PART I. Financial Information This section provides comprehensive unaudited financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Creative Media & Community Trust Corporation, including balance sheets, statements of operations, equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing its assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$885,024** | **$889,555** | | Investments in real estate, net | $704,775 | $709,194 | | Cash and cash equivalents | $27,769 | $20,262 | | **Total Liabilities** | **$584,250** | **$562,492** | | Debt, net | $535,605 | $505,732 | | **Total Equity** | **$288,270** | **$306,264** | - Total assets slightly decreased to **$885.0 million** as of June 30, 2025, from **$889.6 million** at the end of 2024, accompanied by an increase in total liabilities to **$584.3 million** and a decrease in total equity to **$288.3 million**[10](index=10&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's financial performance over specific periods, outlining revenues, expenses, and net loss Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$29,689** | **$34,439** | **$61,984** | **$68,437** | | **Total Expenses** | **$38,245** | **$36,126** | **$75,540** | **$73,433** | | **Net Loss** | **$(9,151)** | **$(852)** | **$(15,423)** | **$(4,757)** | | Net Loss Attributable to Common Stockholders | $(14,279) | $(9,667) | $(26,177) | $(21,962) | | Basic and Diluted EPS | $(18.94) | $(98.64) | $(39.36) | $(224.10) | - The company's net loss widened significantly in Q2 2025 to **$9.2 million** from **$0.9 million** in Q2 2024, and for the first six months, the net loss grew to **$15.4 million** in 2025 from **$4.8 million** in 2024, driven by lower revenues and higher expenses[11](index=11&type=chunk) [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) This section presents the changes in the company's equity components, including net income, dividends, and stock transactions - Total equity decreased from **$306.3 million** at the end of 2024 to **$288.3 million** as of June 30, 2025, primarily driven by a net loss of **$9.15 million** and preferred stock dividends of **$5.3 million** in Q2 2025[12](index=12&type=chunk) - During the six months ended June 30, 2025, the company redeemed Series A1 and Series A Preferred Stock by issuing **96,283** and **192,144** shares of common stock, respectively[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,271) | $5,540 | | Net cash used in investing activities | $(10,226) | $(1,388) | | Net cash provided by financing activities | $16,487 | $2,460 | | **Net Increase in Cash** | **$4,990** | **$6,612** | - For the first six months of 2025, the company experienced a net cash outflow from operations of **$1.3 million**, a significant reversal from a **$5.5 million** inflow in the same period of 2024, primarily due to a higher net loss[15](index=15&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the figures presented in the consolidated financial statements - The company primarily acquires, develops, owns, and operates premier multifamily properties and Class A/creative office assets, also including a hotel and an SBA 7(a) loan origination platform[18](index=18&type=chunk) - The company effected two reverse stock splits in 2025: a **1-for-10** split in January and a **1-for-25** split in April, with all share and per-share amounts retroactively adjusted[20](index=20&type=chunk)[22](index=22&type=chunk) - During Q2 2025, the company recognized an impairment charge of **$0.221 million** on an office property in Austin, Texas, reducing its carrying value to an estimated fair value of **$1.9 million**[74](index=74&type=chunk) - As of June 30, 2025, the company had **$535.6 million** in net debt, an increase from **$505.7 million** at year-end 2024, and in April 2025, it repaid and terminated its 2022 Credit Facility, resulting in a loss on early extinguishment of debt of **$0.088 million**[100](index=100&type=chunk)[107](index=107&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, highlighting increased net losses due to lower revenues and higher expenses, alongside strategic shifts towards multifamily properties and liquidity management efforts [Executive Summary](index=43&type=section&id=Executive%20Summary) This section provides an overview of the company's strategic focus on multifamily properties and a snapshot of its current portfolio performance - The company's strategy is to increase its focus on acquiring, developing, and operating premier multifamily properties, while opportunistically disposing of assets that do not fit this strategy[215](index=215&type=chunk)[217](index=217&type=chunk) Portfolio Snapshot as of June 30, 2025 | Segment | Metric | Value | | :--- | :--- | :--- | | Office Properties | Occupancy | 68.1% | | Multifamily Properties | Occupancy | 83.4% | | Hotel | RevPAR (H1 2025) | $171.63 | - The decrease in office portfolio occupancy to **68.1%** from **82.5%** a year prior was primarily due to a tenant exercising a partial termination option at an office property in Oakland, California[223](index=223&type=chunk)[229](index=229&type=chunk) [2025 Results of Operations (Comparison of the Three Months Ended June 30, 2025 to 2024)](index=47&type=section&id=2025%20Results%20of%20Operations%20%28Q2%20Comparison%29) This section analyzes the company's financial performance for the second quarter of 2025 compared to the same period in 2024, highlighting key revenue and expense trends Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $29,689 | $34,439 | $(4,750) | (13.8)% | | Total Expenses | $38,245 | $36,126 | $2,119 | 5.9% | | **Net Loss** | **$(9,151)** | **$(852)** | **$(8,299)** | **NM** | - The increase in net loss for Q2 2025 was primarily due to a **$6.4 million** decrease in segment net operating income and a **$1.3 million** increase in interest expense[239](index=239&type=chunk) - FFO attributable to common stockholders decreased by **$4.6 million** to **$(7.9) million** in Q2 2025 from **$(3.3) million** in Q2 2024, mainly due to lower segment net operating income and higher interest expense[244](index=244&type=chunk) - Office revenue decreased by **15.8%** due to lower occupancy in an Oakland property, while multifamily revenue dropped **27.6%** due to lower occupancy and rents[249](index=249&type=chunk)[251](index=251&type=chunk) [2025 Results of Operations (Comparison of the Six Months Ended June 30, 2025 to 2024)](index=51&type=section&id=2025%20Results%20of%20Operations%20%28H1%20Comparison%29) This section analyzes the company's financial performance for the first half of 2025 compared to the same period in 2024, detailing revenue and expense trends H1 2025 vs H1 2024 Performance (in thousands) | Metric | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $61,984 | $68,437 | $(6,453) | (9.4)% | | Total Expenses | $75,540 | $73,433 | $2,107 | 2.9% | | **Net Loss** | **$(15,423)** | **$(4,757)** | **$(10,666)** | **224.2%** | - The increased net loss for the first half of 2025 was primarily driven by an **$8.3 million** decrease in segment net operating income and a **$2.4 million** increase in interest expense[268](index=268&type=chunk) - FFO attributable to common stockholders for H1 2025 was **$(13.3) million**, a decrease of **$4.1 million** from **$(9.2) million** in H1 2024, driven by lower segment operating income and higher interest expense, partially offset by lower preferred stock dividends and redemptions[272](index=272&type=chunk) [Cash Flow Analysis](index=55&type=section&id=Cash%20Flow%20Analysis) This section provides an analysis of the company's cash flow changes across operating, investing, and financing activities - Net cash used in operating activities was **$1.3 million** for H1 2025, a significant decrease from **$5.5 million** provided by operations in H1 2024, primarily due to a higher net loss[295](index=295&type=chunk) - Net cash used in investing activities increased to **$10.2 million** in H1 2025 from **$1.4 million** in H1 2024, mainly due to a **$9.0 million** increase in capital expenditures[296](index=296&type=chunk) - Net cash provided by financing activities increased to **$16.5 million** in H1 2025 from **$2.5 million** in H1 2024, driven by higher net proceeds from debt and lower cash redemptions and dividends for preferred stock[297](index=297&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its financial obligations and fund operations, including sources and uses of capital - The company's principal demands for funds include asset acquisitions, property development, debt service, and preferred stock distributions/redemptions[298](index=298&type=chunk) - The company plans to satisfy some or all redemption requests for its Preferred Stock with shares of Common Stock during 2025 to preserve liquidity[304](index=304&type=chunk) - In June 2025, a subsidiary entered into a new **$20.0 million** revolving credit facility secured by SBA 7(a) loans, with **$8.3 million** outstanding and no additional availability as of June 30, 2025[313](index=313&type=chunk) - The company regained compliance with the Nasdaq minimum bid price requirement in April 2025 but notes that maintaining compliance is not guaranteed[308](index=308&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate fluctuations, and its strategies for mitigation - As of June 30, 2025, **17.7%** (**$96.0 million**) of the company's debt was floating rate[331](index=331&type=chunk) - A **50 basis point** change in the SOFR interest rate would impact annual earnings by approximately **$0.48 million**[331](index=331&type=chunk) - The company utilizes interest rate cap agreements with a total notional amount of **$176.8 million** to manage its exposure to interest rate fluctuations[332](index=332&type=chunk) [Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[334](index=334&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[335](index=335&type=chunk) PART II. Other Information This section provides additional information including legal proceedings, risk factors, equity sales, and other relevant disclosures [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings beyond routine litigation arising in the ordinary course of business - The company states it is not currently involved in any material pending or threatened legal proceedings outside of routine litigation incidental to its business[337](index=337&type=chunk) [Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K were reported - No material changes to the risk factors disclosed in the 2024 Form 10-K were reported[338](index=338&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no common stock repurchases during the three and six months ended June 30, 2025, under its $10.0 million share repurchase program - No common stock repurchases were made during the three and six months ended June 30, 2025[339](index=339&type=chunk) - As of June 30, 2025, the company has repurchased a total of **2,650** shares for **$4.7 million** under its existing share repurchase program[339](index=339&type=chunk) [Other Information](index=61&type=section&id=Item%205.%20Other%20Information) The company plans to delist its Common Stock from the Tel Aviv Stock Exchange by August 15, 2025, while maintaining its Nasdaq Capital Market listing - The company has filed to voluntarily delist its Common Stock from the Tel Aviv Stock Exchange (TASE), with the delisting expected to be effective on **August 15, 2025**[344](index=344&type=chunk) - The company's common stock will continue to be listed for trading on the Nasdaq Capital Market[344](index=344&type=chunk)

Financial Data and Key Metrics Changes - The company's core FFO was negative $7,200,000, and overall net operating income decreased to $9,800,000 from $11,800,000 in the prior quarter [12][21] - The overall segment NOI was $9,800,000 in Q2 2025, compared to $16,200,000 in the prior year, a decrease of $6,400,000 [21] - FFO was negative $7,900,000 or negative $10.42 per diluted share compared to negative $3,300,000 or negative $33.46 per diluted share in the prior year [23] Business Line Data and Key Metrics Changes - The office segment NOI for Q2 2025 was $5,500,000, down from $8,900,000 in Q2 2024, primarily due to decreased rental revenue and occupancy [21][22] - Multifamily segment NOI was $189,000 in Q2 2025, compared to $2,300,000 in the prior year, driven by unrealized losses and decreased revenues [22] - Hotel segment NOI for Q2 2025 was $4,200,000, slightly down from $4,300,000 in the prior year, attributed to decreased food and beverage sales [22] Market Data and Key Metrics Changes - The company executed approximately 140,000 square feet of leases through July 2025, representing over a 55% increase from the prior year [5][6] - The office lease percentage was approximately 70% at the end of Q2 2025, and approximately 80% when excluding the Oakland office building [18] Company Strategy and Development Direction - The company is focused on improving its balance sheet and liquidity, enhancing property-level performance, and evaluating asset sales as part of its broader strategic plan [7][9] - Key areas of focus include growing the multifamily portion of the portfolio and executing renovations to improve asset performance [10][19] Management's Comments on Operating Environment and Future Outlook - Management believes there is a meaningful opportunity to grow NOI in 2026, supported by improved office leasing activity and completed renovations [14] - The company is encouraged by market improvements in the adjacent San Francisco market, which historically influences Oakland [6][11] Other Important Information - The company has successfully secured property-level financing on seven assets, allowing for the repayment of a recourse credit facility with a balance of approximately $169,000,000 at the end of 2024 [7][8] - A $20,000,000 revolving credit facility was closed to support lending division originations [8] Q&A Session Summary - No questions were raised during the Q&A session, and the call concluded without any inquiries [26]

