What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-28 compared with 2025-07-29 · 101 added, 95 removed, 382 unchanged (34% of the section changed)

15 unchanged sentences

We are focused on long-term growth and appreciation, as well as current income.

As of June 30, 2025, all of our total owned portfolio, consisting of approximately 4.8 million square feet, was located in Dallas, Denver, Houston and Minneapolis.

As of September 30, 2025, all of our total owned portfolio, consisting of approximately 4.8 million square feet, was located in Dallas, Denver, Houston and Minneapolis.

The main factor that affects our real estate operations is the broad economic market conditions in the United States.

15 unchanged sentences

The credit rating for our senior unsecured debt was downgraded by Moody’s Investor Service from Ba1 to Ba3 on April 12, 2023, from Ba3 to B3 on June 14, 2023, and from B3 to Caa1 on February 27, 2025.

As of June 30, 2025, our credit rating remains at Caa1.

As of September 30, 2025, our credit rating remains at Caa1.

Strategic Review

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In addition, the broad economic market conditions in the United States are typically affected by numerous other factors, including but not limited to, employment levels, energy prices, uncertainty about government fiscal, monetary, trade and tax policies, changes in currency exchange rates, the regulatory environment and the availability of credit.

During 2023 and 2024, the Federal Reserve adjusted the federal funds rate target several times, most recently decreasing it by 25 basis points on December 18, 2024, to a range of 4.25% to 4.50%.

During 2023 through 2025, the Federal Reserve adjusted the federal funds rate target several times, most recently decreasing it by 25 basis points on September 17, 2025, to a range of 4.00% to 4.25%.

If interest rates increase, then the interest costs on our unhedged variable rate debt would be adversely affected, which could in turn adversely affect our cash flow, our ability to pay principal and interest on our debt and our ability to make distributions to stockholders.

As of June 30, 2025, approximately 50.6% of our total debt constituted unhedged variable rate debt.

As of September 30, 2025, approximately 50.6% of our total debt constituted unhedged variable rate debt.

Increased interest rates could also decrease the amount third parties are willing to pay for our assets and limit our ability to incur new debt or refinance existing debt when it matures.

1 unchanged sentence

Real Estate Operations

As of June 30, 2025, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties.

As of September 30, 2025, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties.

We also hold a non-controlling common stock interest in the corporation that is the sole member of FSP Monument Circle LLC, which corporation was organized to operate as a real estate investment trust, which we refer to as the Sponsored REIT.

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We refer to these 15 properties as our owned and consolidated properties.

Our owned properties were approximately 69.1% leased as of June 30, 2025, a decrease from 70.3% leased as of December 31, 2024.

The 1.2% decrease in leased space was primarily a result of lease maturities that occurred during the six months ended June 30, 2025.

As of June 30, 2025, we had approximately 1,484,000 square feet of vacancy in our owned properties compared to approximately 1,428,000 square feet of vacancy at December 31, 2024.

During the six months ended June 30, 2025, we leased approximately 187,000 square feet of office space in our owned properties, of which approximately 171,000 square feet were with existing tenants, at a weighted average term of 6.3 years.

Our owned properties were approximately 68.9% leased as of September 30, 2025, a decrease from 70.3% leased as of December 31, 2024.

The 1.4% decrease in leased space was primarily a result of lease maturities that occurred during the nine months ended September 30, 2025.

As of September 30, 2025, we had approximately 1,497,000 square feet of vacancy in our owned properties compared to approximately 1,428,000 square feet of vacancy at December 31, 2024.

During the nine months ended September 30, 2025, we leased approximately 274,000 square feet of office space in our owned properties, of which approximately 219,000 square feet were with existing tenants, at a weighted average term of 5.7 years.

On average, tenant improvements for such leases were $24.83 per square foot, lease commissions were $9.98 per square foot and rent concessions were approximately four months of free rent.

Average GAAP base rents under such leases were $31.81 per square foot, or 6.0% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2024.

As of June 30, 2025, leases for approximately 3.0% and 11.9% of the square footage in our owned portfolio are scheduled to expire during 2025 and 2026, respectively.

As the third quarter of 2025 begins, we believe that:

As of September 30, 2025, leases for approximately 1.6% and 11.5% of the square footage in our owned portfolio are scheduled to expire during 2025 and 2026, respectively.

As the fourth quarter of 2025 begins, we believe that:

• approximately half of our operating properties are stabilized with leased occupancy of 75% or more;

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Existing vacancy is being actively marketed to numerous potential tenants.

While leasing activity at our properties has continued, we believe that the impact of geopolitical events, current economic conditions and the long-term impact of the COVID-19 pandemic may limit or delay new tenant leasing during at least the third quarter of 2025 and potentially in future periods.

While leasing activity at our properties has continued, we believe that the impact of geopolitical events, current economic conditions and the long-term impact of the COVID-19 pandemic may limit or delay new tenant leasing during at least the fourth quarter of 2025 and potentially in future periods.

While we cannot generally predict when an existing vacancy in our owned properties will be leased or if existing tenants with expiring leases will renew their leases or what the terms and conditions of the lease renewals will be, we expect to renew or sign new leases at then-current market rates for locations in which the buildings are located, which could be above or below

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We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment loss of $13.3 million during the three months ended March 31, 2025, and we reclassified the property as an asset held for sale of $5.7 million as of March 31, 2025.

On June 6, 2025, the property was sold and the impairment loss was decreased by $0.4 million to during the three months ended June 30, 2025 to a net loss of $12.9 million for final sale adjustments after the sale was completed.

On June 6, 2025, the property was sold and the impairment loss was decreased by $0.4 million during the three months ended June 30, 2025 to a net loss of $12.9 million for final sale adjustments after the sale was completed.

During the three months ended September 30, 2023, we entered into an agreement to sell a property in Atlanta, Georgia for a gross sales price of approximately $40.0 million at an expected loss of $20.5 million.

We recorded an impairment on this asset held for sale as of September 30, 2023.

During the three months ended September 30, 2024, we increased the expected loss on the property in Atlanta, Georgia by $6.6 million after we entered into a new agreement to sell the property for a gross sales price of $34.0 million

During the nine months ended September 30, 2024, we entered into an agreement to sell a property in Glen Allen, Virginia for a gross sales price of approximately $31.0 million at an expected loss of $13.2 million, which was recorded as an impairment, and we classified the property as an asset held for sale as of June 30, 2024.

The property was sold on July 8, 2024, at the expected loss.

During the three months ended September 30, 2024, an additional $0.7 million in costs related to the sale of properties previously sold were recorded.

On January 26, 2024, we sold an office property located in Richardson, Texas for a sales price of $35 million.

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In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information.

in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

The accounting policies that we believe are most critical to the understanding of our financial position and results of operations, and that require significant management estimates and judgments, are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

Critical accounting policies are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates.

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Results of Operations

The following table shows financial results for the three months ended June 30, 2025 and 2024:

Three months ended June 30,

The following table shows financial results for the three months ended September 30, 2025 and 2024:

Three months ended September 30,

(in thousands)

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Loss before taxes

Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024:

Total revenues decreased by $4.1 million to $26.7 million for the three months ended June 30, 2025, as compared 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:

Total revenues decreased by $2.4 million to $27.3 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease was primarily a result of:

● A decrease in rental revenue of approximately $2.4 million arising primarily from the sale of three properties in 2024 and other losses of rental income from lease expirations during the periods presented.

These decreases were partially offset by rental income earned from leases commencing after June 30, 2024.

Our leased space in our owned properties was 69.1% as of June 30, 2025 and 72.3% as of June 30, 2024.

Total expenses decreased by $3.8 million to $35.1 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

These decreases were partially offset by rental income earned from leases commencing after September 30, 2024.

Our leased space in our owned properties was 68.9% as of September 30, 2025 and 70.4% as of September 30, 2024.

Total expenses decreased by $2.0 million to $35.9 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease was primarily a result of:

1 unchanged sentence

● A decrease in depreciation and amortization of approximately $0.4 million, which was primarily attributable to the property dispositions noted above.

● A decrease in general and administrative expenses of $0.4 million, which was primarily attributable to fees and costs incurred from the loan amendment we entered into on February 21, 2024 and higher professional fees incurred during the three months ended June 30, 2024.

● A decrease in general and administrative expenses of $0.2 million, which was primarily attributable to lower personnel costs and was partially offset by higher professional fees incurred during the three months ended September 30, 2024.

