Creative Media & Community Trust Corp

Previous wording

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to future growth of our business and availability of funds. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “target,” “expect,” “intend,” “might,” “believe,” “anticipate,” “estimate,” “could,” “would,” “continue,” “pursue,” “potential,” “forecast,” “seek,” “plan,” “should” or “goal” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements also include, among others, statements about our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management has made in light of its experience, as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. Forward-looking statements are necessarily estimates reflecting the judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include those associated with (i) the timing, form, and operational effects of our development activities, (ii) our ability to raise in place rents to existing market rents and to maintain or increase occupancy levels, (iii) fluctuations in market rents, (iv) the effects of inflation and continuing higher interest rates on our operations and profitability and (v) general economic, market and other conditions. Additional important factors that could cause our actual results to differ materially from our expectations are discussed in “Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024 (the “2023 Form 10-K”) and in Part II, Item 1A of this Quarterly Report on Form 10-Q. The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to future growth of our business and availability of funds. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “target,” “expect,” “intend,” “might,” “believe,” “anticipate,” “estimate,” “could,” “would,” “continue,” “pursue,” “potential,” “forecast,” “seek,” “plan,” “should” or “goal” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements also include, among others, statements about our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management has made in light of its experience, as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. Forward-looking statements are necessarily estimates reflecting the judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include those associated with (i) the timing, form, and operational effects of our development activities, (ii) our ability to raise in place rents to existing market rents and to maintain or increase occupancy levels, (iii) fluctuations in market rents, (iv) the effects of inflation and continuing higher interest rates on our operations and profitability and (v) general economic, market and other conditions, including the effects of high unemployment rates, continued or renewed inflation and any recession or

Previous wording

The following discussion of our financial condition as of September 30, 2024 and results of operations for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K and in Part II, Item 1A of this Quarterly Report. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the consolidated financial statements contained therein. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries.

Current wording

The following discussion of our financial condition as of March 31, 2025 and results of operations for the three months ended March 31, 2025 and 2024 should be read in conjunction with the 2024 Form 10-K. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2024 Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the consolidated financial statements contained therein. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries.

Previous wording

The phrase “ADR” represents average daily rate. It is calculated as trailing nine-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only.

Current wording

The phrase “ADR” represents average daily rate. It is calculated as trailing three-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only.

Previous wording

The phrase “RevPAR” represents revenue per available room. It is calculated as trailing nine-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only.

Current wording

The phrase “RevPAR” represents revenue per available room. It is calculated as trailing three-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only.

Previous wording

As of September 30, 2024, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures. Our Unconsolidated Joint Ventures contain two office properties (one of which has been partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site. As of September 30, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 72.2% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $145.74 for the nine months ended September 30, 2024, and our three multifamily properties were 92.0% occupied. Additionally, as of September 30, 2024, we had nine development sites (three of which were being used as parking lots).

Current wording

As of March 31, 2025, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures. Our Unconsolidated Joint Ventures contain one office property, one multifamily site currently under development, two multifamily properties (one of which has been partially converted from office into multifamily units and is now being classified as a multifamily property) and one commercial development site. As of March 31, 2025, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 70.2% occupied, and our one 505-room hotel with an ancillary parking garage, had RevPAR of $176.47 for the three months ended March 31, 2025 and our four multifamily properties were 80.2% occupied. Additionally, as of March 31, 2025, we had nine development sites (three of which were being used as parking lots).

Previous wording

CIM Group believes that a vast majority of the risks associated with acquiring real estate are mitigated by accumulating local market knowledge of the community where the asset is located. As a result, CIM Group typically spends significant resources over a period of between six months and five years evaluating communities prior to making any acquisitions. The distinct districts that CIM Group identifies through this process as targets for acquisitions are referred to as “Qualified Communities.” Qualified Communities typically have dedicated resources to become, or are currently, vibrant communities where people can live, work, shop and be entertained, all within walking distance or close proximity to public transportation. These areas, which include traditional downtown areas and suburban main streets, generally have high barriers to entry, high population density, positive population trends, a propensity for growth and support for investment. CIM Group believes that the critical mass of redevelopment in such Qualified Communities creates positive externalities, which enhance the value of real estate assets in the area. CIM Group targets acquisitions of diverse types of real estate assets, including retail, residential, office, parking, hotel, signage and mixed-use through CIM Group’s extensive network and its current opportunistic activities.