Company Overview and Strategy - CIM Group, a real estate and infrastructure firm, manages CMCT and owns approximately 68% of its stock as of June 30, 2025[8, 12, 151] - CMCT focuses on acquiring, owning, operating, and developing creative office and premier multifamily assets in vibrant communities[15] - The company aims to strengthen its balance sheet and liquidity by extending debt maturities and financing growth initiatives[22, 23] - CMCT's strategy is designed to benefit from the trend toward a more cohesive work/live lifestyle[33] Portfolio Composition and Performance - CMCT's office portfolio is 701% leased in aggregate, consisting of 12 Class A and creative office properties[21] - The company owns 4 premier Class A multifamily properties with 764 total units and has 1 premier Class A multifamily property under development with 36 units[18] - As of June 30, 2025, the total office portfolio's rentable square footage is 1299518 with an overall occupancy rate of 681%[60] - The total multifamily portfolio consists of 764 units with an occupancy rate of 834% and an annualized rent of $18793 thousand[66] Financial Activities and Debt Management - In April 2025, CMCT fully repaid and retired its recourse credit facility after completing 4 new financings across 7 properties[30] - As of June 30, 2025, the company's total debt stood at $5407 million, with a mix of fixed and variable rate mortgages[166] - The company's fixed-rate mortgages payable range from 414% to 741% interest, while variable rate mortgages are based on SOFR plus a margin[166]

Report Overview [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) The company reported a Q2 2025 net loss of $(14.3) million and Core FFO of $(7.2) million while executing key leasing and financing activities Q2 2025 Key Financial Metrics | Metric | Value | Per Diluted Share | | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders | $(14.3) million | $(18.94) | | Funds from Operations (FFO) | $(7.9) million | $(10.42) | | Core FFO | $(7.2) million | $(9.53) | - The company's same-store office portfolio was **70.1% leased**, with **47,859 square feet** of new leases executed with terms longer than 12 months[7](index=7&type=chunk) - In April 2025, the company closed a **$35.5 million mortgage**, using proceeds to repay all outstanding obligations under its 2022 Credit Facility[7](index=7&type=chunk) - In June 2025, a subsidiary secured a **$20.0 million revolving credit facility** backed by its SBA 7(a) loans receivable portfolio[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted progress in its strategic plan, focusing on multifamily assets, balance sheet strength, and increased office leasing activity - The company is accelerating its focus towards **premier multifamily assets**, strengthening its balance sheet, and improving liquidity[4](index=4&type=chunk) - Since September 2024, the company has completed **four refinancings**, extended debt maturities on two multifamily assets, and fully repaid its recourse credit facility[5](index=5&type=chunk) - Office leasing activity has increased, with **78,192 square feet leased** in the first half of 2025 and an additional **61,747 square feet** in July[6](index=6&type=chunk) - Hotel segment NOI increased approximately **5.5%** in the first half of 2025 following the renovation of all 505 hotel rooms[6](index=6&type=chunk) Financial and Operating Performance [Overall Financial Results (Q2 2025)](index=2&type=section&id=Overall%20Financial%20Results%20(Q2%202025)) The company's Q2 2025 net loss widened to $(14.3) million, driven by lower segment NOI and higher interest expense Q2 Financial Results Comparison (2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders | $(14.3) million | $(9.7) million | | Net Loss per Diluted Share | $(18.94) | $(98.64) | | FFO Attributable to Common Stockholders | $(7.9) million | $(3.3) million | | FFO per Diluted Share | $(10.42) | $(33.46) | | Core FFO Attributable to Common Stockholders | $(7.2) million | $(2.1) million | | Core FFO per Diluted Share | $(9.53) | $(21.93) | - The increase in net loss was primarily caused by a **$6.4 million decrease in segment net operating income** and a **$1.3 million rise in interest expense**, partially offset by a $2.6 million decrease in redeemable preferred stock dividends[9](index=9&type=chunk) [Real Estate Portfolio Overview](index=2&type=section&id=Real%20Estate%20Portfolio%20Overview) As of June 30, 2025, the company's portfolio comprised 27 assets across office, multifamily, hotel, and development sites - The portfolio comprises **12 office properties** (~1.3 million rentable sq. ft.), **four multifamily properties (696 units)**, nine development sites, and one 505-room hotel[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Total segment NOI decreased to $9.8 million in Q2 2025 from $16.2 million in Q2 2024, with declines across most segments Total Segment NOI (Q2 2025 vs. Q2 2024) | Period | Total Segment NOI | | :--- | :--- | | Q2 2025 | $9.8 million | | Q2 2024 | $16.2 million | [Office Segment](index=2&type=section&id=Office%20Segment) Office segment same-store NOI decreased to $5.5 million from $8.9 million year-over-year due to reduced rental revenue and lower occupancy Office Segment Same-Store Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Segment NOI | $5.5 million | $8.9 million | | Cash NOI | $5.8 million | $9.9 million | | Occupancy | 68.1% | 83.5% (-1,540 bps) | | Leased Percentage | 70.3% | 82.5% (-1,220 bps) | | Annualized Rent per Occupied Sq. Ft. | $60.96 | $58.85 | [Hotel Segment](index=3&type=section&id=Hotel%20Segment) Hotel Segment NOI was $4.2 million, a slight decrease from $4.3 million in Q2 2024, with minor declines in occupancy and RevPAR Hotel Operating Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Occupancy | 78.4% | 79.9% | | Average Daily Rate (ADR) | $212.92 | $210.54 | | Revenue per Available Room (RevPAR) | $166.83 | $168.30 | [Multifamily Segment](index=3&type=section&id=Multifamily%20Segment) The Multifamily segment's NOI fell sharply to $189,000 from $2.3 million, impacted by an investment loss and lower property revenues - The decrease in multifamily segment NOI was driven by an **unrealized loss on investment** in real estate at an unconsolidated joint venture and a decrease in revenues at multifamily properties in Oakland, California[15](index=15&type=chunk) Multifamily Operating Metrics (as of June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Occupancy | 83.4% | 92.5% | | Monthly Rent per Occupied Unit | $2,458 | $2,647 | | Net Monthly Rent per Occupied Unit | $2,284 | $2,469 | [Lending Segment](index=3&type=section&id=Lending%20Segment) The Lending segment reported an NOI loss of $47,000 for Q2 2025, compared to an income of $743,000 in Q2 2024 - The decrease in Lending segment NOI was primarily due to a decrease in interest income from loan payoffs and lower interest rates, as well as an increase in current expected credit losses[16](index=16&type=chunk) [Debt and Equity](index=3&type=section&id=Debt%20and%20Equity) The company executed a 1-for-25 reverse stock split and strengthened its financial position through new financing and debt repayment - A **1-for-25 reverse stock split** of the company's Common Stock became effective on April 15, 2025[17](index=17&type=chunk) - In April 2025, the company closed a **$35.5 million mortgage** and used the proceeds to repay and terminate the 2022 Credit Facility[18](index=18&type=chunk) - In June 2025, a subsidiary closed on a new **$20.0 million revolving credit facility**, which had an outstanding balance of $8.3 million as of June 30, 2025[19](index=19&type=chunk) [Dividends](index=4&type=section&id=Dividends) The company declared quarterly cash dividends for its Series A, Series A1, and Series D Preferred Stock for the second quarter of 2025 Q2 2025 Preferred Stock Dividends | Preferred Stock Series | Quarterly Dividend Amount per Share | | :--- | :--- | | Series A | $0.34375 | | Series A1 | $0.426875 | | Series D | $0.353125 | Financial Statements [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets stood at $885.0 million, while total liabilities increased, leading to lower total equity Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $885,024 | $889,555 | | Debt, net | $535,605 | $505,732 | | Total Liabilities | $584,250 | $562,492 | | Total Equity | $288,270 | $306,264 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenues declined to $29.7 million while expenses rose, resulting in a net loss attributable to the company of $(9.0) million Selected Income Statement Data (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $29,689 | $34,439 | | Total Expenses | $38,245 | $36,126 | | Net Loss | $(9,151) | $(852) | | Net Loss Attributable to Common Stockholders | $(14,279) | $(9,667) | Non-GAAP Financial Measures & Reconciliations [Funds from Operations (FFO)](index=10&type=section&id=Funds%20from%20Operations%20(FFO)) FFO attributable to common stockholders for Q2 2025 was $(7.9) million, a decline from $(3.3) million in Q2 2024 FFO Reconciliation Summary (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(14,279) | $(9,667) | | Adjustments (Depreciation, Impairment, etc.) | $6,426 | $6,388 | | **FFO attributable to common stockholders** | **$(7,853)** | **$(3,279)** | [Core Funds from Operations (Core FFO)](index=11&type=section&id=Core%20Funds%20from%20Operations%20(Core%20FFO)) Core FFO for Q2 2025 was $(7.2) million, compared to $(2.1) million in the prior-year quarter Core FFO Reconciliation Summary (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | FFO attributable to common stockholders | $(7,853) | $(3,279) | | Adjustments (Debt Extinguishment, Transaction Costs, etc.) | $670 | $1,130 | | **Core FFO attributable to common stockholders** | **$(7,183)** | **$(2,149)** | [Net Operating Income (NOI)](index=12&type=section&id=Net%20Operating%20Income%20(NOI)) Total Segment NOI for Q2 2025 was $9.8 million, a decrease from $16.2 million in Q2 2024 Segment NOI Breakdown (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Office | $5,519 | $8,908 | | Hotel | $4,158 | $4,320 | | Multifamily | $189 | $2,252 | | Lending | $(47) | $743 | | **Total Segment NOI** | **$9,819** | **$16,223** |

```markdown [PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) This section covers the unaudited financial statements, management's analysis, market risk, and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2025 and 2024, covering balance sheets, operations, equity, cash flows, and notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a slight decrease in total assets from $889.6 million to $882.3 million as of March 31, 2025 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$882,343** | **$889,555** | | Investments in real estate, net | $706,537 | $709,194 | | Cash and cash equivalents | $19,772 | $20,262 | | **Total Liabilities** | **$566,909** | **$562,492** | | Debt, net | $512,658 | $505,732 | | **Total Equity** | **$294,635** | **$306,264** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, the company reported a net loss of $6.3 million, an increase from $3.9 million in Q1 2024 Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $32,295 | $33,998 | | Total Expenses | $37,295 | $37,307 | | **Net Loss** | **$(6,272)** | **$(3,905)** | | Net Loss Attributable to the Company | $(6,114) | $(3,730) | | Redeemable preferred stock dividends | $(5,484) | $(7,759) | | **Net Loss Attributable to Common Stockholders** | **$(11,898)** | **$(12,295)** | | **Basic & Diluted EPS** | **$(20.73)** | **$(125.46)** | [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity decreased from $306.3 million to $294.6 million in Q1 2025, driven by net loss and dividends - Key activities impacting equity in Q1 2025 included a net loss of **$6.1 million**, payment of preferred stock dividends totaling **$5.5 million**, and the redemption of Series A and A1 preferred stock paid for with common stock[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $1.2 million in Q1 2025, while investing activities used $5.2 million Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,208 | $1,616 | | Net Cash Used in Investing Activities | $(5,157) | $(393) | | Net Cash Provided by Financing Activities | $206 | $191 | | **Net (Decrease) Increase in Cash** | **$(3,743)** | **$1,414** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, **REIT** structure, reverse stock splits, debt, and related-party transactions - The company is a **REIT** primarily focused on acquiring, developing, and operating multifamily and Class A/creative office properties, and also owns a hotel and an SBA lending platform[17](index=17&type=chunk) - The company effected two reverse stock splits in 2025: a **1-for-10 split** in January and a **1-for-25 split** in April All share and per-share amounts are adjusted retroactively[19](index=19&type=chunk)[21](index=21&type=chunk) - The company recorded a loss of **$1.2 million** from its investments in unconsolidated joint ventures for Q1 2025, a significant increase from the **$0.3 million** loss in Q1 2024[81](index=81&type=chunk) - As of March 31, 2025, the company was **not in compliance with two covenants** under its 2022 Credit Facility The facility was subsequently **paid off in full and terminated** in April 2025 following a refinancing[100](index=100&type=chunk)[102](index=102&type=chunk) - The company plans to **continue satisfying some or all redemption requests for its preferred stock with shares of common stock** in 2025[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, strategic shift to multifamily properties, and liquidity - The company's strategy is to increase its focus on premier multifamily properties, leveraging CIM Group's expertise and using an asset-light, co-investment approach to reduce capital outlay and risk[207](index=207&type=chunk)[208](index=208&type=chunk) Portfolio Occupancy and Rental Trends | Portfolio | Metric | As of March 31, 2025 | As of March 31, 2024 | | :--- | :--- | :--- | :--- | | **Office** | Occupancy | **70.2%** | **83.4%** | | | Ann. Rent/SqFt | **$61.14** | **$58.17** | | **Multifamily** | Occupancy | **80.2%** | **86.2%** | | | Monthly Rent/Unit | **$2,461** | **$2,737** | | **Hotel** | RevPAR | **$176.47** | **$166.84** | - Net loss for Q1 2025 increased to **$6.3 million** from **$3.9 million** in Q1 2024, driven by a **$1.9 million** decrease in segment net operating income and a **$1.1 million** increase in interest expense[228](index=228&type=chunk) - FFO attributable to common stockholders improved to **$(5.4) million** in Q1 2025 from **$(5.9) million** in Q1 2024, mainly due to a **$2.3 million** decrease in redeemable preferred stock dividends declared[232](index=232&type=chunk) - In April 2025, the company refinanced an Austin office property and used the proceeds to fully repay and terminate its **$15.0 million** 2022 Credit Facility, under which it had been out of compliance with certain covenants[262](index=262&type=chunk)[271](index=271&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk with 13.3% of debt floating, impacting earnings by $343 thousand per 50 bps - As of March 31, 2025, **86.7%** of the company's debt was fixed-rate, while **13.3%** was floating-rate[289](index=289&type=chunk) - A hypothetical **50 basis point** (**0.50%**) change in the SOFR interest rate would impact annual earnings by approximately **$343 thousand** based on the floating rate debt outstanding at March 31, 2025[289](index=289&type=chunk) - The company held two interest rate cap agreements with a total notional amount of **$175.8 million** to hedge against interest rate movements[290](index=290&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were **effective as of March 31, 2025**, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were **effective as of March 31, 2025**[292](index=292&type=chunk) - **No changes** occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[293](index=293&type=chunk) [PART II. Other Information](index=55&type=section&id=PART%20II.%20Other%20Information) This section includes disclosures on legal proceedings, risk factors, equity sales, and other general information [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings beyond routine business litigation - The company reports **no material pending or threatened legal proceedings** outside of the ordinary course of business[296](index=296&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) **No material changes to risk factors** from the Annual Report on Form 10-K for the year ended December 31, 2024 are reported - **No material changes to risk factors** from the Annual Report on Form 10-K for the year ended December 31, 2024 are reported[297](index=297&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during Q1 2025 under its $10.0 million repurchase program - There were **no common stock repurchases** during the three months ended March 31, 2025[298](index=298&type=chunk) [Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported **no defaults upon senior securities** - **None**[299](index=299&type=chunk) [Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is **not applicable** to the company - **Not applicable**[300](index=300&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company initiated **voluntary delisting of its Common Stock from the Tel Aviv Stock Exchange** on May 8, 2025 - On May 8, 2025, the company filed a notice to **voluntarily delist its Common Stock from the Tel Aviv Stock Exchange (TASE)**, citing a low trading volume The delisting is expected to be effective three months from the notice date[303](index=303&type=chunk) - The company's common stock will **continue to be listed for trading on the Nasdaq Capital Market**[303](index=303&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments and loan agreements ```

Financial Data and Key Metrics Changes - The company fully repaid its recourse corporate level credit facility, which had a balance of approximately $169 million [5] - Core FFO improved by approximately $1.9 million from the prior quarter, primarily due to higher net operating income and lower preferred dividends [7] - Net operating income (NOI) increased by approximately $2.6 million from the prior quarter, driven by improvements at the hotel [8] - Core FFO was negative $5.1 million or negative $8.85 per diluted share compared to negative $4.4 million or negative $45.15 per diluted share in the prior year comparable period [19] Business Line Data and Key Metrics Changes - Hotel NOI increased by 15% year over year, reaching $4.7 million in Q1 2025 compared to $4.1 million in the prior year [18] - Office segment NOI decreased to $7.1 million in Q1 2025 from $7.9 million in Q1 2024, driven by lower rental revenue in Oakland [17] - Multifamily segment reported an operating loss of $620,000 in Q1 2025 compared to income of $917,000 in the prior year, primarily due to an unrealized loss on investment [18] - Lending division NOI decreased to $590,000 from $789,000 in the prior year, mainly due to lower interest income [19] Market Data and Key Metrics Changes - The office lease percentage was 71.4% at the end of the quarter, and 83% when excluding the Oakland property [14] - Multifamily occupancy at 701 South Hudson reached approximately 41% at the end of the quarter, up from 22% at year-end [11] - The company anticipates a recovery in the Oakland residential market, although it may take time due to economic headwinds [13] Company Strategy and Development Direction - The company is focused on improving its balance sheet and liquidity while accelerating its focus on premier multifamily assets [5] - The company has four operating multifamily assets and is actively evaluating potential asset sales to strengthen its balance sheet [6] - A joint venture for a 36-unit multifamily development in Echo Park is underway, expected to begin lease-up in the third quarter [12] Management's Comments on Operating Environment and Future Outlook - Management noted the challenges in the office financing environment but expressed confidence in the completed refinancing program [5] - The company sees significant opportunities to grow multifamily net operating income through improved occupancy and market rents [10] - Management remains optimistic about the hotel asset's positioning heading into 2026 following renovations [15] Other Important Information - The company completed a refinancing on its office property in Austin, Texas, using proceeds to pay off its credit facility [20] - A one-for-25 reverse stock split was approved by shareholders and executed on April 15 [20] Q&A Session Summary Question: No questions were raised during the Q&A session - The call concluded without any questions from participants [21]