● A decrease in interest expense of approximately $0.2 million.

The decrease was primarily due to a lower principal amount of debt outstanding during the three months ended June 30, 2025 compared to

the same period in 2024 and was partially offset by higher interest rates that went into effect on April 1, 2025 under the loan amendment we entered into on February 21, 2024.

The decrease was primarily due to a lower principal amount of debt outstanding during the three months ended September 30, 2025

compared to the same period in 2024 and was partially offset by higher interest rates that went into effect on April 1, 2025 under the loan amendment we entered into on February 21, 2024.

Loss on extinguishment of debt

During the three months ended June 30, 2025, we repaid debt and incurred a loss on extinguishment of debt of approximately $3,000 related to unamortized deferred financing costs on the dates of the repayments.

During the three months ended September 30, 2025 and September 30, 2024, we repaid debt and incurred losses on extinguishment of debt of approximately $7,000 and $477,000, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Gain (loss) on sale of properties and impairment on asset held for sale

On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana for a gross sales price of $6.0 million.

We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment loss of $13.3 million for the three months ended March 31, 2025 that was decreased by $0.4 million during the three months ended June 30, 2025 for final sale adjustments after the sale was completed on June 6, 2025.

During the three months ended March 31, 2024, we sold an office property located in Richardson, Texas on January 26, 2024, for a sales price of $35.0 million at a loss of approximately $2.1 million.

The property was classified as held for sale as of December 31, 2023, and an impairment loss of $2.1 million was recorded during the year ended December 31, 2023.

An additional $5,000 of costs related to the sale were recorded during the three months ended March 31, 2024.

We recorded an impairment on this asset held for sale as of September 30, 2023.

On July 8, 2024, we sold a property located in Glen Allen, Virginia at a loss of $13.2 million, which had been recorded as an impairment during the three months ended June 30, 2024.

During the three months ended September 30, 2024, an additional $0.7 million in costs related to the sale of properties previously sold were recorded.

Interest income

During the three months ended June 30, 2025 and 2024, we invested disposition proceeds in an interest-bearing account and earned $0.2 million and $0.3 million, respectively, in interest income.

During the three months ended September 30, 2025 and September 30, 2024, we invested disposition proceeds in an interest-bearing account and earned $0.2 million and $0.3 million, respectively, in interest income.

Tax expense on income

Included in income taxes is an estimate of federal income taxes of $31,000 from the sale of Monument Circle and the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties that was $50,000 during the three months ended June 30, 2025, compared to $48,000 during the three months ended June 30, 2024.

Net loss for the three months ended June 30, 2025 was $7.9 million, compared to a net loss of $21.0 million for the three months ended June 30, 2024, for the reasons described above.

The following table shows financial results for the six months ended June 30, 2025 and 2024:

Six months ended June 30,

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties which was $3,000 during the three months ended September 30, 2025, compared to $56,000 during the three months ended September 30, 2024.

Net loss for the three months ended September 30, 2025 was $8.3 million, compared to a net loss of $15.6 million for the three months ended September 30, 2024, for the reasons described above.

The following table shows financial results for the nine months ended September 30, 2025 and 2024:

Nine months ended September 30,

(in thousands)

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Loss before taxes

Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024:

Total revenues decreased by $8.2 million to $53.8 million for the six months ended June 30, 2025, as compared 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:

Total revenues decreased by $10.6 million to $81.1 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease was primarily a result of:

● A decrease in rental revenue of approximately $10.6 million arising primarily from the sale of three properties in 2024 and other losses of rental income from lease expirations during the periods presented.

These decreases were partially offset by rental income earned from leases commencing after June 30, 2024.

Our leased space in our owned properties was 69.1% as of June 30, 2025 and 72.3% as of June 30, 2024.

Total expenses decreased by $7.9 million to $70.6 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

These decreases were partially offset by rental income earned from leases commencing after September 30, 2024.

Our leased space in our owned properties was 68.9% as of September 30, 2025 and 70.4% as of September 30, 2024.

Total expenses decreased by $9.9 million to $106.5 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease was primarily a result of:

1 unchanged sentence

● A decrease in depreciation and amortization of approximately $2.0 million, which was primarily attributable to the property dispositions noted above.

