Creative Media & Community Trust Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to future growth of our business and availability of funds. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “target,” “expect,” “intend,” “might,” “believe,” “anticipate,” “estimate,” “could,” “would,” “continue,” “pursue,” “potential,” “forecast,” “seek,” “plan,” “should” or “goal” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements also include, among others, statements about our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management has made in light of its experience, as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. Forward-looking statements are necessarily estimates reflecting the judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include those associated with (i) the timing, form, and operational effects of our development activities, (ii) our ability to raise in place rents to existing market rents and to maintain or increase occupancy levels, (iii) fluctuations in market rents, (iv) the effects of inflation and continuing higher interest rates on our operations and profitability, (v) general economic, market and other conditions, including the effects of high unemployment rates, continued or renewed inflation and any recession or slowdown in economic growth, and (vi) our approach to artificial intelligence (“AI”). 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 10, 2026 (the “2025 Form 10-K”). The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements expressed or implied in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements expressed or implied herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made. 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, 2026 and results of operations for the three months ended March 31, 2026 and 2025 should be read in conjunction with the 2025 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 2025 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. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries. Definitions We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings: The phrase “ADR” represents average daily rate. It is calculated as trailing three-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only. The phrase “annualized rent” represents gross monthly base rent, or gross monthly contractual rent under parking and retail leases, 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. The phrase “net annualized rent” represents gross monthly base rent, or gross monthly contractual rent under parking and retail leases, net of total rent abatements granted in the applicable month, multiplied by 12. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. The phrase “RevPAR” represents revenue per available room. It is calculated as trailing three-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only. 32 Executive Summary Business Overview Creative Media & Community Trust Corporation is a Maryland corporation and REIT. We primarily acquire, develop, own and operate both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to our multifamily investments. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties and creative office assets that cater to rapidly growing industries such as technology, media and entertainment. All of our real estate assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas. CIM Group is headquartered in Los Angeles, California and has offices in Atlanta, Georgia, Chicago, Illinois, Dallas, Texas, New York, New York, Orlando, Florida, Phoenix, Arizona, London, U.K., and Tokyo, Japan. CIM also maintains additional offices globally with distribution staff and Joint Venture (“JV”) partnerships. Properties As of March 31, 2026, 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, three 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, 2026, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 73.1% occupied and our one 505-room hotel with an ancillary parking garage, had RevPAR of $178.71 for the three months ended March 31, 2026 and our five multifamily properties were 89.6% occupied. Additionally, as of March 31, 2026, we had eight development sites (two of which were being used as parking lots). Strategy We are a Maryland corporation and REIT. Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties situated in vibrant communities throughout the United States. While we may acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments, we intend to increase our focus towards premier multifamily properties. All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas. Our investments in multifamily and creative office assets may take different forms, including direct equity or preferred investments, real estate development activities, side-by-side investments or co-investments with vehicles managed or owned by CIM Group and/or originating loans that are secured directly or indirectly by properties primarily located in qualified communities (“Qualified Communities”) that meet our strategy. Further, we leverage the investor relationships of CIM Group to execute on our investment pipeline using an asset-light approach for certain of our investments. Under this approach, we co-invest with one or more third parties on an asset-level basis by raising capital from such third parties, maintain an economic interest in the asset and, in some cases, earn a management fee and a percentage of the profits. We believe this is a compelling model that is expected to contribute to strong returns on invested capital while reducing risk by reducing our capital outlay. We intend to dispose of assets that do not fit into our strategy over time and opportunistically (i.e., we do not have any specific time frame with respect to such dispositions). 