What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-09 compared with 2025-02-11 · 152 added, 237 removed, 268 unchanged (59% of the section changed)

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Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.

Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in general economic or local market conditions, including the impact of recessionary concerns, inflation, energy prices and interest rates, as well as those resulting from the COVID-19 pandemic, and the impact of work-from-home and return-to-work policies, and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, our inability to extend and/or refinance our debt or effect asset sales sufficient to repay such debt prior to the maturity dates thereof, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, expectations for future potential property dispositions, expectations for future potential leasing activity, expectations for the potential payment of special dividends, changes in interest rates as a result of economic market conditions, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, uncertainties relating to fiscal policy, changes in government regulations and regulatory uncertainty, geopolitical events, and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, additional staffing, insurance increases and real estate tax valuation reassessments.

Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in general economic or local market conditions, including as a result of the long-term effects of the COVID-19 pandemic, wars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, impacts of changes in tariffs that the United States and other countries have announced or implemented, as well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation rates, interest rates, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, expectations for future potential property dispositions, expectations for future potential leasing activity, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated, such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, additional staffing, insurance increases and real estate tax valuation reassessments.

See “Risk Factors” in Part I, Item 1A, of this Annual Report on Form 10-K.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements.

We may not update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

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We believe that the United States sunbelt and mountain west regions have macro-economic drivers that have the potential to increase occupancies and rents.

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

As of December 31, 2024, approximately 4.8 million square feet, or approximately 95.7% of our total owned and consolidated portfolio, was located in Dallas, Denver, Houston and Minneapolis.

We are focused on long-term growth and appreciation.

As of December 31, 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.

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We may look to acquire and/or develop quality properties in good locations in order to lessen the impact of downturns in the market and to take advantage of upturns when they occur.

We continue to believe that the current price of our common stock does not accurately reflect the intrinsic value of our underlying real estate assets and we will seek to increase shareholder value by (1) pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) striving to lease

vacant space.

As we continue to execute this strategy, our revenue, Funds From Operations, and capital expenditures may decrease in the short term.

Proceeds from dispositions are intended to be used primarily for the repayment of debt.

For the year ended December 31, 2024, our disposition strategy resulted in aggregate gross sale proceeds of $100.0 million.

On February 21, 2024, we repaid an aggregate amount of $102 million of debt in connection with the extensions of our BofA Term Loan, BMO Term Loan, our Series A Notes and our Series B Notes (each as defined in Liquidity and Capital Resources below).

On July 10, 2024 and October 25, 2024, we repaid an aggregate amount of $25.3 million and $27.4 million, respectively, of our debt previously outstanding under the BofA Term Loan, BMO Term Loan, Series A Notes and Series B Notes (each as defined in Liquidity and Capital Resources below).

In July 2022, we adopted a variable quarterly dividend policy, which replaced our previous regular quarterly dividend policy.

Under the variable quarterly dividend policy, the Board of Directors determines quarterly dividends based upon a variety of factors, including the Company’s estimates of its annual taxable income and the amount that the Company is required to distribute annually in the aggregate to enable the Company to continue to qualify as a real estate investment trust for federal income tax purposes.

As of February 21, 2024, the interest rate applicable to borrowings under the Senior Notes (as defined in Liquidity and Capital Resources below) was no longer based on the credit rating of our debt.

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

As of December 31, 2024, our credit rating remains at B3.

In May 2025, we announced that our Board of Directors had initiated a review of strategic alternatives in order to explore ways to maximize shareholder value.

Throughout the strategic review process, the Board of Directors and management directed its financial advisors to evaluate a broad range of strategic alternatives, including:

• Portfolio-level transactions

• Individual asset dispositions

• Joint venture structures

• Corporate-level transactions

• Liquidation scenarios

• Refinancing alternatives

During the period from the commencement of the strategic review process to the date of this Annual Report:

• Transaction volume across many of our primary submarkets remained historically low.

• Where transactions occurred, activity was frequently concentrated in lender-controlled or distressed situations and at pricing levels not reflective of stabilized intrinsic valuations.

• Institutional capital in the office sector remained highly selective nationally, primarily targeting trophy or newly delivered assets in select gateway markets, or deeply discounted properties in distress scenarios.

As a result, reported transaction pricing may be influenced by a limited number of transactions that are not necessarily reflective of actual achievable values on our assets.

• Lending liquidity for office assets in similar markets and with comparable occupancy profiles and lease maturities has been significantly constrained relative to historical norms, further limiting the ability to execute transactions at pricing levels consistent with long-term asset values.

On February 26, 2026, we closed a $320 million secured credit facility with an affiliate of TPG Credit.

We repaid in full all of our then outstanding approximately $249 million aggregate principal amount of indebtedness with borrowings under the facility.

The facility has an original stated maturity of February 26, 2029, subject to potential extension of up to one year at our option, subject to certain conditions.

The facility consists of (i) initial term loans in an aggregate principal amount of $275 million, and (ii) delayed draw term loans available upon the approval of the lenders party thereto in an aggregate principal amount of up to $45 million.

The delayed draw term loans may be used, subject to certain conditions, to fund tenant improvements, leasing commissions, building improvements and other uses approved by the lender.

See Note 12, Subsequent Events, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information on the Credit Agreement.

We continue to believe that the intrinsic value of our real estate portfolio exceeds our current public market valuation.

However, our ability to realize that value is dependent upon transaction and financing liquidity in the relevant capital markets and property submarkets, including for assets of similar quality, occupancy levels, and weighted average lease terms.

Based on market evidence, transaction comparables, and discussions with potential counterparties, we, in consultation with our professional advisors, have determined that, to date, market conditions have not been supportive of transactions at pricing levels that would reasonably reflect the intrinsic value of our assets.

Accordingly, we believe that pursuing asset sales or liquidation under such market conditions would likely not maximize value for our shareholders.

