Financial Performance Overview

The company reported a net loss of $21.5 million for Q1 2024, compared to a net loss of $19.5 million for Q1 2023. The increased net loss was primarily due to:

• A decrease in rental income of $0.7 million due to lower occupancy at Cityplace Tower
• A decrease in interest and dividend income of $1.4 million
• An increase in interest expense of $1.0 million due to higher debt levels

These negative factors were partially offset by a $24.9 million change in unrealized gains/losses on investments.

Revenue and Profit Trends

• Rental income decreased 14.8% for non-same store properties, driven by lower occupancy at Cityplace Tower
• Same store rental income decreased 7.3%, due to tenant vacancies
• Interest and dividend income decreased from $10.1 million in Q1 2023 to $8.7 million in Q1 2024, a 14% drop

Balance Sheet Strengths and Weaknesses

Strengths

• Strong cash position, with $20.2 million of cash at quarter end
• Ability to access $33.1 million of restricted cash reserves if needed

Weaknesses

• High degree of leverage, with significant near-term debt maturities
• Cityplace Tower loan maturity in March 2025 still needs long-term refinancing solution
• Negative cash flow from operations of $2.6 million

Future Outlook

The company believes it has adequate liquidity to meet its obligations for the next 12 months. Key factors influencing the future outlook include:

• Ongoing renovation of Cityplace Tower requiring $190-210 million of additional capital
• Potential to refinance floating rate debt into longer-term fixed rate debt
• Access to capital markets for future debt and equity issuances is key but may be constrained
• REIT distribution requirements may limit ability to fund capital expenditures from operating cash flow

The company’s operating cash flows, debt financing availability, and capital markets access will be essential in determining the future outlook.

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