Financial Data and Key Metrics Changes - Core FFO improved by approximately $1,900,000 from the prior quarter, primarily due to higher net operating income and lower preferred dividends [8] - Net operating income increased by approximately $2,600,000 from the prior quarter, driven by a $2,600,000 improvement at the hotel [8] - First quarter NOI at the hotel increased 15% year over year [9] - FFO was negative $5,400,000 or negative $9.42 per diluted share compared to negative $5,900,000 or negative $60.42 per diluted share in the prior year [19] - Core FFO was negative $5,100,000 or negative $8.85 per diluted share compared to negative $4,400,000 or negative $45.15 per diluted share in the prior year [19] Business Line Data and Key Metrics Changes - Multifamily NOI decreased by $1,500,000 from the prior quarter due to lower occupancy [9] - Office NOI improved by $1,900,000 from the prior quarter, with increased leasing activity particularly in Los Angeles and Austin [9] - Hotel segment NOI for Q1 2025 was $4,700,000 compared to $4,100,000 in the prior year, driven by increased occupancy and average daily rate [19] - Lending NOI declined to $590,000 from $789,000 in the prior year, primarily due to decreased interest income [19] Market Data and Key Metrics Changes - Multifamily occupancy at 701 South Hudson reached approximately 41% at the end of the quarter, up from 22% at year-end [11] - Office lease percentage was 71.4% at the end of the quarter, and 83% when excluding the Oakland office [14] - The Oakland residential market recovery is expected to take time due to broader economic headwinds and local market dynamics [13] Company Strategy and Development Direction - The company is focused on improving its balance sheet and liquidity while accelerating its focus on premier multifamily assets [5] - The company has fully repaid its recourse corporate level credit facility, enhancing financial flexibility [6] - The company is actively evaluating potential asset sales to strengthen its balance sheet and grow its multifamily portfolio [8] Management's Comments on Operating Environment and Future Outlook - Management noted significant opportunities to grow multifamily net operating income through improving occupancy and marketing rents [10] - The company anticipates starting a renovation of the public space at the hotel later this year, positioning the asset well for 2026 [15] - Management expressed optimism about the leasing activity in Los Angeles and Austin, indicating a positive trend in the office segment [14] Other Important Information - The company completed a refinancing on its office property in Austin, Texas, using a portion of the proceeds to pay off its credit facility [20] - A one-for-25 reverse split of common stock was approved by shareholders [20] Q&A Session Summary - No questions were raised during the Q&A session, leading to the conclusion of the conference call [21]

[First Quarter 2025 Results](index=1&type=section&id=First%20Quarter%202025%20Results) [Overview and Management Commentary](index=1&type=section&id=Management%20Commentary) CMCT advanced its multifamily strategy in Q1 2025, repaying its $169 million credit facility, securing new office leases, and boosting hotel NOI - The company is accelerating its focus on **premier multifamily assets**, strengthening its balance sheet, and improving liquidity[4](index=4&type=chunk) - Completed the full repayment and retirement of the **$169 million recourse corporate-level credit facility** in early April 2025[5](index=5&type=chunk) - Executed over **30,000 square feet of office leases** in Q1 2025 and saw a **15% YoY increase in hotel segment net operating income**[5](index=5&type=chunk) - A **1-for-25 reverse stock split** of Common Stock became effective on April 15, 2025 All share and per-share amounts in the report are adjusted retroactively[2](index=2&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Results) CMCT reported a net loss of **$(11.9) million** in Q1 2025, an improvement from Q1 2024, driven by lower preferred stock dividends and transaction costs Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders | $(11.9) million | $(12.3) million | | Diluted EPS | $(20.73) | $(125.46) | | FFO Attributable to Common Stockholders | $(5.4) million | $(5.9) million | | Core FFO Attributable to Common Stockholders | $(5.1) million | $(4.4) million | - The decrease in net loss was driven by a **$2.3 million decrease in redeemable preferred stock dividends** and a **$664,000 decrease in transaction-related costs** These were partially offset by a **$1.9 million decrease in segment NOI** and a **$1.1 million increase in interest expense**[8](index=8&type=chunk) - As of March 31, 2025, the real estate portfolio consisted of **27 assets**, including 12 office properties, 4 multifamily properties, 9 development sites, and one 505-room hotel[7](index=7&type=chunk) [Segment Information](index=2&type=section&id=Segment%20Information) [Office Segment](index=2&type=section&id=Office) The office segment's same-store NOI declined to **$7.1 million** in Q1 2025, primarily due to lower occupancy at an Oakland property, despite increased annualized rent per occupied square foot Same-Store Office Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Segment NOI | $7.1 million | $7.9 million | | Cash NOI | $7.8 million | $8.8 million | | Occupancy | 70.2% | 83.0% | | Leased | 71.4% | 83.7% | | Annualized Rent per Occupied Sq. Ft. | $61.23 | $58.30 | - The decrease in same-store office NOI was primarily due to lower rental revenue at the Oakland, California office property, resulting from a large tenant exercising a partial lease termination option[10](index=10&type=chunk) - During Q1 2025, the company executed **30,333 square feet of new leases** with terms longer than 12 months in its same-store office portfolio[10](index=10&type=chunk) [Hotel Segment](index=3&type=section&id=Hotel) The hotel segment demonstrated strong performance in Q1 2025, with Segment NOI increasing to **$4.7 million** driven by higher occupancy and average daily rate - Hotel Segment NOI increased to **$4.7 million** for Q1 2025, up from **$4.1 million** in Q1 2024, due to higher occupancy and average daily rate[13](index=13&type=chunk) Hotel Performance (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Occupancy | 80.0% | 79.0% | | Average Daily Rate (ADR) | $220.57 | $211.06 | | Revenue per Available Room (RevPAR) | $176.47 | $166.84 | [Multifamily Segment](index=3&type=section&id=Multifamily) The multifamily segment reported an NOI loss of **$(620,000)** in Q1 2025, primarily due to an unrealized loss on a joint venture investment, alongside decreased occupancy and monthly rent - Multifamily segment NOI was a loss of **$(620,000)** in Q1 2025, a sharp decrease from income of **$917,000** in Q1 2024 This was mainly due to an unrealized loss on an investment in one of the unconsolidated joint ventures[15](index=15&type=chunk) Multifamily Metrics (as of March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Occupancy | 80.2% | 86.2% | | Monthly Rent per Occupied Unit | $2,461 | $2,737 | [Lending Segment](index=3&type=section&id=Lending) The lending segment's NOI decreased to **$590,000** in Q1 2025, primarily due to lower interest income from loan payoffs and reduced interest rates - Lending segment NOI decreased to **$590,000** for Q1 2025, compared to **$789,000** for the same period in 2024[16](index=16&type=chunk) - The decrease in lending NOI was primarily due to lower interest income from loan payoffs and lower interest rates[16](index=16&type=chunk) [Capital Structure and Dividends](index=3&type=section&id=Capital%20Structure%20and%20Dividends) [Debt and Equity Activities](index=3&type=section&id=Debt%20and%20Equity) The company executed significant financing activities, including closing **$5.0 million** and **$35.5 million** mortgages, and issued **288,427 shares** of Common Stock through preferred stock redemptions - On April 3, 2025, the company closed a **$35.5 million mortgage** on an office property in Austin, Texas, and used the proceeds to repay all outstanding obligations under the 2022 