Financial Performance - Total revenue for the three months ended September 30, 2025, was $28.1 million, an increase of 14.5% compared to $24.6 million for the same period in 2024[135] - The net income for the three months ended September 30, 2025, was $274,000, a significant decrease from $91.5 million for the same period in 2024[135] - Total revenue for the nine months ended September 30, 2025, was $84.8 million, up from $80.5 million in 2024, reflecting a 5% increase[148] - Net loss for the nine months ended September 30, 2025, was $47.5 million, compared to a net income of $14.5 million in 2024, representing a decline of $62.0 million[148] - Total costs and expenses decreased to $91.8 million in 2025 from $108.0 million in 2024, a reduction of 15%[148] Income Sources - Interest income increased to $1.2 million for the three months ended September 30, 2025, from $0.5 million for the same period in 2024, reflecting an increase in the average balance of performing loans[136] - Other income rose to $23.5 million during the three months ended September 30, 2025, compared to $16.2 million for the same period in 2024, primarily due to a $7.0 million legal settlement[137] - Interest income rose significantly to $3.4 million in 2025 from $1.4 million in 2024, marking a 147% increase driven by a higher average balance of performing loans and new lending investments[151] - Other income increased to $42.5 million in 2025 from $35.5 million in 2024, a growth of 20% primarily due to a $7.0 million legal settlement related to a legacy asset[152] Expenses - Real estate expenses increased to $15.6 million for the three months ended September 30, 2025, from $12.9 million in 2024, largely due to a legal settlement[141] - General and administrative expenses decreased to $11.3 million in 2025 from $16.5 million in 2024, a reduction of 32% due to lower management fees[158] Cash Flow and Financial Position - Cash flows used in operating activities improved to $(3.7) million in 2025 from $(24.4) million in 2024, indicating a positive trend in operational cash flow[168] - As of September 30, 2025, the company was in compliance with all financial covenants related to its debt facilities[173] Interest Rate Risks - In a rising interest rate environment, defaults could increase, leading to additional credit losses that adversely affect liquidity and operating results[177] - The company monitors the spreads between interest-earning assets and interest-bearing liabilities and may implement hedging strategies to mitigate interest rate risks[179] - Estimated changes in annual net income based on interest rate fluctuations show a potential decrease of $335,000 if rates increase by 100 basis points[181] - As of September 30, 2025, the company has $146.2 million in floating-rate debt obligations and $55.8 million in cash and cash equivalents[181] - A decrease of 100 basis points in interest rates could result in an increase of $335,000 in net income[181] - The company does not engage in derivative contracts for speculative purposes or to hedge against credit risk[179] - Interest rates are influenced by various factors, including governmental policies and economic conditions, which are beyond the company's control[178] - The potential impact of a 50 basis point increase in interest rates could lead to a decrease of $168,000 in net income[181] - The company aims to limit the effects of interest rate changes on operations through interest rate swaps and caps[179] - Actual results may differ significantly from estimated changes in net income due to interest rate fluctuations[180] Asset Valuation - As of September 30, 2025, the aggregate carrying value of the Asbury Park Waterfront investment was approximately $130.7 million[123] - As of September 30, 2025, the aggregate carrying value of the monetizing portfolio was approximately $160.2 million, primarily consisting of loans and operating properties[128] - The carrying value of the Magnolia Green assets was $27.7 million as of September 30, 2025, with 2,237 residential lots sold to homebuilders[126][127] - The fair value of Safe Shares was $209.5 million based on a closing price of $15.49 as of September 30, 2025[132]
Star (STHO) - 2025 Q3 - Quarterly Report