```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]

Financial Data and Key Metrics Changes - Core FFO improved by approximately $4.5 million from the prior quarter 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, primarily 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 challenges in 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]

Financial Performance - The net loss attributable to common stockholders for Q4 2024 was $16.6 million, or $1.78 per diluted share, compared to a net loss of $16.3 million, or $6.66 per diluted share in Q4 2023[5]. - Total revenues for Q4 2024 were $27,459, a decrease of 6.8% compared to $29,468 in Q4 2023[31]. - Net loss attributable to common stockholders for Q4 2024 was $16,606, compared to a loss of $16,263 in Q4 2023, representing an increase in loss of 2.1%[35]. - Funds from Operations (FFO) attributable to common stockholders for Q4 2024 was $(8,656), a slight improvement from $(9,939) in Q4 2023[35]. - Core Funds from Operations (Core FFO) attributable to common stockholders for Q4 2024 was $(6,953), compared to $(8,445) in Q4 2023, indicating a 17.6% improvement[39]. - Basic net loss per share for Q4 2024 was $(1.78), compared to $(6.66) in Q4 2023, showing a significant reduction in loss per share[31]. - The company reported a net loss attributable to the Company of $10,265,000 for Q4 2024, compared to a net loss of $8,402,000 in Q4 2023, indicating an increase in losses of 22.1%[43][44]. Operational Metrics - The same-store office portfolio was 71.0% leased, with an annualized rent per occupied square foot of $60.48, up from $57.28 in the previous year[7]. - The multifamily segment NOI decreased to $855,000 for Q4 2024, compared to $1.1 million in Q4 2023, with an occupancy rate of 81.7%[11]. - Hotel segment NOI was $2.1 million for Q4 2024, down from $2.9 million in Q4 2023, with occupancy dropping to 54.5% from 69.9%[9]. - The company executed 175,654 square feet of leases with terms longer than 12 months in the same-store office portfolio during Q4 2024[7]. - Total segment net operating income (NOI) was $9.2 million for Q4 2024, down from $10.8 million in Q4 2023[7]. - Cash net operating income for the three months ended December 31, 2024, was $10,166,000, a decrease of 21.3% compared to $12,915,000 for the same period in 2023[43][44]. - Segment net operating income for the same period in 2024 was $9,158,000, down from $10,764,000 in 2023, reflecting a decline of 14.9%[43][44]. - Cash NOI for the real estate segments was $6,234,000 in Q4 2024, down from $6,815,000 in Q4 2023, a decrease of 8.5%[43][44]. - The total cash NOI for the lending segment was $980,000 in Q4 2024, compared to $1,311,000 in Q4 2023, reflecting a decline of 25.3%[43][44]. Financial Position - Total assets decreased from $891,200,000 as of December 31, 2023, to $889,555,000 as of December 31, 2024, reflecting a decline of approximately 0.2%[30]. - Investments in real estate increased from $704,762,000 in 2023 to $709,194,000 in 2024, representing a growth of about 0.6%[30]. - Total liabilities rose from $514,431,000 in 2023 to $562,492,000 in 2024, indicating an increase of approximately 9.3%[30]. - Cash and cash equivalents increased from $19,290,000 in 2023 to $20,262,000 in 2024, a rise of about 5.0%[30]. - The company reported a significant increase in redeemable preferred stock from $0 in 2023 to $20,799,000 in 2024[30]. - Total stockholders' equity decreased from $374,403,000 in 2023 to $304,516,000 in 2024, a decline of approximately 18.6%[30]. Financing Activities - The company completed three property-level financings, reducing the balance on its recourse credit facility to $15 million from $169 million[3]. - The company closed a $105.0 million fixed-rate mortgage on three Los Angeles office properties and a variable-rate mortgage loan on its hotel property with an initial advance of $84.3 million[14]. - The company reported a loss on early extinguishment of debt of $1,416 for the year ended December 31, 2024[31]. - Redeemable preferred stock dividends declared for the year ended December 31, 2024 were $29,686, compared to $25,731 in 2023, reflecting an increase of 15.5%[31]. Future Outlook - The company plans to complete a 36-unit multifamily development in Echo Park, Los Angeles, expected to be completed in Q3 2025[3]. - The company plans to maintain or increase occupancy levels and raise in-place rents to existing market rents as part of its future growth strategy[27]. - Forward-looking statements indicate potential risks including fluctuations in market rents and the impact of inflation and interest rates on operations[27]. Expense Management - Total expenses for Q4 2024 were $37,287, an increase of 1.9% from $36,601 in Q4 2023[31]. - General and administrative expenses increased to $675,000 in Q4 2024 from $1,443,000 in Q4 2023, a reduction of 53.2%[43][44]. - The company’s transaction-related costs were $31,000 in Q4 2024, compared to $1,023,000 in Q4 2023, indicating a significant reduction of 96.9%[43][44]. - Interest expense for the three months ended December 31, 2024, was $8,356,000, compared to $9,465,000 in the same period of 2023, showing a decrease of 11.7%[43][44]. Performance Metrics - Core FFO and FFO should not be used as the sole measure of performance, as they exclude depreciation and amortization, which can materially impact operating results[21]. - The company emphasizes that Segment NOI and Cash NOI are not measures of operating results as per GAAP, but are useful for reflecting revenues and expenses associated with property operations[24].