Current wording

CIM Group believes that many of the risks associated with acquiring real estate are mitigated by accumulating local market knowledge of the community where the asset is located. As a result, CIM Group typically spends significant resources over a period of between six months and five years evaluating communities prior to making any acquisitions. The distinct districts that CIM Group identifies through this process as targets for acquisitions are referred to as “Qualified Communities.” Qualified Communities typically have dedicated resources to become, or are currently, vibrant communities where people can live, work, shop and be entertained, all within walking distance or close proximity to public transportation. These areas, which include traditional downtown areas and suburban main streets, generally have high barriers to entry, high population density, positive population trends, a propensity for growth and support for investment. CIM Group believes that the critical mass of redevelopment in such Qualified Communities creates positive externalities, which enhance the value of real estate assets in the area. CIM Group targets acquisitions of diverse types of real estate assets, including retail, residential, office, parking, hotel, signage and mixed-use through CIM Group’s extensive network and its current opportunistic activities.

Previous wording

We may finance our future activities through one or more of the following methods: (i) offerings of shares of our common stock, par value $0.001 per share (“Common Stock”), preferred stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (v) the sale of existing assets; (vi) partnering with co-investors; and/or (vii) cash flows from operations.

Current wording

We will seek to satisfy our long-term liquidity needs through one or more of the following methods: (i) offerings of shares of Common Stock, Preferred Stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (v) the sale of existing assets; and/or (vi) cash flows from operations.

Previous wording

(2)Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. Total abatements, representing lease incentives in the form of free rent, for the twelve months ended September 30, 2024 and 2023 were approximately $1.8 million and $2.9 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $59.52 and $54.64 as of September 30, 2024 and 2023, respectively (See Definitions for more detail).

Current wording

(2)Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. Total abatements, representing lease incentives in the form of free rent, for the twelve months ended March 31, 2025 and 2024 were approximately $1.0 million and $2.7 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $58.00 and $56.32 as of March 31, 2025 and 2024, respectively (See Definitions for more detail).

Previous wording

(1)Month-to-month tenants occupying a total of 6,670 square feet are included in the expiring leases in the first quarter listed.

Current wording

(1)Month-to-month tenants occupying a total of 4,193 square feet are included in the expiring leases in the first quarter listed.

Previous wording

During the three and nine months ended September 30, 2024, we executed leases with terms longer than 12 months totaling 4,850 and 94,157 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and nine months ended September 30, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

Current wording

During the three months ended March 31, 2025, we executed leases with terms longer than 12 months totaling 30,333 square feet. The table below sets forth information on certain of our executed leases during the three months ended March 31, 2025, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:

Previous wording

(2)Cash rents represent gross monthly base rent, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

Current wording

(2)Cash rents represent gross monthly base rent, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

Previous wording

Multifamily Statistics: The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our property partially owned through an Unconsolidated Joint Venture):

Current wording

Multifamily Statistics: The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our properties partially owned through an Unconsolidated Joint Venture):

Previous wording

(1)Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,444 and $2,100 as of September 30, 2024 and 2023, respectively.

Current wording

(1)Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,341 and $2,429 as of March 31, 2025 and 2024, respectively.

Previous wording

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 21.9% of our annualized office rental income for the three months ended September 30, 2024.

Current wording

Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 23.6% of our annualized office rental income for the three months ended March 31, 2025.

Previous wording

Net loss was$10.6 millionfor the three months ended September 30, 2024 compared to a net loss of$16.6 million for the three months ended September 30, 2023, a decrease of $6.1 million. The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of$9.7 million, partially offset bya decrease of$3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results).

Current wording

Net loss was$6.3 millionfor the three months ended March 31, 2025, compared to a net loss of$3.9 million for the three months ended March 31, 2024, an increase of$2.4 million. Theincrease in net loss was primarily due to a decrease of$1.9 million in segment net operating income (discussed in more detail in the following Summary Segment Results) andan increase in interest expense of$1.1 million, partially offset by a decrease in transaction-related costs of $664,000.

Previous wording

(1)During the three months ended September 30, 2024 and 2023, we recognized $16.1 million and $352,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.

Current wording

(1)During the three months ended March 31, 2025 and 2024, we recognized $300,000 and $806,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.

Previous wording

FFO attributable to common stockholders, which is a non-GAAP measure, was $(28.4) million for the three months ended September 30, 2024, a decrease of approximately $20.9 million compared to $(7.5) million for the three months ended September 30, 2023. The decrease in FFO was primarily due to an increase in redeemable preferred stock redemptions of$15.7 million, a decrease of$3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in redeemable preferred stock dividends of $1.2 million.

Current wording

FFO attributable to common stockholders, which is a non-GAAP measure, was $(5.4) million for the three months ended March 31, 2025, an increase of approximately $516,000 compared to $(5.9) million for the three months ended March 31, 2024. The increase in FFO was primarily due to a decrease in redeemable preferred stock dividends of$2.3 million and a decrease in redeemable preferred stock redemptions of $506,000, which were partially offset by the aforementioned increase in net loss of$2.4 million.

Previous wording

Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $13.8 million for the three months ended September 30, 2024, compared to $14.0 million for the three months ended September 30, 2023. The decrease was primarily due to lower occupancy at an office property in Oakland, California, partially offset by higher rental revenues at an office property in Los Angeles, California due to increased occupancy and at an office property in Beverly Hills, California due to higher rent per occupied square foot.

Current wording

Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $13.1 million for the three months ended March 31, 2025, compared to $14.6 million for the three months ended March 31, 2024. The decrease was primarily due to lower occupancy at an office property in Oakland, California, partially offset by higher rental revenues at an office property in Beverly Hills, California due to higher rent per occupied square foot.

Previous wording

Multifamily Revenue: Multifamily revenue was $4.8 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily attributed to higher rental revenues at our multifamily properties due to increased occupancy and increased monthly rent per occupied unit, net of rent concessions, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Current wording

Multifamily Revenue: Multifamily revenue was $4.1 million for the three months ended March 31, 2025, compared to $4.7 million for the three months ended March 31, 2024. The decrease was attributed to lower rental revenues at our multifamily properties due to decreases in occupancy and monthly rent per occupied unit, net of rent concessions, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $7.9 million for the nine months ended September 30, 2024, compared to $8.2 million for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in premium income and a decrease in interest income as a result of lower loan originations and loan sale volume during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Current wording

Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $2.4 million for the three months ended March 31, 2025, compared to $2.6 million for the three months ended March 31, 2024. The decrease was primarily due to a decrease in interest income due to loan payoffs and a decrease in interest rates.

Previous wording

(Loss) Income From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $834,000 for the three months ended September 30, 2024, compared to income of $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to changes in the valuation of investments in real estate at our unconsolidated office entities which recognized a net unrealized loss during the three months ended September 30, 2024, compared to a net unrealized gain for the three months ended September 30, 2023.

Current wording

(Loss) Income From Unconsolidated Office Entities: The loss from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $29,000 for the three months ended March 31, 2025, compared to income of $117,000 for the three months ended March 31, 2024. The decrease was primarily due to changes in the valuation of investments in real estate at our unconsolidated office entities which recognized a net unrealized loss during the three months ended March 31, 2025, compared to a net unrealized gain for the three months ended March 31, 2024.

Previous wording

(Loss) Income From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $929,000 for the nine months ended September 30, 2024, compared to income of $216,000 for the nine months ended September 30, 2023. The decrease was primarily due to an unrealized loss recognized on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the nine months ended September 30, 2024.

Current wording

Loss From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $1.1 million for the three months ended March 31, 2025, compared to a loss of $443,000 for the three months ended March 31, 2024. The increase was primarily due to changes in the valuation of investments in real estate at our unconsolidated multifamily entities which recognized a larger net unrealized loss during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, was $158,000 for the three months ended September 30, 2024, generally consistent with $220,000 for the three months ended September 30, 2023.

Current wording

Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, was $91,000 for the three months ended March 31, 2025, generally consistent with $144,000 for the three months ended March 31, 2024.