We believe that current transaction activity in many office markets continues to reflect limited capital availability and highly selective buyer demand rather than the underlying long-term value of institutional quality assets.

Our review of potential strategic alternatives remains ongoing and continues to include evaluation of a range of alternatives, including asset sales.

During the year ended December 31, 2024, our disposition strategy resulted in aggregate gross sale proceeds of $100.0 million, and we repaid an aggregate amount of $154.7 million of our debt previously outstanding under the BofA Term Loan, BMO Term Loan, Series A Notes and Series B Notes (each as defined in Liquidity and Capital Resources below).

During the year ended December 31, 2025, we used disposition proceeds of $1.4 million received from escrow proceeds relating to dispositions in 2024, to repay outstanding debt.

In March 2026, our Board of Directors determined to suspend quarterly cash dividends to reduce operating expenses and to redeploy that capital into leasing efforts intended to enhance the value of our portfolio.

In addition, the Credit Agreement provides that we may not declare dividends in excess of the greater of $0.01 per share or such amount as is required to maintain our status as a REIT.

Any future declaration and payment of dividends will be determined from time to time by our Board of Directors and will depend on, among other things, our results of operations, cash flows, liquidity, financial condition, capital requirements and other factors the Board of Directors deems relevant.

Trends and Uncertainties

Long-Term Impact of COVID-19 Pandemic

Considerable uncertainty still surrounds the long-term impact of the COVID-19 pandemic and its potential effects on the population, including the spread of more contagious variants of the virus, and on the commercial real estate market and our business.

Uncertainty still surrounds the long-term impact of the COVID-19 pandemic on the commercial real estate market and our business.

Many of our tenants still do not fully occupy the space that they lease.

The impact of the COVID-19 pandemic continues to present material uncertainty and risk with respect to the performance of our properties and our financial results, such as the potential negative impact to the businesses of our tenants, the impact of work-from-home and return-to-work policies, the potential negative impact to leasing efforts and occupancy at our properties, uncertainty regarding future rent collection levels or requests for rent concessions from our tenants, the occurrence of a default under any of our debt agreements, the potential for increased borrowing costs, negative impacts on our ability to refinance existing indebtedness or to secure new sources of capital on favorable terms, fluctuations in our level of dividends, increased costs of operations, making more difficult our ability to complete required capital expenditures in a timely manner and on budget, decreases in values of our real estate assets, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.

We are unable to estimate the full extent of the long-term impact that the COVID-19 pandemic will have on our future financial results at this time.

The long-term impact of the COVID-19 pandemic has had and may continue to have an adverse impact on our financial condition and results of operations.

The impact of the COVID-19 pandemic continues to present material uncertainty and risk with respect to the performance of our properties and our financial results, such as the potential negative impact to the businesses of our tenants, the impact of work-from-home and return-to-work policies, the potential negative impact to leasing efforts and occupancy at our properties, uncertainty regarding future rent collection levels or requests for rent concessions from our tenants, the occurrence of a default under any of our debt agreements, the potential for increased borrowing costs, negative impacts on our ability to refinance existing indebtedness or to secure new sources of capital on favorable terms decreases in values of our real estate assets, and uncertainty regarding government and regulatory policy.

We are unable to estimate the full extent of the long-term impact that the COVID-19 pandemic has had and will have on our future financial results at this time.

See “The long-term impact of the COVID-19 pandemic has had and may continue to have an adverse impact on our financial condition and results of operations.

This impact could be materially adverse to the extent that the long-term impact of the COVID-19 pandemic, or future pandemics, cause tenants to be unable to pay their rent or reduce the demand for commercial real estate, or cause other impacts described below.” in Item 1A.

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Economic Conditions

Although recent indicators suggest that economic activity has expanded at a modest pace, the global economy continues to experience significant disruptions as a result of various factors, including geopolitical events such as the wars conflicts in Ukraine and the Middle East, increasing tensions with China and Iran, the long-term impact of the COVID-19 pandemic and continuing supply chain difficulties.

In addition, various economic factors, including but not limited to, inflation and interest rates, are contributing to recessionary concerns for the economy of the United States.

The global economy continues to experience significant disruptions as a result of various factors, including changes in U.S.

trade or other policies or those policies of other nations, geopolitical events such as the conflicts in Ukraine and the Middle East, increasing tensions with China and Iran, tensions between the U.S.

and Europe related to the sovereignty of Greenland, major political shifts domestically or internationally and continuing supply chain difficulties.

In addition, various economic factors, including but not limited to, impacts of changes in tariffs that the United States and other countries have announced or implemented, as well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation and interest rates, may adversely affect the economy of the United States.

Economic conditions directly affect the demand for office space, our primary income producing asset.

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%.

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.

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Real Estate Operations

As of December 31, 2024, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties, and 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.

The Sponsored REIT, which we also refer to as Monument Circle, was consolidated effective January 1, 2023.

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

As of December 31, 2025, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties.

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

The 3.7% decrease in leased space was primarily a result of lease maturities that occurred during the year ended December 31, 2024, and the impact on leased percentage from the disposition of properties on January 26, 2024, July 8, 2024 and October 23, 2024, respectively.

These decreases were partially offset by new leasing during the year ended December 31, 2024.

As of December 31, 2024, we had approximately 1,428,000 square feet of vacancy in our owned properties compared to approximately 1,445,000 square feet of vacancy as of December 31, 2023.

The 1.4% decrease in leased space was primarily a result of lease expirations exceeding new executed leases during the year ended December 31, 2025.

As of December 31, 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 year ended December 31, 2025, we leased approximately 413,000 square feet of office space in our owned properties, of which approximately 320,000 square feet were with existing tenants, at a weighted average term of 5.7 years.

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Average GAAP base rents under such leases were $32.42 per square foot, or 5.7% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2024.

Our owned and consolidated properties were approximately 67.5% leased as of December 31, 2024, compared to 71.5% leased as of December 31, 2023.