Real Estate Portfolio - As of September 30, 2024, the real estate portfolio consisted of 27 assets, with 13 office properties totaling approximately 1.3 million rentable square feet at 72.2% occupancy[235] - The three multifamily properties achieved a 92.0% occupancy rate as of September 30, 2024[235] - The company has nine development sites, three of which are currently utilized as parking lots[235] - The strategy focuses on premier multifamily properties and creative office assets in vibrant metropolitan communities, targeting areas with high barriers to entry and positive population trends[236] Financial Performance - Total revenues for the three months ended September 30, 2024, were $28.6 million, a 1.8% increase from $28.1 million in the same period last year[259] - Total revenues for the nine months ended September 30, 2024, were $97.1 million, an increase of 8.1% compared to $89.8 million for the same period in 2023[286] - The net loss for the three months ended September 30, 2024, was $10.6 million, a significant reduction from a net loss of $16.6 million in the same period last year[259] - Net loss for the nine months ended September 30, 2024, was $15.3 million, a significant improvement from a net loss of $42.6 million in the same period of 2023, reflecting a decrease of $27.3 million[286] Revenue Breakdown - Office revenue decreased to $13.8 million for the three months ended September 30, 2024, down 1.6% from $14.0 million in the same period of 2023[267] - Hotel revenue decreased to $7.1 million for the three months ended September 30, 2024, a decline of 10.1% from $7.9 million in the same period of 2023, primarily due to lower occupancy[268] - Multifamily revenue increased to $4.8 million for the three months ended September 30, 2024, up 43.3% from $3.3 million in the same period of 2023, driven by higher occupancy and rent[270] - Office revenue increased to $42.5 million for the nine months ended September 30, 2024, a 2.5% increase from $41.5 million for the same period in 2023[294] - Multifamily revenue rose to $15.0 million for the nine months ended September 30, 2024, representing a 73.4% increase from $8.6 million for the same period in 2023[297] Occupancy and Rent Trends - As of September 30, 2024, occupancy rates for the office portfolio decreased to 72.2% from 82.6% in the previous year, while annualized rent per occupied square foot increased to $60.31 from $56.93[245] - Multifamily occupancy improved to 92.0% as of September 30, 2024, up from 84.1% in the previous year, with monthly rent per occupied unit at $2,555 compared to $2,869[251] - Hotel occupancy decreased to 71.4% for the nine months ended September 30, 2024, down from 76.9% in the previous year, with ADR increasing to $203.98 from $193.84[252] Expenses and Losses - Total expenses decreased by 16.4% to $37.9 million for the three months ended September 30, 2024, compared to $45.4 million in the previous year[259] - Office expenses increased to $7.6 million for the three months ended September 30, 2024, a rise of 19.3% from $6.3 million in the same period of 2023[274] - Multifamily expenses increased to $10.4 million for the nine months ended September 30, 2024, compared to $8.0 million for the same period in 2023, primarily due to expenses from newly acquired properties[304] Financing and Capital Structure - Financing strategies may include offerings of common stock, preferred stock, credit facilities, and cash flows from operations[243] - The company redeemed 2,589,606 shares of Series A1 Preferred Stock and 2,167,156 shares of Series A Preferred Stock in September 2024[328] - The aggregate commitments under the 2022 Credit Facility were reduced from $206.2 million to $169.3 million following the Third Modification Agreement[325] - The company refinanced its 2018 revolving credit facility with a new 2022 Credit Facility, allowing borrowing up to $150.0 million, with $169.3 million outstanding as of September 30, 2024[335] Cash Flow and Investments - Net cash provided by operating activities decreased by $0.9 million for the nine months ended September 30, 2024, compared to the same period in 2023[316] - Net cash used in investing activities decreased by $68.2 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to a decrease in real estate acquisitions of $96.7 million[317] - Net cash used in financing activities decreased by $61.3 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to net proceeds from the 2022 Credit Facility and mortgages of $7.3 million[318] Legal and Regulatory Matters - The company is not currently involved in any material pending or threatened legal proceedings that could materially affect its financial condition[360]