Previous wording

Office Expenses: Office expenses increased to $7.6 million for the three months ended September 30, 2024, compared to $6.3 million for the three months ended September 30, 2023. The increase was primarily due to higher repairs and maintenance, utilities, and administrative expenses at an office property in Oakland, California and higher repairs and maintenance expenses and real estate tax expense at an office property in Austin, Texas.

Current wording

Office Expenses: Office expenses decreased to $5.9 million for the three months ended March 31, 2025, compared to $6.9 million for the three months ended March 31, 2024. The decrease was primarily due to lower repairs and maintenance, utilities, and administrative expenses at an office property in Oakland, California and lower real estate tax expense at an office property in Beverly Hills, California.

Previous wording

Hotel Expenses: Hotel expenses increased to $6.2 million for the three months ended September 30, 2024, compared to $6.0 million for the three months ended September 30, 2023. The increase was primarily due to increases in room expenses as well as higher utilities, maintenance, and administrative expenses during the three months ended September 30, 2024.

Current wording

Hotel Expenses: Hotel expenses increased to $8.0 million for the three months ended March 31, 2025, compared to $7.8 million for the three months ended March 31, 2024. The increase was primarily due to increases in room expenses during the three months ended March 31, 2025.

Previous wording

Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses were $5.7 million, for the nine months ended September 30, 2024, compared with expenses of $6.0 million for the nine months ended September 30, 2023. primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes and a decrease in allocated payroll expense.

Current wording

Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses were $1.8 million, for the three months ended March 31, 2025, generally consistent with $1.9 million for the three months ended March 31, 2024.

Previous wording

Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $515,000 for the three months ended September 30, 2024 compared to $724,000 for the three months ended September 30, 2023. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.

Current wording

Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $360,000 for the three months ended March 31, 2025, compared to $394,000 for the three months ended March 31, 2024. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2024.

Previous wording

Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $592,000 for the three months ended September 30, 2024, generally consistent with expenses of $524,000 for the three months ended September 30, 2023.

Current wording

Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $626,000 for the three months ended March 31, 2025, generally consistent with expenses of $605,000 for the three months ended March 31, 2024.

Previous wording

Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $8.8 million for the three months ended September 30, 2024, compared to $8.6 million for the three months ended September 30, 2023. The increase was primarily attributable to a higher average outstanding principal balance on our 2022 Credit Facility Revolver for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Current wording

Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $9.2 million for the three months ended March 31, 2025, compared to $8.1 million for the three months ended March 31, 2024. The increase was primarily attributable to a higher average outstanding principal balance on our debt as a result of new mortgage loans closed during the fourth quarter of 2024 and first quarter of 2025, partially offset by paydowns on our 2022 Credit Facility subsequent to March 31, 2024.

Previous wording

General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.4 million for the three months ended September 30, 2024, a decrease from $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in legal fees.

Current wording

General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.2 million for the three months ended March 31, 2025, consistent with $1.2 million for the three months ended March 31, 2024.

Previous wording

Transaction-Related Costs: Transaction costs, which related to potential real estate transactions, were $526,000 for the three months ended September 30, 2024, compared with $38,000 for such costs for the three months ended September 30, 2023. The increase was primarily related to deferred offering costs that were written off and recognized during the three months ended September 30, 2024 related to Common Stock.

Current wording

Transaction-Related Costs: Transaction costs, which related to potential real estate transactions, were $26,000 for the three months ended March 31, 2025, compared with $690,000 for such costs for the three months ended March 31, 2024. The decrease was due to a higher level of costs during the three months ended March 31, 2024 related to contemplated transactions.

Previous wording

Provision for Income Taxes: Provision for income taxes was $15,000 for the three months ended September 30, 2024, compared to $554,000 for the three months ended September 30, 2023. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.

Current wording

Provision for Income Taxes: Provision for income taxes was $121,000 for the three months ended March 31, 2025, compared to $270,000 for the three months ended March 31, 2024. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.

Previous wording

Our cash flows from operating activities are primarily dependent upon the real estate assets owned, occupancy level of our real estate assets, the rental rates achieved through our leases, the occupancy and ADR of our hotel, the collectability of rent and recoveries from our tenants, and loan related activity. Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities decreased by $0.9 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily due to a reduction in net loss adjusted for depreciation and amortization expense and other non-cash items of $4.1 million and an increase in net proceeds from the sale of loans of $1.8 million, partially offset by a $7.3 million decrease resulting from a higher level of net working capital used compared to the prior period.

Current wording

Our cash flows from operating activities are primarily dependent upon the real estate assets owned, occupancy level of our real estate assets, the rental rates achieved through our leases, the occupancy and ADR of our hotel, the collectability of rent and recoveries from our tenants, and loan-related activity. Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities decreased by $408,000 for the three months ended March 31, 2025, as compared to the same period in 2024. The decrease was primarily due to an increase in net proceeds from the sale of loans, net of loans funded, of $1.3 million and an decrease from the change in working capital of $61,000, which was offset by an increase in net loss adjusted for depreciation and amortization expense and other non-cash items of $1.7 million.

Previous wording

Our cash flows from investing activities are primarily related to property acquisitions and dispositions, expenditures for the development or repositioning of properties, capital expenditures and cash flows associated with loans originated at our lending segment. Net cash used in investing activities decreased by $68.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease in cash used in investing activities was primarily due to a decrease in acquisitions of real estate of $96.7 million and a decrease in cash outlays of $5.8 million related to our investments in Unconsolidated Joint Ventures during the nine months ended September 30, 2024, compared to the same period in 2023. Partially offsetting the decrease in net cash used in investing activities are $30.3 million in proceeds from the sale of a property to the 4750 Wilshire JV during the nine months ended September 30, 2023.

Current wording

Our cash flows from investing activities are primarily related to property acquisitions and dispositions, expenditures for the development or repositioning of properties, capital expenditures and cash flows associated with loans originated at our lending segment. Net cash used in investing activities increased by $4.8 million for the three months ended March 31, 2025, as compared to the same period in 2024. The increase in cash used in investing activities was primarily due to an increase in capital expenditures of $4.6 million, a decrease in proceeds from the sale of real estate of $1.1 million, and an increase in cash outlays of $285,000 related to our investments in Unconsolidated Joint Ventures during the three months ended March 31, 2025, compared to the same period in 2024. Partially offsetting the increase in net cash used in investing activities was an increase in in the principal collected on loans, net of loan fundings, of $1.2 million.

Previous wording

Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash used in financing activities decreased by $61.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily as a result of net proceeds from our 2022 Credit Facility and mortgages of $7.3 million during the nine months ended September 30, 2024 compared to $54.0 million during the nine months ended September 30, 2023, the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million during the nine months ended September 30, 2023, and a $35.6 million decrease in net proceeds from the issuance of preferred stock. The aforementioned amounts decreasing net cash used in financing activities were partially offset by a decrease in cash redemptions of preferred stock of $74.1 million and a decrease in the payment of deferred debt origination costs of $2.5 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Current wording

Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash provided by financing activities was $206,000 for the three months ended March 31, 2025, consistent with $191,000 during the same period in 2024. Changes in our cash flows from financing activities most notably included net proceeds from debt of $6.4 million during the three months ended March 31, 2025, compared to $1.4 million during the three months ended March 31, 2024, a $10.2 million decrease in cash redemptions of preferred stock, and a combined decrease in preferred stock and common stock dividends of $3.6 million. The aforementioned amounts were offset by a $19.6 million decrease in net proceeds from the issuance of preferred stock during the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Previous wording

On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock. We may finance our future activities through one or more of the following methods: (i) credit facilities and term loans; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (iv) the sale of existing assets; (v) partnering with co-investors; (vi) offerings of preferred stock or other equity and/or debt securities of the Company; and/or (vii) cash flows from operations. In December 2022, we completed a refinancing of our 2018 credit facility, which was set to mature in October 2023, replacing it with the new facility (the “2022 Credit Facility”). The 2022 Credit Facility included a $56.2 million term loan as well as a revolver that originally allowed the Company to borrow up to $150.0 million, both of which are collectively subject to a borrowing base calculation. The 2022 Credit Facility matures in December 2025 and provides for two one-year extension options, subject to certain conditions being satisfied. On December 23, 2022, the Company announced it would redeem all remaining outstanding shares of its Series L Preferred Stock in cash on January 25, 2023 for a total cost of $83.8 million. The payment for the Series L Redemption was made on January 25, 2023 and was funded by a combination of proceeds from the sale of our Series A1 Preferred Stock, draws on our 2022 Credit Facility, and cash on hand.

Current wording

On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock. We may finance our future activities through one or more of the following methods: (i) offerings of shares of Common Stock, Preferred Stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (v) the sale of existing assets; and/or (vi) cash flows from operations. Our 2022 Revolving Credit Facility had an outstanding balance of $15.0 million as of March 31, 2025 and was paid off in full and terminated in April 2025.

Previous wording

Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and/or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock. Additionally, our outstanding commitments to fund loans were $18.5 million as of September 30, 2024, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. A majority of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. To the extent we decide to proceed with development work on any of our development sites (in addition to those discussed below), we will have increased liquidity needs.

Current wording

Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and/or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock. Additionally, our outstanding commitments to fund loans were $9.0 million as of March 31, 2025, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. A majority of these commitments have government guarantees of 75% and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. To the extent we decide to proceed with development work on any of our development sites (in addition to those discussed below), we will have increased liquidity needs.

Previous wording

Our long-term liquidity needs include our plan to renovate the Sheraton Grand Hotel in Sacramento, California (the “Hotel Renovation”), which primarily entails renovating the hotel’s guest rooms and corridors and is expected to cost approximately $20.9 million. As of September 30, 2024, $10.6 million of costs had been incurred with respect to the Hotel Renovation, which the Company has started construction as of July 2024, with anticipated completion by the end of 2024. Additionally, an Unconsolidated Joint Venture (the “1910 Sunset JV”), in which we have approximately a 44% ownership interest, has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project) in Los Angeles, California, which development is expected to be completed by the third quarter of 2025 and with an estimated cost of approximately $14.7 million (excluding the land acquisition cost), our share of which will be $6.5 million. The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution requirements which have not yet been met). As of September 30, 2024, the 1910 Sunset JV had incurred total costs of $4.8 million in connection with the 1915 Park Project.

Current wording

Our long-term liquidity needs include development at an Unconsolidated Joint Venture (the “1910 Sunset JV”), in which we have approximately a 44% ownership interest. The 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”) in Los Angeles, California, which development is expected to be completed by the third quarter of 2025 and with an estimated cost of approximately $14.7 million (excluding the land acquisition cost), our share of which is expected to be $6.5 million. The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which had a balance of $2.7 million as of March 31, 2025 and total borrowing availability of $9.4 million). As of March 31, 2025, the 1910 Sunset JV had incurred total costs of $9.8 million in connection with the 1915 Park Project.

Previous wording

In September 2024, at our option, we redeemed 2,589,606 and 2,167,156 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and, additionally, we paid holder-requested redemptions of 1,010 shares of Series A1 Preferred Stock in shares of Common Stock. We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares Preferred Stock in shares of Common Stock during the fourth quarter of 2024 and are currently evaluating whether we will exercise our right to optionally redeem additional shares of Preferred Stock in shares of Common Stock.

Current wording

From and after September 2024, at our option, we redeemed 2,589,606 and 2,150,076 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and we have paid holder-requested redemptions of 376,128 and 319,184 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock. We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares of Preferred Stock in shares of Common Stock during 2025, when legally permitted. We have in the past exercised our right to redeem shares of Preferred Stock at our option (subject to the terms of the Preferred Stock set forth in the charter) and pay the redemption price in shares of Common Stock, and we may do so again in the future.

Previous wording

These above measures, taken together, will strengthen our balance sheet, improve liquidity and accelerate our transition towards premier multifamily properties. These actions should also better position the Company to take advantage of opportunities that are expected to arise in a recovering real estate market.

Current wording

The measures noted above, taken together, are expected to strengthen our balance sheet, improve liquidity and accelerate our transition towards premier multifamily properties. These actions are also intended to better position the Company to take advantage of opportunities that are expected to arise in a recovering real estate market.