What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-29 · 140 added, 202 removed, 287 unchanged (54% of the section changed)

4 unchanged sentences

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 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 or other potential transactions 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.

See Part I, Item 1A.

8 unchanged sentences

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

As of September 30, 2024, approximately 4.8 million square feet, or approximately 92.8 % of our total owned and consolidated portfolio, was located in Dallas, Denver, Houston and Minneapolis.

As of March 31, 2025, 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.

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

1 unchanged sentence

We have no influence on broader economic market conditions.

In the future, 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 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.

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 nine months ended September 30, 2024 and the year ended December 31, 2023, our disposition strategy resulted in aggregate gross sale proceeds of $66.0 million and $154.5 million, respectively.

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, Series A Notes and 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 more fully described in Note 3 “Bank Note Payable, Term Loans Payable and Senior Notes” in the Notes to Consolidated Financial Statements included in this report and in “Liquidity and Capital Resources” below, on February 21, 2024, we entered into amendments to each of the BofA Term Loan, BMO Term Loan, Series A Notes and Series B Notes (each as defined in Note 3 in the Notes to Consolidated Financial Statements included in this report) to extend the maturity dates of each facility and modify the interest rate payable under each facility and in connection with such amendments, repaid an aggregate of $102 million principal amount of debt.

On July 10, 2024, we used proceeds from the sale of a property in Glen Allen, Virginia to repay an aggregate of approximately $25.3 million of principal amount of 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, which continues to be the rating as of September 30, 2024.

As of February 21, 2024, the interest rate applicable to borrowings under the Senior Notes ceased to be based on the rating of our debt.

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, from Ba3 to B3 on June 14, 2023, and from B3 to Caa1 on February 27, 2025.

As of March 31, 2025, our credit rating remains at Caa1.

Trends and Uncertainties

3 unchanged sentences

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.

See “Risk Factors” in Item 1A.

“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

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.

“Risk Factors ” of our Annual Report on Form 10-K for the year ended December 31, 2024.

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 ongoing wars between Russia and Ukraine, between Israel and Hamas, a U.S.

designated foreign Terrorist Organization, in the Gaza Strip, and between Israel and Hezbollah, a U.S.

designated Foreign Terrorist Organization, in Lebanon and ongoing conflicts in various other parts of 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.

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 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, 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, are contributing to recessionary concerns for 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 50 basis points on September 18, 2024, to a

range of 4.75% to 5.0%.

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

As of September 30, 2024, approximately 50.6% of our total debt constituted unhedged variable rate debt.

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.

As of March 31, 2025, approximately 50.6% of our total debt constituted unhedged variable rate debt.

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

1 unchanged sentence

Real Estate Operations

As of September 30, 2024, our real estate portfolio was comprised of 15 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.

As of March 31, 2025, 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.

Our owned properties were approximately 70.4% leased as of September 30, 2024, a decrease from 74.0% leased as of December 31, 2023.

The 3.6% decrease in leased space was primarily a result of lease maturities that occurred during the nine months ended September 30, 2024, and the impact on leased percentage from the disposition of a properties on January 26, 2024 and July 8, 2024, respectively.

These decreases were partially offset by new leasing during the nine months ended September 30, 2024.

As of September 30, 2024, we had approximately 1,469,000 square feet of vacancy in our owned properties compared to approximately 1,445,000 square feet of vacancy at December 31, 2023.

During the nine months ended September 30, 2024, we leased approximately 364,000 square feet of office space in our owned properties, of which approximately 242,000 square feet were with existing tenants, at a weighted average term of 5.4 years.

On average, tenant improvements for such leases were $25.30 per square foot, lease commissions were $7.83 per square foot and rent concessions were approximately four months of free rent.

Our owned properties were approximately 69.2% leased as of March 31, 2025, a decrease from 70.3% leased as of December 31, 2024.

The 1.1% decrease in leased space was primarily a result of lease maturities that occurred during the three months ended March 31, 2025 .

As of March 31, 2025, we had approximately 1,482,000 square feet of vacancy in our owned properties compared to approximately 1,428,000 square feet of vacancy at December 31, 2024.

During the three months ended March 31, 2025, we leased approximately 60,000 square feet of office space in our owned properties, which were with existing tenants, at a weighted average term of 5.2 years.

On average, tenant improvements for such leases were $3.77 per square foot, lease commissions were $6.65 per square foot and rent concessions were approximately three months of free rent.

Average GAAP base rents under such leases were $29.64 per square foot, or 3.4% 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 67.7% and 72.4% leased, as of September 30, 2024 and September 30, 2023, respectively.

As of September 30, 2024, leases for approximately 1.5% and 8.4 % of the square footage in our owned and consolidated properties are scheduled to expire during 2024 and 2025, respectively.

As the fourth quarter of 2024 begins, we believe that our operating properties are stabilized, with a balanced lease expiration schedule, and existing vacancy is being actively marketed to numerous potential tenants.

While leasing activity at our properties has continued, we believe that the impact of geopolitical events, current economic conditions and the long-term impact of the COVID-19 pandemic may limit or delay new tenant leasing during at least the fourth quarter of 2024 and potentially in future periods.

Our owned and consolidated properties were approximately 66.4% and 67.5% leased, as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, leases for approximately 4.9% and 11.6% of the square footage in our owned portfolio are scheduled to expire during 2025 and 2026, respectively.

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

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

• our remaining operating properties are value add in nature with leased occupancy of less than 75%.

Existing vacancy is being actively marketed to numerous potential tenants.

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

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

5 unchanged sentences

On October 29, 2021, we agreed to amend and restate 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.

The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023, increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications.

In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders 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.

The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023, increased the aggregate principal amount of the loan from $21

million to $24 million, and included certain other modifications.

In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders 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.

As a result of our obtaining this right to vote shares, GAAP variable interest entity (VIE) rules required us to consolidate Monument Circle as of January 1, 2023.

2 unchanged sentences

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

Additional information about the consolidation of Monument Circle is incorporated herein by reference to Note 1, “Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards – Variable Interest Entities (VIEs)” and Note 2, “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.

Additional information about the consolidation of Monument Circle is incorporated herein by reference to Note 1, “Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards – Variable Interest Entities (VIEs)” in the Notes to Consolidated Financial Statements included in this report.

Dispositions of Properties and Assets Held for Sale

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

During the three months ended June 30, 2023, we entered into an agreement to sell a property in Charlotte, North Carolina at an expected loss of $0.8 million, which was recorded as an impairment, and we classified the property as an asset held for sale as of June 30, 2023.

The property was sold on August 9, 2023, for a sales price of $9.2 million, at a loss of $0.8 million, which had been our expected loss.

In addition, during the three months ended September 30, 2023, we executed purchase and sale agreements with four different unrelated purchasers for the potential sale of four properties.

Three of these potential dispositions were classified as assets held for sale as of September 30, 2023.

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

On December 6, 2023, we sold another of the assets held for sale, an office property located in Miami, Florida for a sales price of $68.0 million at a loss of approximately $18.9 million.

The one remaining asset held for sale was expected to sell for a sales price of $40.0 million at a loss of approximately $20.5 million, which was recorded as an impairment as of September 30, 2023;

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 the three months September 30, 2024, the expected loss on this property was increased by $6.6 million after the Company entered into a new agreement to sell the property for a gross sales price of $34.0 million.

The property was sold on October 23, 2024.

During the three months ended December 31, 2023, we executed a purchase and sale agreement to sell a property located in Richardson, Texas for $35 million at an expected loss of approximately $2.1 million, which had been recorded as an impairment as of December 31, 2023.

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

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

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

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

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

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

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

We used the proceeds from the disposition primarily for the repayment of debt.

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, which was recorded as an impairment as of June 30, 2024.

The property was sold on July 8, 2024.

During the three months ended September 30, 2024, the Company used proceeds of $25.3 million, or 90% of the net proceeds from the disposition, to repay outstanding indebtedness.

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

The dispositions of these properties did not represent a strategic shift that has a major effect on our operations and financial results.

The disposition of this property did not represent a strategic shift that has a major effect on our operations and financial results.

Our current strategy is to focus on the sunbelt and mountain west regions of the United States.

Accordingly, the properties sold remained classified within continuing operations for all periods presented.

Accordingly, the property sold remained classified within continuing operations for all periods presented.

We continue to believe that the current price of our common stock does not accurately reflect the 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.

22 unchanged sentences

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 is permitted.

The Company does not anticipate that the adoption of ASU 2023-07 will have a material impact on the consolidated financial statements.

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.

4 unchanged sentences

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):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

ASU 2024-03 requires public business entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement.

The guidance in ASU 2024-03 is required to be applied prospectively and entities may apply it retrospectively.

ASU 2024-03 is effective for public entities for fiscal years beginning after December 15, 2026.

The Company does not anticipate that the adoption of ASU 2024-03 will have a material impact on the consolidated financial statements.

Results of Operations

The following table shows financial results for the three months ended September 30, 2024 and 2023:

Three months ended September 30,

(in thousands)

Total revenues

Real estate operating expenses

Real estate taxes and insurance

Depreciation and amortization

General and administrative

Total expenses

Loss on extinguishment of debt

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

Interest income

Loss before taxes

Comparison of the three months ended September 30, 2024 to the three months ended September 30, 2023:

Total revenues decreased by $7.2 million to $29.7 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The decrease was primarily a result of:

● A decrease in rental revenue of approximately $7.2 million arising primarily from the sale of four properties in 2023, and two 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 September 30, 2023.

Our leased space in our owned and consolidated properties was 67.7% as of September 30, 2024 and 72.4% as of September 30, 2023.

Total expenses decreased by $4.9 million to $37.9 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The decrease was primarily a result of:

● A decrease in real estate operating expenses and real estate taxes and insurance of approximately $2.8 million, which was primarily attributable to the property dispositions noted above.

● A decrease in depreciation and amortization of approximately $2.5 million, which was primarily attributable to the property dispositions noted above.

These decreases were partially offset by:

● An increase in general and administrative expenses of $10,000, which was primarily attributable to higher professional fees during the three months ended September 30, 2024 compared to the same period in 2023.

● An increase in interest expense of approximately $0.4 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, and February 21, 2024, described above and was partially offset by a lower principal amount of debt outstanding compared to the same period in 2023.

Loss on extinguishment of debt

During the three months ended September 30, 2024 and September 30, 2023, we repaid debt and incurred a loss on extinguishment of debt of $477,000 and $39,000, respectively, related to unamortized deferred financing costs on the dates of the repayments.

Gain and loss on sale of properties and impairment

During the three months ended September 30, 2023, we sold an office property located in Charlotte, North Carolina for a sales price of $9.2 million at a loss of approximately $0.8 million, which had been recorded as an impairment during the three months ended June 30, 2023.

During the three months ended September 30, 2023, we 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 the office property located in Charlotte, North Carolina known as 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 for a gross sales price of approximately $68.0 million at an expected loss of $19.2 million and 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 corresponding impairments on these assets 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 the Company entered into a new agreement to sell the property for a gross sales price of $34.0 million.

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

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

Interest income

During the three months ended September 30, 2024, we invested disposition proceeds in an interest-bearing account and earned $0.3 million 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 $56,000 during the three months ended September 30, 2024, compared to $70,000 during the three months ended September 30, 2023.

Net income and loss

Net loss for the three months ended September 30, 2024 was $15.6 million, compared to a net loss of $45.7 million for the three months ended September 30, 2023, for the reasons described above.

The following table shows financial results for the nine months ended September 30, 2024 and 2023:

Nine months ended September 30,

The following table shows financial results for the three months ended March 31, 2025 and 2024:

Three months ended March 31,

(in thousands)

6 unchanged sentences

Loss on extinguishment of debt

Gain on consolidation of Sponsored REIT

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

1 unchanged sentence

Loss before taxes

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023:

Total revenues decreased by $19.2 million to $91.7 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024:

Total revenues decreased by $4.1 million to $27.1 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The decrease was primarily a result of:

● A decrease in rental revenue of approximately $19.2 million arising primarily from the sale of four properties in 2023, and two 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 September 30, 2023.

Our leased space in our owned and consolidated properties was 67.7% as of September 30, 2024 and 72.4% as of September 30, 2023.

Total expenses decreased by $14.2 million to $116.4 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

● A decrease in rental revenue of approximately $4.1 million arising primarily from the sale of three properties in 2024 and other losses of rental income from lease expirations during the periods presented.

These decreases were partially offset by rental income earned from leases commencing after March 31, 2024.

Our leased space in our owned and consolidated properties was 66.4% as of March 31, 2025 and 70.6% as of March 31, 2024 .

Total expenses decreased by $4.1 million to $35.5 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The decrease was primarily a result of:

1 unchanged sentence

● A decrease in depreciation and amortization of approximately $0.8 million, which was primarily attributable to the property dispositions noted above.

These decreases were partially offset by:

● An increase in general and administrative expenses of $0.2 million, which was primarily attributable to higher professional fees related to debt transactions during the nine months ended September 30, 2024 compared to the same period in 2023.

● An increase in interest expense of approximately $2.4 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 and February 21, 2024, as described above, and was partially offset by a lower principal amount of debt outstanding compared to the same period in 2023.

● A decrease in general and administrative expenses of $0.7 million, which was primarily attributable to fees and costs incurred from the loan amendment we entered into on February 21, 2024 described above and higher professional fees incurred during the three months ended March 31, 2024.

● A decrease in interest expense of approximately $1.1 million.

The decrease was primarily due to a lower principal amount of debt outstanding during the three months ended March 31, 2025 compared to the same period in 2024 and was partially offset by higher interest rates under the loan amendment we entered into on February 21, 2024.

Loss on extinguishment of debt

During the nine months ended September 30, 2024 and September 30, 2023, we repaid debt and incurred a loss on extinguishment of debt of $0.6 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 nine months ended September 30, 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 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, for a 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 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.

We recorded corresponding impairments on these assets held for sale as of September 30, 2023.

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

During the nine months ended September 30, 2024, we 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 had been classified as held for sale as of December 31, 2023 and an impairment of $2.1 million had been recorded during the year ended December 31, 2023.

An additional $5,000 of costs related to the sale were recorded during the six months ended June 30, 2024.

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

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

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

During the three months ended March 31, 2025, we repaid debt and incurred a loss on extinguishment of debt of approximately $2,000 related to unamortized deferred financing costs on the dates of the repayments.

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

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

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

The property was classified as held for sale as of December 31, 2023 and an impairment 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.

Interest income

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

On February 21, 2024, we used $102.0 million of disposition proceeds to repay debt.

During the three months ended March 31, 2025 and 2024, we invested disposition proceeds in an interest-bearing account and earned $0.3 million and $1.0 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 $162,000 during the nine months ended September 30, 2024, compared to $212,000 during the nine months ended September 30, 2023.

Net loss for the nine months ended September 30, 2024 was $44.2 million, compared to a net loss of $51.7 million for the nine months ended September 30, 2023, for the reasons described above.

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $52,000 during the three months ended March 31, 2025, compared to $58,000 during the three months ended March 31, 2024.

Net loss for the three months ended March 31, 2025 was $21.4 million, compared to a net loss of $7.6 million for the three months ended March 31, 2024, for the reasons described above.

Non-GAAP Financial Measures

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands):

Gain on consolidation of Sponsored REIT

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

6 unchanged sentences

The information presented includes footnotes and the data is shown by region with properties owned and consolidated in the periods presented, which we call Same Store.

The comparative Same Store results include properties held for the periods presented and exclude acquired properties or properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy

settlements and lease termination fees.

NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently.

NOI, as defined by the Company, may not be comparable to NOI reported by other

REITs that define NOI differently.

NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions.

2 unchanged sentences

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

(in thousands)

4 unchanged sentences

Items in NOI* (b)

Nine Months Ended

Three Months Ended

1 unchanged sentence

Reconciliation to Net Income (Loss)

Net income (loss)

Add (deduct):

Loss on extinguishment of debt

Gain on consolidation of Sponsored REIT

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

10 unchanged sentences

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

The information presented below provides the weighted average GAAP rent per square foot for the nine months ended September 30, 2024 for our owned and consolidated properties and weighted occupancy square feet and percentages.

The information presented below provides the weighted average GAAP rent per square foot for the three months ended March 31, 2025 for our owned and consolidated properties and weighted occupancy square feet and percentages.

GAAP rent includes the impact of tenant concessions and reimbursements.

Percentage as of

September 30,

Rent per Occupied

11 unchanged sentences

Westchase I & II

Pershing Park Plaza (c)

1999 Broadway

3 unchanged sentences

Total Owned & Consolidated Properties

(a) Based on weighted occupied square feet for the nine months ended September 30, 2024, including month-to-month tenants, divided by the applicable property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the nine months ended September 30, 2024, per weighted occupied square foot.

(a) Based on weighted occupied square feet for the three months ended March 31, 2025, including month-to-month tenants, divided by the applicable property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the three months ended March 31, 2025, per weighted occupied square foot.

Liquidity and Capital Resources

Cash and cash equivalents were $42.4 million and $127.9 million at September 30, 2024 and December 31, 2023, respectively.

The decrease of $85.5 million is attributable to $6.7 million provided by operating activities, plus $43.8 million provided by investing activities less $136.0 million used in financing activities.

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.

As of April 29, 2025, the Company had aggregate outstanding indebtedness under three unsecured loans, the BofA Term Loan, the BMO Term Loan and the Senior Notes (each as defined and described below), totaling approximately $250.2 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.

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.

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 and/or asset sales, 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 or sale 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 the financial statements accompanying this Quarterly Report on Form 10-Q.

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 and/or asset sales, 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 and/or asset sales could lead to events of default, which would have a material adverse effect on the Company’s financial condition.

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

The decrease of 11.1 million is attributable to $5.4 million used in operating activities, less $4.5 million used in investing activities less $1.2 million used in financing activities.

Although there is no guarantee that we will be able to obtain the funds necessary for our future growth, we anticipate generating funds from continuing real estate operations and property dispositions.

2 unchanged sentences

Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2024, of $6.7 million is primarily attributable to a net loss of $44.2 million.

excluding $20.5 million of losses on asset sales and impairments on an asset held for sale, plus the add-back of $38.0 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $4.8 million, an increase in payment of deferred leasing commissions of $3.2 million, an increase in lease acquisition costs of $0.7 million plus a decrease in tenant receivables of $0.8 million and a decrease in prepaid expenses of $0.3 million.

Cash used in operating activities for the three months ended March 31, 2025, of $5.4 million is primarily attributable to a net loss of $21.4 million, excluding $13.3 million from an impairment loss on an asset held for sale, plus the add-back of $11.6 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $7.8 million, less an increase in payment of deferred leasing commissions of $0.5 million, less an increase in tenant receivables of $0.2 million, less a decrease in prepaid expenses of $0.2 million, less an increase in lease acquisition costs of $0.1 million and less a decrease in tenant security deposits of $0.1 million.

Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2024, of $43.8 million is primarily attributable to proceeds from an asset sale of $62.9 million, which was partially offset by purchases of other real estate assets and office equipment investments of $19.1 million.

Cash used in investing activities for the three months ended March 31, 2025, of $4.5 million is primarily attributable to purchases of other real estate assets and office equipment investments of $4.5 million.

Financing Activities

Cash used in financing activities for the nine months ended September 30, 2024 of $136.0 million is primarily attributable to the repayment of a portion of the BMO Term Loan of $36.2 million, repayment of a portion of the BofA Revolver (defined below) of $22.6 million, repayment of a portion of the BofA Term Loan (defined below) of $5.6 million, repayment of a portion of the Senior Notes (defined below) of $62.9 million, payment of deferred financing costs of $5.6 million and payment of distributions to stockholders of $3.1 million.

Cash used in financing activities for the three months ended March 31, 2025 of $1.2 million is primarily attributable to payment of distributions to stockholders of $1.0 million and the repayment of $0.2 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.

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.

As of March 31, 2025, we had aggregate outstanding indebtedness of $250.2 million under the BofA Term Loan, the BMO Term Loan and the Senior Notes, each of which matures on April 1, 2026.

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

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.

We intend to operate our properties from the cash flows generated by our properties.

4 unchanged sentences

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

In the past, we considered borrowing from new lenders, adding or refinancing existing debt or raising capital through public offerings or At The Market (ATM) programs of our common stock.

BMO Term Loan

We have a term loan borrowing in the aggregate principal amount of approximately $78.8 million as of September 30, 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.

As of March 31, 2025, we have a term loan borrowing in the aggregate principal amount of approximately $71.0 million, which we refer to as the BMO Term Loan, with Bank of Montreal, as administrative agent, and the other lending institutions party thereto, that matures on April 1, 2026.

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

19 unchanged sentences

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 BMO Term Loan from asset sale proceeds of a property located in Glen Allen, Virginia.

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

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.

On March 6, 2025, we repaid an approximately $43,000 portion of the tranche B 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.

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 September 30, 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 8.44% for the nine months ended September 30, 2024.

As of December 31, 2023, the interest rate on the BMO Term Loan was 8.47% 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.

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.

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

As of April 1, 2025, the interest rate on the BMO Term Loan was 9.00%.

The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 8.00% and 8.34% for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively.

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.

4 unchanged sentences

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

We were in compliance with the BMO Term Loan financial covenants as of September 30, 2024.

We were in compliance with the BMO Term Loan financial covenants as of March 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).

2 unchanged sentences

BofA Term Loan

As of September 30, 2024, we have a term loan borrowing in the amount of approximately $61.7 million, which we refer to as the BofA Term Loan, with Bank of America, N.A.

As of March 31, 2025, 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.

5 unchanged sentences

(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;

(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:

14 unchanged sentences

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.

On March 6, 2025, we 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.

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%.

1 unchanged sentence

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 September 30, 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 8.44% for the nine months ended September 30, 2024.

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.

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

As of April 1, 2025, the interest rate on the BofA Term Loan was 9.00%.

The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was 8.00% and 8.34% for the three months ended March 31, 2025 and for the year ended December 31, 2024, respectively.

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

2 unchanged sentences

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

We were in compliance with the BofA Term Loan financial covenants as of September 30, 2024.

We were in compliance with the BofA Term Loan financial covenants as of March 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).

1 unchanged sentence

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 $137.1 million as of September 30, 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 $79.5 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 $57.6 million, which we refer to as the Series B Notes.

We have senior notes in the aggregate principal amount of approximately $123.6 million as of March 31, 2025, which we refer to as the Senior Notes, that mature on April 1, 2026.

The Senior Notes consist of (i) Series A Senior Notes due April 1, 2026 in an aggregate principal amount of approximately $71.7 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.

16 unchanged sentences

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.

As of September 30, 2024, approximately $79.5 million aggregate principal amount of the Series A Notes remained outstanding and approximately $57.6 million aggregate principal amount of the Series B Notes remained outstanding.

As of September 30, 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.

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.

On March 6, 2025, we 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.

As of March 31, 2025, 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 March 31, 2025 and December 31, 2024, the interest rate on each of the Series A Notes was 8.00% per annum and the interest rate on the Series B Notes was 8.00% per annum, respectively.

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

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

2 unchanged sentences

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

We were in compliance with the Note Purchase Agreement financial covenants as of September 30, 2024.

We were in compliance with the Note Purchase Agreement financial covenants as of March 31, 2025.

Equity Offering

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

corporate purposes.

Stock Repurchase Program

3 unchanged sentences

Contingencies

As of March 31, 2025, 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 the sale of the underlying property.

The property is currently under a purchase and sale agreement for a gross sale price of $6.0 million.

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

2 unchanged sentences

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.

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.

Before making the Sponsored REIT Loan, we considered a variety of subjective factors, including the quality of the underlying real estate, leasing, the financial condition of the Sponsored REIT and local and national market conditions.

These factors are subject to change and we do not apply a formula or assign relative weights to the factors.

Instead, we make a subjective determination after considering such factors collectively.

Additional information about the Sponsored REIT Loan outstanding as of September 30, 2024, is incorporated herein by reference to Note 2, “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.

We anticipate that a portion of the Sponsored REIT Loan will be repaid through sale of the underlying property.

Additional information about the Sponsored REIT Loan outstanding as of March 31, 2025, is incorporated herein by reference to Note 1, “Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards” and Note 10 “Subsequent Events”, in the Notes to Consolidated Financial Statements included in this report.

Other Consideration s

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 nine months ended September 30, 2024 and 2023, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle for the three and nine months ended September 30, 2024 and 2023.

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

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

1 unchanged sentence

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

Monument Circle had approximately $69,000 and $217,000 of rental income, and, $303,000 and $832,000 of operating expenses, for the three and nine months ended September 30, 2024, respectively, and was 4.1% leased to two retail tenants as of September 30, 2024.

Monument Circle had approximately $70,000 and $207,000 of rental income, and, $304,000 and $830,000 of operating expenses, for the three and nine months ended September 30, 2023, respectively, and was 4.1% leased to two retail tenants as of September 30, 2023.

Monument Circle had approximately $76,000 of rental income and $293,000 of operating expenses for the three months ended March 31, 2025.

Monument Circle had approximately $71,000 of rental income and $289,000 of operating expenses for the three months ended March 31, 2024.

Monument Circle was 4.1% leased to two retail tenants at each of March 31, 2025 and 2024.

Off-Balance Sheet Arrangements and Contractual Obligations

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis