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Item 1. Financial Statements

2026-04-28 compared with 2025-10-28 · 117 added, 295 removed, 248 unchanged (62% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except share and par value amounts)

Real estate assets:

Land (amounts related to variable interest entities ("VIEs") of $ 0 and $ 6,416 at September 30, 2025 and December 31, 2024, respectively)

Buildings and improvements (amounts related to VIEs of $ 0 and $ 13,279 at September 30, 2025 and December 31, 2024, respectively)

Buildings and improvements

Fixtures and equipment

Less accumulated depreciation (amounts related to VIEs of $ 0 and $ 682 at September 30, 2025 and December 31, 2024, respectively)

Real estate assets, net (amounts related to VIEs of $ 0 and $ 19,013 at September 30, 2025 and December 31, 2024, respectively)

Acquired real estate leases, less accumulated amortization of $ 14,238 and $ 13,613 , respectively (amounts related to VIEs of $ 0 and $ 67 , less accumulated amortization of $ 0 and $ 35 at September 30, 2025 and December 31, 2024, respectively)

Cash, cash equivalents and restricted cash (amounts related to VIEs of $ 239 and $ 1,314 at September 30, 2025 and December 31, 2024, respectively)

Less accumulated depreciation

Real estate assets, net

Acquired real estate leases, less accumulated amortization of $ 15,058 and $ 14,648 , respectively

Cash, cash equivalents and restricted cash

Tenant rent receivables

4 unchanged sentences

Liabilities and Stockholders’ Equity:

Term loans payable, less unamortized financing costs of $ 881 and $ 2,220 , respectively

Series A & Series B Senior Notes, less unamortized financing costs of $ 473 and $ 1,191 , respectively

Accounts payable and accrued expenses (amounts related to VIEs of $ 83 and $ 534 at September 30, 2025 and December 31, 2024, respectively)

Initial Term Loans, less unamortized financing costs and OID of $ 23,473

Term loans payable, less unamortized financing costs of $ 441

Series A & Series B Senior Notes, less unamortized financing costs of $ 236

Accounts payable and accrued expenses

Accrued compensation

8 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive income

Accumulated distributions in excess of accumulated earnings

4 unchanged sentences

Consolidated Statements of Operations

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands, except per share amounts)

13 unchanged sentences

Franklin Street Properties Corp.

Consolidated Statements of Comprehensive Loss

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Other comprehensive loss:

Reclassification from accumulated other comprehensive income into interest expense

Total other comprehensive loss

Comprehensive loss

The accompanying notes are an integral part of these consolidated financial statements.

Franklin Street Properties Corp.

Consolidated Statements of Stockholders’ Equity

9 unchanged sentences

Balance, March 31, 2025

Comprehensive loss

Equity-based compensation

Distributions $ 0.01 per

share of common stock

Balance, June 30, 2024

Comprehensive loss

Distributions $ 0.01 per

share of common stock

Balance, September 30, 2024

Balance, December 31, 2025

3 unchanged sentences

Balance, March 31, 2026

Comprehensive loss

Equity-based compensation

Distributions $ 0.01 per

share of common stock

Balance, June 30, 2025

Comprehensive loss

Distributions $ 0.01 per

share of common stock

Balance, September 30, 2025

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands)

2 unchanged sentences

Depreciation and amortization expense

Amortization of above and below market leases

Shares issued as compensation

Amortization of other comprehensive income into interest expense

Loss on extinguishment of debt

9 unchanged sentences

Payment of deferred leasing commissions

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

Property improvements, fixtures and equipment

Proceeds received from sales of properties

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Distributions to stockholders

Repayments of Bank note payable

Proceeds received from Initial Term Loans

Cost of extinguished debt

Repayments of Term Loans payable

1 unchanged sentence

Deferred financing costs

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net decrease in cash, cash equivalents and restricted cash

5 unchanged sentences

Accrued costs for purchases of real estate assets

Non-cash financing activities:

Initial Term Loan original issue discount

Accrued deferred financing costs

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

FSP Property Management LLC provides asset management and property management services.

The Company also has 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 (“Monument Circle” or the “Sponsored REIT”).

As of September 30, 2025, the Company owned and operated a portfolio of real estate consisting of 14 operating properties.

As of March 31, 2026, the Company owned and operated a portfolio of real estate consisting of 14 operating properties.

The Company may pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, for geographic, property specific reasons or for other general corporate purposes.

The following table summarizes the Company’s number of owned and consolidated properties and rentable square feet of real estate.

As of September 30,

The following table summarizes the Company’s number of owned properties and rentable square feet of real estate.

As of March 31,

Owned and Consolidated Properties:

1 unchanged sentence

Rentable square feet

(1) Includes one property that was classified as an asset held for sale as of September 30, 2024.

Basis of Presentation

The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned and controlled subsidiaries.

The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated.

4 unchanged sentences

In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.

Liquidity and Management’s Plan

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 in Note 2 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.

Management believes that it is more likely than not that the Company will be successful in extending the maturity date or refinancing all of its existing debt, or in effecting asset sales or other potential transactions prior to the applicable maturity dates.

Accounting Standards Codification (ASC) 205-40, “Presentation of Financial Statements— Going Concern”, requires management to consider whether there is substantial doubt regarding the Company’s ability to continue as a going concern as a result of uncertainty about the maturity of the Company’s debt on April 1, 2026.

Although management believes that it is more likely than not that the Company will be able to extend the maturity date or retire the existing debt through a refinancing, asset sales or other potential transactions, guidance issued under ASC 205-40 requires that management not conclude that such an outcome is “probable” if, among other factors, the outcome is not within the control of the Company.

Because no such restructuring, refinancing, sale or other potential transactions have closed, such outcomes are not within the control of the Company;

therefore, for accounting purposes, management is unable to conclude that such an outcome is probable.

Accordingly, ASC 205-40 requires management to conclude that there is substantial doubt about the Company’s ability to continue as a going concern for at least one year following the date of issuance of these financial statements.

While management believes that it is more likely than not that the Company will be able 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, there is no assurance that the Company will be able to do so.

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.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period.

The Company does not have any comprehensive loss other than what is included in net loss.

If the Company has any comprehensive loss in the future such that a statement of comprehensive loss would be necessary, the Company will include such statement in a separate consolidated statement of comprehensive loss.

Financial Instruments

2 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows.

September 30,

(in thousands)

2 unchanged sentences

Total cash, cash equivalents and restricted cash

(1) Includes $ 89 and $ 1,608 at September 30, 2025 and 2024, respectively, pertaining to Monument Circle, which the Company is unable to utilize for its own operational purposes.

Restricted cash consists of escrows arising from property sales.

11 unchanged sentences

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and considers that conclusion upon a reconsideration event.

As of January 1, 2023, the Company’s relationship with the Sponsored REIT was considered a VIE and the Company became the primary beneficiary.

Upon this reconsideration event, the entity is included within the Company’s consolidated financial statements and all intercompany accounts and transactions have been eliminated in consolidation.

As of January 1, 2023, the Company’s relationship with FSP Monument Circle LLC, which corporation was organized as a real estate investment trust (“Monument Circle” or the “Sponsored REIT”), was considered a VIE and the Company became the primary beneficiary.

Upon this reconsideration event, the entity was included within the Company’s consolidated financial statements and all intercompany accounts and transactions were eliminated in consolidation.

A gain on consolidation of approximately $ 0.4 million was recognized in the three months ended March 31, 2023.

Cash and cash equivalents of $ 3 million held by Monument Circle was included in the Company’s cash and cash equivalents upon consolidation and is reflected as “Consolidation of Sponsored REIT” in the consolidated statement of cash flows.

The cash and cash equivalents held by Monument Circle are unable to be utilized for the Company’s operational purposes.

The creditors of Monument Circle’s trade payables do not have any recourse against the Company.

Cash and cash equivalents of $ 3 million held by Monument Circle was included in the Company’s cash and cash equivalents upon consolidation and was reflected as “Consolidation of Sponsored REIT” in the consolidated statement of cash flows.

The cash and cash equivalents held by Monument Circle were unable to be utilized for the Company’s operational purposes.

The creditors of Monument Circle’s trade payables did not have any recourse against the Company.

The property held by Monument Circle was sold on June 6, 2025, and Monument Circle and the corporation that had been its sole member were dissolved on December 9, 2025.

The Company’s previous loan to Monument Circle that was secured by a mortgage on the real estate owned by Monument Circle (the “Sponsored REIT Loan”) was extinguished on June 6, 2025, when the property securing the loan was sold.

More information on the sale is included in Note 7, “Disposition of Properties and Assets Held for Sale”.

Management fees and interest income from loans:

Asset management fees range from 1 % to 5 % of collected rents and the applicable contracts are cancellable with 30 days ’ notice.

The Company recognized no asset management fee income from non-consolidated entities for each of the nine months ended September 30, 2025 and 2024.

The Company recognized no interest income and fees from the Sponsored REIT Loan for each of the three and nine months ended September 30, 2025 and 2024.

On October 29, 2021, the Company agreed to amend and restate the then existing Sponsored REIT Loan to extend the maturity date from December 6, 2022 to June 30, 2023 and to advance an additional $ 3.0 million tranche of indebtedness to Monument Circle with the same June 30, 2023 maturity date, effectively increasing the aggregate principal amount of the Sponsored REIT Loan from $ 21 million to $ 24 million.

In addition, the Company agreed to defer all principal and interest payments due under the Sponsored REIT Loan until the maturity date.

As part of its consideration for agreeing to amend and restate the Sponsored REIT Loan, the Company obtained from the stockholders of the parent of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023.

There were no commitments to lend additional funds to the Sponsored REIT.

On June 26, 2023, the Sponsored REIT Loan maturity was extended to September 30, 2023.

On September 26, 2023, the Sponsored REIT Loan maturity was further extended to September 30, 2024.

On September 27, 2024, the Sponsored REIT Loan maturity was further extended to September 30, 2025 .

The Sponsored REIT Loan was extinguished on June 6, 2025, when the property securing the loan was sold.

More information on the sale is included in Note 8, “Disposition of Properties and Assets Held for Sale” in this Quarterly Report on Form 10-Q.

The Company did not recognize asset management fee income from non-consolidated entities for the three months ended March 31, 2026 and 2025.

The Company did not recognize interest income and fees from the Sponsored REIT Loan for the three months ended March 31, 2025 .

Recent Accounting Standards

7 unchanged sentences

In November 2024, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 requires public entities to disclose significant segment expense and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

The guidance in ASU 2023-07 is applied retrospectively to all periods presented in the financial statements and is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption was permitted.

The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024, which did not have a material impact on the consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures and disclosures about income taxes paid.

The guidance in ASU 2023-09 should be applied prospectively but may be applied retrospectively for each period presented.

ASU 2023-09 is effective for public entities for fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-09 on January 1, 2025, which did not have a material impact on the consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

5 unchanged sentences

Term Loans Payable and Senior Notes

TPG Term Loans

On February 26, 2026 (the “Closing Date”), the Company entered into a Credit Agreement (the “Credit Agreement”) with Alter Domus (US) LLC, as administrative agent (the “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 (the “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 (the “Extension Option”).

Borrowings under the Credit Facility bear interest at an initial interest rate of 9.0 % per annum.

The Initial Term Loans were issued with original issue discount of 6.0 % of the principal amount thereof.

The Delayed Draw Term Loans, if any, will be issued with original issue discount of 6.0 % of the principal amount thereof.

As of March 31, 2026, the remaining balance of the unamortized original issue discount and the unamortized deferred financing costs amounted to approximately $ 16.1 million and $ 7.4 million, respectively.

If the Company exercises the Extension Option, the interest rate will increase to a rate of 13.0 % per annum.

Additionally, if the Company exercises the Extension Option, the Company must pay the following extension fees multiplied by the then-outstanding principal amount of Term Loans on each applicable date:

(i) 36th month anniversary of Closing Date:

(ii) 39th month anniversary of Closing Date:

(iii) 42nd month anniversary of Closing Date:

(iv) 45th month anniversary of Closing Date:

(v) 48th month anniversary of Closing Date:

The Credit Agreement requires the Company to prepay outstanding Term Loans with certain proceeds of dispositions of real property.

Additionally, the Company may voluntarily prepay the outstanding Term Loans at any time;

provided, that if the Company prepays any Term Loans prior to the first anniversary of the Closing Date, the Company is required to pay a make-whole payment equal to the amount of interest that would have accrued on such Term Loans to and excluding the first anniversary of the Closing Date.

The Company is required to pay an exit fee of 4.0 % of the aggregate principal amount of such Term Loans upon any permitted repayment of the Term Loans prior to the applicable maturity date.

The Company must also pay customary agency fees.

The obligations under the Credit Facility are guaranteed by substantially all subsidiaries of the Company and secured by a first priority lien on substantially all of the assets of the Company and its subsidiaries, including a first priority security interest in all of the Company’s and its subsidiaries’ personal property and first priority mortgage liens on the Company’s and its subsidiaries’ real property, in each case subject to certain exceptions.

The Credit Agreement contains customary representations and affirmative and negative covenants for credit facilities of this type, including, without limitation and subject to certain exceptions, restrictions on indebtedness, liens, investments, mergers, consolidations and other fundamental changes, dispositions of assets (including real property), capital expenditures, changes in business, certain restricted payments, transactions with affiliates, burdensome agreements, sale leaseback transactions, prepayments of other debt, corporate operating expenses and severance and retention payments.

The Credit Agreement also contains financial covenants that require the Company to maintain (i) a minimum tangible net worth $ 424,884,000 plus 70 % of the aggregate net proceeds received by the Company in connection with any offering of stock or other equity in the Company after December 31, 2025 (with a step-down based on 70 % of the impairment charge and/or loss resulting from dispositions of the mortgaged properties of the Company and its subsidiaries, or such other amount as agreed to by the Company and the Lenders) and (ii) a minimum liquidity of not less than $ 5,000,000 in cash or cash equivalents.

The Company was in compliance with the Credit Agreement financial covenants as of March 31, 2026.

The Credit Agreement provides for customary events of default with corresponding grace periods, including, among other things, failure to pay principal or interest when due, breaches of certain covenants, inaccuracies in representations and warranties, certain cross defaults, certain defaults under material contracts, insolvency or bankruptcy events, the entry of certain judgments, the occurrence of a change in control of the Company (as defined in the Credit Agreement) and the departure of the chairman and chief executive officer of the Company.

In the event of a default by the Company, the Agent may, and at the request of the requisite number of Lenders, shall, declare any commitment of the Lenders to make Term Loans terminated, declare all obligations under the Credit Agreement immediately due and payable and enforce any and all rights of the Lenders under the Credit Agreement and related documents.

Certain events of default related to bankruptcy, insolvency, and receivership result in the automatic acceleration of all outstanding obligations.

The Company used the proceeds of the Initial Term Loans on the Closing Date to refinance and retire all outstanding indebtedness under the documents evidencing the BMO Term Loan, the BofA Term and the Senior Notes (each as defined below) and to pay fees and expenses related to the Credit Agreement.

The Company incurred approximately $ 1.0 million of costs in connection with the retirement of the debt, consisting of a make-whole premium related to the Senior Notes and legal and professional fees payable to the lenders under the BMO Term Loan, the BofA Term Loan, and the Senior Notes.

These costs were recognized as part of the loss on debt extinguishment.

The Company may use the proceeds of any Delayed Draw Term Loans funded to finance tenant improvements, leasing commissions, building improvements and other uses approved by the Lenders, subject to certain conditions, in each case as permitted under the Credit Agreement.

BMO Term Loan

As of September 30, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 70.7 million (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, the Company 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 (the “BMO Second Amendment”).

The BMO Second Amendment amended the Second Amended and Restated Credit Agreement dated September 27, 2018 (the “Original BMO Credit Agreement”), as amended by the First Amendment to Second Amended and Restated Credit Agreement dated February 10, 2023 (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 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, BofA Term Loan (defined below) and the Senior Notes (defined below) exceeded $ 200 million, the spread over SOFR or the base rate, as applicable, would be 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;

(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 the Company;

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

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

(7) reduce the Company’s minimum fixed charge coverage ratio from 1.50 x to 1.25 x;

and (8) reduce the Company’s minimum unsecured interest coverage ratio from 1.75 x to 1.25 x.

The Original BMO Credit Agreement, as amended by the BMO First Amendment and the BMO Second Amendment, is referred to as the “BMO Credit Agreement”.

On February 21, 2024, as part of the BMO Second Amendment, the Company repaid an approximately $ 29.0 million portion of the BMO Term Loan.

On July 10, 2024, the Company repaid an approximately $ 7.2 million portion of the BMO Term Loan from asset sale proceeds of a property located in Glen Allen, Virginia.

On October 25, 2024, the Company repaid an approximately $ 7.8 million portion of the BMO Term Loan from asset sale proceeds of a property located in Atlanta, Georgia.

On March 6, 2025, the Company repaid an approximately $ 43,000 portion of the BMO Term Loan from an escrow collected on March 4, 2025, which had been held from the sale of a property located in Glen Allen, Virginia.

On May 16, 2025, the Company 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 %.

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.

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.

On February 26, 2026, the Company repaid in its entirety the Company’s term loan borrowing in the aggregate principal amount of approximately $ 70.7 million, with Bank of Montreal, as administrative agent, and the other lending institutions party thereto, which the Company refers to as the BMO Term Loan.

The BMO Term Loan 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 the Company refers 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 the Company refers to as the BMO First Amendment, and the Second Amendment to Second Amended and Restated Credit Agreement dated February 21, 2024, which the Company refers to as the BMO Second Amendment.

The Company refers to the Original BMO Credit Agreement, as amended by the BMO First Amendment and the BMO Second Amendment, as the BMO Credit Agreement.

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 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 was variable under the BMO Credit Agreement, the Company 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, the Company 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, the Company terminated all outstanding interest rate swaps applicable to the BMO Term Loan and, on February 10, 2023, the Company received an aggregate of approximately $ 4.3 million as a result of such terminations, of which approximately $ 0.1 million related to interest receivable.

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 the Company’s equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of the Company’s common stock, going concern qualifications to the Company’s financial statements, and transactions with affiliates.

In addition, the BMO Credit Agreement also restricts the Company’s ability to make quarterly dividend distributions that exceed $ 0.01 per share of

the Company’s common stock;

provided, however, that notwithstanding such restriction, the Company is permitted to make dividend distributions based on the Company’s good faith estimate of projected or estimated taxable income or otherwise as necessary to retain the Company’s 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 the Company would otherwise be subject.

The BMO Credit Agreement also contains financial covenants that require the Company 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 Company was in compliance with the BMO Term Loan financial covenants as of September 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 of the Company (as defined in the BMO Credit Agreement).

In the event of a default by the Company, 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 outstanding obligations of the Company will become immediately due and payable.

As of February 26, 2026 and 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 was 9 % for the period of January 1, 2026 until February 26, 2026 and 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 the Company 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 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 September 30, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 55.3 million (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, the Company amended the BofA Term Loan by entering into a Second Amendment to Credit Agreement with the lending institutions party thereto (the “BofA Second Amendment”).

The BofA Second Amendment amended the Credit Agreement dated January 10, 2022 (the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023 (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 either 300 basis points over SOFR 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;

(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 the Company;

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

(7) require that, within 90 days of the February 21, 2024 effective date of the BofA Second Amendment, the Company pledge its equity interests in certain of the Company’s subsidiaries as collateral for the BofA Term Loan;

(8) reduce the Company’s minimum fixed charge coverage ratio from 1.50 x to 1.25 x;

and (9) reduce the Company’s minimum unsecured interest coverage ratio from 1.75 x to 1.25 x.

The Original BofA Credit Agreement, as amended by the BofA First Amendment and the BofA Second Amendment, is referred to as the “BofA Credit Agreement”.

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

On July 10, 2024, the Company 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, the Company repaid an approximately $ 6.1 million portion of the BofA Term Loan from asset sale proceeds of a property located in Atlanta, Georgia.

On March 6, 2025, the Company repaid an approximately $ 34,000 portion of the BofA Term Loan from an escrow collected on March 4, 2025, which had been held from the sale of a property located in Glen Allen, Virginia.

On May 16, 2025, the Company 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.

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 interest rate on the BMO Term Loan increased from 8.00 % per annum to 9.00 % per annum.

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 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 the Company’s equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of the Company’s common stock, going concern qualifications to the Company’s financial statements, and transactions with affiliates.

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

The BofA Credit Agreement also contains financial covenants that require the Company 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 Company was 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 of the Company (as defined in the BofA Credit Agreement).

In the event of a default by the Company, BofA, in its capacity as 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 outstanding obligations of the Company will become immediately due and payable.

As of September 30, 2025, the Company has senior notes in the aggregate principal amount of approximately $ 122.9 million (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 (the “Series A Notes”) and (ii) Series B Senior Notes due April 1, 2026 in the aggregate principal amount of approximately $ 51.6 million (the “Series B Notes”).

On February 21, 2024, the Company amended the terms of the Senior Notes by entering into a First Amendment to Note Purchase Agreement (the “NPA First Amendment”) with the purchasers party thereto.

The NPA First Amendment amended the Note Purchase Agreement dated October 24, 2017 (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 the Company;

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

(8) require that, within 90 days of the February 21, 2024 effective date of the NPA First Amendment, the Company pledge its equity interests in certain of the Company’s 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 Original Note Purchase Agreement, as amended by the NPA First Amendment, is referred to as the “Note Purchase Agreement”.

On February 21, 2024, as part of the NPA First Amendment, the Company repaid an approximately $ 29.2 million portion of the Series A Notes and an approximately $ 21.2 million portion of the Series B Notes.

On July 10, 2024, the Company 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, the Company 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.

On March 6, 2025, the Company repaid an approximately $ 44,000 portion of the Series A Notes and an approximately $ 32,000 portion of the Series B Notes from an escrow collected on March 4, 2025, which had been held from the sale of a property located in Glen Allen, Virginia.

On May 16, 2025, the Company 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.

On August 1, 2025, the Company 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.

On February 26, 2026, the Company repaid in its entirety the Company’s term loan borrowing in the amount of approximately $ 55.3 million, with Bank of America, N.A.

as administrative agent, and other lending institutions party thereto, which the Company refers to as the BofA Term Loan.

The BofA Term Loan 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 the Company refers to as the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023, which the Company refers to as the BofA First Amendment, and the Second Amendment to Credit Agreement dated February 21, 2024, which the Company refers to as the BofA Second Amendment.

The Company refers to the Original BofA Credit Agreement, as amended by the BofA First Amendment and the BofA Second Amendment, as the BofA Credit Agreement.

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 February 26, 2026 and 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 9 % for the period of January 1, 2026 until February 26, 2026 and was 8.75 % for the year ended December 31, 2025.

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 the Company 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 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).

On February 26, 2026, the Company repaid in its entirety the Company’s two series of senior notes in the aggregate principal amount of approximately $ 122.9 million, which the Company refers to as the Senior Notes.

The Senior Notes 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 the Company refers 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 the Company refers to as the Series B Notes.

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

The Company refers to the Original Note Purchase Agreement, as amended by the NPA First Amendment, as the Note Purchase Agreement.

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 September 30, 2025 and December 31, 2024, the interest rate on both the Series A Notes and 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 the Company’s equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of the Company’s common stock, going concern qualifications to the Company’s financial statements, transactions with affiliates, certain restrictions on severance, retention and similar arrangements applicable to the Company’s executive officers, and real estate investment trust compliance requirements.

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

The Note Purchase Agreement also contains financial covenants that require the Company 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 Company was in compliance with the Note Purchase Agreement financial covenants as of September 30, 2025.

The Note Purchase Agreement contains customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events.

In the case of an event of default, the purchasers may, among other remedies, accelerate the payment of all obligations.

Financial Instruments:

Derivatives and Hedging

On February 20, 2019, the Company entered into interest rate swap transactions that fixed the interest rate for the period beginning August 26, 2020 and ending January 31, 2024 on the BMO Term Loan (the “2019 BMO Interest Rate Swap”).

The variable rates that were fixed under the 2019 BMO Interest Rate Swap is described in Note 2.

On February 8, 2023, the Company terminated the 2019 BMO Interest Rate Swap applicable to the BMO Term Loan and, on February 10, 2023, the Company received an aggregate of approximately $ 4.3 million as a result of such terminations, of which approximately $ 0.1 million related to interest receivable.

As of September 30, 2025, there were no derivative instruments.

The 2019 BMO Interest Rate Swap qualified as a cash flow hedge and has been recognized on the consolidated balance sheets at fair value.

If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings.

The ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

The gain (loss) on the 2019 BMO Interest Rate Swap was recorded in other comprehensive income (loss) (OCI), and the accompanying consolidated statements of operations as a component of interest expense for the nine months ended September 30, 2025 and 2024, was as follows:

(in thousands)

Nine Months Ended September 30,

Interest Rate Swaps in Cash Flow Hedging Relationships:

Amounts of gain recognized in OCI

Amounts of previously recorded gain (loss) reclassified from OCI into Interest Expense

Total amount of Interest Expense presented in the consolidated statements of operations

Over time, the realized gains in accumulated other comprehensive income were reclassified into earnings as a decrease to interest expense in the same periods in which the hedged interest payments affected earnings.

The Company hedged the exposure to variability in anticipated future interest payments on existing debt.

As of February 26, 2026 and December 31, 2025, the interest rate on both the Series A Notes and the Series B Notes was 9.00 % per annum and 9.00 % per annum, respectively.

The Note Purchase Agreement contained customary affirmative and negative covenants.

The Note Purchase Agreement also contained financial covenants that required the Company 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.

Net Income (Loss) Per Share

1 unchanged sentence

Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.

There were no potential dilutive shares outstanding at each of September 30, 2025 and 2024.

There were no potential dilutive shares outstanding at each of March 31, 2026 and 2025.

Stockholders’ Equity

As of September 30, 2025, the Company had 103,690,340 shares of common stock outstanding.

As of March 31, 2026, the Company had 103,690,340 shares of common stock outstanding.

The Company declared and paid dividends as follows (in thousands, except per share amounts):

1 unchanged sentence

First quarter of 2026

Second quarter of 2025

Third quarter of 2025

First quarter of 2025

Second quarter of 2024

Third quarter of 2024

Equity-Based Compensation

4 unchanged sentences

Upon granting an Award, the Company will recognize compensation cost equal to the fair value of the Company’s common stock, as determined by the Company’s Board of Directors, on the date of the grant.

On May 31, 2024 and May 30, 2025, the Company granted shares under the Plan to non-employee directors with the compensation cost related to such grants indicated in the table below, which was recognized during the year ended December 31, 2024 and the nine months ended September 30, 2025, respectively, and is included in general and administrative expenses for such period.

On May 30, 2025, the Company granted shares under the Plan to non-employee directors with the compensation cost related to such grants indicated in the table below, which was recognized during the three months ended June 30, 2025, and is included in general and administrative expenses for such period.

Such shares were fully vested on the date of issuance.

4 unchanged sentences

Shares granted 2026

Balance September 30, 2025

Balance March 31, 2026

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).

3 unchanged sentences

One such restriction is that the Company generally cannot own more than 10 % of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”).

In the case of TRSs, the

Company’s ownership of securities in all TRSs generally cannot exceed 20 % ( 25 % of taxable years beginning on or before December 31, 2017) of the value of all of the Company’s assets and, when considered together with other non-real estate assets, cannot exceed 25 % of the value of all of the Company’s assets.

In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed 20 % ( 25 % of taxable years beginning on or before December 31, 2017) of the value of all of the Company’s assets and, when considered together with other non-real estate assets, cannot exceed 25 % of the value of all of the Company’s assets.

FSP Investments LLC and FSP Protective TRS Corp.

3 unchanged sentences

A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured.

The Company is expecting to use approximately $ 39,000 of the TRS’s NOLs in 2026 to offset federal income tax related to the actives of the TRSs;

therefore, approximately $ 39,000 of the valuation allowances were reversed during the three months ending March 31, 2026.

Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities.

7 unchanged sentences

Net operating losses

Section 382 of the Code restricts a corporation’s ability to use net operating losses (“NOLs”) to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Company’s prior sponsored REITs available for use by the Company in any particular future taxable year will be limited.

year will be limited.

To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years.

NOLs expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027.

Approximately $ 0.4 million of NOLs expired in 2024.

A valuation allowance is provided for the full amount of the gross NOLs available as the realization of any tax benefits remaining from such NOLs is not assured.

The gross amount of NOLs available to the Company was approximately $ 95.8 million as of both September 30, 2025 and December 31, 2024.

The gross amount of NOLs available to the Company was approximately $ 150.8 million as of both March 31, 2026 and December 31, 2025.

Income Tax Expense

The Company recognized approximately $ 31,000 in Federal Income Tax expense related to the sale of Monument Circle for the nine months ended September 30, 2025.

The Company is subject to a business tax known as the Revised Texas Franchise Tax.

1 unchanged sentence

Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure, it is considered an income tax.

The Company recorded a provision for the Revised Texas Franchise Tax of $ 106,000 and $ 162,000 for the nine months ended September 30, 2025 and 2024, respectively.

The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties.

For the Nine Months Ended September 30,

The Company recorded a provision for the Revised Texas Franchise Tax of $ 52,000 and $ 52,000 for the three months ended March 31, 2026 and 2025, respectively.

The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties and federal income tax related to the TRSs.

For the Three Months Ended March 31,

(Dollars in thousands)

11 unchanged sentences

The Company applies ASC 842-Leases to the combined lease and non-lease components.

For the nine months ended September 30, 2025 and 2024, the Company recognized the following amounts of income relating to lease payments:

For the three months ended March 31, 2026 and 2025, the Company recognized the following amounts of income relating to lease payments:

Income relating to lease payments:

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands)

Income from leases (1)

(1) Includes amounts recognized from variable lease payments of $ 24,362 and $ 26,584 for the nine months ended September 30, 2025 and 2024, respectively.

(1) Includes amounts recognized from variable lease payments of $ 7,770 and $ 8,107 for the three months ended March 31, 2026 and 2025, respectively.

Disposition of Properties and Assets Held for Sale

1 unchanged sentence

The property was sold on June 6, 2025 at a total loss of $ 12.9 million, including an impairment loss of $ 13.3 million that was recorded during the three months ended March 31, 2025 and was decreased by $ 0.4 million for final sale adjustments during the three months ended June 30, 2025 after the sale was completed.

In October 2021, as part of its consideration for agreeing to amend and restate the Sponsored REIT Loan, the Company obtained from the stockholders of the parent of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023.

At March 31, 2025, the Company recorded this property at the fair value less cost to sell, which was less than the carrying value and resulted in an impairment loss of $ 13.3 million.

The Company reclassified $ 5.7 million of this office property as an asset held for sale, which is comprised of $ 18.9 million in real estate assets, net of accumulated depreciation, prior to the impairment.

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

The Company 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 (Level 3 inputs, as there are no observable inputs).

During the three months ended March 31, 2024, the Company sold one 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, which was recorded as an impairment 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.

During the three months ended September 30, 2023, the Company reclassified $ 39.0 million of an office property in Atlanta, Georgia as an asset held for sale as of September 30, 2023.

The Company recorded this property at the fair value less cost to sell, which was less than the carrying value and resulted in an impairment loss of $ 20.5 million in the three months ended September 30, 2023.

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

The Company estimated the fair value of this 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 asset held for sale located in Atlanta, Georgia, was expected to sell for a gross sales price of $ 40.0 million at a loss of approximately $ 20.5 million, which was recorded as an impairment loss as of September 30, 2023, however on November 15, 2023, the Company received notice from the buyer indicating that the buyer was terminating the transaction and directing the deposit and interest be disbursed to the Company.

The property remained classified as an asset held for sale as of September 30, 2024.

During the three months ended September 30, 2024, the Company entered into an agreement to sell the property located in Atlanta, Georgia, which was classified as an asset held for sale during 2023.

The Company increased the expected loss on this property by $ 6.6 million to $ 27.2 million when the Company entered into this new agreement to sell the property for a gross sales price of $ 34.0 million.

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

Segment Information

13 unchanged sentences

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

(in thousands)

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Total consolidated revenues

Reconciling items:

Amortization of above/below market leases

Real estate operating expenses

1 unchanged sentence

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

Reconciliation to Net loss

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Add (deduct):

2 unchanged sentences

Depreciation and amortization

Amortization of above/below market leases

General and administrative

1 unchanged sentence

Interest income

Subsequent Events

On October 3, 2025 , the Board of Directors of the Company declared a cash distribution of $ 0.01 per share of common stock payable on November 6, 2025 , to stockholders of record on October 17, 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-Q

Item 1. Financial Statements