Financial Performance - Net loss attributable to common stockholders was $34.8 million, or $1.22 per diluted share for Q3 2024, compared to a net loss of $22.9 million, or $0.94 per diluted share in Q3 2023[6]. - Funds from operations (FFO) attributable to common stockholders was $(28.4) million, or $(1.00) per diluted share for Q3 2024, compared to $(7.5) million, or $(0.31) per diluted share in Q3 2023[7]. - Core FFO attributable to common stockholders was $(11.5) million, or $(0.40) per diluted share for Q3 2024, compared to $(7.1) million, or $(0.29) per diluted share in Q3 2023[7]. - Total revenues for the three months ended September 30, 2024, were $28,616 million, a 1.8% increase from $28,118 million in the same period of 2023[34]. - Rental and other property income increased to $18,150 million, up 6.4% from $17,061 million year-over-year[34]. - Total expenses decreased to $37,938 million, down 16.5% from $45,400 million in the same quarter of 2023[34]. - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $(34,775) million, compared to $(22,934) million in the same period of 2023[38]. - Funds from Operations (FFO) attributable to common stockholders for the three months ended September 30, 2024, was $(28,420) million, compared to $(7,478) million in 2023[38]. - Basic FFO per share for the three months ended September 30, 2024, was $(1.00), compared to $(0.31) in the same period of 2023[38]. - The company reported a net loss before provision for income taxes of $(10,561) million for the three months ended September 30, 2024, compared to $(16,093) million in 2023[34]. - The company experienced a loss from unconsolidated entities of $(1,239) million for the three months ended September 30, 2024, compared to a gain of $1,189 million in the same period of 2023[34]. - Total net loss attributable to the Company for the three months ended September 30, 2024, was $(10,384) thousand, compared to $(15,773) thousand for the same period in 2023, showing a 34% improvement[48]. Operational Metrics - Same-store office portfolio was 72.9% leased as of September 30, 2024, a decrease of 1,100 basis points year-over-year[8]. - Multifamily segment NOI increased to $508,000 for Q3 2024, compared to $(391,000) for the same period in 2023, with 92.0% occupancy[12]. - Hotel segment NOI was $973,000 for Q3 2024, down from $1.9 million in Q3 2023, primarily due to decreased occupancy from ongoing renovations[10]. - Total segment net operating income (NOI) was $7.6 million for Q3 2024, compared to $11.2 million for the same period in 2023[8]. - Cash net operating income for the total office segment for the three months ended September 30, 2024, was $6,415 thousand, down from $9,889 thousand in the same period of 2023, reflecting a 35% decrease[46]. - Segment net operating income for the total office segment for the three months ended September 30, 2024, was $5,419 thousand, compared to $9,318 thousand for the same period in 2023, a decline of 42%[46]. Asset and Liability Management - Total assets decreased from $891,200,000 on December 31, 2023, to $868,049,000 on September 30, 2024, representing a decline of approximately 2.6%[31]. - Cash and cash equivalents decreased from $19,290,000 to $18,454,000, a reduction of about 4.3%[31]. - Total liabilities increased from $514,431,000 to $524,389,000, reflecting a rise of approximately 1.8%[31]. - The company reported a decrease in investments in real estate, net, from $704,762,000 to $702,845,000, a decline of about 0.3%[31]. - Total stockholders' equity decreased from $374,403,000 to $320,961,000, a decline of approximately 14.3%[32]. - The Series A1 cumulative redeemable preferred stock saw an increase in shares issued and outstanding from 8,553,591 to 11,327,248[31]. Future Outlook and Strategy - The company plans to invest proceeds from refinancing and potential asset sales into premier multifamily properties[4]. - The company completed renovations of nearly 300 hotel rooms, with plans to finalize all 503 rooms by year-end 2024[4]. - The company anticipates future growth and plans to raise in-place rents to align with existing market rents[29]. - The company is focused on maintaining or increasing occupancy levels amidst fluctuations in market rents and inflationary pressures[29]. - The company plans to continue focusing on market expansion and new product development to enhance future performance[36]. - Forward-looking statements indicate potential risks including economic conditions and interest rate fluctuations that may impact profitability[29]. Shareholder Information - Weighted average shares of common stock outstanding increased to 28,493 million from 24,422 million year-over-year[38]. - The basic weighted average shares of common stock outstanding for the three months ended September 30, 2024, increased to 28,493 thousand from 24,422 thousand in the same period of 2023, a growth of 17%[42]. - Redeemable preferred stock redemptions for the three months ended September 30, 2024, amounted to $16,098 thousand, significantly higher than $352 thousand in the same period of 2023[42]. - Interest expense for the three months ended September 30, 2024, was $(8,830) thousand, compared to $(8,556) thousand for the same period in 2023, indicating a slight increase of 3%[46]. - The company reported transaction-related costs of $526 thousand for the three months ended September 30, 2024, compared to $38 thousand for the same period in 2023, marking a significant increase[46]. - Depreciation and amortization for the three months ended September 30, 2024, was $6,423 thousand, down from $16,082 thousand in the same period of 2023, a reduction of 60%[46].