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. 33 CIM Overview Established in 1994, CIM is a vertically integrated, community-focused real estate and infrastructure owner, operator, lender, and developer of real assets. Through CIM’s vertically integrated structure, CIM is able to leverage in-house expertise across the full life cycle of assets to drive value creation across the process. CIM has dedicated teams for sourcing/acquisition, credit analysis, development, financing, commercial leasing, onsite property management and distribution. These functions bring alignment of interests and deep expertise, allowing for disciplined business plan underwriting and effective risk management. CIM also seeks to maximize synergies across its vertically integrated platform. The three investment platforms, real estate, infrastructure, and credit leverage in-house expertise to create value within each investment. Financing Strategy We will seek to satisfy our long-term liquidity needs through one or more of the following methods: (i) offerings of shares of Common Stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (v) the sale of existing assets; and/or (vi) cash flows from operations. Rental Rate Trends Office Statistics: 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, 2026 2025 Occupancy (1) 73.1 % 70.2 % Annualized rent per occupied square foot (1)(2) $ 58.47 $ 61.14 (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) Represents gross monthly base rent under leases commenced as of the specified periods, 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. 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, 2026 and 2025 were approximately $1.8 million and $1.0 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $55.90 and $58.00 as of March 31, 2026 and 2025, 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, 2026 September 30, 2026 December 31, 2026 March 31, 2027 Expiring Cash Rents: Expiring square feet (1) 27,841 30,978 20,097 30,429 Expiring rent per square foot (2) $ 62.46 $ 48.97 $ 54.24 $ 51.53 (1) Month-to-month tenants occupying a total of 6,168 square feet are included in the expiring leases in the first quarter listed. (2) Represents gross monthly base rent, as of March 31, 2026, 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. 34 During the three months ended March 31, 2026, we executed leases with terms longer than 12 months totaling 20,562 square feet. The table below sets forth information on certain of our executed leases during the three months ended March 31, 2026, 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: New Cash Expiring Cash Number of Rentable Rents per Square Rents per Square Leases (1) Square Feet Foot (2) Foot (2) Three Months Ended March 31, 2026 10 20,562 $ 61.35 $ 65.72 (1) Based on the number of tenants that signed leases. (2) Cash rents represent gross monthly base rent, 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. Fluctuations in submarkets, buildings and terms of leases cause large variations in these numbers and make predicting the changes in rent in any specific period difficult. 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 Preferred Stock or renew dividends on our Common Stock. 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, 2026 2025 Occupancy 89.6 % 80.2 % Monthly rent per occupied unit (1) $ 2,493 $ 2,461 ______________________ (1) Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,156 and $2,341 as of March 31, 2026 and 2025, 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, 2026 2025 Occupancy 78.5 % 80.0 % ADR $ 227.75 $ 220.57 RevPAR $ 178.71 $ 176.47 Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year. Generally, our hotel revenues are greater in the first and second quarters than the third and fourth quarters. This seasonality can be expected to cause quarterly fluctuations in revenues, segment net operating income, net income and cash provided by operating activities. In addition, the hotel industry is cyclical and demand generally follows, on a lagged basis, key macroeconomic factors. 35 Lending Segment Prior to the divestiture described in this paragraph, we were a national lender that primarily originated loans to small businesses. As previously announced on November 12, 2025, the Company and First Western entered into the Membership Interest Purchase Agreement with the Buyer. The Closing occurred on January 21, 2026. At the Closing, pursuant to the Membership Interest Purchase Agreement, and upon the terms and subject to the conditions therein, Buyer purchased from the Company all of the issued and outstanding equity interests of First Western for a purchase price of $44.9 million (which is net of the outstanding balance of debt related to the 2023 securitization of certain loan receivables), resulting in proceeds of $31.2 million after the repayment of the Lending Division Revolving Credit Facility, and a net gain of $1.7 million. Subsequent to March 31, 2026, the Company received $1.0 million of escrow proceeds in connection with the Transactions. Property Concentration Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 24.0% of our annualized office rental income for the three months ended March 31, 2026. 