What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 172 added, 159 removed, 388 unchanged (46% of the section changed)

16 unchanged sentences

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 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.

The following discussion of our financial condition as of September 30, 2025 and results of operations for the three and nine months ended September 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.

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The phrase “ADR” represents average daily rate.

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

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

It is calculated as trailing nine-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 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.

As of September 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 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).

As of September 30, 2025, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 69.8% occupied, and our one 505-room hotel with an ancillary parking garage, had RevPAR of $158.92 for the nine months ended September 30, 2025 and our four multifamily properties were 85.3% occupied.

Additionally, as of September 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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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 June 30,

As of September 30,

Occupancy (1) 69.8 % 72.2 %

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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.

(2) 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 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).

Total abatements, representing lease incentives in the form of free rent, for the twelve months ended September 30, 2025 and 2024 were approximately $1.4 million and $1.8 million, respectively.

Giving effect to abatements, net annualized rent per occupied square foot was $57.10 and $59.52 as of September 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

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

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

Expiring Cash Rents:

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(1) Month-to-month tenants occupying a total of 4,930 square feet are included in the expiring leases in the first quarter listed.

(2) Represents gross monthly base rent, as of June 30, 2025, under leases expiring during the periods above, multiplied by 12.

(2) Represents gross monthly base rent, as of September 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 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:

During the three and nine months ended September 30, 2025, we executed leases with terms longer than 12 months totaling 80,962 and 159,154 square feet, respectively.

The table below sets forth information on certain of our executed leases during the three and nine months ended September 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 June 30, 2025 7 30,845 $ 45.26 $ 57.22

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

Three Months Ended September 30, 2025 5 18,539 $ 40.24 $ 47.04

Nine Months Ended September 30, 2025 19 70,965 $ 46.89 $ 54.27

______________________

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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 June 30,

As of September 30,

Occupancy 85.3 % 92.0 %

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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 $2,284 and $2,469 as of June 30, 2025 and 2024, respectively.

Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,215 and $2,444 as of September 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 Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Occupancy 75.7 % 71.4 %

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These loans are anticipated to be primarily concentrated in industries in which we previously had positive experience, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings.

On November 6, 2025, we entered into an agreement to sell our lending business to an unrelated third-party buyer for a purchase price of approximately $44 million (which is net of the outstanding balance of SBA 7(a) Loan-Backed Notes), subject to adjustment and updated information through the closing of the sale.

Upon the closing of the sale, which is still subject to approval by the SBA, and giving effect to the payment of other debt, transaction expenses and other matters, we expect to receive net proceeds of approximately $31 million.

Property Concentration

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.

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 24.5% of our annualized office rental income for the three months ended September 30, 2025.

2025 Results of Operations

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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.

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

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

Net Loss and FFO

Three Months Ended June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

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Total expenses $ 38,728 $ 37,938 $ 790 2.1 %

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

______________________

(*) 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.

Gain on sale of real estate $ 679 $ — $ 679 N/A

Net loss $ (12,586) $ (10,576) $ (2,010) 19.0 %

Net loss was $12.6 million for the three months ended September 30, 2025, compared to a net loss of $10.6 million for the three months ended September 30, 2024, an increase of $2.0 million .

The increase in net loss was primarily due to a decrease of $617,000 in segment net operating income (discussed in more detail in the following Summary Segment Results), an increase in depreciation and amortization expense of $922,000, and an increase in interest expense of $782,000, partially offset by a gain on the sale of real estate of $679,000.

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 June 30,

Three Months Ended September 30,

Net loss attributable to common stockholders (1)

2 unchanged sentences

Non-controlling interests’ proportionate share of depreciation and amortization (54) (68)

Impairment of real estate 221 —

Gain on sale of real estate (679) —

FFO attributable to common stockholders (1)

1 unchanged sentence

______________________

(1) During the three months ended June 30, 2025 and 2024, we recognized $0 and $567,000, respectively, of redeemable preferred stock redemptions.

(1) During the three months ended September 30, 2025 and 2024, we recognized $0 and $16.1 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 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 $(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.

FFO attributable to common stockholders, which is a non-GAAP measure, was $(11.1) million for the three months ended September 30, 2025, an increase of approximately $17.3 million, compared to $(28.4) million for the three months ended September 30, 2024.

The increase in FFO was primarily due to a decrease in redeemable preferred stock redemptions of $16.1 million and a decrease in redeemable preferred stock dividends of $2.7 million, partially offset by a decrease of $617,000 in segment net operating income (discussed in more detail in the following Summary Segment Results), and an increase in interest expense of $782,000.

Summary Segment Results

During the three months ended June 30, 2025 and June 30, 2024, we operated in four segments:

During the three months ended September 30, 2025 and September 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 June 30, Change

Three Months Ended September 30, Change

2025 2024 $ %

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Lending $ 1,904 $ 2,036 $ (132) (6.5) %

(Loss) Income From Unconsolidated Entities:

Loss From Unconsolidated Entities:

Office $ (528) $ (834) $ 306 (36.7) %

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

Multifamily $ (169) $ (405) $ 236 (58.3) %

Non-Segment Revenue and Expenses:

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General and administrative $ (1,189) $ (1,421) $ 232 (16.3) %

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

Transaction-related costs $ (598) $ (526) $ (72) 13.7 %

Depreciation and amortization $ (7,345) $ (6,423) $ (922) 14.4 %

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

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

Gain on sale of real estate $ 679 $ — $ 679 N/A

Provision for income taxes $ (74) $ (15) $ (59) NM*

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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.

Office revenue decreased to $12.5 million for the three months ended September 30, 2025, compared to $13.8 million for the three months ended September 30, 2024.

The decrease was primarily due to lower rental revenues at office properties in Oakland, California, San Francisco, California, and Los Angeles, California, each as a result of lower occupancy.

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.

Hotel revenue increased to $7.6 million for the three months ended September 30, 2025, compared to $7.1 million for the three months ended September 30, 2024.

The increase was mainly due to an increase in occupancy and average daily rates for the three months ended September 30, 2025 compared to the three months ended September 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.

Multifamily revenue was $3.9 million for the three months ended September 30, 2025, compared to $4.8 million for the three months ended September 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 September 30, 2025 compared to the three months ended September 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.

Lending revenue was $2.2 million for the three months ended September 30, 2025, compared to $2.7 million for the three months ended September 30, 2024.

The decrease was primarily due to a decrease in interest income due to loan payoffs and a decrease in interest rates as well as loans funded.

Loss From Unconsolidated Office Entities:

The loss from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $528,000 for the three months ended September 30, 2025, compared to a loss of $834,000 for the three months ended September 30, 2024.

The decrease was primarily due to a decrease in unrealized loss recognized on the value of real estate at an unconsolidated office entity in Los Angeles, California recognized during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Loss From Unconsolidated Multifamily Entities:

The loss from our Unconsolidated Joint Ventures included in the multifamily segment net operating was a loss of $169,000 for the three months ended September 30, 2025, compared to a loss of $405,000 for the three months ended September 30, 2024.

The decrease was primarily due to decreases in unrealized losses recognized on the value of real estate at our unconsolidated multifamily entities recognized during the three months ended September 30, 2025 compared to the three months ended September 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.

Interest and other income, which has not been allocated to our operating segments, was $87,000 for the three months ended September 30, 2025, a decline from $158,000 for the three months ended September 30, 2024 driven by a decrease in interest earned from money market accounts.

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.

Office expenses decreased to $6.9 million for the three months ended September 30, 2025, compared to $7.6 million for the three months ended September 30, 2024.

The decrease is mainly due to lower operating expenses at an office property in Oakland, California as a result of lower occupancy, partially offset by an increase in real estate taxes at an office property in Austin, Texas.

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.

Hotel expenses increased to $6.7 million for the three months ended September 30, 2025, compared to $6.2 million for the three months ended September 30, 2024.

The increase was primarily due to increased occupancy and property management fees during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

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.

Multifamily expenses decreased to $2.9 million for the three months ended September 30, 2025, compared with $3.9 million for the three months ended September 30, 2024.

The decrease was mainly due to a decrease in real estate tax expense as well as decreases in repairs and maintenance expenses at our multifamily properties.

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”).

Lending expenses were $1.9 million for the three months ended September 30, 2025, compared to $2.0 million for the three months ended September 30, 2024.

The decrease was primarily due to a decrease in current expected credit losses (“CECL”) and a decrease in interest expense due to loan paydowns.

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.

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $331,000 for the three months ended September 30, 2025, compared to $515,000 for the three months ended September 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.

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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 $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.

Expense reimbursements to related parties-corporate were $1.2 million for the three months ended September 30, 2025, compared to expenses of $592,000 for the three months ended September 30, 2024, with the increase primarily due to an increase in expense allocation related to activities at our lending division as well as 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.

Interest expense, which has not been allocated to our operating segments, increased to $9.6 million for the three months ended September 30, 2025, compared to $8.8 million for the three months ended September 30, 2024.

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.

General and administrative expenses, which have not been allocated to our operating segments, decreased to $1.2 million for the three months ended September 30, 2025, compared with $1.4 million for

the three months ended September 30, 2024.

The decrease was primarily due to a decrease in legal fees, partially offset by an increase in stockholder services.

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.

Transaction costs were $598,000 for the three months ended September 30, 2025, generally consistent with $526,000 for such costs for the three months ended September 30, 2024.

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.

Depreciation and amortization expense was $7.3 million for the three months ended September 30, 2025, compared with $6.4 million for the three months ended September 30, 2024.

The increase is due to incremental increases to the depreciable asset base at our hotel property as a result of renovation projects.

Gain on Sale of Real Estate:

Gain on sale of real estate was $679,000 for the nine months ended September 30, 2025, due to the sale of a land parcel in Oakland, California.

There were no dispositions 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.

Provision for income taxes was $74,000 for the three months ended September 30, 2025, compared to provision for income taxes of $15,000 for the three months ended September 30, 2024.

The increase in provision for income taxes was a result of one of our taxable REIT subsidiaries writing off the receivable for a refund of Alternative Minimum Tax that the company no longer believes is more likely than not to be received from the Internal Revenue Service.

2025 Results of Operations

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

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

Net Loss and FFO

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2025 2024 $ %

2 unchanged sentences

Total expenses $ 114,268 $ 111,371 $ 2,897 2.6 %

Gain on sale of real estate $ 679 $ — $ 679 N/A

Net loss $ (28,009) $ (15,333) $ (12,676) 82.7 %

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.

Net loss was $28.0 million for the nine months ended September 30, 2025, compared to a net loss of $15.3 million for the nine months ended September 30, 2024, an increase of $12.7 million.

The increase in net loss was primarily due to a decrease of $8.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $3.2 million.

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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):

Six Months Ended June 30,

Nine Months Ended September 30,

Net loss attributable to common stockholders (1)

3 unchanged sentences

Impairment of real estate 221 —

Gain on sale of real estate (679) —

FFO attributable to common stockholders (1)

1 unchanged sentence

______________________

(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.

(1) During the nine months ended September 30, 2025 and 2024, we recognized $300,000 and $17.5 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.

FFO attributable to common stockholders, which is a non-GAAP measure, was $(24.4) million for the nine months ended September 30, 2025, an increase of $13.2 million compared to $(37.6) million for the nine months ended September 30, 2024.

The increase in FFO was primarily due to a decrease in redeemable preferred stock dividends of $7.6 million and a decrease in redeemable preferred stock redemptions of $17.2 million, partially offset by a decrease of $8.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in interest expense of $3.2 million.

Summary Segment Results

During the six months ended June 30, 2025 and June 30, 2024, we operated in four segments:

During the nine months ended September 30, 2025 and September 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

Nine Months Ended September 30, Change

2025 2024 $ %

7 unchanged sentences

Lending $ 5,829 $ 5,708 $ 121 2.1 %

Income (Loss) From Unconsolidated Entities

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

(Loss) Income From Unconsolidated Entities

Office $ (382) $ 487 $ (869) NM*

Multifamily $ (1,903) $ (929) $ (974) NM*

9 unchanged sentences

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

Gain on sale of real estate $ 679 $ — $ 679 N/A

Provision for income taxes $ (353) $ (573) $ 220 (38.4) %

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

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.

Office revenue decreased to $37.4 million for the nine months ended September 30, 2025, compared to $42.5 million for the nine months ended September 30, 2024.

The decrease was primarily due to a decrease in rental revenues at office properties in Oakland, California, Los Angeles, California, and San Francisco, California as a result of lower occupancies, partially offset by an increase in rental revenues at office properties in Beverly Hills, California and Austin, Texas as a result of increased occupancy and rental rates.

Hotel Revenue:

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.

Hotel revenue was $31.9 million for the nine months ended September 30, 2025, compared to $31.2 million for the nine months ended September 30, 2024.

The increase was primarily due to an increase in occupancy and average daily rate during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Multifamily Revenue:

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.

Multifamily revenue was $11.9 million for the nine months ended September 30, 2025, compared to $15.0 million for the nine months ended September 30, 2024.

The decrease was attributed to lower occupancy and decreased monthly rent per occupied unit, net of rent concessions during the nine months ended September 30, 2025 compared to the nine months ended September 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 $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.

Lending revenue was $6.7 million for the nine months ended September 30, 2025, compared to $7.9 million for the nine months ended September 30, 2024.

The decrease was primarily due to a decrease in interest income due to loan payoffs and a decrease in interest rates as well as loans funded.

(Loss) Income From Unconsolidated Office Entities:

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 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.