Credit Facility, which was then terminated[17](index=17&type=chunk) - In Q1 2025, the company closed a **$5.0 million variable-rate mortgage loan** on an office property in Los Angeles, California[17](index=17&type=chunk) - Redemptions of Series A1 and Series A Preferred Stock resulted in the issuance of **288,427 shares of Common Stock** during Q1 2025[16](index=16&type=chunk) [Preferred Stock Dividends](index=4&type=section&id=Dividends) The company declared quarterly cash dividends for its Series A, Series A1, and Series D Preferred Stock, payable on April 15, 2025 Quarterly Dividend per Share | Series | Dividend Amount | | :--- | :--- | | Series A Preferred Stock | $0.34375 | | Series A1 Preferred Stock | $0.44250 | | Series D Preferred Stock | $0.353125 | [Financial Statements](index=8&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=8&type=section&id=CREATIVE%20MEDIA%20%26%20COMMUNITY%20TRUST%20CORPORATION%20AND%20SUBSIDIARIES%20Consolidated%20Balance%20Sheets) As of March 31, 2025, CMCT's total assets were **$882.3 million**, with total liabilities at **$566.9 million** and total equity at **$294.6 million**, reflecting slight changes from year-end 2024 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $882,343 | $889,555 | | Total Liabilities | $566,909 | $562,492 | | Total Equity | $294,635 | $306,264 | [Consolidated Statements of Operations](index=9&type=section&id=CREATIVE%20MEDIA%20%26%20COMMUNITY%20TRUST%20CORPORATION%20AND%20SUBSIDIARIES%20Consolidated%20Statements%20of%20Operations) In Q1 2025, total revenues were **$32.3 million**, resulting in a net loss of **$(6.3) million** and a net loss attributable to common stockholders of **$(11.9) million** Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $32,295 | $33,998 | | Total Expenses | $37,295 | $37,307 | | Net Loss | $(6,272) | $(3,905) | | Net Loss Attributable to Common Stockholders | $(11,898) | $(12,295) | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Funds from Operations (FFO)](index=10&type=section&id=Funds%20from%20Operations%20Attributable%20to%20Common%20Stockholders) FFO attributable to common stockholders for Q1 2025 improved to **$(5.4) million**, or **$(9.42) per diluted share**, after adjusting net loss for depreciation and amortization FFO Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(11,898) | $(12,295) | | Depreciation and amortization | 6,560 | 6,478 | | FFO attributable to common stockholders | $(5,405) | $(5,921) | [Core Funds from Operations (Core FFO)](index=11&type=section&id=Core%20Funds%20from%20Operations%20Attributable%20to%20Common%20Stockholders) Core FFO attributable to common stockholders declined to **$(5.1) million**, or **$(8.85) per diluted share**, in Q1 2025, after further adjustments to FFO Core FFO Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | FFO attributable to common stockholders | $(5,405) | $(5,921) | | Redeemable preferred stock redemptions | 300 | 806 | | Transaction-related costs | 26 | 690 | | Core FFO attributable to common stockholders | $(5,079) | $(4,425) | [Net Operating Income (NOI)](index=12&type=section&id=Reconciliation%20of%20Net%20Operating%20Income) Total segment NOI decreased to **$11.8 million** in Q1 2025, primarily due to lower Office and Multifamily NOI, partially offset by Hotel segment growth Segment Net Operating Income (NOI) (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Office | $7,101 | $7,865 | | Hotel | $4,684 | $4,062 | | Multifamily | $(620) | $917 | | Lending | $590 | $789 | | **Total Segment NOI** | **$11,755** | **$13,633** | [Forward-Looking Statements](index=7&type=section&id=FORWARD-LOOKING%20STATEMENTS) This press release contains forward-looking statements regarding management's plans and objectives, which are subject to various risks and uncertainties - This press release contains forward-looking statements regarding management's plans and objectives, which are subject to various risks and uncertainties These statements are not guarantees of future performance and actual results could differ materially[30](index=30&type=chunk)

Management and Operations - The company relies on the Administrator and Operator for management and administration services, which are critical for its operations [88]. - The company faces risks related to the departure of key personnel from the Administrator and Operator, which could adversely affect its financial condition and results [90]. - The Master Services Agreement with the Administrator renews automatically each year, limiting the company's ability to terminate it without cause [105]. - The Administrator and Operator receive fees regardless of the company's performance, which may reduce their incentive to seek profitable opportunities [107]. - The Administrator and Operator have broad discretion over day-to-day operations and capital deployment, which may not always align with stockholder interests [111]. - Conflicts of interest may arise as directors and executive officers hold positions with the Operator and Administrator, potentially affecting decisions made in the best interest of stockholders [114]. Financial Risks and Performance - The company carries commercial liability and business interruption insurance, but there is no assurance that it will not experience uninsured losses [94]. - The company may incur substantial costs if it seeks to internalize management functions, with uncertain outcomes regarding key personnel retention [92]. - The company may experience poor performance or losses due to limited liability of its Administrator and Operator under the Master Services Agreement [134]. - The company’s Board of Directors can revoke its REIT election without stockholder approval, which could adversely affect total returns to stockholders [130]. - The company may incur substantial costs in protecting its assets if a significant tenant defaults [145]. - The company may not generate sufficient cash flow to meet its debt service obligations, which could impact its ability to fund operations and capital expenditures [216]. - If the company incurs additional indebtedness for future projects, its debt service obligations could increase, potentially limiting its ability to make distributions [218]. Market and Economic Conditions - The COVID-19 pandemic has led to long-term changes in workplace practices, potentially decreasing demand for office space and impacting rental income [102]. - The company is subject to risks associated with the real estate industry, including adverse changes in economic conditions and increased vacancies [137]. - A significant portion of the company's properties are located in California, exposing it to greater economic risks and regulatory challenges [139]. - The company anticipates significant competition in the office real estate market, which may pressure rental rates and occupancy levels [177]. - The performance of the lodging industry is closely linked to the general economy and U.S. GDP growth [149]. - Market conditions, including financial market deterioration, could impact credit availability and the ability to meet debt obligations, affecting overall financial health [172]. Regulatory and Compliance