The difference is primarily a result of property sales and lease expirations during 2024, which were partially offset by leasing achieved during 2024.

During 2024, 2023 and 2022, we had no redevelopment properties.

Our property known as Blue Lagoon in Miami, Florida, was substantially completed during the first quarter of 2021, and had previously been classified as a redevelopment property.

As of December 31, 2022 and September 30, 2023, the property had leases signed for 98.5% of the rentable square feet of the property, including one tenant occupying approximately 73.6% of the rentable square feet of the property.

On December 6, 2023, we sold this property for gross sales proceeds of approximately $68.0 million.

As of December 31, 2025, leases for approximately 7.6% and 10.4% of the square footage in our owned portfolio are scheduled to expire during 2026 and 2027, respectively.

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Real Estate Acquisition and Investment Activity

● on September 27, 2024, we agreed to extend the maturity date of our existing loan to Monument Circle that is secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan, to September 30, 2025.

● we continued to explore additional potential real estate investment opportunities.

● on September 27, 2024, we agreed to extend the maturity date of our loan to Monument Circle that was secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan, to September 30, 2025.

● on September 26, 2023, we agreed to extend the maturity date of the Sponsored REIT Loan, to September 30, 2024.

● we continued to actively explore additional potential real estate investment opportunities.

Property Dispositions and Assets Held for Sale

During 2025, we sold an office property located in Indianapolis, Indiana on June 6, 2025, for a gross sale price of $6 million, at a loss of $12.9 million.

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

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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 at an expected loss of $13.2 million, which was recorded as an impairment.

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 at an expected loss of $13.2 million, which was recorded as an impairment.

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

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however, on November 15, 2023, we received notice from the buyer indicating that the buyer was terminating the transaction and directing the deposit and interest be disbursed to us.

During 2022, we sold two office properties located in Broomfield, Colorado on August 31, 2022 for an aggregate sales price of $102.5 million, at a gain of approximately $24.1 million.

We also sold an office property in Evanston, Illinois on December 28, 2022, for a gross sales price of approximately $27.8 million, at a gain of $3.4 million.

There were no properties held for sale as of December 31, 2022.

We used, or intend to use, the proceeds of the dispositions primarily to repay outstanding indebtedness.

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We believe that our judgments and estimates are consistently applied and produce financial information that fairly presents our results of operations.

Our most critical accounting policies involve our investments in sponsored REITs and our investments in real property.

most critical accounting policies involve our investments in sponsored REITs and our investments in real property.

These policies affect our:

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Loss on extinguishment of debt

Gain on consolidation of Sponsored REIT

Loss on sale of properties and impairment of assets held for sale, net

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The decrease was primarily a result of :

● A decrease in rental revenue of approximately $25.4 million arising primarily from the sale of three properties during 2024 and four properties in 2023 and other losses of rental income from lease expirations during the periods presented.

● A decrease in rental revenue of approximately $12.9 million arising primarily from the sale of one property in 2025 and 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 December 31, 2024.

Our leased space in our owned and consolidated properties was 67.5% as of December 31, 2024, as compared to 71.5% as of December 31, 2023.

● A decrease in other income of $0.2 million during 2024 compared to 2023 from a deposit that was forfeited by a potential buyer in 2023 for a property in Atlanta, Georgia that we had under agreement when the transaction was terminated.

Our leased space in our owned properties was 68.9% as of December 31, 2025 and 70.3% as of December 31, 2024 .

Total expenses decreased by $12.8 million to $140.0 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.

The decrease was primarily a result of:

● A decrease in real estate operating expenses and real estate taxes and insurance of approximately $10.2 million was primarily attributable to the property dispositions noted above.

● A decrease in depreciation and amortization of approximately $10.0 million was primarily attributable to the property dispositions noted above.

● A decrease in general and administrative expenses of $0.1 million, which was primarily attributable to lower personnel costs, which were partially offset by higher professional fees

related to debt transactions completed in 2024 and the costs associated with adding a new director to our Board of Directors in the fourth quarter of 2024.

These decreases were partially offset by:

● An increase in interest expense of approximately $2.1 million.

The increase was primarily due to higher interest expense as a result of higher interest rates under the loan amendments we entered into in February 2024, which are described below and was partially offset by a lower principal amount of debt outstanding compared to the year ended December 31, 2023.

● A decrease in real estate operating expenses and real estate taxes and insurance of approximately $7.5 million, which was primarily attributable to the property dispositions noted above.

● A decrease in depreciation and amortization of approximately $2.2 million, which was primarily attributable to the property dispositions noted above.

● A decrease in general and administrative expenses of $1.5 million, which was primarily attributable to lower professional fees and public company expenses of $0.9 million and lower personnel costs of $0.6 million during 2025 and higher fees and costs incurred from the loan amendment we entered into on February 21, 2024 during the year ended December 31, 2024.

● A decrease in interest expense of approximately $1.7 million.

The decrease was primarily due to a lower principal amount of debt outstanding during the year ended December 31, 2025 compared to

the year ended December 31, 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 years ended December 31, 2024 and December 31, 2023, we repaid debt and incurred a loss on extinguishment of debt of approximately $1.1 million and $0.1 million, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Gain on consolidation of Sponsored REIT

During the year ended December 31, 2023, we recorded a gain on consolidation of Sponsored REIT as a result of reducing the Monument Circle loan loss reserve, which resulted in a $0.4 million gain.

Gain and loss on sale of properties and impairment of assets held for sale

During the three months ended March 31, 2023, we sold an office property located in Elk Grove, Illinois on March 10, 2023, for a gross sales price of $29.1 million, at a gain of approximately $8.4 million.

During the three months ended September 30, 2023, we sold an office property located in Charlotte, North Carolina known as Forest Park, for a sales price of $9.2 million at a loss of approximately $0.8 million.

During the three months ended September 30, 2023, we also recorded a gain on sale of $53,000 as a result of conveying approximately 7,826 square feet of land at our Addison, Texas property to the Town of Addison as part of a road revitalization project and increased the loss on sale of Forest Park by $38,000 as a result of final sales adjustments.

During the three months ended September 30, 2023, we entered into an agreement to sell a property in Miami, Florida, known as Blue Lagoon, for a gross sales price of approximately $68.0 million at an expected loss of $19.2 million that was recorded as an impairment loss.

We completed the sale of the property on December 6, 2023 at an actual loss of $18.9 million.

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 that was recorded as an impairment loss.

On October 26, 2023, we completed the sale of an asset held for sale as of September 30, 2023, which was an office building located in Plano, Texas for a gross sales price of $48.0 million at a gain of approximately $10.6 million.

During the three months ended September 30, 2023, we entered into a purchase and sales agreement, which was subsequently amended, to sell a property located in Richardson, Texas for a gross sales price of $35 million, at an expected loss of $2.1 million that was recorded as an impairment loss during the three months ended December 31, 2023.

The property sold on January 26, 2024, at the expected loss.

During the three months ended June 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 that was recorded as an impairment, and we classified the property as an asset held for sale as of June 30, 2024.

During the years ended December 31, 2025 and December 31, 2024, we repaid debt and incurred a loss on extinguishment of debt of approximately $12,000 and $1,042,000, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Loss on sale of properties and impairment of assets held for sale, net

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 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 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 year ended December 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.

During the year ended December 31, 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.

During the three months ended September 30, 2024, we entered into a new agreement to sell a property in Atlanta, Georgia, which was classified as an asset held for sale, for a gross sales price of $34.0 million, and recorded an additional impairment loss of $6.6 million based on the fair value less cost to sell.

The property sold on October 23, 2024, with a $0.4 million increase to loss from final sales adjustments on the date of sale .

Interest Income

Interest income increased $1.5 million to $2.1 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.

During the three months ended December 31, 2023, we invested disposition proceeds in an interest-bearing account and earned $0.6 million in interest income.

During 2024, we used a portion of the disposition proceeds to reduce debt and earned $2.1 million in interest income from proceeds that remained invested.

During the years ended December 31, 2025 and December 31, 2024, we invested disposition proceeds in an interest-bearing account and earned $1.0 million and $2.1 million, respectively, in interest income.

Tax expense on income

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $0.2 million during the year ended December 31, 2024, compared to $0.3 million during the year ended December 31, 2023.

Net income and loss

Net loss for year ended December 31, 2024, was $52.7 million compared to $48.1 million for the year ended December 31, 2023, 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 $189,000 during the year ended December 31, 2025, compared to $216,000 during the year ended December 31, 2024.

Net loss for the year ended December 31, 2025 was $45.0 million, compared to a net loss of $52.7 million for the year ended December 31, 2024, for the reasons described above.

The following table shows financial results for the years ended December 31, 2024 and 2023.

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(in thousands)

Related party revenue:

Management fees and interest income from loans

Total revenues

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Gain on consolidation of Sponsored REIT

Impairment and loan loss reserve

Gain (loss) on sale of properties and impairments of assets held for sale, net

Loss on sale of properties and impairments of assets held for sale, net

Interest income

Income (loss) before taxes

Net income (loss)

Loss before taxes

Comparison of the year ended December 31, 2024 to the year ended December 31, 2023

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These decreases were partially offset by rental income earned from leases commencing after December 31, 2023.

Our leased space in our owned and consolidated properties was 71.5% at December 31, 2023 and for our owned properties was 75.6% at December 31, 2022.

● A decrease in interest income from loans of approximately $1.8 million due to the consolidation of Monument Circle in our financial results as of January 1, 2023.

● These decreases were partially offset by an increase in other income of $0.2 million from a deposit that was forfeited by a potential buyer for a property in Atlanta, Georgia that we had under agreement when the transaction was terminated.

Our leased space in our owned properties and Monument Circle was 67.5% as of December 31, 2024, as compared to 71.5% as of December 31, 2023.

Total expenses decreased by $18.2 million to $152.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.

The decrease was primarily a result of:

● A decrease in real estate operating expenses and real estate taxes and insurance of approximately $9.4 million primarily attributable to the property dispositions noted above.

● A decrease in depreciation and amortization of approximately $9.1 million primarily attributable to the property dispositions noted above.

● A decrease in real estate operating expenses and real estate taxes and insurance of approximately $10.2 million was primarily attributable to the property dispositions noted above.

● A decrease in depreciation and amortization of approximately $10.0 million was primarily attributable to the property dispositions noted above.

● A decrease in general and administrative expenses of $0.1 million, which was primarily attributable to lower personnel costs, which were partially offset by higher professional fees

related to debt transactions completed in 2024 and the costs associated with adding a new director to our Board of Directors in the fourth quarter of 2024.

These decreases were partially offset by:

● An increase in general and administrative expenses of $0.1 million primarily attributable to expenses relating to a proposed sale transaction that was terminated by the prospective buyer.

● An increase in interest expense of approximately $2.1 million.

The increase was primarily due to higher interest expense as a result of higher interest rates under the loan amendments we entered into on February 10, 2023 described below and was partially offset by a lower principal amount of debt outstanding compared to the year ended December 31, 2022.

Loss on extinguishment of debt

During the year ended December 31, 2023 and December 31, 2022, we repaid debt and incurred a loss on extinguishment of debt of approximately $0.1 million and $0.1 million, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Gain on consolidation of Sponsored REIT

During the year ended December 31, 2023, we recorded a gain on consolidation of Sponsored REIT as a result of reducing the Monument Circle loan loss reserve, which resulted in a $0.4 million gain.

Impairment and loan reserve

During the year ended December 31, 2022, we recorded an impairment on a mortgage receivable of $4.2 million.

Gain and loss on sale of properties and impairment

Gain and loss on sale of properties and impairment of assets held for sale, net

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The property sold on January 26, 2024, at the expected loss.

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.

The property sold on October 23, 2024, with a $0.4 million increase to loss from final sales adjustments on the date of sale.

Interest Income

Interest income increased $1.5 million to $2.1 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.

During the three months ended December 31, 2023, we invested disposition proceeds in an interest-bearing account and earned $0.6 million in interest income.

During 2024, we used a portion of the disposition proceeds to reduce debt and earned $2.1 million in interest income from proceeds that remained invested.

Tax expense on income

Net income and loss

Net loss for year ended December 31, 2023, was $48.1 million compared to net income of $1.1 million for the year ended December 31, 2022, for the reasons described above.

Net loss for year ended December 31, 2024, was $52.7 million compared to $48.1 million for the year ended December 31, 2023, for the reasons described above.

Non-GAAP Financial Measures

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We exclude FFO from any Sponsored REIT that is consolidated from the calculation of FFO.

FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner.

We have included the NAREIT FFO definition as of May 17, 2016 in the table and note that other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

The calculations of FFO are shown in the following table:

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(in thousands):

Net income (loss)

Gain on consolidation of Sponsored REIT

(Gain) loss on sale of properties and impairment of assets held for sale, net

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

Depreciation and amortization

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Cash and cash equivalents were $30.6 million and $42.7 million at December 31, 2025 and December 31, 2024, respectively.

The decrease of $85.2 million is attributable to $9.0 million provided by operating activities, plus $70.3 million provided by investing activities less $164.5 million used in financing activities.

The decrease of $12.1 million is attributable to $3.7 million provided by operating activities, less $10.3 million used in investing activities less $5.5 million used in financing activities.

On February 26, 2026 (the “Closing Date”), we entered into a Credit Agreement (the “Credit Agreement”) with Alter Domus (US) LLC, as administrative agent, and Silver Oak Capital LLC, an affiliate of TPG Credit (collectively, the lenders from time-to-time party thereto (the “Lenders”).

The Credit Agreement provides for a secured credit facility for aggregate principal commitments of up to $320 million, consisting of (i) initial term loans in an aggregate principal amount of $275 million (the “Initial Term Loans”), and (ii) delayed draw term loans available upon the approval of the Lenders after the Closing Date in an aggregate principal amount of up to $45 million (the “Delayed Draw Term Loans” and together with the Initial Term Loans, the “Term Loans”).

The Delayed Draw Term Loans may be used, subject to certain conditions, to fund tenant improvements, leasing commissions, building improvements and other uses approved by the Lenders.

The Term Loans are not subject to amortization and have an initial stated maturity date of February 26, 2029.

The maturity date is subject to potential extension of up to one year at the option of the Company, subject to the satisfaction of certain conditions.

We used the proceeds of the Initial Term Loans on the Closing Date to refinance and retire all outstanding indebtedness under the BMO Term Loan, BofA Term Loan and the Senior Notes (each as defined below).

See Note 12, Subsequent Events, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information on the Credit Agreement.

Management believes that existing cash and cash anticipated to be generated internally by operations, including property dispositions, will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.

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We believe that we have adequate funds to cover unusual expenses and capital improvements, in addition to normal operating expenses.

Our ability to maintain or increase our level of dividends to stockholders, however, depends in significant part upon the level of rental income from our real properties, property dispositions and our interest costs.

Operating Activities

Cash provided by our operating activities for the year ended December 31, 2024 of $9.0 million was primarily attributable to a net loss of $52.7 million excluding net losses on sale of properties of $20.8 million, plus the add-back of $50.7 million of non-cash expenses, less $6.1 million increase in payments of deferred leasing commissions, less a $4.3 million increase in accounts payable and accrued expenses, less a $0.7 million increase in lease acquisition costs plus an increase in tenant rent receivables of $0.9 million and a $0.4 million increase in prepaid expenses and other assets.

Cash provided by our operating activities for the year ended December 31, 2025 of $3.7 million was primarily attributable to a net loss of $45.0 million excluding $12.9 million from a loss on the sale of a property, plus the add-back of $45.7 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $4.6 million, less an increase in payment of deferred leasing commissions of $4.2 million, less an increase in lease acquisition costs of $1.2 million, less a decrease in prepaid expenses of $0.7 million and plus a decrease in tenant receivables of $0.8 million.

Investing Activities

Cash provided by investing activities for the year ended December 31, 2024 of $70.3 million was primarily attributable to proceeds from the sale of three properties of $95.5 million, which was partially offset by capital expenditures and office equipment investments of approximately $25.2 million.

Cash used in investing activities for the year ended December 31, 2025 of $10.3 million was primarily attributable to capital expenditures and office equipment investments of approximately $16.4 million, which was partially offset by proceeds from the disposition of one property of $6.1 million.

Financing Activities

Cash used in financing activities for the year ended December 31, 2024 of $164.5 million is primarily attributable to repayment of a portion of the BMO Term Loan (defined below) of $43.9 million, repayment of a portion of the BofA Revolver (defined below) of $22.7 million, repayment of a portion of the BofA Term Loan (defined below) of $11.7 million, repayment of a portion of the Senior Notes (defined below) of $76.4 million, payment of deferred financing costs of $5.7 million and payment of distributions to stockholders of $4.1 million.

Cash used in financing activities for the year ended December 31, 2025 of $5.5 million is primarily attributable to payment of distributions to stockholders of $4.1 million and the repayment of $1.4 million of our debt.

Liquidity beyond the next 12 months

Our ability to generate cash adequate to meet our needs is dependent primarily on income from real estate investments, the sale of real estate investments, leveraging of real estate investments, proceeds from public offerings of stock, private placement of debt and access to the capital markets.

As of March 5, 2026, we had aggregate outstanding indebtedness of $275 million.

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, proceeds from public offerings of stock, private placement of debt and access to the capital markets.

The acquisition of new properties, the payment of expenses related to real estate operations, capital improvement expenses, debt service payments, general and administrative expenses, and distribution requirements place demands on our liquidity.

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We have used a variety of sources to fund our cash needs in addition to our free cash flow generated from our investments in real estate.

We have considered adding or refinancing existing term debt or raising capital through public offerings or At The Market (ATM) programs of our common stock.

We have considered raising capital through public offerings or At The Market (ATM) programs of our common stock.

We believe these sources of funds will provide sufficient funds to adequately meet our obligations beyond the next twelve months.

BMO Term Loan

We have a term loan borrowing in the aggregate principal amount of approximately $71.1 million as of December 31, 2024, 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.

The BMO Second Amendment amended the Second Amended and Restated Credit Agreement dated September 27, 2018, which we refer to as the Original BMO Credit Agreement, as amended by the First Amendment to Second Amended and Restated Credit Agreement dated February 10, 2023, which we refer to as the BMO First Amendment, to, among other things:

(1) extend the maturity date from October 1, 2024 to April 1, 2026;

(2) change the interest rate from either 300 basis points over SOFR (Secured Overnight Financing Rate) or 200 basis points over the base rate to either 300 basis points over SOFR with a floor on SOFR of 500 basis points or 200 basis points over the base rate with a floor on the base rate of 600 basis points;

(3) provide that, if, as of March 31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan (defined below) and the Senior Notes (defined below) exceeds $200 million, the spread over SOFR or the base rate, as applicable, 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;

(4) 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:

(a) 25.55556% to the BMO Term Loan;

(b) 20.00000% to the BofA Term Loan;

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

(5) require that, within 90 days of the February 21, 2024 effective date of the BMO Second Amendment, certain of our subsidiaries guarantee the BMO Term Loan;

(6) require that, within 90 days of the February 21, 2024 effective date of the BMO Second Amendment, we pledge our equity interests in certain of our subsidiaries as collateral for the BMO Term Loan;

(7) reduce our minimum fixed charge coverage ratio from 1.50x to 1.25x;

and (8) reduce our minimum unsecured interest coverage ratio from 1.75x to 1.25x.

As of December 31, 2025, we had 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, which would have matured on April 1, 2026.

The BMO Term Loan was subject to the terms of the Second Amended and Restated Credit Agreement dated September 27, 2018, which we refer to as the Original BMO Credit Agreement, as amended by the First Amendment to Second Amended and Restated Credit Agreement dated February 10, 2023, which we refer to as the BMO First Amendment, and the Second Amendment to Second Amended and Restated Credit Agreement dated February 21, 2024, which we refer to as the BMO Second Amendment.

We refer to the Original BMO Credit Agreement, as amended by the BMO First Amendment and the BMO Second Amendment, as the BMO Credit Agreement.

The BMO Credit Agreement initially provided for an unsecured term loan borrowing in the amount of $220 million.

The BMO Term Loan initially consisted of a $55 million tranche A term loan and a $165 million tranche B term loan.

On June 4, 2021, we repaid the tranche A term loan that was scheduled to mature on November 30, 2021, and incurred a loss on extinguishment of debt of $0.1 million related to unamortized deferred financing costs.

On February 10, 2023, we repaid a $40 million portion of the tranche B term loan.

On August 10, 2023, we repaid an additional $10 million portion of the tranche B term loan.

On February 21, 2024, as part of the BMO Second Amendment, we repaid an approximately $29.0 million portion of the tranche B term loan.

On July 10, 2024, we repaid an approximately $7.2 million portion of the tranche B term loan from asset sale proceeds of a property located in Glen Allen, Virginia.

On October 25, 2024, we repaid an approximately $7.8 million portion of the tranche B term loan from asset sale proceeds of a property located in Atlanta, Georgia.

The tranche B term loan matures on April 1, 2026.

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%.

In addition, effective February 21, 2024 upon entering into the BMO 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 or the base rate, as applicable, 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.

As of December 31, 2024, the interest rate on the BMO Term Loan was 8.00% per annum.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 8.34% for the year ended December 31, 2024.

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 December 31, 2025, the interest rate on the BMO Term Loan was 9.00% per annum.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan from February 8, 2023, which is when the Company terminated its outstanding interest rate swaps applicable to the BMO Term Loan as described below, through December 31, 2023 was approximately 8.11% per annum.

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.

On February 20, 2019, we entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BMO Term Loan at 2.39% per annum for the period beginning on August 26, 2020 and ending January 31, 2024.

On February 8, 2023, we terminated all remaining interest rate swaps applicable to the BMO Term Loan and, on February 10, 2023, we received an aggregate of approximately $4.3 million as a result of such terminations.

The BMO 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.

In addition, the BMO Credit Agreement also restricts our ability to make quarterly dividend distributions that exceed $0.01 per share of our common stock;

provided, however, that notwithstanding such restriction, we are permitted to make dividend distributions based on our good faith estimate of projected or estimated taxable income or otherwise as necessary to retain our status as a real estate investment trust, to meet the distribution requirements of Section 857 of the Internal Revenue Code or to eliminate any income or excise taxes to which we would otherwise be subject.

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.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 8.75% for the year ended December 31, 2025.

The BMO Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type.

The BMO Credit Agreement also contained financial covenants that required 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 December 31, 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 Agreement).

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.

For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all of our outstanding obligations will become immediately due and payable.

The BMO Credit Agreement also provided 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 Agreement).

BofA Term Loan

As of December 31, 2024, we have a term loan borrowing in the amount of approximately $55.6 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.

Prior to February 21, 2024, we referred to the BofA Term Loan as the BofA Revolver.

On February 21, 2024, we amended the BofA Term Loan by entering into a Second Amendment to Credit Agreement with the lending institutions party thereto, which we refer to as the BofA Second Amendment.

The BofA Second Amendment amended the Credit Agreement dated January 10, 2022, which we refer to as the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023, which we refer to as the BofA First Amendment, to, among other things:

(1) extend the maturity date from October 1, 2024 to April 1, 2026;

(2) convert borrowings from being either revolving loans or letters of credit to a term loan;

(3) change the interest rate from 300 basis points over SOFR to 300 basis points over SOFR with a floor on SOFR of 500 basis points;

(4) 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 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;

(5) 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:

(a) 25.55556% to the BMO Term Loan;

(b) 20.00000% to the BofA Term Loan;

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

(6) require that, within 90 days of the February 21, 2024 effective date of the BofA Second Amendment, certain of our subsidiaries guarantee the BofA Term Loan;

(7) require that, within 90 days of the February 21, 2024 effective date of the BofA Second Amendment, we pledge our equity interests in certain of our subsidiaries as

collateral for the BofA Term Loan;

(8) reduce our minimum fixed charge coverage ratio from 1.50x to 1.25x;

and (9) reduce our minimum unsecured interest coverage ratio from 1.75x to 1.25x.

As of December 31, 2025, we had 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, which would have matured on April 1, 2026.

The BofA Term Loan was subject to the terms of the Credit Agreement dated January 10, 2022, which we refer to as the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023, which we refer to as the BofA First Amendment, and the Second Amendment to Credit Agreement dated February 21, 2024, which we refer to as the BofA Second Amendment.

We refer to the Original BofA Credit Agreement, as amended by the BofA First Amendment and the BofA Second Amendment, as the BofA Credit Agreement.

Prior to entering into the BofA Second Amendment on February 21, 2024, borrowings made under the BofA Revolver could be revolving loans or letters of credit, the combined sum of which could not exceed $150 million outstanding at any time.

On February 10, 2023, we borrowed $40.0 million under the BofA Revolver to repay a portion of the BMO Term Loan.

Effective October 1, 2023, availability under the BofA Revolver was reduced to $125 million.

As of December 31, 2023, there were borrowings of $90 million drawn and outstanding under the BofA Revolver.

On February 21, 2024, as part of the BofA Second Amendment, we repaid an approximately $22.7 million portion of the BofA Revolver.

On July 10, 2024, we repaid an approximately $5.6 million portion of the BofA Term Loan from asset sale proceeds of a property located in Glen Allen, Virginia.

On October 25, 2024, we repaid an approximately $6.1 million portion of the BofA Term Loan from asset sale proceeds 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.

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.

As of December 31, 2024, the interest rate on the BofA Term Loan was 8.00% per annum.

The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was approximately 8.34% per annum for the year ended December 31, 2024.

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

As of December 31, 2025, the interest rate on the BofA Term

Loan was 9.00% per annum.

The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was 8.75% for the year ended December 31, 2025.

As of December 31, 2023, the interest rate on the BofA Revolver was 8.47% per annum.

The weighted average variable interest rate on all amounts outstanding under the BofA Revolver through December 31, 2023 was approximately 8.05% per annum.

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.

In addition, the BofA Credit Agreement also restricts our ability to make quarterly dividend distributions that exceed $0.01 per share of our common stock;

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.

The BofA Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type.

The BofA Credit Agreement also contained financial covenants that required 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 December 31, 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).

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 BofA Credit Agreement immediately due and payable and enforce any and all rights of the lenders

or BofA under the BofA Credit Agreement and related documents.

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 $123.6 million as of December 31, 2024, 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 $71.7 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 $51.9 million, which we refer to as the Series B Notes.

On February 21, 2024, we amended the terms of the Senior Notes by entering into a First Amendment to Note Purchase Agreement, which we refer to as the NPA First Amendment, with the purchasers party thereto.

The NPA First Amendment amended the Note Purchase Agreement dated October 24, 2017, which we refer to as the Original Note Purchase Agreement, to, among other things:

(1) extend the maturity date of the Series A Notes from December 20, 2024 to April 1, 2026;

(2) shorten the maturity date of the Series B Notes from December 20, 2027 to April 1, 2026;

(3) increase the interest rate applicable to the Series A Notes from 4.49% per annum to 8.00% per annum;

(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;

(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:

(a) 25.55556% to the BMO Term Loan;

(b) 20.00000% to the BofA Term Loan;

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

(7) require that, within 90 days of the February 21, 2024 effective date of the NPA First Amendment, certain of our subsidiaries guarantee the Senior Notes;

(8) require that, within 90 days of the February 21, 2024 effective date of the NPA First Amendment, we pledge our equity interests in certain of our subsidiaries as collateral for the Senior Notes;

and (9) conform all financial covenants and negative covenants in the Note Purchase Agreement with the BofA Credit Agreement and the BMO Credit Agreement.

The BofA Credit Agreement also provided 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).

As of December 31, 2025, we had senior notes in the aggregate principal amount of approximately $122.9 million, which we refer to as the Senior Notes, which would have matured on April 1, 2026.

The Senior Notes consisted 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.

The Notes were subject to the terms of the Note Purchase Agreement dated October 24, 2017, which we refer to as the Original Note Purchase Agreement, as amended by the First Amendment to Note Purchase Agreement dated February 21, 2024.

We refer to the Original Note Purchase Agreement, as amended by the NPA First Amendment, as the Note Purchase Agreement.

On February 21, 2024, as part of the NPA First Amendment, we repaid an approximately $29.2 million portion of the Series A Notes.

In addition, on February 21, 2024, as part of the NPA First Amendment, we repaid an approximately $21.2 million aggregate principal amount of the Series B Notes.

On July 10, 2024, we repaid an approximately $7.2 million portion of the Series A Notes and an approximately $5.3 million portion of the Series B Notes from asset sale proceeds of a property located in Glen Allen, Virginia.

On October 25, 2024, we repaid an approximately $7.8 million portion of the Series A Notes and an approximately $5.7 million portion of the Series B Notes from asset sale proceeds of a property located in Atlanta, Georgia.

As of December 31, 2024, approximately $71.7 million aggregate principal amount of the Series A Notes remained outstanding and approximately $51.9 million aggregate principal amount of the Series B Notes remained outstanding.

As of December 31, 2024, the interest rate on the Series A Notes was 8.00% per annum and the interest rate on the Series B Notes was 8.00% per annum.

As of December 31, 2023, the interest rate on the Series A Notes was 4.49% per annum and the interest rate on the Series B Notes was 4.76% per annum.

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.

In addition, the Note Purchase Agreement also restricts our ability to make quarterly dividend distributions that exceed $0.01 per share of our common stock;

Internal Revenue Code or to eliminate any income or excise taxes to which we would otherwise be subject.

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.

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 December 31, 2025 and December 31, 2024, the interest rate 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 contained customary affirmative and negative covenants.

The Note Purchase Agreement also contained financial covenants that required 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 December 31, 2025.

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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 Repurchases

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

As of December 31, 2024, the Sponsored REIT Loan had $24 million principal amount outstanding.

The Sponsored REIT Loan is secured by a mortgage on the underlying property and has a current term of less than one year.

We anticipate that the Sponsored REIT Loan will be repaid through cash flow from property operations or sale of the underlying property, although the actual amount and timing of any repayment is uncertain and will likely depend on prevailing market conditions at the time of any such sale.

On March 9, 2026, the Company received an e-mail message from Iman Hossini, who purports to be a shareholder of the Company, demanding that the Board of Directors investigate alleged breaches of the fiduciary duty of due care and waste of corporate assets by George J.

Carter, Chairman of the Board and Chief Executive Officer of the Company, Jeffrey B.

Carter, President and Chief Investment Officer of the Company, and John G.

Demeritt Executive Vice President and Chief Financial Officer of the Company, in connection with the Company entering into the Credit Agreement.

At this time, the Company cannot predict the outcome or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.

We may be subject to various legal proceedings and claims that arise in the ordinary course of our business.

Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.

Loan to Sponsored REIT

The Sponsored REIT Loan is secured by a mortgage on the underlying property and has a current term of less than one year.

The Sponsored REIT Loan subjects us to credit risk.

However, we believe that our position as asset manager of the Sponsored REIT helps mitigate that risk by providing us with unique insight and the ability to rely on qualitative analysis of the Sponsored REIT.

Additional information about the Sponsored REIT Loan outstanding as of December 31, 2024 is incorporated herein by reference to Note 3, “Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans”, in the Notes to Consolidated Financial Statements included in this report.

Other Considerations

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 twelve months ended December 31, 2024 and 2023, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle for the three and twelve months ended December 31, 2024.

Monument Circle has approximately 214,000 square feet of rentable space comprised of both office and street level retail space.

The office component comprises approximately 95% of the rentable space and had been net leased to a single corporate tenant through December 31, 2018.

The retail component comprises the remaining approximately 5% of the property’s rentable space.

Monument Circle had approximately $85,000 and $302,000 of rental income, and, $263,000 and $1,095,000 of operating expenses, for the three and twelve months ended December 31, 2024, respectively, and was 4.1% leased to two retail tenants as of December 31, 2024.

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

For the three months and year ended December 31, 2025 and 2024, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle for the year ended December 31, 2025 and for the three months and year ended December 31, 2024.

Monument Circle sold its property on June 6, 2025.

Monument Circle had approximately $132,000 of rental income and $435,000 of operating expenses for the year ended December 31, 2025.

Monument Circle had approximately $85,000 and $302,000 of rental income, and $263,000 and $1,095,000 of operating expenses, for the three months and year ended December 31, 2024, respectively.

Rental Income Commitments

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(1) Amounts include principal and interest payments.

(2) This table does not reflect the use of the proceeds of the Initial Term Loans under the Credit Agreement to refinance and retire all of the debt obligations presented in this table on February 26, 2026.

The operating lease in the table above consists of our lease of corporate office space, which commenced September 1, 2010, and was amended on October 25, 2016 and on February 7, 2024.

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Investments in Sponsored REITs

As of December 31, 2024, 2023 and 2022, we held a common stock interest in one Sponsored REIT, Monument Circle, which is fully syndicated and in which we do not share economic benefit or risk.

As of December 31, 2024 and 2023, we held a common stock interest in one Sponsored REIT, Monument Circle, which was fully syndicated and in which we did not share economic benefit or risk.

As a common stockholder, we had no rights to the Sponsored REIT’s earnings or any related cash distributions.

However, upon liquidation of the sponsored REIT, we are entitled to our percentage interest as a common stockholder in any proceeds remaining after the preferred stockholders have recovered their investment.

Our common stock percentage interest in the sponsored REIT is less than 1%.

The affirmative vote of the holders of a majority of the Sponsored REIT’s preferred stockholders is required for any actions involving merger, sale of property, amendment to charter or issuance of additional capital stock.

In addition, the Sponsored REIT allows the holders of more than 50% of the outstanding preferred shares to remove (without cause) and replace one or more members of the Sponsored REIT’s board of directors.

As of December 31, 2024, the Sponsored REIT Loan had $24 million principal amount outstanding.

Additional information about the Sponsored REIT Loan as of December 31, 2024 is incorporated herein by reference to Note 2, “Significant Accounting Policies - Variable Interest Entities (VIEs)” and Note 3, “Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans”, in the Notes to Consolidated Financial Statements included in this report.

However, upon liquidation of the

Sponsored REIT, we were entitled to our percentage interest as a common stockholder in any proceeds remaining after the preferred stockholders recovered their investment.

Our common stock percentage interest in the sponsored REIT was less than 1%.

Monument Circle and the corporation that had been its sole member were dissolved on December 9, 2025.

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-K

Item 7. Management’s Discussion and Analysis