4) million for the three months ended March 31, 2025, an increase of approximately $516,000 compared to $(5.9) million for the three months ended March 31, 2024.

The increase in FFO was primarily due to a decrease in redeemable preferred stock dividends of $2.3 million and a decrease in redeemable preferred stock redemptions of $506,000, which were partially offset by the aforementioned increase in net loss of $2.4 million.

FFO attributable to common stockholders, which is a non-GAAP measure, was $(7.9) million for the three months ended June 30, 2025, a decrease of approximately $4.6 million, compared to $(3.3) million for the three months ended June 30, 2024.

The decrease in FFO was primarily due to a decrease of $6.4 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $1.3 million, partially offset by a decrease in redeemable preferred stock dividends of $2.6 million and a decrease in redeemable preferred stock redemptions of $567,000.

Summary Segment Results

During the three months ended March 31, 2025 and March 31, 2024, we operated in four segments:

During the three months ended June 30, 2025 and June 30, 2024, 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

Three Months Ended June 30, Change

2025 2024 $ %

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(Loss) Income From Unconsolidated Entities:

Office $ (29) $ 117 $ (146) NM*

Office $ 175 $ 1,204 $ (1,029) (85.5) %

Multifamily $ (612) $ (81) $ (531) NM*

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General and administrative $ (712) $ (983) $ 271 (27.6) %

Transaction-related costs $ (803) $ (135) $ (668) NM*

Depreciation and amortization $ (6,264) $ (6,456) $ 192 (3.0) %

Loss on early extinguishment of debt $ (88) $ — $ (88) N/A

Impairment of real estate $ (221) $ — $ (221) N/A

Provision for income taxes $ (158) $ (288) $ 130 NM*

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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 decreased to $11.9 million for the three months ended June 30, 2025, compared to $14.1 million for the three months ended June 30, 2024.

The decrease was primarily due to a decrease in rental revenues at an office property in Oakland, California as a result of lower occupancy, partially offset by an increase in rental revenues at an office property in Beverly Hills, California as a result of increased occupancy and rental rates.

Hotel Revenue:

Hotel revenue decreased to $11.6 million for the three months ended June 30, 2025, compared to $12.2 million for the three months ended June 30, 2024.

The decrease was due to a decrease in food and beverage sale revenues for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Multifamily Revenue:

Multifamily revenue was $3.9 million for the three months ended June 30, 2025, compared to $5.4 million for the three months ended June 30, 2024.

The decrease was attributed to lower rental revenues at our multifamily

properties due to decreases in occupancy and monthly rent per occupied unit, net of rent concessions, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Lending Revenue:

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

Lending revenue was $2.1 million for the three months ended June 30, 2025, compared to $2.6 million for the three months ended June 30, 2024.

The decrease was primarily due to a decrease in interest income due to loan payoffs and a decrease in interest rates.

Income From Unconsolidated Office Entities:

The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to $175,000 for the three months ended June 30, 2025, compared to income of $1.2 million for the three months ended June 30, 2024.

The decrease was primarily due to a decrease in unrealized gain recognized on the value of real estate at the unconsolidated office entities recognized during the three months ended June 30, 2025 compared to 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 $612,000 for the three months ended June 30, 2025, compared to a loss of $81,000 for the three months ended June 30, 2024.

The increase was primarily due to changes in the valuation of investments in real estate at our unconsolidated multifamily entities which recognized a larger net unrealized loss during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Interest and Other Income:

Interest and other income, which has not been allocated to our operating segments, was $143,000 for the three months ended June 30, 2025, generally consistent with $170,000 for the three months ended June 30, 2024.

Office Expenses:

Office expenses were $6.5 million for the three months ended June 30, 2025, generally consistent with expenses of $6.4 million for the three months ended June 30, 2024.

Hotel Expenses:

Hotel expenses decreased to $7.5 million for the three months ended June 30, 2025, compared to $7.8 million for the three months ended June 30, 2024.

The decrease was primarily due to decreases in food and beverage expenses and property management fees during the three months ended June 30, 2025.

Multifamily Expenses:

Multifamily expenses were $3.1 million for the three months ended June 30, 2025, consistent with $3.1 million for the three months ended June 30, 2024.

Lending Expenses:

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

Lending expenses were $2.1 million for the three months ended June 30, 2025, compared to $1.8 million for the three months ended June 30, 2024.

The increase was primarily due to an increase in current expected credit losses (“CECL”).

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 $349,000 for the three months ended June 30, 2025, compared to $425,000 for the three months ended June 30, 2024.

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 2024.

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 $891,000 for the three months ended June 30, 2025, compared to expenses of $612,000 for the three months ended June 30, 2024, with the increase primarily due to an increase in legal services.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, increased to $9.6 million for the three months ended June 30, 2025, compared to $8.3 million for the three months ended June 30, 2024.

The increase was primarily attributable to a higher average outstanding principal balance on our debt as a result of new mortgage loans closed during the fourth quarter of 2024 and first and second quarters of 2025, partially offset by paydowns on our 2022 Credit Facility.

General and Administrative Expenses:

General and administrative expenses, which have not been allocated to our operating segments, were $712,000 for the three months ended June 30, 2025, compared with $1.0 million for the three months ended June 30, 2024.

The decrease was primarily due to a decrease in legal fees.

Transaction-Related Costs:

Transaction costs were $803,000 for the three months ended June 30, 2025, compared with $135,000 for such costs for the three months ended June 30, 2024.

The increase was due to a higher level of costs during the three months ended June 30, 2025 related to contemplated transactions as well as dead deal costs that were expensed during the period.

Depreciation and Amortization Expense:

Depreciation and amortization expense was $6.3 million for the three months ended June 30, 2025, generally consistent with $6.5 million for the three months ended June 30, 2024.

Loss on Early Extinguishment of Debt:

Loss on early extinguishment of debt was $88,000 for the three months ended June 30, 2025 as a result of the payoff and termination of the 2022 Credit Facility.

No such amounts were incurred during the prior year period.

Impairment of Real Estate:

Impairment of real estate was $221,000 for the three months ended June 30, 2025, due to an impairment charge recognized in connection with an office property in Austin, Texas.

No such amounts were incurred during the prior year period.

Provision for Income Taxes:

Provision for income taxes was $158,000 for the three months ended June 30, 2025, compared to provision for income taxes of $288,000 for the three months ended June 30, 2024.

The decrease in provision for income taxes was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.

2025 Results of Operations

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

Net Loss and FFO

Six Months Ended June 30, Change

2025 2024 $ %

(dollars in thousands)

Total revenues $ 61,984 $ 68,437 $ (6,453) (9.4) %

Total expenses $ 75,540 $ 73,433 $ 2,107 2.9 %

Net loss $ (15,423) $ (4,757) $ (10,666) 224.2 %

Net loss was $15.4 million for the six months ended June 30, 2025, compared to a net loss of $4.8 million for the six months ended June 30, 2024, an increase of $10.7 million.

The increase in net loss was primarily due to a decrease of $8.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $2.4 million.

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):

Six Months Ended June 30,

Net loss attributable to common stockholders (1)

$ (26,177) $ (21,962)

Depreciation and amortization 12,824 12,934

Non-controlling interests’ proportionate share of depreciation and amortization

Impairment of real estate 221 —

FFO attributable to common stockholders (1)

$ (13,258) $ (9,200)

______________________

(1) During the six months ended June 30, 2025 and 2024, we recognized $300,000 and $1.4 million , respectively, of redeemable preferred stock redemptions.

Such amounts are included in, and have the effect of increasing, net loss attributable to common stockholders and decreasing 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 $(13.3) million for the six months ended June 30, 2025, a decrease of $4.1 million compared to $(9.2) million for the six months ended June 30, 2024.

The decrease in FFO was primarily due to a decrease of $8.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $2.4 million, partially offset by a decrease in redeemable preferred stock dividends of $4.9 million and a decrease in redeemable preferred stock redemptions of $1.1 million.

Summary Segment Results

During the six months ended June 30, 2025 and June 30, 2024, 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).

Six Months Ended June 30, Change

2025 2024 $ %

Office $ 24,931 $ 28,712 $ (3,781) (13.2) %

Hotel $ 24,316 $ 24,009 $ 307 1.3 %

Multifamily $ 8,035 $ 10,198 $ (2,163) (21.2) %

Lending $ 4,468 $ 5,204 $ (736) (14.1) %

Office $ 12,457 $ 13,260 $ (803) (6.1) %

Hotel $ 15,474 $ 15,627 $ (153) (1.0) %

Multifamily $ 6,732 $ 6,505 $ 227 3.5 %

Lending $ 3,925 $ 3,672 $ 253 6.9 %

Income (Loss) From Unconsolidated Entities

Office $ 146 $ 1,321 $ (1,175) (88.9) %

Multifamily $ (1,734) $ (524) $ (1,210) NM*

Non-Segment Revenue and Expenses:

Interest and other income $ 234 $ 314 $ (80) (25.5) %

Asset management and other fees to related parties $ (709) $ (819) $ 110 (13.4) %

Expense reimbursements to related parties - corporate $ (1,517) $ (1,217) $ (300) 24.7 %

Interest expense $ (18,811) $ (16,403) $ (2,408) 14.7 %

General and administrative $ (1,953) $ (2,171) $ 218 (10.0) %

Transaction-related costs $ (829) $ (825) $ (4) 0.5 %

Depreciation and amortization $ (12,824) $ (12,934) $ 110 (0.9) %

Loss on early extinguishment of debt $ (88) $ — $ (88) N/A

Impairment of real estate $ (221) $ — $ (221) N/A

Provision for income taxes $ (279) $ (558) $ 279 (50.0) %

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

Office revenue decreased to $13.1 million for the three months ended March 31, 2025, compared to $14.6 million for the three months ended March 31, 2024.

The decrease was primarily due to lower occupancy at an office property in Oakland, California, partially offset by higher rental revenues at an office property in Beverly Hills, California due to higher rent per occupied square foot.

Office revenue decreased to $24.9 million for the six months ended June 30, 2025, compared to $28.7 million for the six months ended June 30, 2024.

Hotel Revenue:

Hotel revenue increased to $12.7 million for the three months ended March 31, 2025, compared to $11.9 million for the three months ended March 31, 2024.

The increase was due to an increase in occupancy and average daily rate for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Hotel revenue was $24.3 million for the six months ended June 30, 2025, compared to $24.0 million for the six months ended June 30, 2024.

The increase was primarily due to an increase in average daily rate during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Multifamily Revenue:

Multifamily revenue was $4.1 million for the three months ended March 31, 2025, compared to $4.7 million for the three months ended March 31, 2024.

The decrease was attributed to lower rental revenues at our multifamily properties due to decreases in occupancy and monthly rent per occupied unit, net of rent concessions, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Multifamily revenue was $8.0 million for the six months ended June 30, 2025, compared to $10.2 million for the six months ended June 30, 2024.

The decrease was attributed to lower occupancy and decreased monthly

rent per occupied unit, net of rent concessions during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Lending Revenue:

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

Lending revenue was $2.4 million for the three months ended March 31, 2025, compared to $2.6 million for the three months ended March 31, 2024.

Lending revenue was $4.5 million for the six months ended June 30, 2025, compared to $5.2 million for the six months ended June 30, 2024.

The decrease was primarily due to a decrease in interest income due to loan payoffs and a decrease in interest rates.

(Loss) Income From Unconsolidated Office Entities:

The loss from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $29,000 for the three months ended March 31, 2025, compared to income of $117,000 for the three months ended March 31, 2024.

The decrease was primarily due to changes in the valuation of investments in real estate at our unconsolidated office entities which recognized a net unrealized loss during the three months ended March 31, 2025, compared to a net unrealized gain for the three months ended March 31, 2024.

The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to $146,000 for the six months ended June 30, 2025, compared to income of $1.3 million for the six months ended June 30, 2024.

The decrease was primarily due to a decrease in unrealized gain recognized on the value of real estate at one of the unconsolidated office entities recognized during the six months ended June 30, 2025.

Loss From Unconsolidated Multifamily Entity:

The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $1.1 million for the three months ended March 31, 2025, compared to a loss of $443,000 for the three months ended March 31, 2024.

The increase was primarily due to changes in the valuation of investments in real estate at our unconsolidated multifamily entities which recognized a larger net unrealized loss during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The loss from our Unconsolidated Joint Venture included in the multifamily segment was $1.7 million for the six months ended June 30, 2025, compared to a loss of $524,000 for the six months ended June 30, 2024.

The increase was primarily due to an increase in the unrealized loss recognized on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the six months ended June 30, 2025.

Interest and Other Income:

Interest and other income, which has not been allocated to our operating segments, was $91,000 for the three months ended March 31, 2025, generally consistent with $144,000 for the three months ended March 31, 2024.

Interest and other income, which has not been allocated to our operating segments, decreased to $234,000 for the six months ended June 30, 2025, compared to $314,000 for the six months ended June 30, 2024.

The decrease was primarily related to a decrease in interest earned on money market accounts during the six months ended June 30, 2025.

Office Expenses:

Office expenses decreased to $5.9 million for the three months ended March 31, 2025, compared to $6.9 million for the three months ended March 31, 2024.

The decrease was primarily due to lower repairs and maintenance, utilities, and administrative expenses at an office property in Oakland, California and lower real estate tax expense at an office property in Beverly Hills, California.

Office expenses decreased to $12.5 million for the six months ended June 30, 2025, compared to $13.3 million for the six months ended June 30, 2024.

The decrease was primarily due to lower operating expenses at an office property in Oakland, California as a result of lower utilities and security expenses and property management fees, as well as lower operating expenses at an office property in Beverly Hills, California as result of property tax refunds received during the six months ended June 30, 2025.

Hotel Expenses:

Hotel expenses increased to $8.0 million for the three months ended March 31, 2025, compared to $7.8 million for the three months ended March 31, 2024.

The increase was primarily due to increases in room expenses during the three months ended March 31, 2025.

Hotel expenses were $15.5 million for the six months ended June 30, 2025, generally consistent with $15.6 million for the six months ended June 30, 2024.

Multifamily Expenses:

Multifamily expenses were $3.6 million for the three months ended March 31, 2025, relatively consistent with $3.4 million for the three months ended March 31, 2024.

Multifamily expenses increased to $6.7 million for the six months ended June 30, 2025, compared to $6.5 million for the six months ended June 30, 2024.

The increase was primarily attributable to higher repairs and maintenance and cleaning expenses at a multifamily property in Oakland, California during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Lending Expenses:

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

Lending expenses were $1.8 million, for the three months ended March 31, 2025, generally consistent with $1.9 million for the three months ended March 31, 2024.

Lending expenses were $3.9 million for the six months ended June 30, 2025, compared with expenses of $3.7 million for the six months ended June 30, 2024.

The increase was primarily due to an increase in CECL.

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 $360,000 for the three months ended March 31, 2025, compared to $394,000 for the three months ended March 31, 2024.

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $709,000 for the six months ended June 30, 2025, compared to $819,000 for the six months ended June 30, 2024.

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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 $626,000 for the three months ended March 31, 2025, generally consistent with expenses of $605,000 for the three months ended March 31, 2024.

Expense reimbursements to related parties-corporate were $1.5 million for the six months ended June 30, 2025, consistent with $1.2 million for the six months ended June 30, 2024, with the increase primarily due to an increase in legal services.

Interest Expense:

Interest expense, which has not been allocated to our operating segments, increased to $9.2 million for the three months ended March 31, 2025, compared to $8.1 million for the three months ended March 31, 2024.

The increase was primarily attributable to a higher average outstanding principal balance on our debt as a result of new mortgage loans closed during the fourth quarter of 2024 and first quarter of 2025, partially offset by paydowns on our 2022 Credit Facility subsequent to March 31, 2024.

Interest expense, which has not been allocated to our operating segments, increased to $18.8 million for the six months ended June 30, 2025, compared to $16.4 million for the six months ended June 30, 2024.

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, 2025, consistent with $1.2 million for the three months ended March 31, 2024.

General and administrative expenses, which have not been allocated to our operating segments, were $2.0 million for the six months ended June 30, 2025, compared with $2.2 million for the six months ended June 30, 2024.

The decrease was primarily due to a decrease in legal fees.

Transaction-Related Costs:

Transaction costs, which related to potential real estate transactions, were $26,000 for the three months ended March 31, 2025, compared with $690,000 for such costs for the three months ended March 31, 2024.

The decrease was due to a higher level of costs during the three months ended March 31, 2024 related to contemplated transactions.

Transaction-related costs were $829,000 for the six months ended June 30, 2025, consistent with $825,000 for the six months ended June 30, 2024.

Depreciation and Amortization Expense:

Depreciation and amortization expense was $6.6 million for the three months ended March 31, 2025, generally consistent with $6.5 million for the three months ended March 31, 2024.

Depreciation and amortization expense was $12.8 million for the six months ended June 30, 2025, generally consistent with $12.9 million for the six months ended June 30, 2024.

Loss on Early Extinguishment of Debt:

Loss on early extinguishment of debt was $88,000 for the six months ended June 30, 2025 as a result of the payoff and termination of the 2022 Credit Facility.

No such amounts were incurred during the prior year period.

Impairment of Real Estate:

Impairment of real estate was $221,000 for the six months ended June 30, 2025, due to an impairment charge recognized in connection with an office property in Austin, Texas.

No such amounts were incurred during the prior year period.

Provision for Income Taxes:

Provision for income taxes was $121,000 for the three months ended March 31, 2025, compared to $270,000 for the three months ended March 31, 2024.

Provision for income taxes was $279,000 for the six months ended June 30, 2025, compared with $558,000 for the six months ended June 30, 2024.

The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.

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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 $408,000 for the three months ended March 31, 2025, as compared to the same period in 2024.

The decrease was primarily due to an increase in net proceeds from the sale of loans, net of loans funded, of $1.3 million and an decrease from the change in working capital of $61,000, which was offset by an increase in net loss adjusted for depreciation and amortization expense and other non-cash items of $1.7 million.

Net cash used in operating activities was $1.3 million for the six months ended June 30, 2025, as compared to net cash provided by operating activities of $5.5 million for the same period in 2024.

The decrease in cash provided by operating activities was primarily due to an increase in net loss adjusted for depreciation and amortization expense and other non-cash items of $7.7 million and an decrease from the change in working capital of $2.5 million, partially offset by a decrease in cash used to fund loans, net of cash proceeds from the sale of loans of $3.4 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 increased by $4.8 million for the three months ended March 31, 2025, as compared to the same period in 2024.

The increase in cash used in investing activities was primarily due to an increase in capital expenditures of $4.6 million, a decrease in proceeds from the sale of real estate of $1.1 million, and an increase in cash outlays of $285,000 related to our investments in Unconsolidated Joint Ventures during the three months ended March 31, 2025, compared to the same period in 2024.

Partially offsetting the increase in net cash used in investing activities was an increase in in the principal collected on loans, net of loan fundings, of $1.2 million.

Net cash used in investing activities increased to $10.2 million for the six months ended June 30, 2025, compared to $1.4 million for the same period in 2024.

The increase in cash used in investing activities was primarily due to an increase in capital expenditures of $9.0 million.

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

Net cash provided by financing activities was $206,000 for the three months ended March 31, 2025, consistent with $191,000 during the same period in 2024.

Changes in our cash flows from financing activities most notably included net proceeds from debt of $6.4 million during the three months ended March 31, 2025, compared to $1.4 million during the three months ended March 31, 2024, a $10.2 million decrease in cash redemptions of preferred stock, and a combined decrease in preferred stock and common stock dividends of $3.6 million.

The aforementioned amounts were offset by a $19.6 million decrease in net proceeds from the issuance of preferred stock during the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Net cash provided by financing activities was $16.5 million for the six months ended June 30, 2025, compared to $2.5 million during the same period in 2024.

The increase in our cash flows from financing activities was primarily due to an increase net proceeds from debt of $30.3 million during the six months ended June 30, 2025, compared to $13.6 million during the six months ended June 30, 2024, a $18.1 million decrease in cash redemptions of preferred stock, and a combined decrease in preferred stock and common stock dividends of $8.0 million.

The aforementioned amounts were offset by a $27.9 million decrease in net proceeds from the issuance of preferred stock during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Liquidity and Capital Resources

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and/or (vi) cash flows from operations.

Our 2022 Revolving Credit Facility had an outstanding balance of $15.0 million as of March 31, 2025 and was paid off in full and terminated in April 2025.

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 $9.0 million as of March 31, 2025,

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 $17.2 million as of June 30, 2025, 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% 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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The 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”) in Los Angeles, California, which development is expected to be completed by the third quarter of 2025 and with an estimated cost of approximately $14.7 million (excluding the land acquisition cost), our share of which is expected to be $6.5 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 had a balance of $2.7 million as of March 31, 2025 and total borrowing availability of $9.4 million).

As of March 31, 2025, the 1910 Sunset JV had incurred total costs of $9.8 million in connection with the 1915 Park Project.

Construction has been completed at one of our Unconsolidated Joint Ventures (the “4750 Wilshire JV”), in which we have a 20% ownership interest.

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 had a balance of $5.1 million as of June 30, 2025 and total borrowing availability of $9.4 million).

As of June 30, 2025, the 1910 Sunset JV had incurred total costs of $12.4 million in connection with the 1915 Park Project.

Construction has been substantially completed at one of our Unconsolidated Joint Ventures (the “4750 Wilshire JV”), in which we have a 20% ownership interest.

The 4750 Wilshire JV has converted two of the three floors of an office property at 4750 Wilshire Boulevard in Los Angeles, California (“4750 Wilshire”) from office-use into 68 for-lease multifamily units (the “4750 Wilshire Project”), with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space.

The 4750 Wilshire JV began leasing for the multifamily units in September 2024.

As of March 31, 2025, total costs of $28.0 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project, which has an expected total completion cost of $31.0 million.

Construction has been completed on the Rooms Renovation Project at our Sheraton Grand Hotel in Sacramento, California, with a total cost of approximately $20.9 million, of which approximately $20.3 million had been incurred as of March 31, 2025.

We are currently working on designs for the renovation of Sheraton Grand Hotel’s lobbies and common areas (the “Lobby Renovation Project”).

We have not approved a budget for the Lobby Renovation Project but intend to complete the project in 2025.

As of June 30, 2025, total costs of $28.4 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project, which has an expected total completion cost of $31.0 million.

We plan to begin renovation of Sheraton Grand Hotel’s lobbies and common areas (the “Lobby Renovation Project”) during the third quarter of 2025.

The approved a budget for the Lobby Renovation Project is approximately $11.2 million, which will be funded by a combination of draws on the mortgage loan at the property and key money from the Sheraton Grand Hotel’s franchisor.

On April 3, 2025, the Company completed the refinancing of an office property in Austin, Texas (the “Austin Refinancing”).

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From and after September 2024, at our option, we redeemed 2,589,606 and 2,150,076 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and we have paid holder-requested redemptions of 376,128 and 319,184 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock.

We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares of Preferred Stock in shares of Common Stock during 2025, when legally permitted.

We have in the past exercised our right to redeem shares of Preferred Stock at our option (subject to the terms of the Preferred Stock set forth in the charter) and pay the redemption price in shares of Common Stock, and we may do so again in the future.

We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares of Preferred Stock in shares of Common Stock during 2025, when legally permitted, which the Company currently expects will be in the third or fourth quarter of 2025.We have in the past exercised our right to redeem shares of Preferred Stock at our option (subject to the terms of the Preferred Stock set forth in the charter) and pay the redemption price in shares of Common Stock, and we may do so again in the future.

The measures noted above, taken together, are expected to strengthen our balance sheet, improve liquidity and accelerate our transition towards premier multifamily properties.

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The nature of our business, and the requirements imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis in the form of dividends, may cause us to have substantial liquidity needs over the long-term.

While we will seek to satisfy such needs through one or more of the methods described in this Quarterly Report on Form 10-Q, our ability to take such actions is highly uncertain and cannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in “Item 1A—Risk Factors” of this Quarterly Report on Form 10-Q and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

If we cannot obtain funding for our long-term liquidity needs, our assets may generate lower cash flows or decline in value, or both, which may cause us to sell assets at a time when we would not otherwise do so which 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.

2024 Form 10-K.

We must meet certain financial and liquidity criteria to maintain the listing of our Common Stock on Nasdaq.

If we violate Nasdaq’s listing requirements or fail to meet its listing standards, our Common Stock may be delisted.

On November 7,

2024, we received written notice from the Listing Qualifications Department of Nasdaq indicating that, because the closing bid price for our Common Stock had fallen below $1.00 per share for 30 consecutive business days (the “Bid Price Requirement”), we had fallen out of compliance with the Bid Price Requirement.

On November 7, 2024, we received written notice from the Listing Qualifications Department of Nasdaq indicating that, because the closing bid price for our Common Stock had fallen below $1.00 per share for 30 consecutive business days (the “Bid Price Requirement”), we had fallen out of compliance with the Bid Price Requirement.

To regain compliance, the closing bid price of our Common Stock had to be a minimum of $1.00 per share for a minimum of ten consecutive business days prior to May 6, 2025.

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However, our ability to maintain compliance with the Nasdaq’s listing standards requirements in the future, including the Bid Price Requirement, is not guaranteed.

We believe that delisting our Common Stock from Nasdaq could have significant adverse consequences, including a decreased ability to issue additional shares of Common Stock to raise additional financing in the future due to the increased lack of liquidity that would result in our Common Stock due to the factors described in “We may not be able to maintain a listing of our Common Stock on Nasdaq” in “Item 1A—Risk Factors.” In addition, delisting may result in the inability to redeem Preferred Stock when all other criteria for redemption have been met if registration under applicable state securities or “blue sky” laws is not able to be accomplished in a particular state and the cash required for such redemption is not available.

In addition, delisting may result in the inability to redeem Preferred Stock when all other criteria for redemption have been met if registration under applicable state securities or “blue sky” laws is not able to be accomplished in a particular state and the cash required for such redemption is not available.

Sources and Uses of Funds

We have mortgage loan agreements with outstanding balances of $449.5 million as of March 31, 2025.

Our mortgage loans mature on various dates from June 7, 2025 through January 11, 2030, with two mortgage loans with maturity dates in 2025, each including a 1-year extension option, one of which is at the Company’s discretion and we expect to exercise and one of which (the “Channel House Mortgage”) is subject to certain conditions being met.

The Company has been in discussions with the lender under the Channel House Mortgage, which is non-recourse and has no cross-collateral provisions and is secured by Channel House (a multifamily property in Oakland, California), to restructure the terms of the mortgage, as the Company does not expect the property will meet certain conditions that are required in order for the Company to exercise the option to extend the Channel House Mortgage beyond July 7, 2025.

There can be no assurance that such restructuring will occur.

If the Company and the lender under the Channel House Mortgage cannot agree on a modification of the mortgage and the Company fails to exercise its extension option, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest under the mortgage loan to be immediately due and payable.

We have mortgage loan agreements with outstanding balances of $482.4 million as of June 30, 2025.

Our mortgage loans mature on various dates from June 7, 2026 through January 11, 2030.

With regards to the mortgage payable with a balance of $67.0 million as of June 30, 2025 maturing on June 7, 2026, (the “1150 Clay Mortgage”), we executed the final one-year extension option under the mortgage in June 2025.

We intend to work with the lender in order to refinance the 1150 Clay Mortgage beyond its stated maturity date of June 7, 2026.

Although we believe it is likely it will be able to refinance the 1150 Clay Mortgage prior to June 7, 2026, there can be no assurance that such refinancing will occur.

If we and the lender under the 1150 Clay Mortgage cannot agree on an extension of the mortgage and the we fail to repay the loan in full upon its contractual maturity date, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, take possession of the property.

With regards to the mortgage payable with a balance of $87.0 million as of June 30, 2025 maturing on July 7, 2025 (the “Channel House Mortgage”), on August 4, 2025 the we reached an agreement with the lender to extend the maturity date through January 31, 2027 (the “Channel House Mortgage Extension”).

In connection with Channel House Mortgage Extension, we made a repayment of $6.0 million under the Channel House Mortgage.

Revolving Credit Facilities

In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility (the 2022 Credit Facility”), entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation.

In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility (the “2022 Credit Facility”), entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which were collectively subject to a borrowing base calculation.

At the time the 2022 Credit Facility was entered into, it was collateralized by six of the Company’s office properties, as well as the Company’s hotel property and adjacent parking garage (the “Hotel Properties”).

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

As of March 31, 2025, the variable interest rate was 8.42%.

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.

The 2022 Credit Facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants.

The 2022 Credit Facility originally had a maturity date in December 2025 and provided for two one-year extension options.

In December 2024, using proceeds from the closing of a variable rate mortgage on the Hotel Properties and a fixed rate mortgage on three of the Company’s office properties (collectively, the “Refinancings”), the Company repaid $111.7 million on the 2022 Credit Facility Revolver and $42.6 million on the 2022 Credit Facility Term Loan.

Following the completion of the Refinancings, the 2022 Credit Facility was secured by three of the Company’s office properties.

As of both March 31, 2025, and December 31, 2024, $15.0 million was outstanding under the 2022 Credit Facility and $0 was available for future borrowings.

On April 3, 2025 the Company completed the refinancing of an office property in Austin, Texas (see further discussion in Subsequent Events) (the “Austin Refinancing”).

The Company used a portion of the proceeds from the Austin Refinancing to repay the 2022 Credit Facility in full and, in connection with such repayment, the 2022 Credit Facility was terminated.

In December 2024, using proceeds from the closing of a variable rate mortgage on the Hotel Properties and a fixed rate mortgage on three of the Company’s office properties, the Company repaid $111.7 million on the 2022 Credit Facility Revolver and $42.6 million on the 2022 Credit Facility Term Loan.

On April 3, 2025, the Company completed the refinancing of an office property in Austin, Texas and used a portion of the proceeds from such refinancing to repay the 2022 Credit Facility in full and, in connection with such repayment, the 2022 Credit Facility was terminated.

In June 2025, a subsidiary of the Company, as borrower, entered into an agreement (the “Lending Division Revolving Credit Facility”) with a bank that included a $20.0 million revolving credit facility secured by the unguaranteed portion of certain of such subsidiary’s SBA 7(a) loans receivable and other assets of such subsidiary, subject to a borrowing base calculation, and fully guaranteed by the Company.

Loans included in the borrowing base calculation may not be included for more than 12 calendar months unless certain financial ratios are met and in no case can loans be included for more than 18 months.

The Lending Division Revolving Credit Facility bears interest at (i) the base rate plus 2.00% or (ii) SOFR plus 3.00%, at the borrower’s election, and has an initial maturity date of June 13, 2027, with two one-year extension options.

As of June 30, 2025, the effective interest rate for the lending division credit facility was 7.38% and there was $8.3 million of debt outstanding with no availability for additional borrowings under the Lending Division Revolving Credit Facility, pursuant to the borrowing base calculation.

In connection with the Company’s guaranty of the Lending Division Revolving Credit Facility (the “Parent Guaranty”), the Company is subject to certain financial covenants, including maintenance of (i) a consolidated fixed charge coverage ratio of at least 1.05 to 1.00, (ii) a minimum net worth of $200.0 million, (iii) a total leverage ratio no greater than 2.50 to 1.00 and (iv) $10.0 million of liquidity.

If the Company fails to comply with the financial covenants set forth in the Parent Guaranty, the lender under the Lending Division Revolving Credit Facility has the right to require the Company to post cash collateral for the benefit of the lender in an amount equal to 105% of the outstanding principal balance under the facility plus all accrued and unpaid interest under such facility.

Other Financing Activity

On March 9, 2023, our lending division completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $54.1 million of unguaranteed SBA 7(a) loan-backed notes (with net proceeds of approximately $43.3 million, after payment of fees and expenses in connection with the securitization and the funding of a

reserve account and an escrow account).

The SBA 7(a) loan-backed notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable.

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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, 2025, the variable interest rate was 7.15%.

As of June 30, 2025, the variable interest rate was 7.15%.

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, 2025.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of June 30, 2025.

Securities Offerings

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During the tenure of the offering, we issued 4,603,287 Series A Preferred Stock and Series A Preferred Warrants and received aggregate net proceeds of $105.2 million after commissions, fees and allocated costs.

As of March 31, 2025, all of the Series A Preferred Warrants had expired.

As of June 30, 2025, all of the Series A Preferred Warrants had expired.

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

From June 2022 through September 2024, the we conducted a public offering with respect to shares of its Series A1 Preferred Stock.

From June 2022 through September 2024, we conducted a public offering with respect to shares

of its Series A1 Preferred Stock.

We used the net proceeds from the offerings for general corporate purposes.

We have suspended our offering of Series A1 Preferred Stock.

As of March 31, 2025, we had issued 12,040,878 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 $459.1 million after commissions, fees and allocated costs.

As of June 30, 2025, we had issued 12,040,878 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 $459.1 million after commissions, fees and allocated costs.

Dividends on and Redemptions of Preferred Stock

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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.

Through March 31, 2025, we had redeemed 4,799,446 shares of Series A Preferred Stock, 3,148,815 shares of Series A1 Preferred Stock, and 8,410 shares of Series D Preferred Stock.

Through June 30, 2025, we had redeemed 4,799,446 shares of Series A Preferred Stock, 3,148,815 shares of Series A1 Preferred Stock, and 8,410 shares of Series D Preferred Stock.

We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares of Preferred Stock in shares of Common Stock during 2025, when legally permitted.

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Of the 4,799,446 shares of Series A Preferred Stock that have been redeemed, the redemption of 2,330,186 shares of Series A Preferred Stock were paid in cash, 2,313,106 of which were redeemed at the option of the holders and 17,080 of which were redeemed at the option of the Company.

As of March 31, 2025, the Company, at its option, redeemed 2,150,076 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, as of March 31, 2025, 319,184 shares redeemed at the option of the holders were paid in shares of Common Stock, including all accrued and unpaid dividends as of the redemption date (collectively, the “Series A In-Kind Redemptions”).

As of June 30, 2025, the Company, at its option, redeemed 2,150,076 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, as of June 30, 2025, 319,184 shares redeemed at the option of the holders were paid in shares of Common Stock, including all accrued and unpaid dividends as of the redemption date (collectively, the “Series A In-Kind Redemptions”).

The Series A In-Kind Redemptions resulted in the aggregate issuance of 367,311 shares of Common Stock.

Of the 3,148,815 shares of Series A1 Preferred Stock that have been redeemed, the redemption of 183,081 shares of Series A1 Preferred Stock were paid in cash (all of which were redeemed at the option of the holders).

As of March 31, 2025, the Company, at its option, redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, as of March 31, 2025, 376,128 shares redeemed at the option of the holders were paid in shares of Common Stock, including all accrued and unpaid dividends as of the redemption date (collectively, the “Series A1 In-Kind Redemptions”).

As of June 30, 2025, the Company, at its option, redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, as of June 30, 2025, 376,128 shares redeemed at the option of the holders were paid in shares of Common Stock, including all accrued and unpaid dividends as of the redemption date (collectively, the “Series A1 In-Kind Redemptions”).

The Series A1 In-Kind Redemptions resulted in the aggregate issuance of 288,981 shares of Common Stock.

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Off-Balance Sheet Arrangements

As of March 31, 2025, we did not have any off-balance sheet arrangements.

As of June 30, 2025, we did not have any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

1 unchanged sentence

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