AMREP CORP.

Previous wording

For a description of the Company’s business, refer to Item 1 of Part I of this annual report on Form 10-K. As indicated in Item 1, the Company is primarily engaged in two business segments: land development and homebuilding. The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and accompanying notes.

Current wording

For a description of the Company’s business, refer to Item 1 of Part I of this annual report on Form 10-K. As indicated in Item 1, the Company is primarily engaged in two business segments: land development and homebuilding. The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The information contained in this Item 7 should be read in conjunction with the consolidated financial statements and accompanying notes.

Previous wording

For 2025, the Company had net income of $12,716,000, or $2.37 per diluted share, compared to net income of $6,690,000, or $1.25 per diluted share, in 2024.

Current wording

For 2026, the Company had net income of $10,288,000, or $1.91 per diluted share, compared to net income of $12,716,000, or $2.37 per diluted share, in 2025.

Previous wording

During 2025 and 2024, the Company experienced material delays in municipal entitlements, infrastructure availability, approvals and inspections and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. While construction and land costs remain elevated, the Company has been able to partially offset these cost increases through land and home price increases in 2025 and 2024 due to a strong pricing environment, which may not continue. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. In addition, any tariffs on goods used as inputs in both the land development business segment and homebuilding business segment may result in further increases in the cost of housing and average sales prices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 2025 and 2024, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertainty and an increase in entitlement and infrastructure delays as compared to prior years. This is expected to result in a reduction of revenues from the sale of developed residential land during the fiscal year ending April 30, 2026 as compared to 2024 and 2025. Future economic conditions and the demand for land and homes are subject to continued uncertainty due to many factors, including changes in mortgage interest rates, inflation, tariffs, supplies of new and existing home inventory available for sale, labor shortages and other factors. The Company’s past performance may not be indicative of future results.

Current wording

During 2026 and 2025, the Company experienced material delays in municipal entitlements, infrastructure availability, approvals and inspections, contractor schedules and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. While construction and land costs remain elevated, the Company has been able to partially offset these cost increases through land and home price increases in 2026 and 2025. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. In addition, any tariffs on goods used as inputs in the land development business segment or homebuilding business segment may result in further increases in the cost of housing and average sales prices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the sale prices of certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 2026 and 2025, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertainty, a more intentional focus on growing the homebuilding business segment and an increase in entitlement, contractor and infrastructure delays as compared to prior years. This is expected to result in a reduction of revenues from the sale of developed residential land during fiscal year 2027 as compared to 2026. Future economic conditions and the demand for land and homes are subject to continued uncertainty due to many factors, including macroeconomic factors, changes in mortgage interest rates, inflation, tariffs, supplies of new and existing home inventory available for sale, labor shortages and other factors. The Company’s past performance may not be indicative of future results.

Previous wording

The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for 2025 compared to 2024 were primarily due to the location and mix of land sold. Revenues from the sale of undeveloped land included the sale in 2025 of 549 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,502,000 of revenue, to one purchaser and the sale in 2024 of 147 acres in Brighton, Colorado, representing $7,200,000 of revenue, to one purchaser. The Company does not expect the sale of the properties in the prior sentence to be indicative of future undeveloped land sale revenues.

Current wording

The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for 2026 compared to 2025 were primarily due to the location and mix of land sold. Revenues from the sale of undeveloped land included the sale in 2026 of 467 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,174,000 of revenue, to one purchaser and the sale in 2025 of 549 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,502,000 of revenue, to one purchaser. The Company does not expect the sale of the properties in the prior sentence to be indicative of future undeveloped land sale revenues.

Previous wording

As of April 30, 2025, the Company had 88 homes in production, including 28 homes under contract, which homes under contract represented $12,787,000 of expected home sale revenues when closed, subject to customer cancellations and change orders. As of April 30, 2024, the Company had 64 homes in production, including 20 homes under contract, which homes under contract represented $8,719,000 of expected home sale revenues when closed, subject to customer cancellations and change orders.

Current wording

As of April 30, 2026, the Company had 75 homes in production, including 24 homes under contract, which homes under contract represented $12,983,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders. As of April 30, 2025, the Company had 88 homes in production, including 28 homes under contract, which homes under contract represented $12,787,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders.

Previous wording

Miscellaneous other revenues for 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues. Miscellaneous other revenues for 2024 primarily consist of extension fees for purchase contracts and residential rental revenues.

Current wording

Miscellaneous other revenues for 2026 primarily consist of management fees for homeowners’ associations, residential rental revenues and billboard advertising revenues. Miscellaneous other revenues for 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues.

