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Item 1. Financial Statements

2025-07-29 compared with 2025-04-29 · 123 added, 78 removed, 403 unchanged (33% of the section changed)

4 unchanged sentences

Real estate assets:

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

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

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

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

Fixtures and equipment

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

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

Acquired real estate leases, less accumulated amortization of $ 14,015 and $ 13,613 , respectively (amounts related to VIEs of $ 0 and $ 67 , less accumulated amortization of $ 0 and $ 35 at March 31, 2025 and December 31, 2024, respectively)

Asset held for sale (amounts related to VIEs of $ 5,685 and $ 0 at March 31, 2025 and December 31, 2024, respectively)

Cash, cash equivalents and restricted cash (amounts related to VIEs of $ 1,218 and $ 1,314 at March 31, 2025 and December 31, 2024, respectively)

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

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

Acquired real estate leases, less accumulated amortization of $ 13,829 and $ 13,613 , respectively (amounts related to VIEs of $ 0 and $ 67 , less accumulated amortization of $ 0 and $ 35 at June 30, 2025 and December 31, 2024, respectively)

Cash, cash equivalents and restricted cash (amounts related to VIEs of $ 235 and $ 1,314 at June 30, 2025 and December 31, 2024, respectively)

Tenant rent receivables

6 unchanged sentences

Series A & Series B Senior Notes, less unamortized financing costs of $ 711 and $ 1,191 , respectively

Accounts payable and accrued expenses (amounts related to VIEs of $ 663 and $ 534 at March 31, 2025 and December 31, 2024, respectively)

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

Accrued compensation

15 unchanged sentences

Consolidated Statements of Operations

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands, except per share amounts)

6 unchanged sentences

Loss on extinguishment of debt

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

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

Interest income

6 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

16 unchanged sentences

Balance, March 31, 2024

Comprehensive loss

Equity-based compensation

Distributions $ 0.01 per

share of common stock

Balance, June 30, 2024

Balance, December 31, 2024

3 unchanged sentences

Balance, March 31, 2025

Comprehensive loss

Equity-based compensation

Distributions $ 0.01 per

share of common stock

Balance, June 30, 2025

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

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Amortization of above and below market leases

Shares issued as compensation

Amortization of other comprehensive income into interest expense

29 unchanged sentences

Accrued costs for purchases of real estate assets

Accrued deferred financing costs

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

6 unchanged sentences

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 March 31, 2025, the Company owned and operated a portfolio of real estate consisting of 14 operating properties, and the Sponsored REIT, which was consolidated effective January 1, 2023.

As of June 30, 2025, 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 March 31,

As of June 30,

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 March 31, 2025 and 2024.

(1) Includes two properties that were classified as an asset held for sale as of June 30, 2024.

Basis of Presentation

6 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 months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other period.

Operating results for the three and six months ended June 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 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 in Note 2 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.

As of July 29, 2025, the Company had aggregate outstanding indebtedness under three unsecured loans, the BofA Term Loan, the BMO Term Loan and the Senior Notes (each as defined and described in Note 2 below), totaling approximately $ 249.8 million and maturing on April 1, 2026, which is within 12 months of the date of issuance of the financial statements accompanying this Quarterly Report on Form 10-Q.

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 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;

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 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.

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.

7 unchanged sentences

Total cash, cash equivalents and restricted cash

(1) Includes $ 1,218 and $ 2,080 at March 31, 2025 and 2024, respectively, pertaining to Monument Circle, which the Company is unable to utilize for its own operational purposes.

(1) Includes $ 235 and $ 1,745 at June 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.

2 unchanged sentences

The Company determines whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective.

The determination of whether an entity in which the Company holds a, direct or

indirect, variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support.

The determination of whether an entity in which the Company holds a, direct or indirect, variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support.

The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

14 unchanged sentences

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 three months ended March 31, 2025 and 2024.

The Company recognized no interest income and fees from the Sponsored REIT Loan for each of the three months ended March 31, 2025 and 2024.

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

The Company recognized no interest income and fees from the Sponsored REIT Loan for each of the three and six months ended June 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.

5 unchanged sentences

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.

Recent Accounting Standards

3 unchanged sentences

ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission.

The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be

effective when the removal of the related SEC disclosure requirements is effective.

The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective.

If the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective.

23 unchanged sentences

BMO Term Loan

As of March 31, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 71.0 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.

As of June 30, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 70.9 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”).

2 unchanged sentences

(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) 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;

(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:

4 unchanged sentences

(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;

(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;

5 unchanged sentences

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.

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 %.

1 unchanged sentence

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.

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

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

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

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.

3 unchanged sentences

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.

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 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 of the Company (as defined in the BMO

Credit Agreement).

The Company was in compliance with the BMO Term Loan financial covenants as of June 30, 2025.

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.

1 unchanged sentence

BofA Term Loan

As of March 31, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 55.6 million (the “BofA Term Loan”) with Bank of America, N.A.

As of June 30, 2025, the Company has a term loan borrowing in the aggregate principal amount of approximately $ 55.5 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.

20 unchanged sentences

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.

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 %.

2 unchanged sentences

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 the year ended December 31, 2024, respectively.

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

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

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

2 unchanged sentences

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 March 31, 2025.

The Company was in compliance with the BofA Term Loan financial covenants as of June 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).

1 unchanged sentence

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 March 31, 2025, the Company has senior notes in the aggregate principal amount of approximately $ 123.6 million (the “Senior Notes”) that mature on April 1, 2026.

As of June 30, 2025, the Company has senior notes in the aggregate principal amount of approximately $ 123.4 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 $ 71.6 million (the “Series A Notes”) and (ii) Series B Senior Notes due April 1, 2026 in the aggregate principal amount of approximately $ 51.8 million (the “Series B Notes”).

3 unchanged sentences

(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;

(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;

13 unchanged sentences

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.

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.

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.

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

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

As of June 30, 2025 and December 31, 2024, the interest 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.

2 unchanged sentences

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 March 31, 2025.

The Company was in compliance with the Note Purchase Agreement financial covenants as of June 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.

5 unchanged sentences

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 March 31, 2025, there were no derivative instruments.

As of June 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.

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 three months ended March 31, 2025 and 2024, was as follows:

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 six months ended June 30, 2025 and 2024, was as follows:

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Interest Rate Swaps in Cash Flow Hedging Relationships:

7 unchanged sentences

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 March 31, 2025 and 2024.

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

Stockholders’ Equity

As of March 31, 2025, the Company had 103,566,715 shares of common stock outstanding.

As of June 30, 2025, 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 2025

Second quarter of 2025

First quarter of 2024

Second 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, 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, 2024, and is included in general and administrative expenses for such period.

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 three months ended June 30, 2024 and June 30, 2025, respectively, 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 2025

Balance March 31, 2025

Balance June 30, 2025

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.

assets, cannot exceed 25 % of the value of all of the Company’s assets.

FSP Investments LLC and FSP Protective TRS Corp.

16 unchanged sentences

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 and $ 95.8 million as of March 31, 2025 and December 31, 2024, respectively.

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 and $ 95.8 million as of June 30, 2025 and December 31, 2024, respectively.

Income Tax Expense

The Company recognized approximately $31,000 in Federal Income Tax expense related to the sale of Monument Circle for the six months ended June 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 $ 52,000 and $ 58,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company recorded a provision for the Revised Texas Franchise Tax of $ 103,000 and $ 106,000 for the six months ended June 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 Three Months Ended March 31,

For the Six Months Ended June 30,

(Dollars in thousands)

Federal Income Tax

Revised Texas Franchise Tax

9 unchanged sentences

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

For the three months ended March 31, 2025 and 2024, the Company recognized the following amounts of income relating to lease payments:

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

Income relating to lease payments:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(in thousands)

Income from leases (1)

(1) Includes amounts recognized from variable lease payments of $ 8,107 and $ 8,707 for the three months ended March 31, 2025 and 2024, respectively.

(1) Includes amounts recognized from variable lease payments of $ 15,929 and $ 17,462 for the six months ended June 30, 2025 and 2024, respectively.

Disposition of Properties and Assets Held for Sale

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

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 that 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 of $ 13.3 million.

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.

3 unchanged sentences

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 June 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

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The calculations of Segment NOI are shown in the following table:

Three Months Ended

Six Months Ended

Three Months Ended

Six Months Ended

(in thousands)

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Total consolidated revenues

3 unchanged sentences

Real estate taxes and insurance

Three Months Ended

Six Months Ended

Three Months Ended

Six Months Ended

Reconciliation to Net loss

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Add (deduct):

7 unchanged sentences

Subsequent Events

Effective April 1, 2025, the interest rates applicable to the BMO Term Loan, the BofA Term Loan and the Senior Notes permanently increased by 1.00 %, from 8.00 % per annum to 9.00 % per annum.

On April 7, 2025 , the Board of Directors of the Company declared a cash distribution of $ 0.01 per share of common stock payable on May 8, 2025 , to stockholders of record on April 17, 2025 .

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.

On July 11, 2025 , the Board of Directors of the Company declared a cash distribution of $ 0.01 per share of common stock payable on August 14, 2025 , to stockholders of record on July 25, 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