● A decrease in general and administrative expenses of $1.0 million, which was primarily attributable to lower personnel costs during 2025 and fees and costs incurred from the loan amendment we entered into on February 21, 2024 and higher professional fees incurred during the six months ended June 30, 2024.

● A decrease in general and administrative expenses of $1.3 million, which was primarily attributable to lower personnel costs during 2025 and fees and costs incurred from the loan amendment we entered into on February 21, 2024 and higher professional fees incurred during the nine months ended September 30, 2024.

● A decrease in interest expense of approximately $2.1 million.

The decrease was primarily due to a lower principal amount of debt outstanding during the six months ended June 30, 2025 compared to the same period in 2024 and was partially offset by higher interest rates that went into effect on April 1, 2025 under the loan amendment we entered into on February 21, 2024.

The decrease was primarily due to a lower principal amount of debt outstanding during the nine months ended September 30, 2025 compared to the same period in 2024 and was partially offset by higher interest rates that went into effect on April 1, 2025 under the loan amendment we entered into on February 21, 2024.

Loss on extinguishment of debt

During the six months ended June 30, 2025, we repaid debt and incurred a loss on extinguishment of debt of approximately $5,000 related to unamortized deferred financing costs on the dates of the repayments.

During the nine months ended September 30, 2025 and September 30, 2024, we repaid debt and incurred a loss on extinguishment of debt of approximately $12,000 and $614,000, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Loss on sale of properties and impairment on asset held for sale

1 unchanged sentence

We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment charge of $13.3 million during the three months ended March 31, 2025 that was decreased by $0.4 million during the three months ended June 30, 2025 for final sale adjustments after the sale was completed on June 6, 2025.

During the six months ended June 30, 2024, we sold an office property located in Richardson, Texas on January 26, 2024, for a sales price of $35.0 million at a loss of approximately $2.1 million.

We recorded an impairment on this asset held for sale as of September 30, 2023.

During the nine months ended September 30, 2024, we sold an office property located in Richardson, Texas on January 26, 2024, for a sales price of $35.0 million at a loss of approximately $2.1 million.

The property was classified as held for sale as of December 31, 2023, and an impairment loss of $2.1 million was recorded during the year ended December 31, 2023.

An additional $5,000 of costs related to the sale were recorded during the three months ended March 31, 2024.

During the three months ended June 30, 2024, the Company entered into an agreement to sell a property in Glen Allen, Virginia for a gross sales price of approximately $31.0 million and an expected loss of $13.2 million.

The Company reclassified $28.6 million of its office property as an asset held for sale as of June 30, 2024, which was comprised of $38.0 million of real estate assets, net of accumulated depreciation, $1.4 million of straight-line rents receivable, and $2.4 million of deferred leasing commissions, net of accumulated amortization.

The Company recorded the property at the fair value less cost to sell, which was less than the carrying value and resulted in an impairment loss of $13.2 million in the three months ended June 30, 2024.

The reclassification is a non-cash investing activity on the statement of cash flows.

The Company estimated the fair value of the property, less estimated costs to sell, using the offers to purchase the property made by third parties (Level 3 inputs, as there is no active market).

The Company closed on the sale of the property on July 8, 2024.

The property was sold on July 8, 2024, at the expected loss.

During the three months ended September 30, 2024, an additional $0.7 million in costs related to the sale of properties previously sold were recorded.

Interest income

During the six months ended June 30, 2025 and 2024, we invested disposition proceeds in an interest-bearing account and earned $0.5 million and $1.4 million, respectively, in interest income.

During the nine months ended September 30, 2025 and September 30, 2024, we invested disposition proceeds in an interest-bearing account and earned $0.8 million and $1.7 million, respectively, in interest income.

Tax expense on income

Included in income taxes is an estimate of federal income taxes of $31,000 from the sale of Monument Circle and the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $102,000 during the six months ended June 30, 2025, compared to $106,000 during the six months ended June 30, 2024.

Net loss for the six months ended June 30, 2025 was $29.3 million, compared to a net loss of $28.6 million for the six months ended June 30, 2024, for the reasons described above.

Included in income taxes is an estimate of federal income taxes of $31,000 from the sale of Monument Circle and the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $137,000 during the nine months ended September 30, 2025, compared to $162,000 during the nine months ended September 30, 2024.

Net loss for the nine months ended September 30, 2025 was $37.6 million, compared to a net loss of $44.2 million for the nine months ended September 30, 2024, for the reasons described above.

Non-GAAP Financial Measures

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands):

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Three Months Ended

Six Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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Items in NOI* (b)

Six Months Ended

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

Reconciliation to Net Income (Loss)

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*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

The information presented below provides the weighted average GAAP rent per square foot for the six months ended June 30, 2025 for our owned properties and weighted occupancy square feet and percentages.

The information presented below provides the weighted average GAAP rent per square foot for the nine months ended September 30, 2025 for our owned properties and weighted occupancy square feet and percentages.

GAAP rent includes the impact of tenant concessions and reimbursements.

Percentage as of

September 30,

Rent per Occupied

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Total Owned Properties

(a) Based on weighted occupied square feet for the six months ended June 30, 2025, including month-to-month tenants, divided by the applicable property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the six months ended June 30, 2025, per weighted occupied square foot.

(a) Based on weighted occupied square feet for the nine months ended September 30, 2025, including month-to-month tenants, divided by the applicable property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the nine months ended September 30, 2025, per weighted occupied square foot.

Liquidity and Capital Resources

As of July 29, 2025, the Company had aggregate outstanding indebtedness under three unsecured loans, the BofA Term Loan, the BMO Term Loan and the Senior Notes (each as defined and described below), totaling approximately $249.8 million and maturing on April 1, 2026, which is within 12 months of the date of issuance of the financial statements accompanying this Quarterly Report on Form 10-Q.

As of October 28, 2025, the Company had aggregate outstanding indebtedness under three unsecured loans, the BofA Term Loan, the BMO Term Loan and the Senior Notes (each as defined and described below), totaling approximately $248.9 million and maturing on April 1, 2026, which is within 12 months of the date of issuance of the financial statements accompanying this Quarterly Report on Form 10-Q.

Management intends to engage in discussions with the Company’s lenders and/or third party financing sources to extend or refinance the Company’s existing debt and the Company also may seek to effect asset sales or other potential transactions to repay such debt prior to the applicable maturity dates.

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The failure to extend the maturity dates applicable to, or retire, the BofA Term Loan, the BMO Term Loan and the Senior Notes through a refinancing, asset sales or other potential transactions could lead to events of default, which would have a material adverse effect on the Company’s financial condition.

Cash and cash equivalents were $30.5 million and $42.7 million as of June 30, 2025 and December 31, 2024, respectively.

Cash and cash equivalents were $31.6 million and $42.7 million as of September 30, 2025 and December 31, 2024, respectively.

The decrease of $11.1 million is attributable to $0.1 million used in operating activities, less $6.5 million used in investing activities less $4.5 million used in financing activities.

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Operating Activities

Cash used in operating activities for the six months ended June 30, 2025, of $8.4 million is primarily attributable to a net loss of $29.3 million, excluding $12.9 million from a loss on the sale of a property, plus the add-back of $23.0 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $12.1 million, less an increase in payment of deferred leasing commissions of $2.2 million, less an increase in tenant receivables of $0.3 million, less a decrease in prepaid expenses of $0.3 million and less an increase in lease acquisition costs of $0.1.

Cash used in operating activities for the nine months ended September 30, 2025, of $0.1 million is primarily attributable to a net loss of $37.6 million, excluding $12.9 million from a loss on the sale of a property, plus the add-back of $34.2 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $4.7 million, less an increase in payment of deferred leasing commissions of $3.2 million, less an increase in lease acquisition costs of $1.1 million, less a decrease in prepaid expenses of $0.5 million and less an increase in tenant receivables of $0.1 million,.

Investing Activities

Cash used in investing activities for the six months ended June 30, 2025, of $1.2 million is primarily attributable to purchases of other real estate assets and office equipment investments of $7.3 million less proceeds from the sale of a property of $6.1 million.

Cash used in investing activities for the nine months ended September 30, 2025, of $6.5 million is primarily attributable to purchases of other real estate assets and office equipment investments of $12.6 million less proceeds from the sale of a property of $6.1 million.

Financing Activities

Cash used in financing activities for the six months ended June 30, 2025 of $2.6 million is primarily attributable to payment of distributions to stockholders of $2.1 million and the repayment of $0.5 million of our debt.

Cash used in financing activities for the nine months ended September 30, 2025 of $4.5 million is primarily attributable to payment of distributions to stockholders of $3.1 million and the repayment of $1.4 million of our debt.

Liquidity beyond the next 12 months

As of June 30, 2025, we had aggregate outstanding indebtedness of $249.8 million under the BofA Term Loan, the BMO Term Loan and the Senior Notes, each of which matures on April 1, 2026.

As of September 30, 2025, we had aggregate outstanding indebtedness of $248.9 million under the BofA Term Loan, the BMO Term Loan and the Senior Notes, each of which matures on April 1, 2026.

Our ability to generate cash adequate to satisfy our debt obligations as they mature and meet our operating needs is dependent primarily on income from real estate investments, the sale of real estate investments, leveraging of real estate investments, availability of bank borrowings, proceeds from public offerings of stock, private placement of debt and access to the capital markets.

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BMO Term Loan

As of June 30, 2025, we have a term loan borrowing in the aggregate principal amount of approximately $70.9 million, which we refer to as the BMO Term Loan, with Bank of Montreal, as administrative agent, and the other lending institutions party thereto, that matures on April 1, 2026.

As of September 30, 2025, we have a term loan borrowing in the aggregate principal amount of approximately $70.7 million, which we refer to as the BMO Term Loan, with Bank of Montreal, as administrative agent, and the other lending institutions party thereto, that matures on April 1, 2026.

On February 21, 2024, we amended the BMO Term Loan by entering into a Second Amendment to Second Amended and Restated Credit Agreement with Bank of Montreal and the other lending institutions party thereto, which we refer to as the BMO Second Amendment.

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On May 16, 2025, we repaid an approximately $103,000 portion of the BMO Term Loan from escrows collected on May 14, 2025, which had been held from the sale of a property located in Glen Allen, Virginia and the sale of a property located in Atlanta, Georgia.

On August 1, 2025, the Company repaid an approximately $256,000 portion of the BMO Term Loan from escrows collected on July 31, 2025, which had been held from the sale of a property located in Atlanta, Georgia.

Effective February 21, 2024 upon entering into the BMO Second Amendment, the BMO Term Loan bears interest at either (i) 300 basis points over one, three or six month term SOFR, plus a corresponding adjustment of 0.11448%, 0.26161% or 0.42826%, respectively, with a floor on SOFR of 5.00% or (ii) 200 basis points over the base rate with a floor on the base rate of 6.00%.

2 unchanged sentences

Effective April 1, 2025, the interest rate on the BMO Term Loan increased from 8.00% per annum to 9.00% per annum.

As of June 30, 2025 and December 31, 2024, the interest rate on the BMO Term Loan was 9.00% and 8.00% per annum, respectively.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 8.50% and 8.34% for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the interest rate on the BMO Term Loan was 9.00% and 8.00% per annum, respectively.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 8.67% and 8.34% for the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively.

Although the interest rate on the BMO Term Loan is currently variable under the BMO Credit Agreement, we previously fixed the base LIBOR interest rate that previously applied to the BMO Term Loan by entering into interest rate swap transactions.

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The BMO Credit Agreement also contains financial covenants that require us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.

We were in compliance with the BMO Term Loan financial covenants as of June 30, 2025.

The BMO Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control (as defined in the BMO Credit

We were in compliance with the BMO Term Loan financial covenants as of September 30, 2025.

In the event of a default by us, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the BMO Credit Agreement immediately due and payable, terminate the lenders’ commitments to make loans under the BMO Credit Agreement, and enforce any and all rights of the lenders or administrative agent under the BMO Credit Agreement and related documents.

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BofA Term Loan

As of June 30, 2025, we have a term loan borrowing in the amount of approximately $55.5 million, which we refer to as the BofA Term Loan, with Bank of America, N.A.

As of September 30, 2025, we have a term loan borrowing in the amount of approximately $55.3 million, which we refer to as the BofA Term Loan, with Bank of America, N.A.

as administrative agent, and other lending institutions party thereto that matures on April 1, 2026.

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On May 16, 2025, we repaid an approximately $80,000 portion of the BofA Term Loan from escrows collected on May 14, 2025, which had been held from the sale of a property located in Glen Allen, Virginia and the sale of a property located in Atlanta, Georgia.

On August 1, 2025, the Company repaid an approximately $200,000 portion of the BofA Term Loan from escrows collected on July 31, 2025, which had been held from the sale of a property located in Atlanta, Georgia.

Effective February 21, 2024 upon entering into the BofA Second Amendment, the BofA Term Loan bears interest at 300 basis points over either (i) the daily simple SOFR, plus an adjustment of 0.11448%, or (ii) one, three or six month term SOFR, plus a corresponding adjustment of 0.11448%, 0.26161% or 0.42826%, respectively, with a floor on SOFR of 5.00%.

In addition, effective February 21, 2024 upon entering into the BofA Second Amendment, under certain circumstances, such as if SOFR is not able to be determined, the BofA Term Loan bears interest at 200 basis points over the base rate with a floor on the base rate of 600 basis points.

from 300 basis points to 400 basis points in the case of SOFR, and from 200 basis points to 300 basis points in the case of the base rate.

In addition, effective February 21, 2024 upon entering into the BofA Second Amendment, under certain circumstances, such

as if SOFR is not able to be determined, the BofA Term Loan bears interest at 200 basis points over the base rate with a floor on the base rate of 600 basis points.

In addition, effective February 21, 2024 upon entering into the BofA Second Amendment, if, as of March 31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes exceeds $200 million, the spread over SOFR will permanently increase by 100 basis points from 300 basis points to 400 basis points in the case of SOFR, and from 200 basis points to 300 basis points in the case of the base rate.

Effective April 1, 2025, the spread over SOFR or the base rate, as applicable, permanently increased by 100 basis points, from 300 basis points to 400 basis points in the case of SOFR, and from 200 basis points to 300 basis points in the case of the base rate.

Effective April 1, 2025, the interest rate on the BMO Term Loan increased from 8.00% per annum to 9.00% per annum.

As of June 30, 2025 and December 31, 2024, the interest rate on the BofA Term Loan was 9.00% and 8.00% per annum, respectively.

The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was 8.50% and 8.34% for the six months ended June 30, 2025 and for the year ended December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the interest rate on the BofA Term Loan was 9.00% and 8.00% per annum, respectively.

The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was 8.67% and 8.34% for the nine months ended September 30, 2025 and for the year ended December 31, 2024, respectively.

The BofA Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, use of net cash proceeds from the disposition of property, assets and equity issuances, mandatory prepayments, the requirement to have certain subsidiaries provide guarantees, the requirement to pledge our equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of our common stock, going concern qualifications to our financial statements, and transactions with affiliates.

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The BofA Credit Agreement also contains financial covenants that require us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.

We were in compliance with the BofA Term Loan financial covenants as of June 30, 2025.

We were in compliance with the BofA Term Loan financial covenants as of September 30, 2025.

The BofA Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with the provisions of the BofA Credit Agreement, certain cross defaults and a change in control (as defined in the BofA Credit Agreement).

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For certain events of default related to bankruptcy, insolvency, and receivership, all of our outstanding obligations will become immediately due and payable.

We have senior notes in the aggregate principal amount of approximately $123.4 million as of June 30, 2025, which we refer to as the Senior Notes, that mature on April 1, 2026.

We have senior notes in the aggregate principal amount of approximately $122.9 million as of September 30, 2025, which we refer to as the Senior Notes, that mature on April 1, 2026.

The Senior Notes consist of (i) Series A Senior Notes due April 1, 2026 in an aggregate principal amount of approximately $71.3 million, which we refer to as the Series A Notes, and (ii) Series B Senior Notes due April 1, 2026 in the aggregate principal amount of approximately $51.6 million, which we refer to as the Series B Notes.

