Overview

The company’s revenue was $25.9 million in the first quarter of 2024, down slightly from $26.1 million in the first quarter of 2023. However, the company’s net loss increased from $0.4 million in Q1 2023 to $6 million in Q1 2024, primarily due to higher interest expense and changes in the fair value of derivative liabilities.

The company continues to face high preferred stock dividends and redemption payments, which contributed significantly to the net loss attributable to common shareholders of $8.7 million. The company redeemed $3.2 million of Series D Preferred Stock by issuing common shares during the quarter.

Revenue and Expenses

Category	Q1 2024	Q1 2023	Change
Total Revenue	$25.9 million	$26.1 million	-0.7%
Property Operating Expenses	$9.1 million	$9 million	+1.1%
Depreciation & Amortization	$6.6 million	$7.5 million	-11.6%
Interest Expense	$7.4 million	$6.5 million	+14.3%

• The slight revenue decline was driven by lower lease amortization revenue and non-property revenue
• Property operating expenses increased slightly due to higher insurance costs
• Depreciation decreased due to recent property acquisitions
• Interest expense rose due to higher debt balances and borrowing rates

Net Operating Income

• Same-property NOI increased 2.7% to $15.5 million, driven by a 2.1% increase in property revenue. This indicates stable performance from the operating property portfolio.

Cash Flow

• Operating cash flow increased 42% to $5.2 million due to lower expenses and higher Same Property NOI.
• Investing cash flow was relatively unchanged at -$4.1 million.
• Financing cash outflow declined from $3.3 million to $2.4 million due to lower distributions and no preferred stock repurchases.

Balance Sheet

• Total debt outstanding remained relatively steady at approximately $497 million.
• The company redeemed $3.2 million of Series D Preferred Stock, reducing the liquidation preference to $95.9 million.
• Cash balances declined from $52.1 million to $38.5 million, providing over 6 months of liquidity.

Outlook

The company continues to face pressure from its high cost of capital driven by the Series D Preferred Stock and Convertible Notes. It intends to continue redeeming preferred shares with common stock and refinancing debt maturities.

Delivering pre-leased space, filling vacancies, and increasing lease rates through renovations will be management’s focus in improving cash flow. Non-core asset sales may also assist in providing liquidity over the coming year.

Table of Contents

Overview

Discusses top and bottom line performance, net loss drivers, and preferred stock redemptions. Provides a snapshot of the quarter’s operating results.

Revenue and Expenses

Summarizes the income statement line items, compares to prior year, and analyzes the underlying factors driving each category.

Net Operating Income

Highlights same-property performance to show the portfolio’s operating trends.

Cash Flow

Reviews operating, investing, and financing cash flow activity for the quarter. Discusses the major sources and uses of cash.

Balance Sheet

Describes changes in debt balances, preferred stock, and cash balances. Provides insight into the company’s financial flexibility.

Outlook

Discusses management’s initiatives for addressing high cost of capital and improving financial performance. Summarizes the key opportunities and challenges ahead.