2026 Results of Operations Overview We are not aware of any material trends or uncertainties, other than geopolitical conflict and 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, 2025. Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025 Net Loss and FFO Three Months Ended March 31, Change 2026 2025 $ % (dollars in thousands) Total revenues $ 29,417 $ 32,295 $ (2,878) (8.9) % Total expenses $ 38,195 $ 37,295 $ 900 2.4 % Gain on sale of First Western $ 1,737 $ — $ 1,737 N/A Net loss $ (8,417) $ (6,272) $ (2,145) 34.2 % The Company had a net loss of $8.4 million for the three months ended March 31, 2026, representing an increase of $2.1 million compared to a net loss of $6.3 million for the three months ended March 31, 2025. The increase in net loss was primarily due to a decrease of $1.9 million in segment net operating income (discussed in more detail below in “Summary Segment Results”). Funds from Operations We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO represents net income (loss) attributable to common stockholders, computed in accordance with GAAP, which reflects the deduction of redeemable preferred stock dividends accumulated, excluding gains (or losses) from sales of real estate, impairment of real estate, and real estate depreciation and amortization. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (the “NAREIT”). Like any metric, FFO should not be used as the only measure of our performance because it excludes depreciation and amortization and captures neither the changes in the value of our real estate properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our operating results. Other REITs may not calculate FFO in accordance with the standards established by the NAREIT; accordingly, our FFO may not be comparable to the FFOs of other REITs. Therefore, FFO should be considered only as a supplement to net income (loss) as a measure of our 36 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 holders of common stockholders (in thousands): Three Months Ended March 31, 2026 2025 Net loss attributable to common stockholders (1) $ (34,695) $ (11,898) Depreciation and amortization 7,721 6,560 Noncontrolling interests’ proportionate share of depreciation and amortization (58) (67) Gain on sale of First Western (1,737) — FFO attributable to common stockholders (1) $ (28,769) $ (5,405) (1) During the three months ended March 31, 2026 and 2025, we recognized $22.2 million and $300,000, 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 $(28.8) million for the three months ended March 31, 2026, a decrease of $(23.4) million compared to $(5.4) million for the three months ended March 31, 2025. The decrease in FFO was primarily attributable to an increase in redeemable preferred stock redemptions of $21.9 million, a decrease of $1.9 million in segment net operating income (discussed in more detail below in “Summary Segment Results”) and an increase of $705,000 in loss on early extinguishment of debt, partially offset by a decrease in redeemable preferred stock dividends of $1.3 million. 37 Summary Segment Results During the three months ended March 31, 2026 and 2025, we operated in three segments: office, hotel and multifamily properties. As previously disclosed, the Company completed the sale of its lending business on January 21, 2026, and, as a result, the Company’s lending business ceased to be one of the Company’s reportable segments during the three months ended March 31, 2026. As the lending segment activity was de minimis during the period it remained under the Company’s ownership for the three months ended March 31, 2026, the related amounts are included within non-segment interest and other income, interest expense, and general and administrative, as applicable, in the following table for the three months ended March 31, 2026. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands). Three Months Ended March 31, Change 2026 2025 $ % Revenues: Office $ 12,578 $ 13,054 $ (476) (3.6) % Hotel $ 12,376 $ 12,681 $ (305) (2.4) % Multifamily $ 3,872 $ 4,091 $ (219) (5.4) % Lending $ — $ 2,378 $ (2,378) NM* Expenses: Office $ 6,141 $ 5,924 $ 217 3.7 % Hotel $ 8,420 $ 7,997 $ 423 5.3 % Multifamily $ 3,047 $ 3,589 $ (542) (15.1) % Lending $ — $ 1,788 $ (1,788) NM* Income (Loss) From Unconsolidated Entities Office $ 62 $ (29) $ 91 NM* Multifamily $ (1,438) $ (1,122) $ (316) 28.2 % Non-Segment Revenue and Expenses: Interest and other income $ 591 $ 91 $ 500 NM* Asset management and other fees to related parties $ (584) $ (360) $ (224) 62.2 % Expense reimbursements to related parties—corporate $ (875) $ (626) $ (249) 39.8 % Interest expense $ (9,124) $ (9,184) $ 60 (0.7) % General and administrative $ (1,571) $ (1,241) $ (330) 26.6 % Transaction-related costs $ (7) $ (26) $ 19 NM* Depreciation and amortization $ (7,721) $ (6,560) $ (1,161) 17.7 % Loss on early extinguishment of debt $ (705) $ — $ (705) N/A Gain on sale of First Western $ 1,737 $ — $ 1,737 N/A Provision for income taxes $ — $ (121) $ 121 NM* ______________________ (*) Percentage changes in excess of 100% are deemed to be not meaningful (“NM”) Revenues Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $12.6 million for the three months ended March 31, 2026 from $13.1 million for the three months ended March 31, 2025. The change is primarily due to a decrease in tenant reimbursement revenue at an office property in Oakland, California. Hotel Revenue: Hotel revenue decreased to $12.4 million for the three months ended March 31, 2026, compared to $12.7 million for the three months ended March 31, 2025. The decrease was largely attributable to temporary factors, including 38 a renovation-related disruption early in the quarter, and an issue in one of the mechanical systems that temporarily removed a number of rooms from service in March of 2026. Multifamily Revenue: Multifamily revenue decreased to $3.9 million for the three months ended March 31, 2026, compared to $4.1 million for the three months ended March 31, 2025. The decrease is primarily due to decreased rent per occupied unit, net of rent concessions, at our multifamily properties during the three months ended March 31, 2026. Lending Revenue: Lending revenue represented interest income on loans and other loan-related fee income from our lending business (First Western), which was sold on January 21, 2026. The Company recorded no lending revenue for the three months ended March 31, 2026, compared to $2.4 million for the three months ended March 31, 2025. Lending revenue for the period First Western was still under ownership during the three months ended March 31, 2026 was recorded to interest and other income not allocated to any of our operating segments. Income (Loss) From Unconsolidated Office Entities: Income from our unconsolidated office entities was $62,000 for the three months ended March 31, 2026, compared to a loss of $29,000 for the three months ended March 31, 2025. The increase was due to an increase in rental revenues at one of our unconsolidated office entities during the three months ended March 31, 2026. Loss From Unconsolidated Multifamily Entities: The loss from our unconsolidated multifamily entities increased to $1.4 million for the three months ended March 31, 2026, compared to $1.1 million for the three months ended March 31, 2025. The increase is due to an increase in the unrealized loss on investments in real estate at one of our unconsolidated multifamily entities during the three months ended March 31, 2026, partially offset by an increase in rental revenues at the property. Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, was $591,000 for the three months ended March 31, 2026, compared to $91,000 for the three months ended March 31, 2025. The increase is primarily due the Company recording lending revenue for the period First Western was still under ownership during the three months ended March 31, 2026 to interest and other income. Expenses Office Expenses: Office expenses increased to $6.1 million for the three months ended March 31, 2026, compared to $5.9 million for the three months ended March 31, 2025. The increase is primarily a result of an increase in real estate tax expense at an office property in Beverly Hills, California for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven by a tax refund recorded in the prior-year period. Hotel Expenses: Hotel expenses increased to $8.4 million for the three months ended March 31, 2026, compared to $8.0 million for the three months ended March 31, 2025. The increase is due to an increase in operating expenses and administrative expenses, driven mostly by elevated maintenance and marketing costs for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Multifamily Expenses: Multifamily expenses decreased to $3.0 million for the three months ended March 31, 2026, compared to $3.6 million for the three months ended March 31, 2025. The decrease was primarily due to a decrease in real estate tax expenses at multifamily properties in Oakland, California for the three months ended March 31, 2026, compared to the prior period. Lending Expenses: Lending expenses included interest expense, general and administrative expenses and fees to related parties from our lending business (First Western), which was sold on January 21, 2026. The Company recorded no lending expenses for the three months ended March 31, 2026, compared to $1.8 million for the three months ended March 31, 2025. Lending expenses for the period First Western was still under ownership during the three months ended March 31, 2026 were recorded to general and administrative expenses and interest expense not allocated to any of our operating segments. 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 increased to $584,000 for the three months ended March 31, 2026, compared to $360,000 for the three months ended March 31, 2025. The change was a result of an increase in asset management fees driven by an increase in our net asset value attributable to common stockholders resulting from the issuance of additional shares of Common Stock during the three months ended March 31, 2026. 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 $875,000 for the three months ended March 31, 2026, compared to $626,000 for the three months ended March 31, 2025. The change was primarily due to an increase in expense allocation as well as an increase in legal services. 39 Interest Expense: Interest expense, which has not been allocated to our operating segments, was $9.1 million for the three months ended March 31, 2026, consistent with $9.2 million for the three months ended March 31, 2025. General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.6 million for the three months ended March 31, 2026, compared to $1.2 million for the three months ended March 31, 2025. The increase is primarily due the Company recording lending general and administrative expenses for the period First Western was still under ownership during the three months ended March 31, 2026 to general and administrative expenses not allocated to any of our operating segments. Transaction-Related Costs: Transaction-related costs were $7,000 for the three months ended March 31, 2026, generally consistent with $26,000 for the three months ended March 31, 2025. Depreciation and Amortization Expense: Depreciation and amortization expense increased to $7.7 million for the three months ended March 31, 2026, compared to $6.6 million for the three months ended March 31, 2025. The increase was primarily due to an increase in tenant improvement amortization at an office property located in Beverly Hills, California, as well as an increase at our hotel property due to renovation projects which have increased depreciable assets. Gain on sale of First Western: Gain on sale of First Western was $1.7 million for the three months ended March 31, 2026, related to the sale of First Western in January 2026. There were no such amounts recorded for the three months ended March 31, 2025. Provision for Income Taxes: There was no provision for income taxes for the three months ended March 31, 2026, compared to a provision for income taxes of $121,000 for the three months ended March 31, 2025. The decrease is primarily due to the sale of First Western, one of our taxable REIT subsidiaries, on January 21, 2026. Cash Flow Analysis Our cash flows from operating activities are primarily dependent upon the real estate assets owned, occupancy level of our real estate assets, the rental rates achieved through our leases, the occupancy and ADR of our hotel, the collectability of rent and recoveries from our tenants, and prior to the sale of our lending division, First Western, in January 2026, loan-related activity. 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 $26.0 million for the three months ended March 31, 2026, compared to net cash provided by operating activities of $1.2 million for the three months ended March 31, 2025. The decrease is primarily due to changes in working capital, including the timing of cash payments related to amounts due to related parties, as well as, an increase in net loss, adjusted for depreciation and amortization expense and other non-cash items of $2.4 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, prior to the sale of First Western in January 2026, cash flows associated with loans originated at our lending segment. Net cash provided by investing activities was $41.4 million for the three months ended March 31, 2026, compared to net cash used in investing activities of $5.2 million for the three months ended March 31, 2025. The change was primarily due to $44.6 million of proceeds from the sale of assets held for sale, net, in connection with the sale of First Western, as further discussed in Note 5 to the consolidated financial statements included in this Quarterly Report on Form 10-Q, as well as a $2.3 million decrease in capital expenditures, partially offset by a decrease in proceeds from principal loan collections, net of loans funded, of $2.0 million during the three months ended March 31, 2026 as compared to the same period in 2025. Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash used in financing activities for the three months ended March 31, 2026 was $15.4 million, compared to net cash provided by financing activities of $206,000 for the three months ended March 31, 2025. The change was primarily due to net repayments on debt of $10.3 million during the three months ended March 31, 2026, as compared to net proceeds from debt of $6.4 million during the three months ended March 31, 2025. The change was partially offset by a $1.0 million decrease in preferred stock dividends paid during three months ended March 31, 2026, as compared to the same period in 2025. Liquidity and Capital Resources General On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, and paying distributions on our Preferred Stock. We may finance our future activities through one or more of the following methods: (i) offerings of shares of Common Stock or other equity and/or debt securities of 40 the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (v) the sale of existing assets; and/or (vi) cash flows from operations . 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, 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 any renewed distributions on our Common Stock. To the extent we decide to proceed with development work on any of our development sites (in addition to those discussed below), we will have increased liquidity needs. Construction has been substantially completed on the renovation of the Sheraton Grand Hotel’s guest rooms and corridors (the “Rooms Renovation Project”) at our Sheraton Grand Hotel in Sacramento, California, with total costs incurred of $21.5 million as of March 31, 2026. We 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 $9.0 million had been incurred as of March 31, 2026. Both the Rooms Renovation Project and Lobby Renovation Project are being funded by a combination of draws on the mortgage loan at the property, key money from the Sheraton Grand Hotel’s franchisor, and cash from operations of the hotel. In addition, we are evaluating a potential refinancing and are in discussions with and receiving proposals from potential lenders related to the Sheraton Hotel that could result in an upsized loan and a reduced interest rate. From and after September 2024, at our option, we redeemed 10,129,244, 4,019,649 and 21,760 shares of Series A1 Preferred Stock, Series A Preferred Stock, and Series D Preferred Stock, respectively, in shares of Common Stock and we have paid holder-requested redemptions of 913,141, 759,308, and 4,122 shares of Series A1 Preferred Stock, Series A Preferred Stock, and Series D Preferred Stock, respectively, in shares of Common Stock. On March 16, 2026, we redeemed, at our option, 7,539,638 shares of Series A1 Preferred Stock, 1,869,573 shares of Series A Preferred Stock and 21,760 shares of Series D Preferred Stock in shares of Common Stock (the “March 2026 Redemption”). Other than the March 2026 Redemption, the Company does not currently intend to redeem, at the Company’s election, additional Preferred Stock in shares of Common Stock. However, the Company will evaluate redemption requests submitted by holders of its shares of Preferred Stock at the time it receives them and may elect to redeem those Preferred Shares in Common Stock or cash, at the Company’s discretion. As of May 1, 2026, the Company has received redemption requests related to Series A1 Preferred Stock and Series A Preferred Stock, totaling approximately $204,000, which the Company intends to redeem in shares of Common Stock as soon as practical after the Company opens its trading window in accordance with its Insider Trading Policy. The measures noted above, taken together, strengthen our balance sheet and improve liquidity. These actions are also intended to better position the Company to take advantage of opportunities that are expected to arise in a recovering real estate market. We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements. 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 2025 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 any renewed distributions on our Common Stock. 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 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. On May 1, 2025, we received a letter from the Nasdaq Listing Qualification Department informing the Company that it had regained compliance with the Bid Price Requirement as of April 30, 2025 due to the price of our Common Stock maintaining a minimum bid price in excess of $1.00 for ten consecutive business days. In addition, in order to remain in compliance with Nasdaq’s Modified Low- 41 Price Requirement (which triggers an immediate suspension of trading and potential delisting notice for securities that do not maintain a closing bid price of greater than $0.10 for ten consecutive trading days), the Company effected a 1-for-10 reverse stock split on March 26, 2026 and, in order to remain in compliance with the Bid Price Requirement, the Company effected an additional 1-for-10 reverse stock split on April 20, 2026. However, our ability to maintain compliance with 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” of the 2025 Form 10-K. 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 Mortgages We have mortgage loan agreements with outstanding balances of $477.1 million as of March 31, 2026. Our mortgage loans mature on various dates from June 7, 2026 through January 11, 2030. With regard to the mortgage payable with a balance of $66.3 million as of March 31, 2026 maturing on June 7, 2026 (the “1150 Clay Mortgage”), the Company executed the final one-year extension option under the mortgage in June 2025. The Company intends to work with the lender in order to refinance the 1150 Clay Mortgage beyond its stated maturity date of June 7, 2026. Although the Company believes 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 the Company and the lender under the 1150 Clay 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. With regard to the mortgage payable with a balance of $81.0 million as of March 31, 2026 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 from its previous balance of $87.0 million. Although the Company believes it is likely it will be able to refinance the Channel House Mortgage prior to January 31, 2027, there can be no assurance that such refinancing will occur. If the Company and the lender under the Channel House 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. With regard to the mortgage payable with a balance of $97.1 million as of March 31, 2026 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 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. Upon the closing of the sale of First Western on January 21, 2026, the remaining balance of $10.4 million under the Lending Division Revolving Credit Facility was paid in full, resulting in the termination of the Lending Division Revolving Credit Facility. Other Financing Activity We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest‑only payments. The junior subordinated balance is due at maturity on March 30, 2035. 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, 2026. 42 Securities Offerings We conducted a continuous public offering of Series A Preferred Stock from October 2016 through January 2020, where one Series A Preferred Warrant was issued along with each issued share of Series A Preferred Stock. 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, 2026, 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 our 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, 2026, 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 Holders of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share as follows: (1) at the of greater of (i) an annual rate of 6.0% of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5% of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5% of the Series A1 Preferred Stock Stated Value per quarter, (2) 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter), and (3) 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), respectively. We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the Maryland General Corporation Law (“MGCL”) or other factors make it imprudent to do so. The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time. From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A1 Preferred Stock, Series A Preferred Stated Value and Series D Preferred Stated Value, respectively. From and after the fifth anniversary of the date of original issuance of any share of our Preferred Stock, we generally (subject to certain conditions) have the right (but not the obligation) to redeem, and the holder of such share may require us to redeem, such share at a redemption price equal to 100% of the stated value of such share, plus any accrued but unpaid dividends in respect of such share as of the effective date of the redemption. 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, 2026, we had redeemed 7,109,143 shares of Series A Preferred Stock, 11,225,466 shares of Series A1 Preferred Stock, and 34,292 of Series D Preferred Stock. Other than the March 2026 Redemption, the Company does not currently intend to redeem, at the Company’s election, additional Preferred Stock in shares of Common Stock. However, the Company will evaluate redemption requests submitted by holders of its shares of Preferred Stock at the time it receives them and may elect to redeem those Preferred Shares in Common Stock or cash, at the Company’s discretion. As of May 1, 2026, the Company has received redemption requests related to Series A1 Preferred Stock and Series A Preferred Stock, totaling approximately $204,000, which the Company intends to redeem in shares of Common Stock as soon as practical after the Company opens its trading window in accordance with its Insider Trading Policy. Of the 7,109,143 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, 2026, the Company, at its option, redeemed 4,019,649 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, 2026, 759,308 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- 43 Kind Redemptions”). The Series A In-Kind Redemptions resulted in the aggregate issuance of 534,863 shares of Common Stock. Of the 11,225,466 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, 2026, the Company had, at its option, redeemed 10,129,244 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, 2026, 913,141 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 2,096,914 shares of Common Stock. Of the 34,292 shares of Series D Preferred Stock that have been redeemed, the redemption of 8,410 shares of Series D Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). As of March 31, 2026, the Company had, at its option, redeemed 21,760 shares of Series D Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of the redemption date and, in addition, as of March 31, 2026, 4,122 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 D In-Kind Redemptions”). The Series D In-Kind Redemptions resulted in the aggregate issuance of 6,057 shares of Common Stock. Dividends on Common Stock Holders of our Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by us out of legally available funds. In determining our dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, our financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor. We have not paid dividends on our Common Stock since 2024, and we cannot predict with certainty if or when we may be able to resume paying such dividends on our Common Stock. Off Balance Sheet Arrangements As of March 31, 2026, we did not have any off-balance sheet arrangements. Recently Issued Accounting Pronouncements Our recently issued accounting pronouncements are described in Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.