The loss from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $382,000 for the nine months ended September 30, 2025, compared to income of $487,000 for the nine months ended September 30, 2024.

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

Loss From Unconsolidated Multifamily Entities:

The loss from our Unconsolidated Joint Venture included in the multifamily segment was $1.9 million for the nine months ended September 30, 2025, compared to a loss of $929,000 for the nine months ended September 30, 2024.

The increase was primarily due to increases in the net unrealized loss recognized on the value of real estate at the unconsolidated multifamily entities included in our multifamily segment during the nine months ended September 30, 2025.

Interest and Other Income:

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.

Interest and other income, which has not been allocated to our operating segments, decreased to $321,000 for the nine months ended September 30, 2025, compared to $472,000 for the nine months ended September 30, 2024.

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

Office Expenses:

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.

Office expenses decreased to $19.4 million for the nine months ended September 30, 2025, compared to $20.8 million for the nine months ended September 30, 2024.

The decrease was primarily due to lower operating expenses at an office property in Oakland, California resulting from lower occupancy, as well as lower operating expenses at an office property in Beverly Hills, California as result of property tax refunds received during nine months ended September 30, 2025, partially offset by increased property taxes at an office property in Austin, Texas during the nine months ended September 30, 2025.

Hotel Expenses:

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.

Hotel expenses were $22.2 million for the nine months ended September 30, 2025, compared to $21.8 million for the nine months ended September 30, 2024.

The increase is due to increased occupancy during the nine months ended September 30, 2025 compared to the prior year period.

Multifamily Expenses:

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.

Multifamily expenses decreased to $9.6 million for the nine months ended September 30, 2025, compared to $10.4 million for the nine months ended September 30, 2024.

The decrease was mainly due to a decrease in real estate tax expense as well as decreases in repairs and maintenance expenses at our multifamily properties during the nine months ended September 30, 2025 compared to the nine months ended September 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 $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.

Lending expenses were $5.8 million for the nine months ended September 30, 2025, compared with expenses of $5.7 million for the nine months ended September 30, 2024.

The increase was primarily due to an increase in CECL and an increase legal, accounting, and tax fees, partially offset by a decrease in interest expense due to loan paydowns.

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 $709,000 for the six months ended June 30, 2025, compared to $819,000 for the six months ended June 30, 2024.

Asset management fees and other fees to related parties, which have not been allocated to our operating segments, decreased to $1.0 million for the nine months ended September 30, 2025, compared to $1.3 million for the nine months ended September 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 $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.

Expense reimbursements to related parties-corporate were $2.7 million for the nine months ended September 30, 2025, compared to $1.8 million for the nine months

ended September 30, 2024, with the increase primarily due to an increase in expense allocation related to activities at our lending division as well as an increase in legal services.

Interest Expense:

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.

Interest expense, which has not been allocated to our operating segments, increased to $28.4 million for the nine months ended September 30, 2025, compared to $25.2 million for the nine months ended September 30, 2024.

General and Administrative Expenses:

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.

General and administrative expenses, which have not been allocated to our operating segments, were $3.1 million for the nine months ended September 30, 2025, compared to $3.6 million for the nine months ended September 30, 2024.

The decrease is primarily attributable to a decrease in accounting and tax preparation fees during the nine months ended September 30, 2025.

Transaction-Related Costs:

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.

Transaction-related costs were $1.4 million for both the nine months ended September 30, 2025 and 2024.

Depreciation and Amortization Expense:

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.

Depreciation and amortization expense was $20.2 million for the nine months ended September 30, 2025, compared with $19.4 million for the nine months ended September 30, 2024.

The increase is due to incremental increases to the depreciable asset base at our hotel property.

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.

Loss on early extinguishment of debt was $88,000 for the nine months ended September 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.

Impairment of real estate was $221,000 for the nine months ended September 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.

Gain on Sale of Real Estate:

Gain on sale of real estate was $679,000 for the nine months ended September 30, 2025, due to the sale of a land parcel in Oakland, California.

There were no dispositions during the prior year period.

Provision for Income Taxes:

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.

Provision for income taxes was $353,000 for the nine months ended September 30, 2025, compared with $573,000 for the nine months ended September 30, 2024.

The increase was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period as well as our taxable REIT subsidiaries writing off the receivable for a refund of Alternative Minimum Tax that the company no longer believes is more likely than not to be received from the Internal Revenue Service.

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 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.

Net cash provided by operating activities was $2.5 million for the nine months ended September 30, 2025, as compared to net cash provided by operating activities of $15.9 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 $10.5 million as well as a decrease in net cash proceeds from the sale of loans of $2.5 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 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.

Net cash used in investing activities decreased to $9.3 million for the nine months ended September 30, 2025, compared to $14.7 million for the same period in 2024.

The decrease in cash used in investing activities was primarily due to a decrease in cash used to fund loans of $5.7 million and an increase in the receipt of deferred key money of $2.3 million, partially offset by an increase in capital expenditures of $2.9 million.

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

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.

Net cash provided by financing activities was $2.2 million for the nine months ended September 30, 2025, compared to net cash used in financing activities of $9.4 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 $22.2 million during the nine months ended September 30, 2025, compared to $7.3 million during the nine months ended September 30, 2024, a $24.9 million decrease in cash redemptions of preferred stock, and a combined decrease in preferred stock and common stock dividends of $12.7 million.

The aforementioned

amounts were offset by a $40.5 million decrease in net proceeds from the issuance of preferred stock during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Liquidity and Capital Resources

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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 $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.

Additionally, our outstanding commitments to fund loans were $16.5 million as of September 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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Our long-term liquidity needs include development at an Unconsolidated Joint Venture (the “1910 Sunset JV”), in which we have approximately a 44% ownership interest.

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 $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.

The 1910 Sunset JV is nearing completion on its project 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, 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 is financing 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 $6.4 million as of September 30, 2025 and total borrowing availability of $9.4 million).

As of September 30, 2025, the 1910 Sunset JV had incurred total costs of $12.5 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.

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

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.

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 June 30, 2025.

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.

As of September 30, 2025, total costs of $28.6 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project, which has an expected total completion cost of $31.4 million.

Construction has been substantially completed on the Rooms Renovation Project at our Sheraton Grand Hotel in Sacramento, California, with total costs incurred of $21.5 million as of September 30, 2025.

We have also started our renovation of Sheraton Grand Hotel’s lobbies and common areas (the “Lobby Renovation Project”) during the third quarter of 2025.

The estimated cost for the Lobby Renovation Project is approximately $11.6 million, of which $4.4 million had been incurred as of September 30, 2025.

Both the Rooms Renovation Project and Lobby Renovation Project are being 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”).

The Company used a portion of the proceeds from the Austin Refinancing to repay the $15.0 million outstanding balance on our 2022 Credit Facility in full and, in connection with such repayment, the 2022 Credit Facility was terminated.

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, 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.

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 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 the

2024 Form 10-K.

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 Preferred Stock or pay dividends on our Common Stock.

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Sources and Uses of Funds

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

We have mortgage loan agreements with outstanding balances of $475.8 million as of September 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.

With regards to the mortgage payable with a balance of $66.3 million as of September 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.

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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.

With regards to the mortgage payable with a balance of $81.0 million as of September 30, 2025 secured by a multifamily property in Oakland, California, (the “Channel House Mortgage”), on August 4, 2025 the Company reached an agreement with the lender to extend the maturity date through January 31, 2027 (the “Channel House Mortgage Extension”).

In connection with the Channel House Mortgage Extension, the Company made a repayment of $6.0 million under the Channel House Mortgage, reducing it form its previous balance of $87.0 million.

In regards to the mortgage payable with a balance of $97.1 million as of September 30, 2025 maturing on July 1, 2026 (the “1 Kaiser Mortgage”), the Company intends to work with the lender in order to refinance the 1 Kaiser Mortgage beyond its

stated maturity date of July 1, 2026.

Although the Company believes it is likely it will be able to refinance the 1 Kaiser Mortgage prior to July 1, 2026, there can be no assurance that such refinancing will occur.

If the Company and the lender under the 1 Kaiser Mortgage cannot agree on an extension of the mortgage and the Company fails 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.

Revolving Credit Facilities

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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.

As of September 30, 2025, the effective interest rate for the lending division credit facility was 7.19% and there was $9.3 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.

On October 22, 2025, the Company entered into an amendment to the Parent Guaranty to modify the Parent Guaranty’s consolidated fixed charge coverage ratio covenant.

Pursuant to the amendment, the Company must maintain a consolidated fixed charge coverage ratio of (x) for the fiscal quarters ending September 30, 2025 and December 31, 2025, not less than 1.00 to 1.00, and (y) for any fiscal quarter ending after December 31, 2025, not less than 1.15 to 1.00.

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

As of September 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 June 30, 2025.

The aggregate principal balance of the junior subordinated notes was $27.1 million as of September 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 June 30, 2025, all of the Series A Preferred Warrants had expired.

As of September 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, 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 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.

As of September 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 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.

Through September 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 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”).

As of September 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 September 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 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”).

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

As of September 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