Previous wording

Land sale gross margins were 52% for 2025 compared to 36% for 2024. The change in gross margin was primarily due to changes in public improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold (including the sale of 690.4 acres for 2025 as compared to 222.9 acres for 2024 of undeveloped land with a low associated land sale cost of revenues).

Current wording

Land sale gross margins were 61% for 2026 compared to 52% for 2025. The change in gross margin was primarily due to changes in public improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold.

Previous wording

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in 2025 or 2024. Due to volatility in market conditions and development costs, the Company may experience future impairment charges.

Current wording

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in 2026 or 2025. Changes in economic and other market conditions may adversely impact the fair market value of the Company’s real estate inventory or investment assets, which could lead to impairment charges in future periods.

Previous wording

Interest Income, net. Interest income, net was $1,622,000 for 2025 and $823,000 for 2024. There were no interest or loan costs capitalized in real estate inventory in 2025. Interest and loan costs of $2,000 were capitalized in real estate inventory in 2024.

Current wording

Interest Income, net. Interest income, net was $1,734,000 for 2026 and $1,622,000 for 2025. There were no interest or loan costs capitalized in real estate inventory in 2026 or 2025.

Previous wording

Income Taxes. The Company had a provision for income taxes of $1,009,000 for 2025 and $1,735,000 for 2024. The provision for income taxes for 2025 related to the amount of income before income taxes during the year and to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during 2025. Refer to Note 12 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding accumulated other comprehensive income (loss). The provision for income taxes for 2024 correlated to the amount of income before income taxes during the year.

Current wording

Income Taxes. The Company had a provision for income taxes of $3,838,000 for 2026 and $1,009,000 for 2025. The provision for income taxes for 2026 related to the amount of income before income taxes during the year. The provision for income taxes for 2025 related to the amount of income before income taxes during the year and to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during 2025. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding accumulated other comprehensive income (loss).

Previous wording

The Company’s primary sources of funding for working capital requirements are cash flows from operations, a revolving line of credit, bank financing for specific real estate projects, interest income and existing balances of cash and cash equivalents. Land and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or commercial buildings for sale or lease or pursuing other real estate projects may require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected.

Current wording

The Company’s primary sources of funding for working capital requirements are cash flows from operations, a revolving line of credit, bank financing for specific real estate projects, interest income and existing balances of cash and cash equivalents. Land and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or commercial buildings for sale or lease or the pursuit of other real estate projects may require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected.

Previous wording

Pension Plan. The Company’s defined benefit pension plan was terminated in 2024. The Company did not make any contributions to the pension plan during 2024. During 2024, the Company transferred $547,000, which was the amount of residual assets (after satisfying any pension plan liabilities) following termination of the defined benefit pension plan, from the defined benefit pension plan to the Company’s 401(k) retirement plan available for future awards to eligible employees. This amount that was transferred to the Company’s 401(k) retirement plan is recognized as restricted cash on the Company’s balance sheet. During 2025, the Company utilized $92,000 of this restricted cash to fund its 401(k) employer contribution for the calendar year ended December 31, 2024. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s 401(k) plan.

Current wording

Restricted Cash. During the fiscal year ending April 30, 2024, the Company transferred $547,000, which was the amount of residual assets (after satisfying any pension plan liabilities) following termination of the Company’s defined benefit pension plan, from the defined benefit pension plan to the Company’s 401(k) retirement plan available for future awards to eligible employees. This amount that was transferred to the Company’s 401(k) retirement plan is recognized as restricted cash on the Company’s balance sheet. The Company utilized restricted cash of $137,000 and $92,000 during 2026 and 2025 to fund its 401(k) employer contributions. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s 401(k) plan.

Previous wording

Notes payable decreased from $35,000 as of April 30, 2024 to $26,000 as of April 30, 2025 due to principal debt repayments. Refer to Note 6 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s notes payable.

Current wording

Notes payable decreased from $26,000 as of April 30, 2025 to $18,000 as of April 30, 2026 due to principal debt repayments. Refer to Note 6 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s notes payable.

Previous wording

Refer to Note 2 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding real estate inventory. From April 30, 2024 to April 30, 2025, the change in land inventory was primarily due to the sale of land offset in part by land development activity, the change in homebuilding model and completed inventory was primarily due to the completion of homes not yet sold offset in part by the sale of homes and the change in homebuilding construction in process was primarily due to a decrease in the number of homes that started construction.

Current wording

From April 30, 2025 to April 30, 2026, the change in land inventory was primarily due to land development activity and the acquisition of land offset in part by the sale of land, the change in homebuilding model and completed inventory was primarily due to the sale of homes offset in part by the completion of homes not yet sold and the change in homebuilding construction in process was primarily due to a decrease in the number of homes that started construction. Refer to Note 2 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding real estate inventory.

Previous wording

Refer to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding investment assets. As of April 30, 2025, the Company leased 21 homes to residential tenants. As of April 30, 2024, the Company leased 10 homes to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $115,000 for 2025 and $82,000 for 2024.

Current wording

As of April 30, 2026, the Company leased 28 homes to residential tenants. As of April 30, 2025, the Company leased 21 homes to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $167,000 for 2026 and $115,000 for 2025. Refer to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding investment assets.

Previous wording

The forward-looking statements contained in this annual report on Form 10-K include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, acquisition of land, homebuilding, commercial projects, general and administrative expenses and capital expenditure needs, (2) the Company’s expected liquidity sources, including the availability of bank financing for projects and the utilization of existing bank financing, (3) anticipated development of the Company’s real estate holdings, (4) the development and construction of possible future commercial properties to be marketed to tenants, (5) the designs, pricing and levels of options and amenities with respect to the Company’s homebuilding operations, (6) the amount and timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (7) the number of planned residential lots in the Company’s subdivisions, (8) estimates of the Company’s exposure to warranty claims and liabilities for litigation and legal claims, estimates of the cost to complete of common land development costs and the estimated relative sales values of individual parcels of land in connection with the allocation of common land development costs, (9) the adequacy of warranty reserves, subcontractor indemnities and third-party insurance to cover the ultimate resolution of any potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation, (10) the conditions resulting in homebuyer affordability challenges, (11) estimates and assumptions used in determining future cash flows of real estate projects, (12) the amount of revenues from the sale of developed residential land during the fiscal year ending April 30, 2026, (13) the backlog of homes under contract and in production and the dollar amount of expected sale revenues when such homes are closed, (14) the effect of seasonality on the Company’s operations, (15) the categorization of homes and buildings leased or intended to be leased to third parties, (16) the effect of recent accounting pronouncements, (17) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (18) the Company’s belief that its compensation package and benefits offered to employees are competitive with others in the industry, (19) the future issuance of deferred stock units to directors of the Company, (20) the future business conditions that may be experienced by the Company, including the pace of the Company’s housing starts and land development projects, (21) the dilution to earnings per share that outstanding options to purchase shares of common stock of the Company may cause in the future, (22) the adequacy of the

Current wording

The forward-looking statements contained in this annual report on Form 10-K include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, acquisition of land, homebuilding, commercial projects, general and administrative expenses and capital expenditure needs, (2) the Company’s expected liquidity sources, including the availability of bank financing for projects and the utilization of existing bank financing, (3) anticipated development of the Company’s real estate holdings, (4) the development and construction of possible future commercial properties to be marketed to tenants, (5) the designs, pricing and levels of options and amenities with respect to the Company’s homebuilding operations, (6) the amount and timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (7) the number of planned residential lots in the Company’s subdivisions, (8) estimates of the Company’s exposure to warranty claims and liabilities for litigation and legal claims, estimates of the cost to complete of common land development costs and the estimated relative sales values of individual parcels of land in connection with the allocation of common land development costs, (9) the adequacy of warranty reserves, subcontractor indemnities and third-party insurance to cover the ultimate resolution of any potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation, (10) the conditions resulting in homebuyer affordability challenges, (11) estimates and assumptions used in determining future cash flows of real estate projects, (12) the amount of revenues from the sale of developed residential land during the fiscal year ending April 30, 2027, (13) the backlog of homes under contract and in production and the dollar amount of expected sale revenues when such homes are closed, (14) the categorization of owned real estate leased or intended to be leased, (15) the effect of seasonality on the Company’s operations, (16) the categorization of homes and buildings leased or intended to be leased to third parties, (17) the effect of recent accounting pronouncements, (18) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (19) the Company’s belief that its compensation package and benefits offered to employees are competitive with others in the industry, (20) the future issuance of deferred stock units to directors of the Company, (21) the future business conditions that may be experienced by the Company, including the pace of the Company’s housing starts and land development projects, (22) the dilution to earnings per share that outstanding options to purchase shares of common stock of the Company may cause in the future, (23) the adequacy of t…

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