Risks - The Maryland Business Combination Act may restrict third parties from acquiring control without Board approval, potentially limiting stockholder opportunities [119]. - The company has opted out of certain provisions of the Maryland Control Share Acquisition Act, which could affect voting rights in control share acquisitions [124]. - The company has implemented takeover defenses, including a two-thirds vote requirement to remove a director, which may limit stockholder influence [125]. - Compliance with the Americans with Disabilities Act (ADA) and other regulations may require unanticipated expenditures, impacting cash available for distributions [192]. - Non-compliance with SBA regulations could result in liability being transferred back to the company's lending operations, adversely affecting financial condition [244]. Environmental and Climate Risks - The company’s operations are susceptible to natural disasters, particularly in California, which could significantly impact its properties and financial performance [96]. - The company faces risks from climate change, which could lead to increased costs for property insurance and energy, adversely affecting financial conditions [191]. - The company’s properties are primarily located in California, which is at risk of extreme weather due to climate change, potentially increasing operational costs [190]. - Environmental regulations may impose liability for contamination, which could result in significant costs for the company [184]. Debt and Financing - The company has incurred significant indebtedness and may incur additional debt to fund future acquisitions and operational needs [205]. - High interest rates may persist in 2025, making it difficult for the company to finance or refinance assets, potentially reducing the number of properties it can acquire [212]. - The company expects a continued high interest rate environment in 2025, which will increase the variable rate component of its indebtedness, adversely affecting cash flows and distributions [215]. - The company may be required to borrow funds or sell assets to fund dividends, potentially at unfavorable rates [259]. Tenant and Lease Risks - The company has a significant tenant concentration, with Kaiser accounting for 22.9% of its annualized rental income for the year ended December 31, 2024 [143]. - 29.0% of the rentable square footage of the office portfolio was available for lease as of December 31, 2024 [148]. - 11.9% of the occupied square footage of office properties is scheduled to expire in 2025 [148]. - The company may face challenges in renewing leases or releasing apartment units at favorable terms [158]. - The company may be adversely affected by trends in the office real estate industry, such as telecommuting and shared office spaces [147]. Investment Strategy and Growth - The company is focused on Class A and creative office assets but may expand into multifamily residential and real estate debt to broaden its investment strategy [129]. - The company may be unable to deploy capital effectively for growth due to competition and market conditions [159]. - Changes in the Operator's acquisition process may result in inferior due diligence and transaction standards, negatively impacting asset performance [129]. Lending Operations - The company’s lending operations are concentrated in the hospitality industry, which exposes it to significant risks from economic downturns and other adverse events [232]. - The company’s SBA 7(a) Program loans are subject to delinquency and foreclosure risks, particularly due to the nature of the hospitality industry [236]. - The company has achieved national preferred lender program (PLP) status, allowing expedited loan processing without prior SBA review [243]. - Defaults on SBA 7(a) Program loans could materially adversely affect the company's business, financial condition, and cash flow [240]. Stockholder Rights and Dividends - The rights of Common Stock holders to receive dividends rank junior to those of Preferred Stock holders [277]. - Upon liquidation, Preferred Stock holders are entitled to receive a liquidation preference before any distribution to Common Stock holders [278]. - The company may pay required dividends in shares of stock rather than cash, leading to potential tax liabilities for stockholders [264]. - Delays in deploying capital may adversely affect the company's ability to pay distributions on Common and Preferred Stock [284]. - Cash distributions to holders of Preferred and Common Stock may be less frequent or lower than expected, depending on various factors [285].

Financial Data and Key Metrics Changes - Core FFO improved by approximately $4.5 million from the prior quarter primarily due to higher NOI, lower interest expense, and lower preferred dividends [11] - Net operating income (NOI) increased by $1.6 million from the third quarter, mainly driven by the Hotel Segment which increased by $1.1 million [11] - FFO was negative $8.7 million or negative $0.93 per diluted share compared to negative $9.9 million or negative $4.07 per diluted share in the prior year [27] - Core FFO was negative $7 million or negative $0.75 per diluted share compared to negative $8.4 million or negative $3.46 per diluted share in the prior year [27] Business Line Data and Key Metrics Changes - Hotel operations experienced a decrease in NOI of approximately $828,000, resulting in $2.1 million for Q4 2024 compared to $2.9 million in the prior year [26] - Multifamily segment reported NOI of approximately $855,000 during Q4 2024, down from approximately $1.1 million in the prior year [25] - Office segment NOI for Q4 2024 was $5.2 million versus $5.4 million during Q4 2023, driven by a decrease in rental revenue at the Oakland property [24] Market Data and Key Metrics Changes - Total occupancy in the multifamily segment declined about 220 basis points from the prior quarter but increased 240 basis points year-over-year [17] - Office lease percentage was 71% at the end of Q4, and 82% when excluding one office building in Oakland [20] Company Strategy and Development Direction - Company remains focused on improving balance sheet and liquidity, growing multifamily portfolio, and reducing traditional office assets [7] - Significant progress made in reducing corporate debt, with the balance on the credit facility down to $15 million from $169 million [9] - Company is evaluating asset sales to strengthen balance sheet and improve liquidity [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment for financing office properties but expressed optimism about progress made in refinancing and reducing debt [9] - Leasing activity has been steadily picking up, particularly in L.A. and Austin assets, despite work-from-home trends impacting occupancy [21] Other Important Information - Company is seeking shareholder approval for a 1 for 25 reverse stock split to improve stock price following recent preferred common redemptions [28] - Renovation projects are underway, including a $21 million room renovation at the Sheraton Grand Hotel [14] Q&A Session Summary - No questions were raised during the Q&A session [29]