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(4) increase the interest rate applicable to the Series B Notes from 4.76% per annum to 8.00% per annum;

(5) provide that, if, as of March 31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes exceeds $200 million, the per annum interest rates applicable to the Series A Note and the Series B Notes will permanently increase by 1.00% from 8.00% per annum to 9.00% per annum;

(5) provide that, if, as of March

31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes exceeds $200 million, the per annum interest rates applicable to the Series A Note and the Series B Notes will permanently increase by 1.00% from 8.00% per annum to 9.00% per annum;

(6) require mandatory prepayments of the BMO Term Loan, the BofA Term Loan and the Senior Notes with net cash proceeds from the disposition of property, assets and equity issuances as follows:

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(b) 20.00000% to the BofA Term Loan;

Senior Notes;

and (d) the remaining 10% to be retained by us;

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On May 16, 2025, we repaid an approximately $103,000 portion of the Series A Notes and an approximately $75,000 portion of the Series B Notes from escrows collected on May 14, 2025, which had been held from the sale of a property located in Glen Allen, Virginia and the sale of a property located in Atlanta, Georgia.

As of June 30, 2025, approximately $71.6 million aggregate principal amount of the Series A Notes remained outstanding and approximately $51.8 million aggregate principal amount of the Series B Notes remained outstanding.

On August 1, 2025, we repaid an approximately $258,000 portion of the Series A Notes and an approximately $187,000 portion of the Series B Notes from escrows collected on August 1, 2025, which had been held from the sale of a property located in Atlanta, Georgia.

As of September 30, 2025, approximately $71.3 million aggregate principal amount of the Series A Notes remained outstanding and approximately $51.6 million aggregate principal amount of the Series B Notes remained outstanding.

Effective April 1, 2025, the interest rates on both the Series A Notes and the Series B Notes permanently increased from 8.00% per annum to 9.00% per annum.

As of June 30, 2025 and December 31, 2024, the interest rates on both the Series A Notes and the Series B Notes was 9.00% per annum and 8.00% per annum, respectively.

As of September 30, 2025 and December 31, 2024, the interest rates on both the Series A Notes and the Series B Notes was 9.00% per annum and 8.00% per annum, respectively.

The Note Purchase Agreement contains customary affirmative and negative covenants, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, use of net cash proceeds from the disposition of property, assets and equity issuances, mandatory prepayments, the requirement to have certain subsidiaries provide guarantees, the requirement to pledge our equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of our common stock, going concern qualifications to our financial statements, transactions with affiliates, certain restrictions on severance, retention and similar arrangements applicable to our executive officers, and real estate investment trust compliance requirements.

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The Note Purchase Agreement also contains financial covenants that require us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.

We were in compliance with the Note Purchase Agreement financial covenants as of June 30, 2025.

We were in compliance with the Note Purchase Agreement financial covenants as of September 30, 2025.

Equity Offering

From time to time, we may issue debt securities, common stock, preferred stock or depository shares under a registration statement to fund the acquisition of additional properties, to pay down any existing debt financing and for other corporate purposes.

Stock Repurchase Program

On June 23, 2021, we announced that our Board of Directors had authorized the repurchase of up to $50 million of the Company’s common stock from time to time in the open market, privately negotiated transactions or other manners as

permitted by federal securities laws.

The repurchase authorization may be suspended or discontinued at any time.

On February 10, 2023, we disclosed in a Current Report on Form 8-K that our Board of Directors had discontinued the repurchase authorization.

Contingencies

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We generally pay the ordinary annual operating expenses of our owned and consolidated properties from the rental revenue generated by the properties.

For the three and six months ended June 30, 2025 and 2024, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle’s property for each of the three and six months ended June 30, 2025 and 2024.

For the three and nine months ended September 30, 2025 and 2024, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle’s property for the nine months ended September 30, 2025 and for the three and nine months ended September 30, 2024.

Monument Circle sold its property on June 6, 2025.

Monument Circle had approximately $56,000 and $132,000 of rental income and $157,000 and $450,000 of operating expenses for the three and six months ended June 30, 2025, respectively.

Monument Circle had approximately $77,000 and $148,000 of rental income and $240,000 and $529,000 of operating expenses for the three and six months ended June 30, 2024, respectively.

Monument Circle had approximately $132,000 of rental income and $445,000 of operating expenses for the nine months ended September 30, 2025.

Monument Circle had approximately $69,000 and $217,000 of rental income, and $303,000 and $832,000 of operating expenses, for the three and nine months ended September 30, 2024, respectively.

Off-Balance Sheet Arrangements and Contractual Obligations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis