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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-09043

BROAD STREET REALTY, INC.

(Exact name of registrant as specified in its charter)


Delaware	36-3361229
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
11911 Freedom Drive, Suite 450 Reston, Virginia	20190
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (301) 828-1200

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    None

    N/A

    N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~November 6, 2024, the registrant had 35,041,443 shares of common stock outstanding.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Condensed and Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2526
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4446
Item 4.	Controls and Procedures	4446
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	4547
Item 1A.	Risk Factors	4547
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4647
Item 3.	Defaults Upon Senior Securities	4647
Item 4.	Mine Safety Disclosures	4647
Item 5.	Other Information	4647
Item 6.	Exhibits	4748
	Signatures	4849

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

	June 30, 2024			December 31, 2023
	September 30, 2024			December 31, 2023
				(audited)
Assets
Real estate properties
Land	$	54,936		$	54,936
Building and improvements		287,~~453~~476			281,598
Intangible lease assets		3332,~~127~~967			33,374
Construction in progress		~~248~~502			5,462
Furniture and equipment		1,~~749~~756			1,711
Less accumulated depreciation and amortization		(5963,~~489~~187	)		(51,890	)
Total real estate properties, net		~~318~~314,~~024~~450			325,191
Cash and cash equivalents		18,~~857~~013			9,779
Restricted cash		4,~~603~~802			4,018
Straight-line rent receivable		34,~~914~~043			3,090
Tenant and accounts receivable, net of allowance of $316 and $194, respectively		1,195			1,918
Tenant and accounts receivable, net of allowance of $332 and $194, respectively		1,424			1,918
Derivative assets		~~1,218~~245			796
Other assets, net		56,~~287~~439			6,327
Total Assets	$	~~353~~349,~~098~~416		$	351,119
Liabilities and Equity
Liabilities
Mortgage and other indebtedness, net (includes $12,303 and $16,187, respectively, at fair value under the fair value option)	$	242,954		$	231,049
Mortgage and other indebtedness, net (includes $15,450 and $16,187, respectively, at fair value under the fair value option)	$	245,828		$	231,049
Accounts payable and accrued liabilities		1114,~~711~~373			15,457
Unamortized intangible lease liabilities, net		~~475~~379			633
Payables due to related parties		3545			63
Deferred revenue		~~845~~946			827
Total liabilities		~~256~~261,~~020~~571			248,029
Commitments and contingencies
Temporary Equity
Redeemable noncontrolling Fortress preferred interest		9396,~~402~~372			87,288
Permanent Equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized: Series A preferred stock, 20,000 shares authorized, 500 shares issued and outstanding at each of June 30, 2024 and December 31, 2023		—			—
Preferred stock, $0.01 par value, 1,000,000 shares authorized: Series A preferred stock, 20,000 shares authorized, 500 shares issued and outstanding at each of September 30, 2024 and December 31, 2023		—			—
Common stock, $0.01 par value, 300,000,000 shares authorized, 34,950,565 and 33,417,101 issued and outstanding at June 30, 2024 and December 31, 2023, respectively		350			334
Common stock, $0.01 par value, 300,000,000 shares authorized, 35,041,443 and 33,417,101 issued and outstanding at September 30, 2024 and December 31, 2023, respectively		350			334
Additional paid in capital		4743,~~200~~518			55,186
Accumulated deficit		(4045,~~860~~777	)		(36,387	)
Accumulated other comprehensive income		~~2,547~~304			547
Total Broad Street Realty, Inc. stockholders' equity		9,237			19,680
Total Broad Street Realty, Inc. stockholders' (deficit) equity		(1,605	)		19,680
Noncontrolling interest		(56,~~561~~922	)		(3,878	)
Total permanent equity		3,676			15,802
Total permanent (deficit) equity		(8,527	)		15,802
Total Liabilities, Temporary Equity and Permanent Equity	$	~~353~~349,~~098~~416		$	351,119

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues
Rental income	$	9,~~255~~666		$	109,~~257~~206		$	1828,~~766~~432		$	2029,~~465~~671
Commissions		~~824~~503			~~663~~751			1,~~326~~829			12,~~519~~270
Management fees and other income		5244			5390			~~110~~154			~~121~~211
Total revenues		10,~~131~~213			10,~~973~~047			2030,~~202~~415			2232,~~105~~152
Operating Expenses
Cost of services		~~644~~507			~~529~~693			1,~~065~~572			1,~~085~~778
Property operating		2,~~734~~800			3,~~145~~027			58,~~740~~540			69,~~206~~233
Depreciation and amortization		3,~~790~~698			53,~~290~~986			711,~~609~~307			1014,~~858~~844
Impairment of real estate assets		~~331~~119			~~167~~762			~~441~~560			~~167~~929
Impairment of real estate assets held for sale		—			~~1,957~~396			—			12,~~957~~353
Bad debt expense		6815			2440			~~210~~225			66106
General and administrative		3,~~022~~002			2,~~820~~990			69,~~502~~504			69,~~350~~340
Total operating expenses		10,~~589~~141			1311,~~932~~894			2131,~~567~~708			2638,~~689~~583
Gain on disposal of property		—			11,619			—			11,619
(Loss) gain on disposal of property		—			(108	)		—			11,511
Operating (loss) gain		(458	)		8,660			(1,365	)		7,035
Operating gain (loss)		72			(1,955	)		(1,293	)		5,080
Other income (expense)
Interest and other income		~~251~~277			17106			~~468~~745			30136
Derivative fair value adjustment		78(1,432	)		~~194~~(33	)		~~967~~(465	)		15(18	)
Net gain (loss) on fair value change of debt held under the fair value option		210			(1,131	)		2,553			2,104
Net (loss) gain on fair value change of debt held under the fair value option		(557	)		(816	)		1,996			1,288
Interest expense		(4,~~556~~695	)		(4,~~735~~585	)		(813,~~889~~584	)		(914,~~516~~101	)
Loss on extinguishment of debt		—			(1521	)		(7	)		(1536	)
Other expense		~~(26~~11	)		(1351	)		(3221	)		(1970	)
Total other expense		(46,~~043~~396	)		(5,~~683~~400	)		(411,~~940~~336	)		(712,~~401~~801	)
Net (loss) income before income taxes		(4,501	)		2,977			(6,305	)		(366	)
Net loss before income taxes		(6,324	)		(7,355	)		(12,629	)		(7,721	)
Income tax benefit (expense)		—56			92,276			(~~134~~78	)		13,~~692~~968
Net (loss) income	$	(4,501	)	$	2,986		$	(6,439	)	$	1,326
Net loss	$	(6,268	)	$	(5,079	)	$	(12,707	)	$	(3,753	)
Less: Preferred equity return on Fortress preferred equity		(3,~~084~~181	)		(3,~~569~~716	)		(69,~~106~~287	)		(610,~~996~~712	)
Less: Preferred equity accretion to redemption value		(~~973~~1,004	)		(~~756~~583	)		(23,~~352~~356	)		(1,~~171~~754	)
Less: Preferred OP units return		(~~144~~151	)		(~~118~~122	)		(~~283~~434	)		(~~230~~352	)
Plus: Net loss attributable to noncontrolling interest		1,~~127~~351			~~132~~1,633			13,~~966~~317			12,~~146~~779
Net loss attributable to common stockholders	$	(79,~~575~~253	)	$	(17,~~325~~867	)	$	(1322,~~214~~467	)	$	(513,~~925~~792	)
Net loss attributable to common stockholders per share
Basic and diluted	$	(0.2126	)	$	(0.0422	)	$	(0.3763	)	$	(0.1739	)
Weighted average shares outstanding
Basic and diluted		35,~~905~~997,~~412~~585			35,~~660~~691,~~560~~830			35,~~890~~926,369			35,~~518~~576,~~179~~699

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net (loss) income	$	(4,501	)	$	2,986		$	(6,439	)	$	1,326
Net loss	$	(6,268	)	$	(5,079	)	$	(12,707	)	$	(3,753	)
Other comprehensive income (loss):
Other comprehensive (loss) income:
Change in fair value due to credit risk on debt held under the fair value option		1(2,~~260~~243	)		~~(1,332~~287	)		~~2,000~~(243	)		~~400~~687
Total other comprehensive income (loss)		1,260			(1,332	)		2,000			400
Total other comprehensive (loss) income		(2,243	)		287			(243	)		687
Comprehensive (loss) income	$	(3,241	)	$	1,654		$	(4,439	)	$	1,726
Comprehensive loss	$	(8,511	)	$	(4,792	)	$	(12,950	)	$	(3,066	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(in thousands, except share amounts)

(Unaudited)

	Preferred Stock				Common Stock
	Shares		Par Value		Shares			Par Value		Additional Paid-InCapital			AccumulatedDeficit			Accumulated Other Comprehensive Income			Non-controllingInterest			Total Equity
Balance at December 31, 2022		500	$	—		32,256,974		$	323	$	72,097		$	(33,294	)	$	56		$	(437	)	$	38,745
Forfeiture of restricted stock		—		—		(6,695	)		—		—			—			—			—			—
Shares surrendered for taxes upon vesting		—		—		(4,126	)		—		(6	)		—			—			—			(6	)
Stock-based compensation		—		—		166,125			1		213			—			—			—			214
Preferred equity return on preferred equity investment		—		—		—			—		(3,427	)		—			—			—			(3,427	)
Preferred equity accretion		—		—		—			—		(415	)		—			—			—			(415	)
Preferred OP Units return		—		—		—			—		(112	)		—			—			66			(46	)
Other comprehensive income		—		—		—			—		—			—			1,732			—			1,732
Net loss		—		—		—			—		—			(646	)		—			(1,014	)		(1,660	)
Balance at March 31, 2023		500		—		32,412,278			324		68,350			(33,940	)		1,788			(1,385	)		35,137
Grants of restricted stock		—		—		419,618			—		—			—			—			—			—
Forfeiture of restricted stock		—		—		(9,649	)		—		—			—			—			—			—
Stock-based compensation		—		—		287,743			7		544			—			—			—			551
Preferred equity return on preferred equity investment		—		—		—			—		(3,569	)		—			—			—			(3,569	)
Preferred equity accretion		—		—		—			—		(756	)		—			—			—			(756	)
Preferred OP Units return		—		—		—			—		(118	)		—			—			164			46
Other comprehensive loss		—		—		—			—		—			—			(1,332	)		—			(1,332	)
Net income (loss)		—		—		—			—		—			3,118			—			(132	)		2,986
Balance at June 30, 2023		500		—		33,109,990			331		64,451			(30,822	)		456			(1,353	)		33,063
Forfeiture of restricted stock		—		—		(3,447	)		—		—			—			—			—			—
Stock-based compensation		—		—		25,500			—		354			—			—			—			354
Preferred equity return on preferred equity investment		—		—		—			—		(3,716	)		—			—			—			(3,716	)
Preferred equity accretion		—		—		—			—		(583	)		—			—			—			(583	)
Preferred OP Units return		—		—		—			—		(122	)		—			—			122			—
Other comprehensive loss		—		—		—			—		—			—			287			—			287
Net loss		—		—		—			—		—			(3,446	)		—			(1,633	)		(5,079	)
Balance at September 30, 2023		500	$	—		33,132,043		$	331	$	60,384		$	(34,268	)	$	743		$	(2,864	)	$	24,326

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity (Continued)

(in thousands, except share amounts)

(Unaudited)

	Preferred Stock				Common Stock
	Shares		Par Value		Shares			Par Value		Additional Paid-InCapital			AccumulatedDeficit			Accumulated Other Comprehensive Income			Non-controllingInterest			Total Equity
Balance at December 31, 2023		500	$	—		33,417,101		$	334	$	55,186		$	(36,387	)	$	547		$	(3,878	)	$	15,802
Shares surrendered for taxes upon vesting		—		—		(27,087	)		—		(24	)		—			—			—			(24	)
Stock-based compensation		—		—		11,945			—		360			—			—			—			360
Preferred equity return on preferred equity investment		—		—		—			—		(3,022	)		—			—			—			(3,022	)
Preferred equity accretion		—		—		—			—		(1,379	)		—			—			—			(1,379	)
Preferred OP Units return		—		—		—			—		(139	)		—			—			139			—
Other comprehensive income		—		—		—			—		—			—			740			—			740
Net loss		—		—		—			—		—			(1,099	)		—			(839	)		(1,938	)
Balance at March 31, 2024		500		—		33,401,959			334		50,982			(37,486	)		1,287			(4,578	)		10,539
Grants of restricted stock		—		—		1,519,154			—		—			—			—			—			—
Stock-based compensation		—		—		29,452			16		419			—			—			—			435
Preferred equity return on preferred equity investment		—		—		—			—		(3,084	)		—			—			—			(3,084	)
Preferred equity accretion		—		—		—			—		(973	)		—			—			—			(973	)
Preferred OP Units return		—		—		—			—		(144	)		—			—			144			—
Other comprehensive income		—		—		—			—		—			—			1,260			—			1,260
Net loss		—		—		—			—		—			(3,374	)		—			(1,127	)		(4,501	)
Balance at June 30, 2024		500		—		34,950,565			350		47,200			(40,860	)		2,547			(5,561	)		3,676
Issuance of common stock		—		—		52,485			—		161			—			—			(161	)		—
Stock-based compensation		—		—		38,393			—		493			—			—			—			493
Preferred equity return on preferred equity investment		—		—		—			—		(3,181	)		—			—			—			(3,181	)
Preferred equity accretion		—		—		—			—		(1,004	)		—			—			—			(1,004	)
Preferred OP Units return		—		—		—			—		(151	)		—			—			151			—
Other comprehensive loss		—		—		—			—		—			—			(2,243	)		—			(2,243	)
Net loss		—		—		—			—		—			(4,917	)		—			(1,351	)		(6,268	)
Balance at September 30, 2024		500	$	—		35,041,443		$	350	$	43,518		$	(45,777	)	$	304		$	(6,922	)	$	(8,527	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities
Net (loss) income	$	(6,439	)	$	1,326
Net loss	$	(12,707	)	$	(3,753	)
Adjustments to reconcile net (loss) income to net cash from operating activities
Adjustments to reconcile net loss to net cash from operating activities
Deferred income taxes		—			(13,~~692~~968	)
Depreciation and amortization		711,~~609~~307			1014,~~858~~844
Amortization of deferred financing costs and debt discounts		~~415~~652			~~500~~657
Amortization of above and below market lease intangibles, net		~~145~~210			~~129~~227
Minimum multiple on preferred interests		—			(331	)
Loss on extinguishment of debt		7			1536
Gain on disposal of property		—			(11,~~619~~511	)
Impairment of real estate assets		~~441~~560			~~167~~929
Impairment of real estate assets held for sale		—			12,~~957~~353
Straight-line rent revenue		(~~746~~834	)		(~~734~~945	)
Straight-line rent expense		103			(2032	)
Stock-based compensation		~~795~~1,288			~~765~~1,119
Change in fair value of derivatives		~~(967~~465	)		~~(15~~18	)
Change in fair value of debt held under the fair value option		(21,~~553~~996	)		(21,~~104~~288	)
Bad debt expense		~~210~~225			66106
Write-off related party receivables		4			—
Write-off of pre-acquisition costs		1			—
Write-off related party receivables		5			—
Changes in operating assets and liabilities
Accounts receivable		~~513~~269			~~(322~~70	)
Other assets		~~818~~(467	)		~~918~~(198	)
Accounts payable and accrued liabilities		~~(688~~462	)		(21,~~535~~106	)
Payables due to related parties		(2818	)		107
Deferred revenues		18119			~~307~~(284	)
Net cash from operating activities		(~~343~~349	)		(23,~~354~~050	)
Cash flows from investing activities
Cash received on disposition of real estate, net of selling costs		—			2244,~~369~~779
Capitalized pre-acquisition costs, net of refunds		5			2—
Insurance proceeds		~~516~~2,125			—
Capital expenditures for real estate		(34,~~515~~038	)		(34,~~081~~829	)
Net cash from investing activities		(21,~~994~~908	)		1939,~~290~~950
Cash flows from financing activities
Borrowings under debt agreements		37,082			821,~~750~~024
Repayments under debt agreements		(2021,~~644~~154	)		(2153,~~713~~854	)
Preferred equity return on preferred equity investment		(23,~~344~~559	)		(23,~~080~~178	)
Proceeds related to interest rate swap		—			2,171
Payments related to interest rate swap		—			(773	)
Taxes remitted upon vesting of restricted stock		(24	)		(6	)
Debt origination and discount fees		(1,070	)		(~~292~~555	)
Net cash from financing activities		1311,~~000~~275			(1335,~~943~~171	)
Increase in cash, cash equivalents, and restricted cash		9,~~663~~018			21,~~993~~729
Cash, cash equivalents and restricted cash at beginning of period		13,797			17,031
Cash, cash equivalents and restricted cash at end of period	$	2322,~~460~~815		$	2018,~~024~~760

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Continued)

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2024			2023
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	18,~~857~~013		$	1413,~~473~~931
Restricted cash		4,~~603~~802			54,~~551~~829
Cash, cash equivalents and restricted cash at end of period	$	2322,~~460~~815		$	2018,~~024~~760
Supplemental Cash Flow Information
Interest paid	$	711,~~692~~934		$	913,~~169~~510
Taxes paid, net of refunds	$	2935		$	1319
Supplemental disclosure of non-cash investing and financing activities
Capitalized Preferred Return	$	(35,~~757~~715	)	$	(47,~~907~~514	)
Accrued Current Preferred Return	$	(~~394~~402	)	$	(~~355~~365	)
Capitalized interest on Mezzanine loan	$	(~~668~~1,016	)	$	(~~540~~822	)
Accrued capital expenditures for real estate	$	~~245~~90		$	1,~~073~~556

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROAD STREET REALTY, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements

Unaudited

~~June~~September 30, 2024

Note 1 - Organization and Nature of Business

Broad Street Realty, Inc. (the “Company”) is focused on owning and managing essential grocery-anchored and mixed-use assets located in densely populated technology employment hubs and higher education centers within the Mid-Atlantic, Southeast and Colorado markets. As of ~~June~~September 30, 2024, the Company had gross real estate assets of $374.45 million (gross real estate properties less gross real estate intangibles liabilities) in 15 real estate properties. In addition, the Company provides commercial real estate brokerage services for its own portfolio and third-party office, industrial and retail operators and tenants.

The Company is structured as an “Up-C” corporation with substantially all of its operations conducted through Broad Street Operating Partnership, LP (the “Operating Partnership”) and its direct and indirect subsidiaries. As of ~~June~~September 30, 2024, the Company owned 86.34% of the Class A common units of limited partnership interest in the Operating Partnership (“Common OP units”) and Series A preferred units of limited partnership interest in the Operating Partnership (“Preferred OP units”) and, together with the Common OP units, “OP units”) and is the sole member of the sole general partner of the Operating Partnership. The Company began operating in its current structure on December 27, 2019, upon the completion of the Initial Mergers (as defined below) and operates as a single reporting segment.

Liquidity, Management’s Plan and Going Concern

The Company’s rental revenue and operating results depend significantly on the occupancy levels at its properties and the ability of its tenants to meet their rent and other obligations to the Company. The Company’s projected operating model reflects sufficient cash flow to cover its obligations over the next twelve months, except as noted below.

The Company’s financing is generally comprised of mortgage loans secured by the Company’s properties that typically mature within three to five years of origination. The Company is currently in contact with lenders and brokers in the marketplace to restructure the Company’s debt.

Specifically, as of ~~June~~September 30, 2024, the Company had three mortgage loans with a combined principal balance outstanding of approximately $24.32 million that mature within twelve months of the date that these condensed consolidated financial statements are issued. On October 28, 2024, the Company entered into an agreement to extend the maturity date of one of the mortgage loans to March 1, 2025. The Company is seeking to refinance these loans prior to maturity in ~~December~~January ~~2024~~2025, ~~January~~March 2025 and June 2025. Management is in discussions with the current lenders as well as various other lenders to extend or refinance these three mortgage loans prior to maturity. Although the Company has a history of demonstrating its ability to successfully refinance its loans as they come due, there can be no assurances that the Company will be successful in its efforts to refinance the loans on favorable terms or at all. While it is not the Company's current plan, the Company also has the option to sell properties securing the loans and use the proceeds to satisfy the outstanding loan obligations. If the Company is ultimately unable to repay or refinance these loans or sell the properties prior to maturity, the lender has the right to place the loans in default and ultimately foreclose on the properties securing the loans. Under this circumstance, the Company would not have any further financial obligations to the lenders as the current estimated market values of these properties are in excess of the outstanding loan balances.

The Company's access to capital depends upon a number of factors over which the Company has little or no control, including general market conditions, the market's perception of the Company's current and potential future earnings and cash distributions, the Company's current debt levels and the market price of the shares of the Company's common stock. Although the Company's common stock is quoted on the OTCQX Best Market, an over-the-counter stock market, there is a very limited trading market for the Company's common stock, and if a more active trading market is not developed and sustained, the Company will be limited in its ability to issue equity to fund its capital needs. If the Company cannot obtain capital from third-party sources, the Company may not be able to meet the capital and operating needs of its properties, satisfy its debt service obligations or pay dividends to its stockholders.

Under the Company's debt agreements, the Company is subject to certain covenants. In the event of a default, the lenders could accelerate the timing of payments under the applicable debt obligations and the Company may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on the Company's liquidity, financial condition and results of operations. The Company was in compliance with all covenants under its debt agreements as of ~~June~~September 30, 2024.

Note 2 - Accounting Policies and Related Matters

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim reports. In the opinion of management, the accompanying ~~unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for~~

unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for a full year. The unaudited condensed consolidated financial statements and related notes do not include all information and footnotes required by GAAP for annual reports. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on April 1, 2024.

The interim condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and subsidiaries in which the Company has a controlling interest. All intercompany transactions and balances have been eliminated in consolidation.

For information about significant accounting policies, refer to the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on April 1, 2024. During the ~~six~~nine months ended ~~June~~September 30, 2024, there were no material changes to these policies.

Change in Presentation

The Company has made certain reclassifications to prior period financial statements in order to enhance the comparability with current period condensed consolidated financial statements. These reclassifications had no effect on net loss or cash flows from operations.

Accounting Guidance

Adoption of Accounting Standards

There were no adopted pronouncements during the ~~six~~nine months ended ~~June~~September 30, 2024 that impacted the Company.

Issued Accounting Standards Not Yet Adopted

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires entities to annually disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU is effective for the Company for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of the guidance.

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which requires entities to provide disclosures of significant segment expenses and other significant segment items, as well as provide in interim periods all disclosures about a reportable segments' profit or loss and assets that are currently required annually. Additionally, entities with a single reportable segment have to provide all of the disclosures required by ASC 280, including the significant segment expense disclosures. The ASU is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. This ASU is effective for the Company for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of this guidance.

Note 3 – Real Estate

Concentrations of Credit Risks

The following table contains information regarding the geographic concentration of the properties in the Company’s portfolio as of ~~June~~September 30, 2024, which includes rental income for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023.

(dollars in thousands)	NumberofProperties	Gross Real Estate Assets		Percentage of Total Real Estate Assets			Rental income for the ~~six~~nine months ended ~~June~~September 30,
Location	~~June~~September 30, 2024	~~June~~September 30, 2024		~~June~~September 30, 2024			2024		2023
Maryland	6	$	102,~~264~~462		27.34	%	$	69,~~425~~927	$	69,~~078~~214
Virginia (1)	5		198,~~573~~676		53.10	%		711,~~781~~754		812,~~703~~395
Pennsylvania (2)	―		—		—			—		1,~~353~~501
Washington D.C.	1		8,380		2.2	%		~~400~~596		~~303~~438
Colorado	3		65,~~150~~020		17.4	%		46,~~160~~155		46,~~028~~123
	15	$	374,~~367~~538		100.0	%	$	1828,~~766~~432	$	2029,~~465~~671

(1)

Rental income for the ~~six~~nine months ended ~~June~~September 30, 2023 includes $1.2 million of rental income from Spotswood Valley Square Shopping Center, which was sold on June 30, 2023.

(2)

Rental income related solely to Dekalb Plaza, which was sold on July 20, 2023.

Note 4 – Intangibles

The following is a summary of the carrying amount of the Company’s intangible assets and liabilities as of ~~June~~September 30, 2024 and December 31, 2023.

(in thousands)	~~June~~September 30, 2024			December 31, 2023
Assets:
Above-market leases	$	4,153		$	4,153
Above-market leases accumulated amortization		(2,~~773~~909	)		(2,469	)
In-place leases		28,~~974~~814			29,221
In-place leases accumulated amortization		(2122,~~582~~171	)		(20,094	)
Total real estate intangible assets, net	$	87,~~772~~887		$	10,811
Liabilities
Below-market leases	$	3,~~146~~099		$	3,146
Below-market leases accumulated amortization		(2,~~671~~720	)		(2,513	)
Total real estate intangible liabilities, net	$	~~475~~379		$	633

For the three months ended ~~June~~September 30, 2024 and 2023, the Company recognized amortization related to in-place leases of approximately $0.7 million and $21.1 million, respectively, and net amortization related to above-market leases and below-market leases for each of the three months ended ~~June~~September 30, 2024 and 2023 of approximately $0.1 million in its condensed consolidated statements of operations.

For the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, the Company recognized amortization related to in-place leases of approximately $12.63 million and $45.45 million, respectively, and net amortization related to above-market leases and below-market leases for each of the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 of approximately $0.12 million in its condensed consolidated statements of operations.

The following table represents expected amortization of existing real estate intangible assets and liabilities as of ~~June~~September 30, 2024:

(in thousands)	Amortization of in-place leases		Amortization of above-market leases		Amortization of below-market leases			Total amortization, net
Remainder of 2024	$	~~1,124~~539	$	~~254~~118	$	(~~125~~48	)	$	~~1,253~~609
2025		2,~~069~~024		449		(~~161~~153	)		2,~~357~~320
2026		1,~~479~~433		253		(9183	)		1,~~641~~603
2027		~~962~~933		167		(4744	)		1,~~082~~056
2028		~~520~~503		112		(26	)		~~606~~589
2029		~~390~~383		80		(14	)		~~456~~449
Thereafter		~~848~~828		65		(11	)		~~902~~882
Total	$	76,~~392~~643	$	1,~~380~~244	$	(~~475~~379	)	$	87,~~297~~508

The Company amortizes the value of in-place leases to amortization expense, the value of above-market leases as a reduction of rental income and the value of below-market leases as an increase to rental income over the initial term of the respective leases.

~~Note~~As 5of September 30, 2024, the weighted average remaining amortization period of in-place ~~Other~~lease ~~Assets~~intangibles, above-market lease intangible assets and below-market lease intangibles is approximately 2.0 years, 2.4 years and 0.9 years, respectively.

~~Items~~Note ~~included~~5 in- ~~other~~Tenant ~~assets, net on the Company’s condensed consolidated balance sheets as of June 30, 2024~~ and ~~December~~Accounts ~~31,~~Receivable ~~2023 are detailed in the table below:~~

(in thousands)	June 30, 2024		December 31, 2023
Prepaid assets and deposits	$	343	$	1,380
Leasing commission costs and incentives, net		2,304		2,141
Right-of-use assets, net		1,360		1,494
Pre-acquisition costs		1		6
Other receivables, net		32		35
Corporate property, net		124		144
Receivables from related parties		1,123		1,127
Total assets	$	5,287	$	6,327

Items included in tenant and accounts receivable, net on the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 are detailed in the table below:

Receivables due from related parties as of June 30, 2024 and December 31, 2023 are described further in Note 15 “Related Party Transactions.”


(in thousands)	September 30, 2024		December 31, 2023
Tenant receivable, net	$	375	$	255
Accounts receivable, net		1,049		1,663
Total tenant and accounts receivable, net	$	1,424	$	1,918

Note 6 - ~~Accounts~~Other ~~Payable~~Assets ~~and Accrued Liabilities~~

Items included in ~~accounts~~other ~~payable~~assets, ~~and~~net ~~accrued liabilities~~ on the Company’s condensed consolidated balance sheets as of ~~June~~September 30, 2024 and December 31, 2023 are detailed in the table below:

(in thousands)	~~June~~September 30, 2024		December 31, 2023
Trade payable	$	1,083	$	2,372
Prepaid assets and deposits	$	1,483	$	1,380
Security deposit		2,328		2,340
Leasing commission costs and incentives, net		2,344		2,141
Real estate tax payable		652		1,222
Right-of-use assets, net		1,306		1,494
Interest payable		1,327		1,213
Pre-acquisition costs		—		6
Derivative liability		123		668
Other receivables, net		62		35
Lease payable		1,490		1,521
Corporate property, net		122		144
Income tax payable		5		340
Receivables from related parties		1,122		1,127
Other (1)		4,703		5,781
Total assets	$	6,439	$	6,327
Accounts payable and accrued liabilities	$	11,711	$	15,457

~~Primarily~~Receivables ~~includes~~due ~~accrued~~from ~~expenses relating to payroll~~ related ~~items,~~parties ~~cost~~as of ~~services~~September 30, ~~property~~2024 ~~operating~~and ~~expenses,~~December ~~professional fees~~31, ~~amounts~~2023 ~~due~~are todescribed ~~tenants~~further ~~for~~in ~~lease~~Note ~~inducements~~16 ~~and~~“Related ~~construction~~Party ~~in progress~~Transactions.”

Note 7 –- ~~Mortgage~~Accounts Payable and ~~Other~~Accrued ~~Indebtedness~~Liabilities

~~The~~Items ~~table~~included ~~below~~in ~~details~~accounts payable and accrued liabilities on the Company’s ~~debt~~condensed consolidated balance atsheets ~~June~~as of September 30, 2024 and December 31, 2023 are detailed in the table below:

(dollars in thousands)	Maturity Date		Rate Type	Interest Rate (1)		June 30, 2024			December 31, 2023
(in thousands)	September 30, 2024			December 31, 2023
Basis Term Loan (net of discount of $0 and $21, respectively)	July 1, 2024		Floating (2)	N/A		$	—		$	8,491		(3)
Trade payable	$	1,814		$	2,372
Hollinswood Shopping Center Loan	December 1, 2024		SOFR + 2.36% (4)	4.06%			12,271			12,437
Accrued operating and administrative expenses (1)		5,651			5,781
Avondale Shops Loan	June 1, 2025		Fixed	4.00%			2,807			2,868
Security deposit		2,404			2,340
Vista Shops at Golden Mile Loan (net of discount of $93 and $9, respectively) (5)	February 8, 2029		Fixed	6.90%			16,058			11,252
Real estate tax payable		1,235			1,222
Brookhill Azalea Shopping Center Loan	January 31, 2025		SOFR + 2.75%	8.09%			9,197			9,198
Interest payable		1,195			1,213
Crestview Shopping Center Loan (net of discount of $43 and $53, respectively)	September 29, 2026		Fixed	7.83%			11,957			11,947
Derivative liability		581			668
Lamar Station Plaza West Loan (net of discount of $63 and $73, respectively)	December 10, 2027		Fixed	5.67%			18,753			18,927
Lease payable		1,436			1,521
Highlandtown Village Shopping Center Loan (net of discount of $34 and $38, respectively)	May 10, 2028		SOFR + 2.5% (6)	6.085%			8,716			8,712
Income tax payable		57			340
Midtown Colonial and Midtown Lamonticello Shopping Center Loan (net of discount of $205 and $0, respectively) (7)	May 1, 2027		Fixed	7.92%			18,955			—
Accounts payable and accrued liabilities	$	14,373		$	15,457
Midtown Row Loan (net of discount of $17 and $19, respectively)	December 1, 2027		Fixed	6.48%			75,983			75,981
Midtown Row/Fortress Mezzanine Loan (8)	December 1, 2027		Fixed	13.00% (9)			12,303			16,187
Cromwell Field Shopping Center Loan (net of discount of $52 and $60, respectively)	December 22, 2027		Fixed	6.71%			12,377			10,597
Coral Hills Shopping Center Loan (net of discount of $179 and $189, respectively)	October 31, 2033		Fixed	6.95%			12,489			12,560
West Broad Shopping Center Loan (net of discount of $83 and $88, respectively)	December 21, 2033		Fixed	7.00%			11,630			11,712
The Shops at Greenwood Village (net of discount of $72 and $80, respectively)	October 10, 2028		SOFR + 2.85% (10)	5.85%			21,933			22,218
						$	245,429		$	233,087
Unamortized deferred financing costs, net							(2,475	)		(2,038	)
Total Mortgage and Other Indebtedness						$	242,954		$	231,049

(1)

~~Interest~~The ~~rates~~table ~~are~~below provides additional details for items included in “Accrued operating and administrative expenses” as of ~~June~~September 30, 2024. and December 31, 2023:

The interest rate for the Basis Term Loan was the greater of (i) the Secured Overnight Financing Rate (“SOFR”) plus 3.97% per annum and (ii) 6.125% per annum. On November 23, 2022, the Company entered into an interest rate cap agreement to cap the SOFR interest rate at 4.65% effective January 1, 2023, which replaced the existing interest rate cap agreement that capped the SOFR interest rate at 3.5%.


(in thousands)	September 30, 2024		December 31, 2023
Payroll and payroll related expenses	$	1,069	$	1,099
Accrued cost of services		1,011		1,004
Accrued legal and professional fees		1,121		810
Insurance proceeds for repairs		1,081		3
Accrued construction in progress		33		732
Accrued property operating expenses		680		729
Other accrued expenses		656		1,404
Accrued operating and administrative expenses	$	5,651	$	5,781

Note 8 – Mortgage and Other Indebtedness

The table below details the Company’s debt balance at September 30, 2024 and December 31, 2023:


(dollars in thousands)	Maturity Date	Rate Type	Interest Rate (1)	September 30, 2024			December 31, 2023
Basis Term Loan (net of discount of $0 and $21, respectively)	July 1, 2024	Floating (2)	N/A	$	—		$	8,491		(3)
Hollinswood Shopping Center Loan	December 1, 2024 (4)	SOFR + 2.36% (5)	4.06%		12,188			12,437
Avondale Shops Loan	June 1, 2025	Fixed	4.00%		2,776			2,868
Vista Shops at Golden Mile Loan (net of discount of $87 and $9, respectively) (6)	February 8, 2029	Fixed	6.90%		16,044			11,252
Brookhill Azalea Shopping Center Loan	January 31, 2025	SOFR + 2.75%	7.60%		9,197			9,198
Crestview Shopping Center Loan (net of discount of $38 and $53, respectively)	September 29, 2026	Fixed	7.83%		11,929			11,947
Lamar Station Plaza West Loan (net of discount of $59 and $73, respectively)	December 10, 2027	Fixed	5.67%		18,668			18,927
Highlandtown Village Shopping Center Loan (net of discount of $31 and $38, respectively)	May 10, 2028	SOFR + 2.5% (7)	6.085%		8,719			8,712
Midtown Colonial and Midtown Lamonticello Shopping Center Loan (net of discount of $187 and $0, respectively) (8)	May 1, 2027	Fixed	7.92%		18,973			—
Midtown Row Loan (net of discount of $15 and $19, respectively)	December 1, 2027	Fixed	6.48%		75,985			75,981
Midtown Row/Fortress Mezzanine Loan (9)	December 1, 2027	Fixed	13.00% (10)		15,450			16,187
Cromwell Field Shopping Center Loan (net of discount of $49 and $60, respectively)	December 22, 2027	Fixed	6.71%		12,381			10,597
Coral Hills Shopping Center Loan (net of discount of $174 and $189, respectively)	October 31, 2033	Fixed	6.95%		12,429			12,560
West Broad Shopping Center Loan (net of discount of $81 and $88, respectively)	December 21, 2033	Fixed	7.00%		11,589			11,712
The Shops at Greenwood Village (net of discount of $67 and $80, respectively)	October 10, 2028	SOFR + 2.85% (11)	5.85%		21,790			22,218
				$	248,118		$	233,087
Unamortized deferred financing costs, net					(2,290	)		(2,038	)
Total Mortgage and Other Indebtedness				$	245,828		$	231,049

(1)

Interest rates are as of September 30, 2024.

(2)

(3)

The outstanding balance includes less than $0.1 million of exit fees at December 31, 2023. On April 30, 2024, the Company paid off the outstanding principal balance on the Basis Term Loan with a portion of the proceeds of a new loan secured by the properties that were collateral for the Basis Term Loan.

(4)

~~The~~On ~~Company~~October ~~has~~28, 2024, the Company entered into an ~~interest~~agreement ~~rate~~to ~~swap~~extend ~~which fixes~~ the ~~interest~~maturity ~~rate~~date of this loan atto ~~4.06%.~~March 1, 2025.

(5)

The Company has entered into an interest rate swap which fixes the interest rate of this loan at 4.06% until December 1, 2024.

(6)

On February 8, 2024, the Company refinanced the Vista Shops at Golden Mile Loan to extend the maturity date to February 8, 2029 and entered into an interest rate swap which fixes the interest rate of the new loan at 6.90%.

(7)

The Company has entered into an interest rate swap which fixes the interest rate of this loan at 6.085%.

(8)

This loan was originated on April 30, 2024.

(9)

The outstanding balance reflects the fair value of the debt.

(10)

A portion of the interest on this loan is paid in cash (the “Current Interest”) and a portion of the interest is capitalized and added to the principal amount of the loan each month (the “Capitalized Interest” and, together with the Current Interest, the “Mezzanine Loan Interest”). The initial Mezzanine Loan Interest rate was 12% per annum, comprised of a 5% Current Interest rate and a 7% Capitalized Interest rate. The Capitalized Interest rate increases each year by 1%.

(11)

On May 1, 2023, the Company terminated this loan’s prior interest rate swap and entered into a new interest rate swap agreement to fix the interest rate at 5.85%.

Basis Term Loan

In December 2019, six of the Company’s subsidiaries, as borrowers (collectively, the “Borrowers”), and Big Real Estate Finance I, LLC, a subsidiary of a real estate fund managed by Basis Management Group, LLC (“Basis”), as lender (the “Basis Lender”), entered into a loan agreement (the “Basis Loan Agreement”) pursuant to which the Basis Lender made a senior secured term loan of up to $66.9 million (the “Basis Term Loan”) to the Borrowers. Pursuant to the Basis Loan Agreement, the Basis Term Loan was originally secured by mortgages on the following properties: Coral Hills, Crestview, Dekalb, Midtown Colonial, Midtown Lamonticello and West Broad. The Basis Term Loan initial maturity was January 1, 2023, subject to two one-year extension options, subject to certain conditions. On November 22, 2022, the Company exercised one of the one-year extension options and the maturity date was extended to January 1, 2024. On December 6, 2023, the Company exercised the remaining extension option and the maturity date was extended to July 1, 2024.

The Basis Loan Agreement was amended and restated on June 29, 2022 to replace LIBOR with SOFR. The Basis Term Loan bore interest at a rate equal to the greater of (i) SOFR plus 3.97% per annum and (ii) 6.125% per annum. The Borrowers entered into an interest rate cap agreement that effectively capped the prior-LIBOR rate at 3.50% per annum. On August 1, 2022, the interest rate cap agreement was modified to cap the SOFR rate at 3.50% per annum. The interest rate cap expired on January 1, 2023. On November 23, 2022, the Company entered into an interest rate cap agreement, effective January 1, 2023, to cap the SOFR interest rate at 4.65%.

On April 30, 2024, the Company received a loan secured by Midtown Colonial and Midtown Lamonticello and paid off the Basis Term Loan in full with a portion of the proceeds from the new mortgage loan.

Mortgage Indebtedness

InAs ~~addition to the indebtedness described above, as~~ of ~~June~~September 30, 2024 and December 31, 2023, the Company had approximately $~~233~~232.17 million and $208.4 million, respectively, of outstanding mortgage indebtedness secured by individual properties.

On May 1, 2023, the Company terminated the prior interest rate swap for the loan secured by The Shops at Greenwood Village and entered into a new interest rate swap agreement to fix the interest rate at 5.85%.

On June 28, 2023, the loan agreement for the Company’s mortgage loan secured by the Vista Shops at Golden Mile was amended to change the interest rate to 7.73% per annum and extend the maturity date to June 24, 2024. On February 8, 2024, the Company refinanced the mortgage loan. The new loan has a principal balance of $16.2 million, bears interest at SOFR plus a spread of 2.75% per annum and matures on February 8, 2029. The Company entered into an interest rate swap which fixes the interest rate of the loan at 6.90%.

On April 30, 2024, the Company received a $19.2 million loan secured by Midtown Colonial and Midtown Lamonticello, which bears interest at a rate of 7.92% per annum and matures on May 1, 2027. The Company used a portion of the proceeds from the new mortgage loan to pay off the Basis Term Loan.

Fortress Mezzanine Loan

In connection with the acquisition of Midtown Row, the Company entered into a $15.0 million mezzanine loan (the “Fortress Mezzanine Loan”) secured by 100% of the membership interests in the entity that owns Midtown Row. The mezzanine loan matures on December 1, 2027. The Company elected to measure the Fortress Mezzanine Loan at fair value in accordance with the fair value option. The fair value at ~~June~~September 30, 2024 and December 31, 2023 was $1215.34 million and $16.2 million, respectively. For the three months ended ~~June~~September 30, 2024 and 2023, the Company recognized a net ~~gain~~loss of $0.26 million and ~~a net loss of~~ $10.18 million, respectively, on fair value change of debt held under the fair value option in the condensed consolidated statements of operations and a net ~~gain~~loss of $12.32 million and a net ~~loss~~gain of $10.3 million, respectively, in change in fair value due to credit risk on debt held under the fair value option in the condensed consolidated statements of comprehensive loss. For the three months ended September 30, 2024 and 2023, the Company recognized $0.6 million and $0.5 million, respectively, of interest expense in the condensed consolidated statements of operations, each of which includes $0.3 million of Capitalized Interest recorded in the condensed consolidated balance sheets.

14For the nine months ended September 30, 2024 and 2023, the Company recognized a net gain of $2.0 million and $1.3 million, respectively, on fair value change of debt held under the fair value option in the condensed consolidated statements of operations and a net loss of $0.2 million and a net gain of $0.7 million, respectively, in change in fair value due to credit risk on debt held under the fair value option in the condensed consolidated statements of comprehensive loss. For the nine months ended September 30, 2024 and 2023, the Company recognized $1.6 million and $1.4 million, respectively, of interest expense in the condensed consolidated statements of operations, which includes $1.0 million and $0.8 million, respectively, of Capitalized Interest recorded in the condensed consolidated balance sheets.

condensed consolidated statements of comprehensive loss. For the three months ended June 30, 2024 and 2023, the Company recognized $0.5 million and $0.4 million, respectively of interest expense in the condensed consolidated statements of operations, which includes $0.3 million and $0.2 million, respectively, of Capitalized Interest recorded in the condensed consolidated balance sheets. 15

For the six months ended June 30, 2024 and 2023, the Company recognized a net gain of $2.6 million and $2.1 million, respectively, on fair value change of debt held under the fair value option in the condensed consolidated statements of operations and a net gain of $2.0 million and $0.4 million, respectively, in change in fair value due to credit risk on debt held under the fair value option in the condensed consolidated statements of comprehensive loss. For the six months ended June 30, 2024 and 2023, the Company recognized $1.0 million and $0.9 million, respectively, of interest expense in the condensed consolidated statements of operations, which includes $0.7 million and $0.5 million, respectively, of Capitalized Interest recorded in the condensed consolidated balance sheets.

Debt Maturities

The following table details the Company’s scheduled principal repayments and maturities during each of the next five years and thereafter as of ~~June~~September 30, 2024:

(dollars in thousands)	Amount Due
Remainder of 2024	$	1312,~~359~~830
2025		14,~~107~~144
2026		14,~~861~~867
2027		142,~~240~~589
2028		28,~~879~~878
2029		15,~~425~~423
Thereafter		2221,~~007~~984
		250,878
		250,715
Unamortized debt discounts and deferred financing costs, net and fair value option adjustment		(74,~~924~~887	)
Total	$	~~242~~245,~~954~~828

Interest Rate Cap and Interest Rate Swap Agreements

To mitigate exposure to interest rate risk, the Company entered into an interest rate cap agreement, effective December 27, 2019, on the full $66.9 million Basis Term Loan. The Basis Term Loan bore interest at a rate equal to the greater of (i) SOFR plus 3.97% per annum and (ii) 6.125% per annum. On November 23, 2022, the Company entered into an interest rate cap agreement, effective January 1, 2023, on the full $66.9 million Basis Term Loan to cap the SOFR interest rate at 4.65%. As of December 31, 2023, the effective interest rate of the Basis Term Loan was 8.62%.

The Company also entered into two interest rate swap agreements on the Hollinswood Loan to fix the interest rate at 4.06% until December 1, 2024. The swap agreements are effective as of December 27, 2019 on the outstanding balance of $10.2 million and on July 1, 2021 for the additional availability of $3.0 million under the Hollinswood Loan. On May 3, 2023, the Hollinswood loan agreement was amended to replace LIBOR with SOFR, effective July 1, 2023.

On May 1, 2023, the Company terminated the prior interest rate swap agreement for the loan secured by The Shops at Greenwood Village and entered into a new interest rate swap agreement to fix the interest rate for the loan at 5.85%. The Company also received $2.2 million upon the termination of the prior interest rate swap agreement.

On May 5, 2023, the Company entered into an interest rate swap agreement on the Highlandtown Village Shopping Center mortgage loan to fix the interest rate at 6.085%.

The Company recognizes all derivative instruments as assets or liabilities at their fair value in the condensed consolidated balance sheets. Changes in the fair value of the Company’s derivatives that are not designated as hedges or do not meet the criteria of hedge accounting are recognized in earnings. For the three months ended ~~June~~September 30, 2024 and 2023, the Company recognized ~~gains~~losses of ~~less~~approximately ~~than~~ $0.1.5 million and gains of approximately $0.3 million, respectively, as a component of “Derivative fair value adjustment” on the condensed consolidated statements of operations. For the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, the Company recognized ~~gains (~~losses) of approximately $01.41 million and gains of less than $(0.3)1 million, respectively, as a component of “Derivative fair value adjustment” on the condensed consolidated statements of operations.

The fair value of the Company’s derivative financial instruments as of ~~June~~September 30, 2024 and December 31, 2023 was an interest rate swap asset of approximately $10.2 million and $0.8 million, respectively, and an interest rate swap liability of $0.6 million at September 30, 2024. The interest rate swap asset is included in Derivative assets and the interest rate swap liability is included in Accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Covenants

The Company’s loan agreements contain customary financial and operating covenants including debt service coverage ratios and aggregate minimum unencumbered cash covenants. As of ~~June~~September 30, 2024, the Company was in compliance with all covenants under its debt agreements.

15Note 9 – Commitments and Contingencies

Note 8 – Commitments and Contingencies

Litigation

From time to time, the Company or its properties may be subject to claims and suits in the ordinary course of business. The Company’s lessees and borrowers have indemnified, and are obligated to continue to indemnify, the Company against all liabilities arising from the operations of the properties and are further obligated to indemnify it against environmental or title problems affecting the real estate underlying such facilities. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on its condensed consolidated financial condition, results of operations or cash flows.

Note 9 – Fortress Preferred Equity Investment

The Company consolidates Broad Street Eagles JV LLC (the “Eagles Sub-OP”) under the guidance set forth in Accounting Standards Codification (“ASC”) 810, Consolidation. The Company evaluated whether the Eagles Sub-OP met the criteria for classification as a variable interest entity (“VIE”) or, alternatively, as a voting interest entity and concluded that that the Eagles Sub-OP met the criteria of a VIE. The Company is considered to have a controlling financial interest in the Eagles Sub-OP because the Company determined that it is the primary beneficiary because it is most closely associated with the Eagles Sub-OP.

On November 22, 2022, the Company, the Operating Partnership and the Eagles Sub-OP, entered into a Preferred Equity Investment Agreement with CF Flyer PE Investor LLC (the “Fortress Member”), an affiliate of Fortress Investment Group LLC, pursuant to which the Fortress Member invested $80.0 million in the Eagles Sub-OP in exchange for a preferred membership interest (such interest, the “Fortress Preferred Interest” and such investment, the “Preferred Equity Investment”). In connection with the Preferred Equity Investment, the Operating Partnership and the Fortress Member, the only holder of a preferred membership interest in the Eagles Sub-OP, entered into the Amended and Restated Limited Liability Company Agreement of the Eagles Sub-OP (the “Eagles Sub-OP Operating Agreement”), and the Operating Partnership contributed to the Eagles Sub-OP its subsidiaries that, directly or indirectly, own Brookhill Azalea Shopping Center, Vista Shops, Hollinswood Shopping Center, Avondale Shops, Greenwood Village Shopping Center and Lamar Station Plaza East in November 2022, as well as Cromwell Field in December 2022. Pursuant to the Eagles Sub-OP Operating Agreement, the Operating Partnership had the obligation to contribute to the Eagles Sub-OP its direct or indirect subsidiaries owning eight additional properties. As of June 30, 2024, the Operating Partnership had contributed to the Eagles Sub-OP its subsidiaries that own Highlandtown, Crestview, Coral Hills, West Broad, Midtown Colonial and Midtown Lamonticello and, with the approval of the Fortress Member, sold Spotswood and Dekalb Plaza (collectively, the “Excluded Properties”).

Pursuant to the Eagles Sub-OP Operating Agreement, the Fortress Member is entitled to monthly distributions, a portion of which is paid in cash (the “Current Preferred Return”) and a portion that accrues on and is added to the Fortress Preferred Interest each month (the “Capitalized Preferred Return” and, together with the Current Preferred Return, the “Preferred Return”). The initial Preferred Return was 12% per annum, comprised of a 5% Current Preferred Return and a 7% Capitalized Preferred Return, provided that, until certain of the Excluded Properties were contributed to the Eagles Sub-OP, the Capitalized Preferred Return was increased by 4.75%. The Capitalized Preferred Return increases each year by 1%. As of June 30, 2024, the Capitalized Preferred Return was approximately $15.1 million and is reflected within Redeemable noncontrolling Fortress preferred interest on the condensed consolidated balance sheets. For the three months ended June 30, 2024 and 2023, the Company recognized $1.2 million and $1.1 million, respectively, of Current Preferred Return and $1.9 million and $2.5 million, respectively, of Capitalized Preferred Return, as a reduction to additional paid-in capital in the condensed consolidated statements of equity. For the six months ended June 30, 2024 and 2023, the Company recognized $2.3 million and $2.1 million, respectively, of Current Preferred Return and $3.8 million and $4.9 million, respectively, of Capitalized Preferred Return, as a reduction to additional paid-in capital in the condensed consolidated statements of equity.

As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the Fortress Member has approval rights over certain Major Actions (as defined in the Eagles Sub-OP Operating Agreement). In addition, the Company is required to maintain separate bank accounts for tenant improvement costs and leasing costs as well as the net proceeds from the Spotswood and Dekalb dispositions. Prior written consent of the Fortress Member is required for the disbursement and use of cash held in such accounts, which had a combined balance of $11.9 million as of June 30, 2024 and is reflected in cash and cash equivalents.

On May 21, 2024, the Company agreed with the Fortress Member that, after revision of the total yield calculation as of March 31, 2024, the Company did not meet the minimum total yield requirement under the Eagles Sub-OP Operating Agreement, which would have been a Trigger Event (as defined in the Eagles Sub-Op Agreement). Effective May 21, 2024, the Fortress Member and the Operating Partnership entered into a temporary waiver agreement to waive the total yield failure and the existence of the Trigger Event until such time as the Fortress Member elects to revoke such waiver. Upon the occurrence of a Trigger Event, the Fortress Member has the right to cause the Eagles Sub-OP to redeem the Fortress Preferred Interest by payment to the Fortress Member of the full Redemption Amount (as defined in the Eagles Sub-OP Operating Agreement) upon not less than 90 days prior written notice to the Eagles Sub-OP. Additionally, upon the occurrence of a Trigger Event, the Fortress Member would have the right (among other rights) to (i) remove the Operating Partnership as the managing member of the Eagles Sub-OP and to serve as the managing member until the Fortress Member is paid the Redemption Amount, (ii) cause the Eagles Sub-OP to sell one or more properties until the entire Fortress Preferred Interest has been redeemed for the Redemption Amount, (iii) cause the Eagles Sub-OP to use certain reserve accounts to pay the Fortress Member

the ~~full~~real ~~Redemption~~estate ~~Amount,~~underlying ~~and~~such ~~(iv)~~facilities. ~~terminate~~The ~~all~~Company ~~property~~is ~~management~~not ~~and~~aware ~~other~~of ~~service~~any ~~agreements~~pending ~~with~~or ~~affiliates~~threatened oflitigation ~~the~~that, ~~Company.~~if ~~Further,~~resolved against the ~~mezzanine~~Company, ~~loan~~would ~~agreement~~have ~~for~~a ~~the~~material ~~Fortress~~adverse ~~Mezzanine~~effect ~~Loan~~on ~~provides~~its ~~for~~condensed ~~cross-default~~consolidated infinancial ~~the~~condition, ~~event~~results of aoperations ~~Trigger~~or ~~Event~~cash flows.

~~The~~Note ~~Fortress~~10 ~~Member’s~~– interest in the Eagles Sub-OP under the Eagles Sub-OP Operating Agreement is a financial instrument with both equity and debt characteristics and is classified as mezzanine equity in our accompanying condensed consolidated financial statements. The instrument was initially recognized at fair value net of issuance costs. The Fortress Preferred ~~Interest~~Equity is redeemable at a determinable date (at year five (5), prior to year five if a Qualified Public Offering occurs or at any time so long as the Fortress Mezzanine Loan is repaid in full before or concurrently with such redemption) and therefore, at each subsequent reporting period we will accrete the carrying value to the amount due upon redemption of the Fortress Preferred Interest based on the effective interest method over the remaining term. All financial instruments that are classified as mezzanine equity are evaluated for embedded derivative features by evaluating each feature against the nature of the host instrument (e.g., more equity-like or debt-like). Features identified as embedded derivatives that are material are recognized separately as a derivative asset or liability in the condensed consolidated financial statements. The Company has evaluated the Fortress Preferred Interest and determined that its nature is that of a debt host and certain embedded derivatives exist that would require bifurcation on the Company’s condensed consolidated balance sheets. For the three months ended June 30, 2024 and 2023, the Company recognized a gain of $0.1 million and a loss of $(0.1) million, respectively, in derivative fair value adjustment in the condensed consolidated statements of operations. For the six months ended June 30, 2024 and 2023, the Company recognized a gain of $0.5 million and $0.3 million, respectively, in derivative fair value adjustment in the condensed consolidated statements of operations. The derivative liability was $0.1 million and $0.7 million at June 30, 2024 and December 31, 2023, respectively, and is reflected in accounts payable and accrued liabilities in the condensed consolidated balance sheets. Investment

The ~~following~~Company ~~table~~consolidates ~~summarizes~~Broad Street Eagles JV LLC (the ~~preferred~~“Eagles ~~equity~~Sub-OP”) ~~investment~~under ~~activities~~the ~~for~~guidance set forth in Accounting Standards Codification (“ASC”) 810, Consolidation. The Company evaluated whether the ~~six~~Eagles ~~months~~Sub-OP ~~ended~~met ~~June~~the 30criteria for classification as a variable interest entity (“VIE”) or, ~~2024~~alternatively, as a voting interest entity and ~~2023~~concluded that that the Eagles Sub-OP met the criteria of a VIE. The Company is considered to have a controlling financial interest in the Eagles Sub-OP because the Company determined that it is the primary beneficiary because it is most closely associated with the Eagles Sub-OP.

(thousands)	Preferred Equity Investment
Balance at December 31, 2023	$	87,288
Preferred equity return		6,106
Preferred equity payment		(2,344	)
Preferred equity accretion		2,352
Balance at June 30, 2024	$	93,402

On November 22, 2022, the Company, the Operating Partnership and the Eagles Sub-OP, entered into a Preferred Equity Investment Agreement with CF Flyer PE Investor LLC (the “Fortress Member”), an affiliate of Fortress Investment Group LLC, pursuant to which the Fortress Member invested $80.0 million in the Eagles Sub-OP in exchange for a preferred membership interest (such interest, the “Fortress Preferred Interest” and such investment, the “Preferred Equity Investment”). In connection with the Preferred Equity Investment, the Operating Partnership and the Fortress Member, the only holder of a preferred membership interest in the Eagles Sub-OP, entered into the Amended and Restated Limited Liability Company Agreement of the Eagles Sub-OP (the “Eagles Sub-OP Operating Agreement”), and the Operating Partnership contributed to the Eagles Sub-OP its subsidiaries that, directly or indirectly, own Brookhill Azalea Shopping Center, Vista Shops, Hollinswood Shopping Center, Avondale Shops, Greenwood Village Shopping Center and Lamar Station Plaza East in November 2022, as well as Cromwell Field in December 2022. Pursuant to the Eagles Sub-OP Operating Agreement, the Operating Partnership had the obligation to contribute to the Eagles Sub-OP its direct or indirect subsidiaries owning eight additional properties. As of September 30, 2024, the Operating Partnership had contributed to the Eagles Sub-OP its subsidiaries that own Highlandtown, Crestview, Coral Hills, West Broad, Midtown Colonial and Midtown Lamonticello and, with the approval of the Fortress Member, sold Spotswood and Dekalb Plaza (collectively, the “Excluded Properties”).

(thousands)	Preferred Equity Investment
Balance at December 31, 2022	$	73,697
Preferred equity return		6,996
Preferred equity payment		(2,080	)
Preferred equity accretion		1,171
Balance at June 30, 2023	$	79,784

Pursuant to the Eagles Sub-OP Operating Agreement, the Fortress Member is entitled to monthly distributions, a portion of which is paid in cash (the “Current Preferred Return”) and a portion that accrues on and is added to the Fortress Preferred Interest each month (the “Capitalized Preferred Return” and, together with the Current Preferred Return, the “Preferred Return”). The initial Preferred Return was 12% per annum, comprised of a 5% Current Preferred Return and a 7% Capitalized Preferred Return, provided that, until certain of the Excluded Properties were contributed to the Eagles Sub-OP, the Capitalized Preferred Return was increased by 4.75%. The Capitalized Preferred Return increases each year by 1%. As of September 30, 2024 and December 31, 2023, the Capitalized Preferred Return was approximately $17.1 million and $11.3 million, respectively, and is reflected within Redeemable noncontrolling Fortress preferred interest on the condensed consolidated balance sheets. For the three months ended September 30, 2024 and 2023, the Company recognized $1.2 million and $1.1 million, respectively, of Current Preferred Return and $2.0 million and $2.6 million, respectively, of Capitalized Preferred Return, as a reduction to additional paid-in capital in the condensed consolidated statements of equity. For the nine months ended September 30, 2024 and 2023, the Company recognized $3.6 million and $3.2 million, respectively, of Current Preferred Return and $5.7 million and $7.5 million, respectively, of Capitalized Preferred Return, as a reduction to additional paid-in capital in the condensed consolidated statements of equity.

~~Note~~As disclosed in the Company's Annual Report on Form 10-K –for ~~Equity~~ the year ended December 31, 2023, the Fortress Member has approval rights over certain Major Actions (as defined in the Eagles Sub-OP Operating Agreement). In addition, the Company is required to maintain separate bank accounts for tenant improvement costs and leasing costs as well as the net proceeds from the Spotswood and Dekalb dispositions. Prior written consent of the Fortress Member is required for the disbursement and use of cash held in such accounts, which had a combined balance of $9.7 million and $3.1 million as of September 30, 2024 and December 31, 2023, respectively, and is reflected in cash and cash equivalents.

The Fortress Member’s interest in the Eagles Sub-OP under the Eagles Sub-OP Operating Agreement is a financial instrument with both equity and debt characteristics and is classified as mezzanine equity in our accompanying condensed consolidated financial

statements. The instrument was initially recognized at fair value net of issuance costs. The Fortress Preferred Interest is redeemable at a determinable date (at year five (5), prior to year five if a Qualified Public Offering occurs or at any time so long as the Fortress Mezzanine Loan is repaid in full before or concurrently with such redemption) and therefore, at each subsequent reporting period we will accrete the carrying value to the amount due upon redemption of the Fortress Preferred Interest based on the effective interest method over the remaining term. All financial instruments that are classified as mezzanine equity are evaluated for embedded derivative features by evaluating each feature against the nature of the host instrument (e.g., more equity-like or debt-like). Features identified as embedded derivatives that are material are recognized separately as a derivative asset or liability in the condensed consolidated financial statements. The Company has evaluated the Fortress Preferred Interest and determined that its nature is that of a debt host and certain embedded derivatives exist that would require bifurcation on the Company’s condensed consolidated balance sheets. For the three months ended September 30, 2024 and 2023, the Company recognized a gain of $0.1 million and a loss of $0.3 million, respectively, in derivative fair value adjustment in the condensed consolidated statements of operations. For the nine months ended September 30, 2024 and 2023, the Company recognized a gain of $0.6 million and less than $0.1 million, respectively, in derivative fair value adjustment in the condensed consolidated statements of operations. The derivative liability was less than $0.1 million and $0.7 million at September 30, 2024 and December 31, 2023, respectively, and is reflected in accounts payable and accrued liabilities in the condensed consolidated balance sheets.

The following table summarizes the preferred equity investment activities for the nine months ended September 30, 2024 and 2023.


(thousands)	Preferred Equity Investment
Balance at December 31, 2023	$	87,288
Preferred equity return		9,287
Preferred equity payment		(3,559	)
Preferred equity accretion		3,356
Balance at September 30, 2024	$	96,372


(thousands)	Preferred Equity Investment
Balance at December 31, 2022	$	73,697
Preferred equity return		10,712
Preferred equity payment		(3,179	)
Preferred equity accretion		1,754
Balance at September 30, 2023	$	82,984

Note 11 – Equity

Common Stock

On January 2, 2024, April 5, 2024 and July 1, 2024, the Company issued 11,945, 29,452, and 38,393 shares of common stock, respectively, to one of its directors in lieu of such director’s cash retainers. The foregoing shares were issued under the Company’s Amended and Restated 2020 Equity Incentive Plan (the “Plan”). Compensation expense for each of the three and nine months ended September 30, 2024 was less than $0.1 million and was included in general and administrative expenses on the condensed consolidated statement of operations.

On July 1, 2024, the Company issued 52,484 shares of common stock in connection with the redemption of OP units.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock, in one or more series, with a $0.01 par value per share, of which 20,000 shares have been designated as Series A preferred stock, $0.01 par value per share (the “Series A preferred stock”).

As of ~~June~~September 30, 2024 and December 31, 2023, the Company had 500 shares of Series A preferred stock outstanding, all of which were assumed from MedAmerica Properties Inc. (“MedAmerica”) upon completion of the initial mergers on December 27, 2019 (the “Initial Mergers”). The holders of Series A preferred stock are entitled to receive, out of funds legally available for that purpose, cumulative, non-compounded cash dividends on each outstanding share of Series A preferred stock at the rate of 10.0% of the $100 per share issuance price (“Series A preferred dividends”). The Series A preferred dividends are payable semiannually to the holders of Series A preferred stock, when and as declared by the Company’s board of directors, on June 30 and December 31 of each year, that shares of Series A preferred stock are outstanding; provided that due and unpaid Series A preferred dividends may be declared and paid on any date declared by the Company’s board of directors. As of ~~June~~September 30, 2024, less than $0.1 million of Series A preferred dividends were undeclared.

1718

Noncontrolling Interest

As of ~~June~~September 30, 2024 and December 31, 2023, the Company owned an 86.34% and 85.7% interest, respectively, in the Operating Partnership.

Amended and Restated 2020 Equity Incentive Plan

On September 15, 2021, the Company’s board of directors approved the Plan, which increased the number of shares of the Company’s common stock reserved for issuance under the Plan by 1,500,000 shares, from 3,620,000 shares to 5,120,000 shares. On April 9, 2024, the Company’s board of directors approved a further amendment and restatement of the Plan, which increased the number of shares of the Company's common stock reserved for issuance under the Plan by 1,400,000 shares, from 5,120,000 shares to 6,520,000 shares. The Plan provides for the grant of stock options, share awards (including restricted stock and restricted stock units), share appreciation rights, dividend equivalent rights, performance awards, annual cash incentive awards and other equity-based awards, including LTIP units, which are convertible on a one-for-one basis into Common OP units. As of ~~June~~September 30, 2024, there were ~~244~~205,~~325~~932 shares available for future issuance under the Plan, subject to certain adjustments set forth in the Plan. Each share subject to an award granted under the Plan will reduce the available shares under the Plan on a one-for-one basis. The Plan is administered by the compensation committee of the Company’s board of directors.

Restricted Stock

Awards of restricted stock are awards of the Company’s common stock that are subject to restrictions on transferability and other restrictions as established by the Company’s compensation committee on the date of grant that are generally subject to forfeiture if employment (or service as a director) terminates prior to vesting. Upon vesting, all restrictions would lapse. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends on the shares. The value of the awards is determined based on the market value of the Company’s common stock on the date of grant. The Company expenses the cost of restricted stock ratably over the vesting period.

The following table summarizes the stock-based award activity under the Plan for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023.

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2023		775,369		$	0.99
Granted		1,519,154			0.40
Vested		(190,665	)		1.20
Outstanding as of June 30, 2024		2,103,858		$	0.54
Outstanding as of September 30, 2024		2,103,858		$	0.54

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2022		159,439		$	2.24
Granted		419,618			0.78
Vested		(59,607	)		2.25
Forfeitures		(1619,~~344~~791	)		1.8369
Outstanding as of June 30, 2023		503,106		$	1.04
Outstanding as of September 30, 2023		499,659		$	1.04

Of the restricted shares that vested during the ~~six~~nine months ended ~~June~~September 30, 2024, 27,087 shares were surrendered by certain employees to satisfy their tax obligations.

Compensation expense related to these share-based payments for each of the three months ended ~~June~~September 30, 2024 and 2023 was approximately $0.2 million and $0.1 million, respectively, and approximately $0.35 million and $0.12 million for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, respectively, and was included in general and administrative expenses on the condensed consolidated statements of operations. The remaining unrecognized costs from stock-based awards as of ~~June~~September 30, 2024 was approximately $0.75 million and will be recognized over a weighted-average period of 10.19 years.

On April 18, 2024, the Company granted 894,154 restricted shares of common stock to certain employees, which will vest ratably on January 2, 2025, January 2, 2026, and January 4, 2027, subject to continued service through such dates. The total value of these awards is calculated to be approximately $0.4 million.

On June 21, 2024, the Company granted 625,000 restricted shares of common stock to its directors, which will vest on May 29, 2025. The total value of these awards is calculated to be approximately $0.3 million.

1819

Restricted Stock Units

The Company’s restricted stock unit (“RSU”) awards represent the right to receive unrestricted shares of common stock based on the achievement of Company performance objectives as determined by the Company’s compensation committee. Grants of RSUs generally entitle recipients to shares of common stock equal to 0% up to 300% of the number of units granted on the vesting date. RSUs are not eligible to vote or to receive dividends prior to vesting. Dividend equivalents are credited to the recipient and are paid only to the extent that the RSUs vest based on the achievement of the applicable performance objectives.

On October 1, 2021, the Company granted certain employees RSUs with an aggregate target number of 1,220,930 RSUs, of which 0% to 300% will vest based on the Company’s Implied Equity Market Capitalization (defined as (i) the sum of (a) the number of shares of common stock of the Company outstanding and (b) the number of Common OP units outstanding (not including Common OP units held by the Company), in each case, as of the last day of the applicable performance period, multiplied by (ii) the value per share of common stock at the end of the performance period) on December 31, 2024, the end of the performance period, subject to the executive’s continued service on such date. If, however, the maximum amount of the award is not earned as of December 31, 2024, the remaining RSUs may be earned based on the Company’s Implied Equity Market Capitalization as of December 31, 2025. To the extent performance is between any two designated amounts, the percentage of the target award earned will be determined using a straight-line linear interpolation between the two designated amounts. The value of the awards is determined by using a Monte Carlo simulation model in estimating the market value of the RSUs as of the date of grant. The Company expenses the cost of RSUs ratably over the vesting period. On February 28, 2023, 232,558 RSUs were forfeited as a result of an employee’s resignation. ~~The remaining unrecognized costs from RSU awards as of June 30, 2024 was approximately $1.5 million and will be recognized over 1.5 years.~~

Compensation expense related to the RSUs for each of the three months ended September 30, 2024 and 2023 was approximately $0.2 million and approximately $0.7 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, and was included in general and administrative expenses on the condensed consolidated statement of operations. The remaining unrecognized costs from RSU awards as of September 30, 2024 was approximately $1.2 million and will be recognized over 1.3 years.

Option Awards

In connection with the completion of the Initial Mergers, the Company assumed option awards previously issued to directors and officers of MedAmerica. Details of these options for the ~~six~~nine months ended ~~June~~September 30, 2023 are presented in the tables below:

	Numberof SharesUnderlyingOptions			WeightedAverage ExercisePrice Per Share			WeightedAverage FairValue at Grant Date		WeightedAverage RemainingContractual Life		Intrinsic Value
Balance at December 31, 2022		10,000		$	6.00		$	—		0.45	$	—
Options granted		—			—			—		—		—
Options exercised		—			—			—		—		—
Options expired		(10,000	)		(~~600~~6.00	)		—		—		—
Balance at June 30, 2023		—		$	—		$	—		—	$	—
Balance at September 30, 2023		—		$	—		$	—		—	$	—

The fair values of stock options are estimated using the Black-Scholes method, which takes into account variables such as estimated volatility, expected holding period, dividend yield, and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the date of grant. The expected life is based on the contractual life of the options at the date of grant. The intrinsic value was not material. All options expired as of June 30, 2023.

1920

Note 1112 – Revenues

Disaggregated Revenue

The following table represents a disaggregation of revenues from contracts with customers for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 by type of service:

	Topic 606	Three Months Ended ~~June~~September 30,				~~Six~~Nine Months Ended ~~June~~September 30,
(in thousands)	Revenue Recognition	2024		2023		2024		2023
Topic 606 Revenues
Leasing commissions	Point in time	$	~~727~~480	$	~~517~~675	$	1,~~187~~667	$	12,~~335~~010
Property and asset management fees	Over time		3332		2927		69101		6289
Sales commissions	Point in time		9723		~~146~~76		~~139~~162		~~184~~260
Development fees	Over time		—		—33		1		942
Engineering services	Over time		1912		1518		4052		2947
Topic 606 Revenue			~~876~~547		~~707~~829		1,~~436~~983		12,~~619~~448
Out of Scope of Topic 606 revenue
Rental income		$	9,~~255~~666	$	109,~~257~~206	$	1828,~~766~~432	$	2029,~~465~~671
Sublease income			—		912		—		2133
Total Out of Scope of Topic 606 revenue			9,~~255~~666		109,~~266~~218		1828,~~766~~432		2029,~~486~~704
Total Revenue		$	10,~~131~~213	$	10,~~973~~047	$	2030,~~202~~415	$	2232,~~105~~152

Leasing Operations

Minimum cash rental payments due to the Company in future periods under executed non-cancelable operating leases in place for the Company’s properties as of ~~June~~September 30, 2024 are reflected in the table below.

(in thousands)
Remainder of 2024	$	157,~~374~~816
2025		2627,~~767~~217
2026		1819,~~873~~450
2027		1617,~~877~~442
2028		14,~~094~~610
2029		11,~~062~~531
Thereafter		3536,~~602~~374
Total	$	~~138~~134,~~649~~440

Note 1213 – Earnings per Share

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined based on the weighted average number of shares outstanding during the period combined with the incremental average shares that would have been outstanding assuming the conversion of all potentially dilutive common shares into common shares as of the earliest date possible. Potentially dilutive securities include stock options, convertible preferred stock, restricted stock, warrants, RSUs and OP units, which, subject to certain terms and conditions, may be tendered for redemption by the holder thereof for cash based on the market price of the Company’s common stock or, at the Company’s option and sole discretion, for shares of the Company’s common stock on a one-for-one basis. Stock options, convertible preferred stock, restricted stock, warrants, RSUs and OP units have been omitted from the Company’s denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the denominator would have no dilutive impact due to the net loss position. The weighted average number of anti-dilutive convertible preferred stock, restricted stock, RSUs and OP units outstanding for the three months ended ~~June~~September 30, 2024 and 2023 was approximately 7.9 million and 7.01 million, respectively. The weighted average number of anti-dilutive convertible preferred stock, restricted stock, RSUs and OP units outstanding for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 was approximately 7.59 million and 67.90 million, respectively.

2021

The following table sets forth the computation of earnings per common share for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023:

(in thousands, except per share data)	Three Months Ended ~~June~~September 30,						~~Six~~Nine Months Ended ~~June~~September 30,
Numerator:	2024			2023			2024			2023
Net (loss) income	$	(4,501	)	$	2,986		$	(6,439	)	$	1,326
Net loss	$	(6,268	)	$	(5,079	)	$	(12,707	)	$	(3,753	)
Less: Preferred equity return on Fortress preferred equity		(3,~~084~~181	)		(3,~~569~~716	)		(69,~~106~~287	)		(610,~~996~~712	)
Less: Preferred equity accretion to redemption value		(~~973~~1,004	)		(~~756~~583	)		(23,~~352~~356	)		(1,~~171~~754	)
Less: Preferred OP units return		(~~144~~151	)		(~~118~~122	)		(~~283~~434	)		(~~230~~352	)
Plus: Net loss attributable to noncontrolling interest		1,~~127~~351			~~132~~1,633			13,~~966~~317			12,~~146~~779
Net loss attributable to common stockholders	$	(79,~~575~~253	)	$	(17,~~325~~867	)	$	(1322,~~214~~467	)	$	(513,~~925~~792	)
Denominator
Basic weighted-average common shares		35,~~905~~998			35,~~661~~692			35,~~890~~926			35,~~518~~577
Dilutive potential common shares		—			—			—			—
Diluted weighted-average common shares		35,~~905~~998			35,~~661~~692			35,~~890~~926			35,~~518~~577
Net loss per common share- basic and diluted	$	(0.2126	)	$	(0.0422	)	$	(0.3763	)	$	(0.1739	)

Note 1314 – Fair Value of Financial Instruments

The Company uses fair value measures to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. GAAP establishes a three-level hierarchy that prioritizes inputs into the valuation techniques used to measure fair value. Fair value measurements associated with assets and liabilities are categorized into one of the following levels of the hierarchy based upon how observable the valuation inputs are that are used in the fair value measurements.

•

Level 1 — The valuation is based upon quoted prices in active markets for identical instruments.

•

Level 2 — The valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or derived from a model in which significant inputs or significant value drivers are observable in active markets.

•

Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar methodologies, which incorporates management's own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation.

Financial Assets and Liabilities Measured at Fair Value

The Company’s financial assets and liabilities measured at fair value on a recurring basis currently include derivative financial instruments and the Fortress Mezzanine Loan. The following tables present the carrying amounts of these assets and liabilities that are measured at fair value on a recurring basis by instrument type and based upon the level of the fair value hierarchy within which fair value measurements of the Company’s assets and liabilities are categorized:

Fair Value Measurements

(in thousands)

~~June~~September 30, 2024

Level 1

Level 2

Level 3

Assets:

Derivative instruments

~~1,218~~245

—

~~1,218~~245

—

Liabilities:

Derivative instruments (1)

~~123~~581

—

~~123~~581

—

Fortress Mezzanine Loan

1215,~~303~~450

—

1215,~~303~~450

—

(1)

Derivative liabilities are included in Accounts payable and accrued liabilities on the condensed consolidated balance sheets.

2122

			Fair Value Measurements
(in thousands)	December 31, 2023		Level 1		Level 2		Level 3
Assets:
Derivative instruments	$	796	$	—	$	796	$	—
Liabilities:
Derivative instruments (1)	$	668	$	—	$	668	$	—
Fortress Mezzanine Loan	$	16,187	$	—	$	16,187	$	—

(1)

Derivative liabilities are included in Accounts payable and accrued liabilities on the condensed consolidated balance sheets.

The derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate caps and interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. See Note 78 “—Interest Rate Cap and Interest Rate Swap Agreements” for further discussion regarding the Company’s interest rate cap and interest rate swap agreements.

The Preferred Equity Investment contains embedded features that are required to be bifurcated from the temporary equity-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815, Derivatives and Hedging. The fair value of the embedded derivative liability was valued using a binomial lattice-based model which takes into account variables such as estimated volatility, expected holding period, stock price, the exit fee and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the valuation date. This technique incorporates Level 1 and Level 2 inputs.

The Company elected to measure the Fortress Mezzanine Loan at fair value in accordance with the fair value option. The Fortress Mezzanine Loan is a debt host financial instrument containing embedded features which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements under ASC 815, Derivatives and Hedging. The fair value option election for the Fortress Mezzanine Loan is due to the number and complexity of features that would require separate bifurcation absent this election. The fair value of the Fortress Mezzanine Loan is valued using a binomial lattice-based model which takes into account variables such as estimated volatility, expected holding period, stock price, the exit fee and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the valuation date. This technique incorporates Level 1 and Level 2 inputs.

Financial Assets and Liabilities Not Carried at Fair Value

The tables below provide information about the carrying amounts and fair values of those financial instruments of the Company for which fair value is not measured on a recurring basis and organizes the information based upon the level of the fair value hierarchy within which fair value measurements are categorized.

At June 30, 2024

At September 30, 2024

Fair Value

(in thousands)

Carrying Amount

Level 1

Level 2

Level 3

Assets:

Cash and cash equivalents

18,~~857~~013

—

Restricted cash

4,~~603~~802

—

Liabilities:

Mortgage and other indebtedness, net - variable rate

5251,~~117~~894

—

5251,~~117~~894

—

Mortgage and other indebtedness, net - fixed rate

~~181~~180,~~009~~774

—

~~180~~186,~~732~~159

—

2223


	At December 31, 2023
			Fair Value
(in thousands)	Carrying Amount		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	9,779	$	9,779	$	—	$	—
Restricted cash		4,018		4,018		—		—

Liabilities:
Mortgage and other indebtedness, net - variable rate	$	61,056	$	—	$	61,056	$	—
Mortgage and other indebtedness, net - fixed rate		155,844		—		159,065		—

The carrying amounts of cash and cash equivalents, restricted cash, receivables and payables are reasonable estimates of their fair value as of ~~June~~September 30, 2024 and December 31, 2023 due to the short-term nature of these instruments (Level 1).

At ~~June~~September 30, 2024 and December 31, 2023, the Company’s indebtedness was comprised of borrowings that bear interest at variable and fixed rates. The fair value of the Company’s borrowings under variable rates at ~~June~~September 30, 2024 and December 31, 2023 approximate their carrying values as the debt is at variable rates currently available and resets on a monthly basis.

The fair value of the Company’s fixed rate debt as of ~~June~~September 30, 2024 and December 31, 2023 is estimated by using Level 2 inputs such as discounting the estimated future cash flows using current market rates for similar loans that would be made to borrowers with similar credit ratings and for the same remaining maturities.

Fair value estimates are made at a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement at such fair value amounts may not be possible.

Note 1415 – Taxes

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items, such as the net gain on change in fair value of debt held under the fair value option, which are recorded in the interim period. The provision for income taxes for the three months ended ~~June~~September 30, 2024 and 2023 reflects an income tax benefit of ~~less than~~ $0.1 million and $2.3 million, respectively, at an estimated annual effective tax rate of 23(0.124)%. ~~There~~and ~~was no income tax benefit (expense) for the three months ended June 30~~22.6%, ~~2024~~respectively. The provision for income taxes for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 reflects an income tax (expense) benefit of $(0.1) million and $14.70 million, respectively, at an estimated annual effective tax rate of (0.4224)% and 2322.16%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate is primarily due to the loss attributable to the Operating Partnership and net gain on change in fair value of debt held under the fair value option, each of which is not subject to federal tax and state income taxes. ~~and~~As ~~the fact the Company had a full valuation as~~ of ~~June~~September 30, 2024 and December 31, 2023~~. As of June 30~~, ~~2024,~~ the Company maintained a full valuation allowance on its deferred tax assets as the timing of the utilization of its net operating losses is uncertain. For the three months ended September 30, 2024 and ~~six~~2023, the Company recorded a valuation allowance of $1.8 million and $0.4 million, respectively, against the deferred tax asset. For the nine months ended ~~June~~September 30, 2024 and 2023, the Company recorded a valuation allowance of $15.94 million and $31.65 million, respectively, against the deferred tax asset.

Note 1516 – Related Party Transactions

Receivables and Payables

As of each of ~~June~~September 30, 2024 and December 31, 2023, the Company had $1.1 million in receivables due from related parties, included in Other assets, net on the condensed consolidated balance sheets. The $1.1 million at ~~June~~September 30, 2024 and December 31, 2023 relates to the merger pursuant to which the Company acquired Lamar Station Plaza West, including the note receivable due from a related party. Additionally, as of ~~June~~September 30, 2024 and December 31, 2023, the Company had less than $0.1 million and approximately $0.1 million, respectively, in payables due to properties managed by the Company related to amounts borrowed by the Company for working capital, which are reflected in Payables due to related parties on the condensed consolidated balance sheets.

Tax Protection Agreements

On December 27, 2019, the Company and the Operating Partnership entered into tax protection agreements (the “Initial Tax Protection Agreements”) with each of the prior investors in BSV Colonial Investor LLC, BSV Lamonticello Investors LLC and BSV Patrick Street Member LLC, including Messrs. Jacoby, Yockey and Topchy, in connection with their receipt of Common OP units in certain of the Initial Mergers. On April 4, 2023, the Company and the Operating Partnership entered into a tax protection agreement (together with the Initial Tax Protection Agreements, the “Tax Protection Agreements”), with each of the prior investors in BSV Lamont Investors LLC, including Messrs. Jacoby, Yockey and Topchy, in connection with their receipt of Common OP units in the merger whereby the Company acquired Lamar Station Plaza West. Pursuant to the Tax Protection Agreements, until the seventh anniversary of ~~the completion of the applicable merger, the Company and the Operating Partnership may be required to indemnify the other parties~~

2324

the completion of the applicable merger, the Company and the Operating Partnership may be required to indemnify the other parties thereto for their tax liabilities related to built-in gain that exists with respect to the properties known as Midtown Colonial, Midtown Lamonticello, Vista Shops at Golden Mile and Lamar Station Plaza West (the “Protected Properties”). Furthermore, until the seventh anniversary of the completion of the applicable merger, the Company and the Operating Partnership will be required to use commercially reasonable efforts to avoid any event, including a sale of the Protected Properties, that triggers built-in gain to the other parties to the Tax Protection Agreements, subject to certain exceptions, including like-kind exchanges under Section 1031 of the Code.

Guarantees

The Company’s subsidiaries’ obligations under the Eagles Sub-OP Operating Agreement and Brookhill mortgage loan are guaranteed by Messrs. Jacoby and Yockey. The Company has agreed to indemnify Mr. Yockey for any losses he incurs as a result of his guarantee of the Brookhill mortgage loan. Mr. Jacoby is also a guarantor under the mortgage loan agreements for Coral Hills Shopping Center, Cromwell Field Shopping Center, Highlandtown Village Shopping Center, Midtown Colonial and Midtown Lamonticello, and West Broad Shopping Center.

Legal Fees

Samuel Spiritos, a director of the Company, is the managing partner of Shulman Rogers LLP, which represents the Company in certain real estate matters. During each of the three months ended ~~June~~September 30, 2024 and 2023, the Company paid ~~approximately~~less than $0.1 million ~~and $0.2 million, respectively,~~ in legal fees to Shulman Rogers LLP. During the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, the Company paid approximately $0.1 million and $0.3 million, respectively, in legal fees to Shulman Rogers LLP.

2425

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. References to “we,” “our,” “us,” and “Company” refer to Broad Street Realty, Inc., together with its consolidated subsidiaries.

Forward-Looking Statements

We make statements in this Quarterly Report on Form 10-Q (this “report”) that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements include, without limitation, statements about our estimates, expectations, predictions and forecasts of our future business plans and financial and operating performance and/or results, as well as statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. When we use the words “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “project,” “seek,” or similar expressions or their negatives, as well as statements in future tense, we intend to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance, and our actual financial and operating results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such differences are described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents that we file from time to time with the Securities and Exchange Commission (the “SEC”), which factors include, without limitation, the following:

•

our limited access to capital and our ability to repay, refinance, restructure and/or extend our indebtedness as it becomes due;

•

the substantial rights of the Fortress Member (as defined herein) under the Eagles Sub-OP Operating Agreement (as defined below), including approval rights over major decisions and repayment and control rights upon the occurrence of a Trigger Event (as defined in the Eagles Sub-OP Operating Agreement), including if the Fortress Member revokes its waiver of the failure to meet the total yield calculation under the Eagles Sub-OP Agreement as of March 31, 2024 as discussed below under “—Factors that May Impact Future Results of Operations—Fortress Member’s Rights”;

•

our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions or investments;

•

adverse economic or real estate developments, either nationally or in the markets in which our properties are located;

•

changes in financial markets and interest rates, or to our business or financial condition;

•

the nature and extent of our competition;

•

other factors affecting the retail industry or the real estate industry generally;

•

availability of financing and capital;

•

the performance of our portfolio; and

•

the impact of any financial, accounting, legal or regulatory issues or litigation.

Given these uncertainties, undue reliance should not be placed on our forward-looking statements. We assume no duty or responsibility to publicly update or revise any forward-looking statement that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. We urge you to review the disclosures concerning risks in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 for further discussion of these and other risks, as well as the risks, uncertainties and other factors discussed in this report and identified in other documents we file with the SEC from time to time. You should carefully consider these risks before making any investment decisions in the Company. New risks and uncertainties may also emerge from time to time that could materially and adversely affect us.

Overview

We are focused on owning and managing essential grocery-anchored and mixed-use assets located in densely populated technology employment hubs and higher education centers within the Mid-Atlantic, Southeast and Colorado markets. As of June 30, 2024, we owned 15 properties. The properties in our portfolio are dispersed in sub-markets that we believe generally have high population densities, high traffic counts, good visibility and accessibility, which provide our tenants with attractive locations to serve the necessity-based needs of the surrounding communities. We intend to focus on acquiring additional strategically positioned properties in established and developing neighborhoods primarily leased to necessity-based tenants that meet the needs of the surrounding communities in our existing markets, as well as acquiring properties in new markets that meet our investment criteria, including the Southeastern United States. In addition, we provide commercial real estate brokerage services for our own portfolio and third-party office, industrial and retail operators and tenants.

The table below provides certain information regarding our portfolio as of June 30, 2024 and December 31, 2023. For additional information, see “—Our Portfolio.”

	As of			As of
	June 30, 2024			December 31, 2023
Number of properties		15			15
Number of states		4			4
Total square feet (in thousands)		1,918			1,916
Retail		1,656			1,654
Residential		262			262
Leased % of rentable square feet (1):
Total portfolio		90.1	%		90.1	%
Retail		88.2	%		88.5	%
Residential		100.0	%		100.0	%
Occupied % of rentable square feet (1):
Total portfolio		89.8	%		86.2	%
Retail		87.8	%		84.1	%
Residential		100.0	%		100.0	%
Total residential units/beds	240/620			240/620
Monthly residential base rent per bed	$	957.45		$	1,099.26
Annualized residential base rent per leased square foot (2)	$	27.15		$	31.22
Annualized retail base rent per leased square foot (2)	$	15.13		$	14.99

Percent leased is calculated as (a) gross leasable area (“GLA”) of rentable commercial square feet occupied or subject to a lease as of June 30, 2024 or December 31, 2023, as applicable, divided by (b) total GLA as of June 30, 2024 or December 31, 2023, as applicable, expressed as a percentage. The total percent occupied, which excludes leases that have been signed but not commenced, was 89.8% and 86.2% as of June 30, 2024 and December 31, 2023, respectively.

Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of June 30, 2024 or December 31, 2023, as applicable.

The table below provides certain information regarding our retail portfolio as of June 30, 2024 and December 31, 2023. For additional information, see “—Our Portfolio.”

	As of			As of
	June 30, 2024			December 31, 2023
Total rentable square feet (in thousands)		1,656			1,654
Anchor spaces		854			843
Inline spaces		802			811
Leased % of rentable square feet (1):
Total retail portfolio		88.2	%		88.5	%
Anchor spaces		95.1	%		95.0	%
Inline spaces		80.8	%		81.6	%
Occupied % of rentable square feet (1):
Total retail portfolio		87.8	%		84.1	%
Anchor spaces		95.1	%		88.8	%
Inline spaces		80.0	%		79.2	%
Weighted average remaining lease term (in years) (2)		5.6			5.4

~~Percent~~Overview leased is calculated as (a) GLA of rentable commercial square feet occupied or subject to a lease as of June 30, 2024 or December 31, 2023, as applicable, divided by (b) total GLA as of June 30, 2024 or December 31, 2023, as applicable, expressed as a percentage. The total percent occupied, which excludes leases that have been signed but not commenced, was 87.8% and 84.1% as of June 30, 2024 and December 31, 2023, respectively.

We are focused on owning and managing essential grocery-anchored and mixed-use assets located in densely populated technology employment hubs and higher education centers within the Mid-Atlantic, Southeast and Colorado markets. As of September 30, 2024, we owned 15 properties. The properties in our portfolio are dispersed in sub-markets that we believe generally have high population densities, high traffic counts, good visibility and accessibility, which provide our tenants with attractive locations to serve the necessity-based needs of the surrounding communities. We intend to focus on acquiring additional strategically positioned properties in established and developing neighborhoods primarily leased to necessity-based tenants that meet the needs of the surrounding communities in our existing markets, as well as acquiring properties in new markets that meet our investment criteria, including the Southeastern United States. In addition, we provide commercial real estate brokerage services for our own portfolio and third-party office, industrial and retail operators and tenants.

The table below provides certain information regarding our portfolio as of September 30, 2024 and December 31, 2023. For additional information, see “—Our Portfolio.”


	As of			As of
	September 30, 2024			December 31, 2023
Number of properties		15			15
Number of states		4			4
Total square feet (in thousands)		1,919			1,916
Retail		1,657			1,654
Residential		262			262
Leased % of rentable square feet (1):
Total portfolio		90.7	%		90.1	%
Retail		88.9	%		88.5	%
Residential		100.0	%		100.0	%
Occupied % of rentable square feet (1):
Total portfolio		89.3	%		86.2	%
Retail		87.1	%		84.1	%
Residential		100.0	%		100.0	%
Total residential units/beds	240/620			240/620
Monthly residential base rent per bed	$	1,277.51		$	1,099.26
Annualized residential base rent per leased square foot (2)	$	36.23		$	31.22
Annualized retail base rent per leased square foot (2)	$	15.14		$	14.99

(1)

Percent leased is calculated as (a) gross leasable area (“GLA”) of rentable commercial square feet occupied or subject to a lease as of September 30, 2024 or December 31, 2023, as applicable, divided by (b) total GLA as of September 30, 2024 or December 31, 2023, as applicable, expressed as a percentage. The total percent occupied, which excludes leases that have been signed but not commenced, was 89.3% and 86.2% as of September 30, 2024 and December 31, 2023, respectively.

(2)

Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of September 30, 2024 or December 31, 2023, as applicable.

The table below provides certain information regarding our retail portfolio as of September 30, 2024 and December 31, 2023. For additional information, see “—Our Portfolio.”


	As of			As of
	September 30, 2024			December 31, 2023
Total rentable square feet (in thousands)		1,657			1,654
Anchor spaces		854			843
Inline spaces		803			811
Leased % of rentable square feet (1):
Total retail portfolio		88.9	%		88.5	%
Anchor spaces		95.1	%		95.0	%
Inline spaces		82.2	%		81.6	%
Occupied % of rentable square feet (1):
Total retail portfolio		87.1	%		84.1	%
Anchor spaces		95.1	%		88.8	%
Inline spaces		78.5	%		79.2	%
Weighted average remaining lease term (in years) (2)		5.6			5.4

(1)

Percent leased is calculated as (a) GLA of rentable commercial square feet occupied or subject to a lease as of September 30, 2024 or December 31, 2023, as applicable, divided by (b) total GLA as of September 30, 2024 or December 31, 2023, as applicable, expressed as a percentage. The total percent occupied, which excludes leases that have been signed but not commenced, was 87.1% and 84.1% as of September 30, 2024 and December 31, 2023, respectively.

(2)

The average remaining lease term (in years) excludes the future options to extend the term of the lease.

We are structured as an “Up-C” corporation with substantially all of our operations conducted through Broad Street Operating Partnership, LP (our “Operating Partnership”) and its direct and indirect subsidiaries. As of ~~June~~September 30, 2024, we owned 86.34% of the Class A common units of limited partnership interest in the Operating Partnership (“Common OP units”) and Series A preferred units of limited partnership interest in the Operating Partnership (“Preferred OP units” and, together with the Common OP units, “OP units”), and we are the sole member of the sole general partner of our Operating Partnership. We began operating in our current structure on December 27, 2019 upon the completion of certain mergers that were part of the previously announced series of mergers (collectively, the “Mergers”) on such date, and we operate as a single reporting segment.

Portfolio Summary

As of ~~June~~September 30, 2024, we owned 15 properties, of which 12 are located in the Mid-Atlantic region and three are located in Colorado. Retail properties comprise our entire portfolio except for a portion of one of our properties (Midtown Row), which includes a student housing property. Our retail properties have 1,656,~~239~~687 total square feet of GLA. The following table provides additional information about the retail properties in our portfolio as of ~~June~~September 30, 2024.

Property Name	City/State	Year Built /Renovated (1)		GLA		PercentLeased (2)			Total Annualized Base Rent (3)		Annualized Base Rent per Leased SF (4)		Percentage of Total Annualized Base Rent			Gross RealEstate Assets(in thousands)
Avondale Shops	Washington, D.C.	2010			28,308		100.0	%	$	~~679~~682,~~697~~103	$	24.0110		3.1	%	$	8,380
Brookhill Azalea Shopping Center	Richmond, VA	2012			163,~~353~~008		88.02	%		1,~~590~~594,~~240~~799		11.0610		7.2	%		18,~~286~~333
Coral Hills Shopping Center	Capitol Heights, MD		2012		85,514		100.0	%		1,~~478~~486,~~469~~954		17.2939		6.7	%		16,680
Crestview Square Shopping Center	Landover Hills, MD		2012		74,694		~~100~~95.06	%		1,~~544~~486,~~985~~122		20.6880		76.07	%		18,~~705~~707
Cromwell Field Shopping Center	Glen Burnie, MD		2020		233,~~405~~606		8487.36	%		12,~~942~~051,~~018~~109		910.8703		89.82	%		19,~~773~~819
The Shops at Greenwood Village	Greenwood Village, CO		2019		~~198~~199,~~691~~571		9597.91	%		3,~~460~~456,~~366~~779		1817.1585		15.64	%		31,~~666~~523
Highlandtown Village Shopping Center	Baltimore, MD		1987		57,524		100.0	%		1,~~168~~170,~~473~~973		20.3136		5.3	%		7,450
Hollinswood Shopping Center	Baltimore, MD		2020		112,~~659~~671		97.8	%		1,~~811~~812,~~417~~383		16.4445		8.21	%		24,~~585~~676
Lamar Station Plaza East	Lakewood, CO		1984		84,745		3234.48	%		~~496~~538,~~402~~362		18.0623		2.24	%		8,~~746~~759
Lamar Station Plaza West	Lakewood, CO		2016		186,887		100.0	%		2,~~152~~154,~~575~~895		11.5253		9.76	%		24,738
Midtown Colonial	Williamsburg, VA		2018		95,~~455~~472		88.0	%		1,~~055~~060,~~770~~035		12.5661		4.8	%		17,~~659~~680
Midtown Lamonticello	Williamsburg, VA		2019		6362,~~157~~786		86.16	%		~~950~~951,~~590~~981		17.4851		4.3	%		16,~~042~~020
Midtown Row (Retail Portion)	Williamsburg, VA		2021		63,~~622~~676		2225.46	%		~~366~~428,~~760~~710		2526.7327		1.79	%		126,~~622~~679
Vista Shops at Golden Mile	Frederick, MD		2009		98,674		100.0	%		1,~~871~~876,~~684~~744		1819.9702		8.54	%		15,~~071~~130
West Broad Commons Shopping Center	Richmond, VA		2017		109,551		97.8	%		1,~~524~~530,~~196~~905		14.2229		6.9	%		19,964
Total					1,656,~~239~~687		88.29	%	$	22,~~093~~282,~~642~~854	$	15.1314		100.0	%	$	374,~~367~~538

(1)

Represents the most recent year in which a property was built or renovated. For purposes of this table, renovation means significant upgrades, alterations or additions to the property.

2728

(2)

Percent leased is calculated as (a) GLA of rentable commercial square feet occupied or subject to a lease as of ~~June~~September 30, 2024 divided by (b) total GLA, expressed as a percentage. The total percent occupied, which excludes leases that have been signed but not commenced, was 87.81% as of ~~June~~September 30, 2024.

(3)

Total annualized base rent is calculated by multiplying (a) monthly base rent (before abatements) as of ~~June~~September 30, 2024, for leases that had commenced as of such date, by (b) 12. Total annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area maintenance or other operating expenses.

(4)

Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of ~~June~~September 30, 2024.

Geographic Concentration

The following table contains information regarding the geographic concentration of the properties in our portfolio as of ~~June~~September 30, 2024, which includes rental income for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023.

(dollars in thousands)	NumberofProperties	Gross Real Estate Assets		Percentage of Total Real Estate Assets			Rental income for the ~~six~~nine months ended ~~June~~September 30,
Location	~~June~~September 30, 2024	~~June~~September 30, 2024		~~June~~September 30, 2024			2024		2023
Maryland	6	$	102,~~264~~462		27.34	%	$	69,~~425~~927	$	69,~~078~~214
Virginia (1)	5		198,~~573~~676		53.10	%		711,~~781~~754		812,~~703~~395
Pennsylvania (2)	―		—		—			—		1,~~353~~501
Washington D.C.	1		8,380		2.2	%		~~400~~596		~~303~~438
Colorado	3		65,~~150~~020		17.4	%		46,~~160~~155		46,~~028~~123
	15	$	374,~~367~~538		100.0	%	$	1828,~~766~~432	$	2029,~~465~~671

(1)

Rental income for the ~~six~~nine months ended ~~June~~September 30, 2023 includes $1.2 million of rental income from Spotswood Valley Square Shopping Center, which was sold on June 30, 2023.

(2)

Rental income related solely to Dekalb Plaza, which was sold on July 20, 2023.

Critical Accounting Policies

Refer to our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 for a discussion of our accounting policies, including the critical accounting policies of revenue recognition, real estate investments, asset impairment, income taxes, and our accounting policy on consolidation, which are included in our 2023 Annual Report on Form 10-K, which was filed with the SEC on April 1, 2024. During the ~~six~~nine months ended ~~June~~September 30, 2024, there were no material changes to these policies. See Note 2 “—Accounting Guidance” to our condensed consolidated financial statements in Item 1 of this report for recently-adopted accounting pronouncements.

Factors that May Impact Future Results of Operations

Rental Income

Growth in rental income will depend on our ability to acquire additional properties that meet our investment criteria and on filling vacancies and increasing rents on the properties in our portfolio. The amount of rental income generated by the properties in our portfolio depends on our ability to renew expiring leases or re-lease space upon the scheduled or unscheduled termination of leases, lease currently available space and maintain or increase rental rates at our properties. Our rental income in future periods could be adversely affected by local, regional, or national economic conditions, an oversupply of or a reduction in demand for retail space, changes in market rental rates, our ability to provide adequate services and maintenance at our properties, fluctuations in interest rates and dispositions of properties. In addition, economic downturns affecting our markets or downturns in our tenants’ businesses that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments to us could adversely affect our ability to maintain or increase rent and occupancy.

Scheduled Lease Expirations

Our ability to re-lease expiring space at rental rates equal to or greater than that of current rental rates will impact our results of operations. Our properties are marketed to smaller tenants that generally desire shorter-term leases. As of ~~June~~September 30, 2024, approximately 44.48% of our portfolio (based on GLA) was leased to tenants occupying less than 10,000 square feet. In addition, as of ~~June~~September 30, 2024, approximately 11.81% of our GLA was vacant and approximately 10.32% of our leases (based on GLA) were scheduled to expire on or before December 31, 2024. Although we maintain ongoing dialogue with our tenants, we generally raise the issue of renewal at least 12 months prior to lease renewal often providing concessions for early renewal. If our current tenants do not renew their leases or terminate their leases early, we may be unable to re-lease the space to new tenants on favorable terms or at all. Our vacancy trends will be impacted by new properties that we acquire, which may include properties with higher vacancy where we identified opportunities to increase occupancy.

2829

Acquisitions

Over the long-term, we intend to grow our portfolio through the acquisition of additional strategically positioned properties in established and developing neighborhoods primarily leased to necessity-based tenants that meet the needs of the surrounding communities in our existing markets, as well as acquiring properties in new markets that meet our investment criteria, including the Southeastern United States. We have established relationships with a wide variety of market participants, including tenants, leasing agents, investment sales brokers, property owners and lenders, in our target markets and beyond, and, over the long-term, we believe that we will have opportunities to acquire properties that meet our investment criteria at attractive prices.

General and Administrative Expenses

General and administrative expenses include employee compensation costs, professional fees, consulting, and other general administrative expenses. We expect ~~an increase in general and administrative expenses in the future related to stock issuances to employees. We expect~~ that our general and administrative expenses will rise in some measure as our portfolio grows but that such expenses as a percentage of our revenue will decrease over time due to efficiencies and economies of scale.

Capital Expenditures

We incur capital expenditures at our properties that vary in amount and frequency based on each property’s specific needs. We expect our capital expenditures will be for recurring maintenance to ensure our properties are in good working condition, including parking and roof repairs, façade maintenance and general upkeep. We also will incur capital expenditures related to repositioning and refurbishing properties where we have identified opportunities to improve our properties to increase occupancy, and we may incur capital expenditures related to redevelopment or development consistent with our business and growth strategies.

Fortress Member’s Rights

On November 22, 2022, the Company, the Operating Partnership and Broad Street Eagles JV LLC, a newly formed subsidiary of the Operating Partnership (the “Eagles Sub-OP”), entered into a Preferred Equity Investment Agreement with CF Flyer PE Investor LLC (the “Fortress Member”), an affiliate of Fortress Investment Group LLC, pursuant to which the Fortress Member invested $80.0 million in the Eagles Sub-OP in exchange for a preferred membership interest (the “Fortress Preferred Interest” and such investment, the “Preferred Equity Investment”). In connection with the Preferred Equity Investment, the Operating Partnership and the Fortress Member entered into the Amended and Restated Limited Liability Company Agreement of the Eagles Sub-OP (the “Eagles Sub-OP Operating Agreement”). Under the Eagles Sub-OP Operating Agreement, upon the occurrence of a Trigger Event, the Fortress Member has the right to cause the Eagles Sub-OP to redeem the Fortress Preferred Interest by payment to the Fortress Member of the full Redemption Amount (as defined in the Eagles Sub-OP Operating Agreement) upon not less than 90 days prior written notice to the Eagles Sub-OP, unless the Trigger Event is in connection with a Bankruptcy Event (as defined in the Eagles Sub-OP Operating Agreement), in which case the redemption must occur as of the date of such Trigger Event. Additionally, upon the occurrence of a Trigger Event, the Fortress Member would have the right (among other rights) to (i) remove the Operating Partnership as the managing member of the Eagles Sub-OP and to serve as the managing member until the Fortress Member is paid the Redemption Amount, (ii) cause the Eagles Sub-OP to sell one or more properties until the entire Fortress Preferred Interest has been redeemed for the Redemption Amount, (iii) cause the Eagles Sub-OP to use certain reserve accounts to pay the Fortress Member the full Redemption Amount, and (iv) terminate all property management and other service agreements with our affiliates. If the Fortress Member removes the Operating Partnership and becomes the managing member of the Eagles Sub‑OP, the Eagles Sub-OP Operating Agreement only requires the Fortress Member to act in a manner consistent with other institutional preferred equity investors that have exercised remedies to remove managing members. Moreover, in such a circumstance, the Eagles Sub-OP Operating Agreement specifically reserves the Fortress Member’s right to (i) sell any property to a third-party buyer unaffiliated with the Fortress Member, (ii) take any action in connection with curing or reacting to a default under any mortgage loan and (iii) otherwise exercise its rights and remedies pursuant to the terms of the Eagles Sub-OP Operating Agreement. Accordingly, in the event the Fortress Member becomes the managing member of the Eagles Sub-OP, it may take actions that are not in the best interest of us and our stockholders. Further, the mezzanine loan agreement for a mezzanine loan (the “Fortress Mezzanine Loan”) secured by 100% of the membership interests in the entity that owns Midtown Row provides for cross-default in the event of a Trigger Event

On May 21, 2024, we agreed with the Fortress Member that, after revision of the total yield calculation as of March 31, 2024, we did not meet the minimum total yield requirement under the Eagles Sub-OP Operating Agreement, which would have been a Trigger Event. Effective May 21, 2024, the Fortress Member and the Operating Partnership entered into a temporary waiver agreement to waive the total yield failure and the existence of the Trigger Event until such time as the Fortress Member elects to revoke such waiver. If the Fortress Member elects to revoke such waiver or a separate Trigger Event occurs, the Fortress Member will be entitled to exercise the rights described above, which could have a material adverse effect on us.

2930

Results of Operations

This section provides a comparative discussion on our results of operations and should be read in conjunction with our condensed consolidated financial statements, including the accompanying notes.

Comparison of the three months ended ~~June~~September 30, 2024 to the three months ended ~~June~~September 30, 2023

	For the Three Months Ended						Change
(dollars in thousands)	~~June~~September 30, 2024			~~June~~September 30, 2023			$			%
Revenues
Rental income	$	9,~~255~~666		$	109,~~257~~206		$	~~(1,002~~460	)		~~(10~~5	%)
Commissions		~~824~~503			~~663~~751			~~161~~(248	)		24(33	%)
Management fees and other income		5244			5390			(146	)		(251	%)
Total revenues		10,~~131~~213			10,~~973~~047			~~(842~~166	)		(82	%)
Operating Expenses
Cost of services		~~644~~507			~~529~~693			~~115~~(186	)		22(27	%)
Property operating		2,~~734~~800			3,~~145~~027			(~~411~~227	)		(137	%)
Depreciation and amortization		3,~~790~~698			53,~~290~~986			(~~1,500~~288	)		(287	%)
Impairment of real estate assets		~~331~~119			~~167~~762			~~164~~(643	)		98(84	%)
Impairment of real estate assets held for sale		—			~~1,957~~396			(~~1,957~~396	)		(100	%)
Bad debt expense		6815			2440			44(25	)		~~183~~(63	%)
General and administrative		3,~~022~~002			2,~~820~~990			~~202~~12			70	%
Total operating expenses		10,~~589~~141			1311,~~932~~894			(31,~~343~~753	)		(2415	%)
Gain on disposal of property		—			11,619			(11,619	)		(100	%)
Loss on disposal of property		—			(108	)		108			(100	%)
Operating (loss) income		(458	)		8,660			(9,118	)		(105	%)
Operating income (loss)		72			(1,955	)		2,027			104	%
Other income (expense)
Interest and other income		~~251~~277			17106			~~234~~171			~~1,376~~161	%
Derivative fair value adjustment		78(1,432	)		~~194~~(33	)		(~~116~~1,399	)		(604,239	%)
Net gain (loss) on fair value change of debt held under the fair value option		210			(1,131	)		1,341			119	%
Net loss on fair value change of debt held under the fair value option		(557	)		(816	)		259			32	%
Interest expense		(4,~~556~~695	)		(4,~~735~~585	)		~~179~~(110	)		(42	%)
Loss on extinguishment of debt		—			(1521	)		1521			(100	%)
Other expense		~~(26~~11	)		(1351	)		~~(13~~62	)		~~100~~122	%
Total other expense		(46,~~043~~396	)		(5,~~683~~400	)		~~1,640~~(996	)		~~(29~~18	%)
Net (loss) income before income taxes		(4,501	)		2,977			(7,478	)		(251	%)
Net loss before income taxes		(6,324	)		(7,355	)		1,031			(14	%)
Income tax benefit		—56			92,276			(92,220	)		(~~100~~98	%)
Net (loss) income	$	(4,501	)	$	2,986		$	(7,487	)		(251	%)
Net loss	$	(6,268	)	$	(5,079	)	$	(1,189	)		23	%
Less: Preferred equity return on Fortress preferred equity		(3,~~084~~181	)		(3,~~569~~716	)	$	~~485~~535			(14	%)
Less: Preferred equity accretion to redemption value		(~~973~~1,004	)		(~~756~~583	)	$	(~~217~~421	)		2972	%
Less: Preferred OP units return		(~~144~~151	)		(~~118~~122	)	$	(2629	)		2224	%
Plus: Net loss attributable to noncontrolling interest		1,~~127~~351			~~132~~1,633			~~995~~(282	)		~~754~~(17	%)
Net loss attributable to common stockholders	$	(79,~~575~~253	)	$	(17,~~325~~867	)	$	(61,~~250~~386	)		~~472~~18	%

Revenues for the three months ended ~~June~~September 30, 2024 ~~decreased~~increased approximately $0.82 million, or 82%, compared to the three months ended ~~June~~September 30, 2023, as a result of an approximately $1.0.5 million ~~decrease~~increase in rental income asprimarily adue ~~result~~to ofan ~~the~~increase ~~sale of two properties~~ in ~~the~~occupancy ~~second~~period ~~and~~over ~~third quarters of 2023, which had aggregate rental income of $1~~period.3 ~~million during the three months ended June 30, 2023.~~ This ~~decrease~~increase was partially offset by ana ~~increase~~decrease in ~~rental income for the remaining properties. The increase in~~ commissions is due to alower ~~higher~~ transaction volume of leasing and management fees and other income.

Total operating expenses for the three months ended ~~June~~September 30, 2024 decreased approximately $31.38 million, or 2415%, compared to the three months ended ~~June~~September 30, 2023, primarily ~~from~~due to (i) a $20.6 million decrease in impairment of real estate assets relating to early lease terminations, (ii) a $0.4 million impairment of real estate assets held for sale recognized in the ~~second~~third quarter of 2023 relating to a property that was disposed of during 2023, ~~and~~(iii) a $0.3 million decrease in depreciation and amortization expense ~~of approximately $1.5 million,~~ primarily related to a $10.24 million decrease in amortization of in-place lease intangibles, ~~and~~partially offset by a $0.41 million increase in amortization of real property depreciation, (iv) a $0.2 million decrease ~~relating~~in toproperty ~~two~~operating ~~properties~~expenses ~~that~~of ~~were~~which ~~disposed~~$0.1 million relates to the disposal of ~~during~~a property in the third quarter of 2023 and (v) a $0.2 million decrease in cost of services.

~~Gain~~Loss on disposal of properties for the three months ended ~~June~~September 30, 2023 reflects the ~~gain~~loss recognized in connection with the sale of ~~Spotswood~~Dekalb ~~Valley Square Shopping Center~~Plaza.

3031

Interest and other income for the three months ended ~~June~~September 30, 2024 increased approximately $0.2 million compared to the three months ended ~~June~~September 30, 2023, primarily due to $0.1 million of bank interest income and $0.1 million of business interruption proceeds received during the third quarter of 2024.

The ~~gain~~net loss on derivative fair value adjustment ~~decreased~~increased approximately $0.1.4 million, ~~or 60%,~~ compared to the three months ended ~~June~~September 30, 2023. The ~~decrease~~increase was primarily due to a $01.39 million decrease in the fair value of interest rate swaps, partially offset by a $0.24 million increase in the fair value of the embedded derivative liability relating to the Preferred Equity Investment and $0.1 million of losses recognized during the three months ended September 30, 2023 relating to an interest rate cap that matured on January 1, 2024.

Net gain on fair value change of debt held under the fair value option reflects the change in fair value of the Fortress Mezzanine Loan for which we elected the fair value option.

Interest expense for the three months ended ~~June~~September 30, 2024 ~~decreased~~increased approximately $0.21 million, or 42%, compared to the three months ended ~~June~~September 30, 2023, primarily due to the incurrence of $0.2 million of interest expense relating to additional refinancings. This increase was partially offset by a $0.41 million decline in interest expense relating to debt that was repaid in connection with the sale of ~~two~~a ~~properties~~property during the ~~second and~~ third ~~quarters~~quarter of 2023. ~~This decline was partially offset by the incurrence of $0.2 million of interest expense relating to additional refinancings.~~ We had additional net borrowings of approximately $613.23 million after ~~June~~September 30, 2023.

Income tax benefit for the three months ended September 30, 2024 decreased approximately $2.2 million compared to the three months ended September 30, 2023, which is primarily attributable to the Company recording a valuation allowance against its deferred tax asset during the three months ended September 30, 2024.

Preferred equity return on Fortress preferred equity reflects the portion of the distribution to the Fortress Member that is payable in cash and the portion that is accrued and added to the Preferred Equity Investment.

Preferred equity accretion to redemption value reflects the accretion of the carrying value of the Fortress preferred equity to the Redemption amount over the remaining term.

Preferred OP units return reflects the portion of the distribution to holders of the Preferred OP units that are payable in cash and the portion that are accrued and added to the liquidation preference of the Preferred OP units.

Net loss attributable to noncontrolling interest for the three months ended ~~June~~September 30, 2024 ~~increased~~decreased $1.0.3 million compared to the three months ended ~~June~~September 30, 2023. The net loss attributable to noncontrolling interest reflects the proportionate share of the OP units held by outside investors in the operating results of the Operating Partnership.

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

	For the Six Months Ended						Change
(dollars in thousands)	June 30, 2024			June 30, 2023			$			%
Revenues
Rental income	$	18,766		$	20,465		$	(1,699	)		(8	%)
Commissions		1,326			1,519			(193	)		(13	%)
Management fees and other income		110			121			(11	)		(9	%)
Total revenues		20,202			22,105			(1,903	)		(9	%)
Operating Expenses
Cost of services		1,065			1,085			(20	)		(2	%)
Property operating		5,740			6,206			(466	)		(8	%)
Depreciation and amortization		7,609			10,858			(3,249	)		(30	%)
Impairment of real estate assets		441			167			274			164	%
Impairment of real estate assets held for sale		—			1,957			(1,957	)		(100	%)
Bad debt expense		210			66			144			218	%
General and administrative		6,502			6,350			152			2	%
Total operating expenses		21,567			26,689			(5,122	)		(19	%)
Gain on disposal of property		—			11,619			(11,619	)		(100	%)
Operating (loss) income		(1,365	)		7,035			(8,400	)		(119	%)
Other income (expense)
Interest and other income		468			30			438			1,460	%
Derivative fair value adjustment		967			15			952			6,347	%
Net gain on fair value change of debt held under the fair value option		2,553			2,104			449			21	%
Interest expense		(8,889	)		(9,516	)		627			(7	%)
Loss on extinguishment of debt		(7	)		(15	)		8			(53	%)
Other expense		(32	)		(19	)		(13	)		68	%
Total other expense		(4,940	)		(7,401	)		2,461			(33	%)
Net loss before income taxes		(6,305	)		(366	)		(5,939	)		1,623	%
Income tax (expense) benefit		(134	)		1,692			(1,826	)		(108	%)
Net (loss) income	$	(6,439	)	$	1,326		$	(7,765	)		(586	%)
Less: Preferred equity return on Fortress preferred equity		(6,106	)		(6,996	)		890			(13	%)
Less: Preferred equity accretion to redemption value		(2,352	)		(1,171	)		(1,181	)		101	%
Less: Preferred OP units return		(283	)		(230	)		(53	)		23	%
Plus: Net loss attributable to noncontrolling interest		1,966			1,146			820			72	%
Net loss attributable to common stockholders	$	(13,214	)	$	(5,925	)	$	(7,289	)		123	%

Revenues for the six months ended June 30, 2024 decreased approximately $1.9 million, or 9%, compared to the six months ended June 30, 2023, as a result of approximately $1.7 million and $0.2 million decreases in rental income and commissions, respectively. Rental income primarily decreased as a result of the sale of two properties in the second and third quarters of 2023, which had aggregate rental income of $2.5 million during the six months ended June 30, 2023. This decrease was partially offset by an increase in rental income for the remaining properties. The decrease in commissions is due to a lower transaction volume of leasing.

Total operating expenses for the six months ended June 30, 2024 decreased approximately $5.1 million, or 19%, compared to the six months ended June 30, 2023, primarily from (i) a decrease in depreciation and amortization expense of approximately $3.2 million, primarily related to a $2.4 million decrease in amortization of in-place lease intangibles and a $1.1 million decrease relating to two properties that were disposed of during 2023, partially offset by a $0.3 million increase in amortization of real property depreciation and (ii) a $2.0 million impairment of real estate assets held for sale in 2023 as a result of reducing the carrying value of Dekalb Plaza for the amount that exceeded the property's fair value less estimated selling costs.

Gain on disposal of properties for the six months ended June 30, 2023 reflects the gain recognized in connection with the sale of Spotswood Valley Square Shopping Center.

Interest and other income for the six months ended June 30, 2024 increased approximately $0.4 million compared to the six months ended June 30, 2023, primarily due to $0.2 million of bank interest income and $0.1 million of business interruption proceeds received during 2024.

The gain on derivative fair value adjustment was approximately $1.0 million for the six months ended June 30, 2024 compared to less than $0.1 million for the six months ended June 30, 2023. The increase of approximately $1.0 million was primarily due to a $0.7

~~million~~Comparison ~~change~~of in the ~~fair~~nine ~~value~~months ofended ~~interest~~September ~~rate~~30, ~~swaps~~2024 ~~and~~to ~~a $0.3 million change in~~ the ~~fair~~nine ~~value~~months ofended ~~the~~September ~~embedded~~30, ~~derivative liability relating to the Preferred Equity Investment.~~2023


	For the Nine Months Ended						Change
(dollars in thousands)	September 30, 2024			September 30, 2023			$			%
Revenues
Rental income	$	28,432		$	29,671		$	(1,239	)		(4	%)
Commissions		1,829			2,270			(441	)		(19	%)
Management fees and other income		154			211			(57	)		(27	%)
Total revenues		30,415			32,152			(1,737	)		(5	%)
Operating Expenses
Cost of services		1,572			1,778			(206	)		(12	%)
Property operating		8,540			9,233			(693	)		(8	%)
Depreciation and amortization		11,307			14,844			(3,537	)		(24	%)
Impairment of real estate assets		560			929			(369	)		(40	%)
Impairment of real estate assets held for sale		—			2,353			(2,353	)		(100	%)
Bad debt expense		225			106			119			112	%
General and administrative		9,504			9,340			164			2	%
Total operating expenses		31,708			38,583			(6,875	)		(18	%)
Gain on disposal of property		—			11,511			(11,511	)		(100	%)
Operating (loss) income		(1,293	)		5,080			(6,373	)		(125	%)

Other income (expense)
Interest and other income		745			136			609			448	%
Derivative fair value adjustment		(465	)		(18	)		(447	)		(2,483	%)
Net gain on fair value change of debt held under the fair value option		1,996			1,288			708			55	%
Interest expense		(13,584	)		(14,101	)		517			(4	%)
Loss on extinguishment of debt		(7	)		(36	)		29			(81	%)
Other expense		(21	)		(70	)		49			(70	%)
Total other expense		(11,336	)		(12,801	)		1,465			(11	%)
Net loss before income taxes		(12,629	)		(7,721	)		(4,908	)		64	%
Income tax (expense) benefit		(78	)		3,968			(4,046	)		(102	%)
Net loss	$	(12,707	)	$	(3,753	)	$	(8,954	)		239	%
Less: Preferred equity return on Fortress preferred equity		(9,287	)		(10,712	)		1,425			(13	%)
Less: Preferred equity accretion to redemption value		(3,356	)		(1,754	)		(1,602	)		91	%
Less: Preferred OP units return		(434	)		(352	)		(82	)		23	%
Plus: Net loss attributable to noncontrolling interest		3,317			2,779			538			19	%
Net loss attributable to common stockholders	$	(22,467	)	$	(13,792	)	$	(8,675	)		63	%

Revenues for the nine months ended September 30, 2024 decreased approximately $1.7 million, or 5%, compared to the nine months ended September 30, 2023, as a result of approximately $1.2 million and $0.4 million decreases in rental income and commissions, respectively. Rental income primarily decreased as a result of the sale of two properties in the second and third quarters of 2023, which had aggregate rental income of $2.7 million during the nine months ended September 30, 2023. This decrease was partially offset by an increase in rental income for the remaining properties. The decrease in commissions is due to a lower transaction volume of leasing.

Total operating expenses for the nine months ended September 30, 2024 decreased approximately $6.9 million, or 18%, compared to the nine months ended September 30, 2023, primarily from (i) a decrease in depreciation and amortization expense of approximately $3.5 million, primarily related to a $2.8 million decrease in amortization of in-place lease intangibles and a $1.1 million decrease relating to two properties that were disposed of during 2023, partially offset by a $0.4 million increase in amortization of real property depreciation, (ii) a $2.4 million impairment of real estate assets held for sale in 2023 as a result of reducing the carrying value of Dekalb Plaza for the amount that exceeded the property's fair value less estimated selling costs, (iii) a $0.7 million decline in property operating expenses of which $0.6 million relates to two properties that were disposed of during 2023 and (iv) a $0.4 million decline in impairment of real estate assets relating to early lease terminations.

Gain on disposal of properties for the nine months ended September 30, 2023 reflects the gain recognized in connection with the sale of Spotswood Valley Square Shopping Center, partially offset by the loss recognized in connection with the sale of Dekalb Plaza.

Interest and other income for the nine months ended September 30, 2024 increased approximately $0.6 million compared to the nine months ended September 30, 2023, primarily due to $0.2 million of bank interest income and $0.3 million of business interruption proceeds received during 2024.

The loss on derivative fair value adjustment was approximately $0.5 million for the nine months ended September 30, 2024 compared to less than $0.1 million for the nine months ended September 30, 2023. The increase of approximately $0.4 million was primarily due to a $1.3 million decline in the fair value of interest rate swaps, partially offset by a $0.7 million increase in the fair value of the embedded derivative liability relating to the Preferred Equity Investment and $0.1 million of gains recognized during the nine months ended September 30, 2023 relating to an interest rate cap that matured on January 1, 2024.

Net gain on fair value change of debt held under the fair value option reflects the change in fair value of the Fortress Mezzanine Loan for which we elected the fair value option.

Interest expense for the ~~six~~nine months ended ~~June~~September 30, 2024 decreased approximately $0.65 million, or 74%, compared to the ~~six~~nine months ended ~~June~~September 30, 2023, primarily due to a $1.24 million decline in interest expense, $01.91 million of which relates to debt that was repaid in connection with the sale of two properties during the second and third quarters of 2023 and $0.3 million of which relates to the refinancing of five mortgages and the Basis Term Loan (as defined below). This decline was partially offset by the incurrence of $0.49 million of interest expense relating to additional refinancings. We had additional net borrowings of approximately $613.23 million after ~~June~~September 30, 2023.

Income tax (expense) benefit for the ~~six~~nine months ended ~~June~~September 30, 2024 decreased approximately $14.80 million compared to the ~~six~~nine months ended ~~June~~September 30, 2023, which is primarily attributable to the Company recording a valuation allowance against its deferred tax asset asduring ofthe ~~June~~nine months ended September 30, 2024.

Preferred equity accretion to redemption value reflects the accretion of the carrying value of the Fortress preferred equity to the Redemption amount over the remaining term.

Net loss attributable to noncontrolling interest for the ~~six~~nine months ended ~~June~~September 30, 2024 increased $0.85 million compared to the ~~six~~nine months ended ~~June~~September 30, 2023. The net loss attributable to noncontrolling interest reflects the proportionate share of the OP units held by outside investors in the operating results of the Operating Partnership.

Leasing Activity

Below is a summary of leasing activity for our retail portfolio for the three months ended ~~June~~September 30, 2024 and 2023:

	Total Deals						Inline Deals
	For the Three Months Ended June 30,						For the Three Months Ended June 30,
	For the Three Months Ended September 30,						For the Three Months Ended September 30,
	2024			2023			2024			2023
New leases
Number of leases		5			5			5			5
Square footage		726,~~288~~624			177,~~523~~810			726,~~288~~624			177,~~523~~810
Annualized base rent (in thousands) (1)	$	117,369		$	236,771		$	117,369		$	236,771
Annualized base rent (1)	$	394,513		$	219,676		$	394,513		$	219,676
Annualized base rent per square feet (2)	$	1614.1082		$	1328.5113		$	1614.1082		$	1328.5113
Number of comparable leases (3)		32			1			32			1
Comparable rent spread (4)		-196.10	%		13.71	%		-196.10	%		13.71	%
Weighted-average lease term (in years)		78.2			87.90			78.2			87.90
Renewals and options:
Number of leases		139			108			129			8
Square footage		6216,~~648~~406			5012,~~313~~235			2316,~~389~~406			2112,~~647~~235
Annualized base rent (in thousands) (1)	$	855,155		$	770,155		$	530,532		$	404,496
Annualized base rent (1)	$	372,675		$	284,161		$	372,675		$	284,161
Annualized base rent per square feet (2)	$	1322.6572		$	1523.3123		$	22.6872		$	1823.6923
Comparable rent spread		85.36	%		155.08	%		105.46	%		205.38	%
Weighted-average lease term (in years) (5)		5.21			64.08			5.61			4.8
Number of leases, excluding options exercised		78			78			78			78
Comparable rent spread, all leases		61.37	%		145.14	%		7.1.7	%		175.94	%
Portfolio retention rate (6)		7583.28	%		5141.70	%		4683.68	%		5141.70	%

(1)

Annualized base rent (in thousands) is calculated as (a) the monthly cash base rent before abatements as of ~~June~~September 30, 2024 or 2023, as applicable, multiplied by (b) 12. Annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.

~~Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of June 30, 2024 or 2023, as applicable.~~34

(2)

Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of September 30, 2024 or 2023, as applicable.

(3)

Comparable leases are leases with terms consistent with the prior lease for substantially the same space, which has been vacant for less than twelve months.

(4)

Comparable rent spread is calculated as the percentage increase or decrease in first-year annualized base rent (excluding any free rent or escalations) on new or renewal leases (including options) over the annualized base rent of the expiring year of the previous lease, where the lease was considered a comparable lease.

(5)

Weighted-average lease terms (in years) excludes month-to-month tenants but includes tenants operating on license agreements.

(6)

Portfolio retention rate is calculated as (a) total square feet of retained tenants with leases originally expiring during the three months ended ~~June~~September 30, 2024 or 2023, as applicable, divided by (b) total square feet of leases originally expiring during the three months ended ~~June~~September 30, 2024 or 2023, as applicable.

Below is a summary of leasing activity for our retail portfolio for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023:

	Total Deals						Inline Deals
	For the Six Months Ended June 30,						For the Six Months Ended June 30,
	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2024			2023			2024			2023
New leases
Number of leases		1419			1015			1419			1015
Square footage		2551,~~180~~755			3543,~~978~~788			2551,~~180~~755			3543,~~978~~788
Annualized base rent (in thousands) (1)	$	512,491		$	590,233		$	512,491		$	590,233
Annualized base rent (1)	$	907,004		$	809,908		$	907,004		$	809,908
Annualized base rent per square feet (2)	$	2017.3552		$	1618.4150		$	2017.3552		$	1618.4150
Number of comparable leases (3)		812			45			812			45
Comparable rent spread (4)		07.37	%		3529.6	%		07.37	%	~~35,6%~~	29.6	%
Weighted-average lease term (in years)		7.17			9.94			7.17			9.94
Renewals and options:
Number of leases		2232			2331			2030			2028
Square footage		~~107~~124,~~735~~142			~~107~~119,~~029~~264			4460,~~081~~488			5163,~~459~~694
Annualized base rent (in thousands) (1)	$	1,568,352		$	1,873,624		$	930,159		$	1,023,693
Annualized base rent (1)	$	1,955,428		$	2,157,785		$	1,317,235		$	1,307,854
Annualized base rent per square feet (2)	$	1415.5675		$	1718.5109		$	21.1078		$	1920.8953
Comparable rent spread		76.28	%		109.59	%		76.06	%		87.48	%
Weighted-average lease term (in years) (5)		5.5			6.64			65.29			4.6
Number of leases, excluding options exercised		1331			1931			1329			1928
Comparable rent spread, all leases		57.90	%		1312.64	%		56.29	%		1312.80	%
Portfolio retention rate (6)		8685.69	%		8165.90	%		6874.39	%		5130.0	%

(1)

(2)

Annualized base rent per leased square foot is calculated as total annualized base rent divided by leased GLA as of ~~June~~September 30, 2024 or 2023, as applicable.

(3)

Comparable leases are leases with terms consistent with the prior lease for substantially the same space, which has been vacant for less than twelve months.

(4)

(5)

Weighted-average lease terms (in years) excludes month-to-month tenants but includes tenants operating on license agreements.

(6)

Portfolio retention rate is calculated as (a) total square feet of retained tenants with leases originally expiring during the ~~six~~nine months ended ~~June~~September 30, 2024 or 2023, as applicable, divided by (b) total square feet of leases originally expiring during the ~~six~~nine months ended ~~June~~September 30, 2024 or 2023, as applicable.

Non-GAAP Performance Measures

We present the non-GAAP performance measures set forth below. These measures should not be considered as an alternative to, or more meaningful than, net income (calculated in accordance with U.S. generally accepted accounting principles (“GAAP”)) or other GAAP financial measures, as an indicator of financial performance and are not alternatives to, or more meaningful than, cash flow from operating activities (calculated in accordance with GAAP) as a measure of liquidity. Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results to those calculated in accordance with GAAP. Our computation of these non-GAAP performance measures may differ in certain respects from the methodology utilized by other real estate companies and, therefore, may not be comparable to similarly titled measures presented by other real estate companies. Investors are cautioned that items excluded from these non-GAAP performance measures are relevant to understanding and addressing financial performance.

3435

measures may differ in certain respects from the methodology utilized by other real estate companies and, therefore, may not be comparable to similarly titled measures presented by other real estate companies. Investors are cautioned that items excluded from these non-GAAP performance measures are relevant to understanding and addressing financial performance.

Net Operating Income and Same-center Net Operating Income

Net operating income (“NOI”) is a supplemental non-GAAP measure of the operating performance of our properties. We define NOI as rental income less property operating expenses, including real estate taxes. We also exclude the impact of straight‑line rent revenue, net amortization of above and below market leases, depreciation and amortization, interest, impairments and gains or losses of real estate assets and other significant infrequent items that create volatility in our earnings and make it difficult to determine the earnings generated by our core ongoing business. Same-center NOI should not be viewed as an alternative measure to net income or loss calculated in accordance with GAAP as a measurement of our financial performance. We believe that NOI is a helpful measure because it provides additional information to allow management, investors and our current and potential creditors to evaluate and compare our core operating results.

Same-center NOI is a supplemental non-GAAP financial measure which we use to assess our operating results. For the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, Same-center NOI represents the NOI for ~~thirteen~~15 properties that were wholly owned and operational for the entire portion of each reporting period. Same-center NOI should not be viewed as an alternative measure to net income or loss calculated in accordance with GAAP as a measurement of our financial performance, as it does not reflect the operations of our entire portfolio. We believe that Same-center NOI is a helpful measure because it provides additional information to allow management, investors and our current and potential creditors to enhance the comparability of our operating performance between periods.

The table below compares Same-center NOI for the three months ended ~~June~~September 30, 2024 and 2023:

	For the three months ended June 30,													Change
	For the three months ended September 30,													Change
(unaudited, dollars in thousands)	2024							2023						$			%
	Retail			Residential		Total		Retail		Residential		Total
Revenues
Rental income (1)	$	67,~~800~~257	(2)	$	2,~~124~~386	$	89,~~924~~643	$	6,~~725~~835	$	2,~~160~~121	$	8,~~885~~956	$	39687			08	%
Operating Expenses
Property operating		2,~~465~~502			~~704~~729		3,~~169~~231		2,~~470~~458		~~786~~831		3,~~256~~289		(8758	)		(32	%)
Total Same-center NOI	$	4,~~335~~755		$	1,~~420~~657	$	56,~~755~~412	$	4,~~255~~377	$	1,~~374~~290	$	5,~~629~~667	$	~~126~~745			213	%

(1)

Excludes straight-line revenue and net amortization of above and below market lease.

(2)

Rental income for the retail portfolio excludes $0.1 million of business interruption proceeds for rent that was abated due to a fire at one of our retail properties. This amount is reflected in net interest and other income.

35The increase in total Same-center NOI for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, is mainly due to (i) an increase in occupancy due to higher leasing activity and scheduled rent increases for retail period over period, (ii) an increase in recoveries from tenants and (iii) an increase in residential base rent.

~~Our reconciliation of Same-center NOI for the three months ended June 30, 2024 and 2023 is as follows:~~36

	For the three months ended June 30,
	2024									2023
(unaudited, dollars in thousands)	Retail			Residential			Total			Retail			Residential			Total
Net (loss) income	$	(3,681	)	$	(820	)	$	(4,501	)	$	5,741		$	(2,755	)	$	2,986
Adjusted to exclude:
Commissions		(824	)		—			(824	)		(663	)		—			(663	)
Management and other income		(52	)		—			(52	)		(53	)		—			(53	)
Straight-line rent revenue		(394	)		—			(394	)		(288	)		—			(288	)
Amortization of above and below market lease, net		64			—			64			81			—			81
Consolidated eliminations adjustments		(435	)		—			(435	)		(423	)		—			(423	)
Cost of services		644			—			644			529			—			529
Depreciation and amortization		3,157			633			3,790			3,815			1,475			5,290
Impairment of real estate assets		331			—			331			167			—			167
Impairment of real estate held for sale		—			—			—			1,957			—			1,957
Bad debt expense		68			—			68			24			—			24
General and administrative		2,987			35			3,022			2,928			(108	)		2,820
Gain on disposal of properties		—			—			—			(11,619	)		—			(11,619	)
Net interest and other income		(251	)		—			(251	)		(17	)		—			(17	)
Derivative fair value adjustment		(78	)		—			(78	)		(194	)		—			(194	)
Net (gain) loss on fair value change on debt held under the fair value option		(21	)		(189	)		(210	)		113			1,018			1,131
Interest expense		2,795			1,761			4,556			2,991			1,744			4,735
Loss on extinguishment of debt		—			—			—			15			—			15
Other expense		26			—			26			13			—			13
Income tax benefit, net		—			—			—			(9	)		—			(9	)
NOI		4,336			1,420			5,756			5,108			1,374			6,482
Less: Non Same-center NOI relating to dispositions (1)		(1	)		—			(1	)		(853	)		—			(853	)
Total Same-center NOI	$	4,335		$	1,420		$	5,755		$	4,255		$	1,374		$	5,629

Our reconciliation of Same-center NOI for the three months ended September 30, 2024 and 2023 is as follows:


	For the three months ended September 30,
	2024									2023
(unaudited, dollars in thousands)	Retail			Residential			Total			Retail			Residential			Total
Net loss	$	(4,856	)	$	(1,412	)	$	(6,268	)	$	(3,161	)	$	(1,918	)	$	(5,079	)
Adjusted to exclude:
Commissions		(503	)		—			(503	)		(751	)		—			(751	)
Management and other income		(44	)		—			(44	)		(90	)		—			(90	)
Straight-line rent revenue		(88	)		—			(88	)		(211	)		—			(211	)
Amortization of above and below market lease, net		65			—			65			98			—			98
Consolidated eliminations adjustments		(431	)		—			(431	)		(368	)		(7	)		(375	)
Cost of services		507			—			507			693			—			693
Depreciation and amortization		3,064			634			3,698			3,343			643			3,986
Impairment of real estate assets		119			—			119			762			—			762
Impairment of real estate held for sale		—			—			—			396			—			396
Bad debt expense		15			—			15			40			—			40
General and administrative		2,929			73			3,002			2,931			59			2,990
Loss on disposal of properties		—			—			—			108			—			108
Net interest and other income		(277	)		—			(277	)		(106	)		—			(106	)
Derivative fair value adjustment		1,432			—			1,432			33			—			33
Net loss on fair value change on debt held under the fair value option		56			501			557			82			734			816
Interest expense		2,834			1,861			4,695			2,806			1,779			4,585
Loss on extinguishment of debt		—			—			—			21			—			21
Other expense		(11	)		—			(11	)		51			—			51
Income tax benefit, net		(56	)		—			(56	)		(2,276	)		—			(2,276	)
NOI		4,755			1,657			6,412			4,401			1,290			5,691
Less: Non Same-center NOI relating to dispositions (1)		—			—						(24	)		—			(24	)
Total Same-center NOI	$	4,755		$	1,657		$	6,412		$	4,377		$	1,290		$	5,667

(1)

Reflects operating revenues and expenses for Spotswood Valley Square Shopping Center and Dekalb Plaza.

The table below compares Same-center NOI for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023:

	For the six months ended June 30,													Change
	For the nine months ended September 30,													Change
(unaudited, dollars in thousands)	2024							2023						$		%
	Retail			Residential		Total		Retail		Residential		Total
Revenues
Rental income (1)	$	1321,~~920~~178	(2)	$	46,~~242~~627	$	1827,~~162~~805	$	1320,~~412~~247	$	46,~~175~~296	$	1726,~~587~~543	$	~~575~~1,262		35	%
Operating Expenses
Property operating		57,~~265~~767			12,~~330~~059		69,~~595~~826		57,~~050~~508		12,~~355~~186		69,~~405~~694		~~190~~132		31	%
Total Same-center NOI	$	813,~~655~~411		$	24,~~912~~568	$	1117,~~567~~979	$	812,~~362~~739	$	24,~~820~~110	$	1116,~~182~~849	$	~~385~~1,130		37	%

(1)

Excludes straight-line revenue and net amortization of above and below market lease.

(2)

Rental income for the retail portfolio excludes $0.13 million of business interruption proceeds for rent that was abated due to a fire at one of our retail properties. This amount is reflected in net interest and other income.

36The increase in total Same-center NOI for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, is mainly due to (i) an increase in occupancy due to higher leasing activity and scheduled rent increases for retail period over period, (ii) an increase in recoveries from tenants and (iii) an increase in residential base rent.

~~Our reconciliation of Same-center NOI for the six months ended June 30, 2024 and 2023 is as follows:~~37

	For the six months ended June 30,
	2024									2023
(unaudited, dollars in thousands)	Retail			Residential			Total			Retail			Residential			Total
Net (loss) income	$	(6,731	)	$	292		$	(6,439	)	$	3,013		$	(1,687	)	$	1,326
Adjusted to exclude:
Commissions		(1,326	)		—			(1,326	)		(1,519	)		—			(1,519	)
Management and other income		(110	)		—			(110	)		(121	)		—			(121	)
Straight-line rent revenue		(746	)		—			(746	)		(734	)		—			(734	)
Amortization of above and below market lease, net		145			—			145			129			—			129
Consolidated eliminations adjustments		(852	)		—			(852	)		(867	)		—			(867	)
Cost of services		1,065			—			1,065			1,085			—			1,085
Depreciation and amortization		6,344			1,265			7,609			7,950			2,908			10,858
Impairment of real estate assets		441			—			441			167			—			167
Impairment of real estate held for sale		—			—			—			1,957			—			1,957
Bad debt expense		210			—			210			66			—			66
General and administrative		6,430			72			6,502			6,360			(10	)		6,350
Gain on disposal of properties		—			—			—			(11,619	)		—			(11,619	)
Net interest and other income		(468	)		—			(468	)		(30	)		—			(30	)
Derivative fair value adjustment		(967	)		—			(967	)		(15	)		—			(15	)
Net gain on fair value change on debt held under the fair value option		(255	)		(2,298	)		(2,553	)		(211	)		(1,893	)		(2,104	)
Interest expense		5,308			3,581			8,889			6,014			3,502			9,516
Loss on extinguishment of debt		7			—			7			15			—			15
Other expense		32			—			32			19			—			19
Income tax expense (benefit), net		134			—			134			(1,692	)		—			(1,692	)
NOI		8,661			2,912			11,573			9,967			2,820			12,787
Less: Non Same-center NOI relating to dispositions (1)		(6	)		—			(6	)		(1,605	)		—			(1,605	)
Total Same-center NOI	$	8,655		$	2,912		$	11,567		$	8,362		$	2,820		$	11,182

Our reconciliation of Same-center NOI for the nine months ended September 30, 2024 and 2023 is as follows:


	For the nine months ended September 30,
	2024									2023
(unaudited, dollars in thousands)	Retail			Residential			Total			Retail			Residential			Total
Net loss	$	(11,587	)	$	(1,120	)	$	(12,707	)	$	(148	)	$	(3,605	)	$	(3,753	)
Adjusted to exclude:
Commissions		(1,829	)		—			(1,829	)		(2,270	)		—			(2,270	)
Management and other income		(154	)		—			(154	)		(211	)		—			(211	)
Straight-line rent revenue		(834	)		—			(834	)		(945	)		—			(945	)
Amortization of above and below market lease, net		210			—			210			227			—			227
Consolidated eliminations adjustments		(1,283	)		—			(1,283	)		(1,235	)		(7	)		(1,242	)
Cost of services		1,572			—			1,572			1,778			—			1,778
Depreciation and amortization		9,408			1,899			11,307			11,293			3,551			14,844
Impairment of real estate assets		560			—			560			929			—			929
Impairment of real estate held for sale		—			—			—			2,353			—			2,353
Bad debt expense		225			—			225			106			—			106
General and administrative		9,359			145			9,504			9,291			49			9,340
Gain on disposal of properties		—			—			—			(11,511	)		—			(11,511	)
Net interest and other income		(745	)		—			(745	)		(136	)		—			(136	)
Derivative fair value adjustment		465			—			465			18			—			18
Net gain on fair value change on debt held under the fair value option		(199	)		(1,797	)		(1,996	)		(129	)		(1,159	)		(1,288	)
Interest expense		8,143			5,441			13,584			8,820			5,281			14,101
Loss on extinguishment of debt		7			—			7			36			—			36
Other expense		21			—			21			70			—			70
Income tax expense (benefit), net		78			—			78			(3,968	)		—			(3,968	)
NOI		13,417			4,568			17,985			14,368			4,110			18,478
Less: Non Same-center NOI relating to dispositions (1)		(6	)		—			(6	)		(1,629	)		—			(1,629	)
Total Same-center NOI	$	13,411		$	4,568		$	17,979		$	12,739		$	4,110		$	16,849

(1)

Reflects operating revenues and expenses for Spotswood Valley Square Shopping Center and Dekalb Plaza.

Funds From Operations and Adjusted Funds from Operations

Funds from operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating performance. The National Association of Real Estate Investment Trusts (“Nareit”) defines FFO as follows: net income (loss), computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Considering the nature of our business as a real estate owner and operator, we believe that FFO is useful to investors in measuring our operating and financial performance because the definition excludes items included in net income that do not relate to or are not indicative of our operating and financial performance, such as depreciation and amortization related to real estate, and items which can make periodic and peer analysis of operating and financial performance more difficult, such as gains and losses from the sale of certain real estate assets and impairment write-downs of certain real estate assets. Specifically, in excluding real estate related depreciation and amortization and gains and losses from sales of depreciable operating properties, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to

3738

fund our cash needs, including our ability to pay dividends or service indebtedness. Also, FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

Adjusted FFO (“AFFO”) is calculated by excluding the effect of certain items that do not reflect ongoing property operations, including stock-based compensation expense, deferred financing and debt issuance cost amortization, non-real estate depreciation and amortization, straight-line rent expense, straight-line rent revenue, non-cash interest expense and other non-comparable or non-operating items. Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO.

AFFO is not intended to represent cash flow or liquidity for the period and is only intended to provide an additional measure of our operating performance. We believe that Net income/(loss) is the most directly comparable GAAP financial measure to AFFO. Management believes that AFFO is a widely recognized measure of the operations of real estate companies and presenting AFFO enables investors to assess our performance in comparison to other real estate companies. AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

Our reconciliation of net loss to FFO and AFFO for the three months ended ~~June~~September 30, 2024 and 2023 is as follows:

	For the Three Months Ended June 30,						Change
	For the Three Months Ended September 30,						Change
(unaudited, dollars in thousands)	2024			2023 (1)			$			%
Net (loss) income	$	(4,501	)	$	2,986		$	(7,487	)		(251	%)
Net loss	$	(6,268	)	$	(5,079	)	$	(1,189	)		23	%
Gain on disposal of properties		—			(11,619	)		11,619			(100	%)
Loss on disposal of properties		—			108			(108	)		(100	%)
Impairment of real estate assets held for sale		—			~~1,957~~396			(~~1,957~~396	)		(100	%)
Real estate depreciation and amortization		3,~~827~~662			53,~~193~~870			(~~1,366~~208	)		(265	%)
Amortization of direct leasing costs		2427			2441			—(14	)		0(34	%)
FFO attributable to common shares and OP units		(~~650~~2,579	)		(~~1,459~~664	)		~~809~~(1,915	)		~~(55~~288	%)
Stock-based compensation expense		~~435~~493			~~551~~354			~~(116~~139	)		~~(21~~39	%)
Deferred financing and debt issuance cost amortization		~~222~~237			~~218~~157			480			251	%
Impairment of real estate assets (2)		~~331~~119			~~167~~762			~~164~~(643	)		98(84	%)
Intangibles amortization		6465			8198			(1733	)		(2134	%)
Non-real estate depreciation and amortization		~~(60~~9	)		7675			(~~136~~66	)		(~~179~~88	%)
Straight-line rent expense		37—			(1112	)		4812			(~~436~~100	%)
Non-cash interest expense		~~337~~348			~~367~~282			~~(30~~66	)		(823	%)
Recurring capital expenditures		(15161	)		(~~398~~507	)		~~383~~346			(9668	%)
Straight-line rent revenue		(~~394~~88	)		(~~288~~211	)		~~(106~~123	)		37(58	%)
Minimum multiple on preferred interests		—			(254	)		254			(100	%)
Non-cash fair value adjustment		1,989			849			1,140			134	%
Non-cash fair value adjustment		(288	)		937			(1,225	)		(131	%)
AFFO attributable to common shares and OP units	$	432		$	1,183		$	(751	)		(63	%)
AFFO attributable to common shares and OP units	$	19		$	(13	)	$	32			(246	%)
Weighted average shares outstanding to common shares
Diluted		35,~~905~~997,~~412~~585			35,~~660~~691,~~560~~830
Net loss attributable to common stockholders per share
Diluted (3)	$	(0.2126	)	$	(0.0422	)
Weighted average shares outstanding to common shares and OP units
Diluted		41,~~465~~505,~~708~~396			41,~~220~~252,~~856~~126
FFO attributable to common shares and OP units
Diluted (4)	$	(0.0206	)	$	(0.0402	)

(1)

Revised to include straight-line rent expense for comparability.

(2)

Impairment of real estate assets relates to the early termination of leases.

(3)

The weighted average common shares outstanding used to compute net loss per diluted common share only includes the common shares. We have excluded the OP units since the conversion of OP units is anti-dilutive in the computation of diluted net loss per share for the periods presented.

3839

(4)

The weighted average common shares outstanding used to compute FFO per diluted common share includes OP units that were excluded from the computation of diluted net loss per share. Conversion of these OP units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted earnings per share for the periods presented.

The ~~increase~~decrease in FFO and AFFO for the three months ended ~~June~~September 30, 2024 compared to the three months ended ~~June~~September 30, 2023, is mainly due to a $12.3 million ~~increase~~decrease in ~~net~~income ~~gain~~tax ~~(loss)~~benefit onprimarily ~~fair~~attributable ~~value~~to ~~change~~the ofCompany ~~debt~~recording ~~held~~a ~~under~~valuation allowance against its deferred tax asset during the ~~fair~~three ~~value~~months ~~option~~ended September 30, 2024. This was partially offset by a net reduction of $0.82 million of total revenues. The decrease in AFFO was also partially offset by non-cash fair value adjustment relating to the increase in net loss on derivative instruments and the decline in fair value change of debt held under the fair value option. See Results of Operations for further discussion.

Our reconciliation of net loss to FFO and AFFO for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 is as follows:

	For the Six Months Ended June 30,						Change
	For the Nine Months Ended September 30,						Change
(unaudited, dollars in thousands)	2024			2023 (1)			$			%
Net (loss) income	$	(6,439	)	$	1,326		$	(7,765	)		(586	%)
Net loss	$	(12,707	)	$	(3,753	)	$	(8,954	)		239	%
Gain on disposal of properties		—			(11,~~619~~511	)		11,~~619~~511			(100	%)
Impairment of real estate assets held for sale		—			12,~~957~~353			(12,~~957~~353	)		(100	%)
Real estate depreciation and amortization		711,~~542~~204			1014,~~716~~586			(3,~~174~~382	)		(3023	%)
Amortization of direct leasing costs		4774			5192			(418	)		(820	%)
FFO attributable to common shares and OP units		(1,~~150~~429	)		21,~~431~~767			(13,~~281~~196	)		(53181	%)
Stock-based compensation expense		~~795~~1,288			~~765~~1,119			30169			415	%
Deferred financing and debt issuance cost amortization		~~415~~652			~~500~~657			(855	)		(171	%)
Impairment of real estate assets (2)		~~441~~560			~~167~~929			~~274~~(369	)		~~164~~(40	%)
Intangibles amortization		~~145~~210			~~129~~227			16(17	)		12(7	%)
Non-real estate depreciation and amortization		2029			91166			(71137	)		(7883	%)
Straight-line rent expense		103			(2032	)		~~123~~135			(~~615~~422	%)
Non-cash interest expense		~~668~~1,016			~~667~~949			167			07	%
Recurring capital expenditures		(~~108~~269	)		(~~406~~913	)		~~298~~644			(7371	%)
Straight-line rent revenue		(~~746~~834	)		(~~734~~945	)		~~(12~~111	)		2(12	%)
Minimum multiple on preferred interests		—			(331	)		331			(100	%)
Non-cash fair value adjustment		(31,~~520~~531	)		(21,~~119~~270	)		(~~1,401~~261	)		6621	%
AFFO attributable to common shares and OP units	$	(~~637~~205	)	$	12,~~140~~323		$	(12,~~777~~528	)		(~~156~~109	%)
Weighted average shares outstanding to common shares
Diluted		35,~~890~~926,369			35,~~518~~576,~~179~~699
Net loss attributable to common stockholders per share
Diluted (3)	$	(0.3763	)	$	(0.1739	)
Weighted average shares outstanding to common shares and OP units
Diluted		41,~~450~~469,~~665~~042			41,~~078~~136,~~475~~995
FFO attributable to common shares and OP units
Diluted (4)	$	(0.03	)	$	0.0604

(1)

Revised to include straight-line rent expense for comparability.

(2)

Impairment of real estate assets relates to the early termination of leases.

(3)

(4)

The decrease in FFO and AFFO for the ~~six~~nine months ended ~~June~~September 30, 2024 compared to the ~~six~~nine months ended ~~June~~September 30, 2023, is mainly due to a $14.71 million ~~decline~~decrease in ~~rental~~ income astax abenefit ~~result~~primarily ofattributable ~~the~~to ~~sale of two properties in~~ the ~~second~~Company ~~and~~recording ~~third quarters of 2023, partially offset by~~ a ~~$0.6~~valuation ~~million~~allowance ~~decline~~against inits ~~interest~~deferred ~~expense~~tax ~~primarily~~asset ~~due~~during ~~to debt that was repaid in connection with~~ the ~~sale~~nine ofmonths ~~the~~ended ~~two~~September ~~properties~~30, 2024. See Results of Operations for further discussion.

3940

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre

We calculate EBITDAre in accordance with standards established by Nareit and define EBITDAre as net income or loss computed in accordance with GAAP (i) plus depreciation and amortization, interest expense and income tax expense, (ii) plus or minus losses or gains on the disposition of properties, (iii) plus impairment losses and (iv) with appropriate adjustments to reflect our share of EBITDAre of unconsolidated affiliates and consolidated affiliates with non-controlling interests, in each case as applicable. We define Adjusted EBITDAre as EBITDAre plus non-cash stock compensation, non-cash amortization related to above and below market leases, straight-line rent expense and less straight-line rent revenue and non-cash fair value adjustment. Some of the adjustments can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates. EBITDAre and Adjusted EBITDAre are non-GAAP financial measures and should not be viewed as alternatives to net income or loss calculated in accordance with GAAP as a measurement of our operating performance. We believe that EBITDAre and Adjusted EBITDAre are helpful measures because they provide additional information to allow management, investors and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt. We also believe that EBITDAre and Adjusted EBITDAre can help facilitate comparisons of operating performance between periods and with other real estate companies.

Our reconciliation of net (loss) ~~income~~ to EBIDTAre and Adjusted EBITDAre for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 is as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(unaudited, dollars in thousands)	2024			2023 (1)			2024			2023 (1)
Net (loss) income	$	(4,501	)	$	2,986		$	(6,439	)	$	1,326
Net loss	$	(6,268	)	$	(5,079	)	$	(12,707	)	$	(3,753	)
Interest expense		4,~~556~~695			4,~~735~~585			813,~~889~~584			914,~~516~~101
Income tax expense (benefit)		-			(9	)		134			(1,692	)
Income tax (benefit) expense		(56	)		(2,276	)		78			(3,968	)
Depreciation and amortization expense		3,~~790~~698			53,~~290~~986			711,~~609~~307			1014,~~858~~844
EBITDA		32,~~845~~069			131,~~002~~216			1012,~~193~~262			2021,~~008~~224
Gain on sale of real estate		—			(11,619	)		—			(11,619	)
Loss (gain) on sale of real estate		—			108			—			(11,511	)
Impairment loss		~~331~~119			21,~~124~~158			~~441~~560			23,~~124~~282
EBITDAre		42,~~176~~188			32,~~507~~482			1012,~~634~~822			1012,~~513~~995
Stock-based compensation expense		~~435~~493			~~551~~354			~~795~~1,288			~~765~~1,119
Straight-line rent revenue		(~~394~~88	)		(~~288~~211	)		(~~746~~834	)		(~~734~~945	)
Amortization of above and below market lease, net		6465			8198			~~145~~210			~~129~~227
Straight-line rent expense		37—			(1112	)		103			(2032	)
Non-cash fair value adjustment		~~(288~~1,989	)		~~937~~849			(31,~~520~~531	)		(21,~~119~~270	)
Adjusted EBITDAre	$	4,~~030~~647		$	43,~~777~~560		$	712,~~411~~058		$	812,~~534~~094

(1)

Revised to include straight-line rent expense for comparability.

EBITDAre decreased $0.3 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 mainly due to an increase in loss on derivative fair value adjustment, partially offset by an increase in total revenues and an overall decline in operating expenses primarily relating to cost of services and property operating expenses. See “Results of Operations” above for further discussion.

Adjusted EBITDAre increased $1.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 mainly due to an increase in total revenues, an increase in interest and other income and an overall decline in operating expenses primarily relating to cost of services, property operating expenses and general and administrative costs. See “Results of Operations” above for further discussion.

EBITDAre and Adjusted EBITDAre decreased $0.2 million and less than $0.1 million, respectively, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 mainly due to a decline in total revenues, partially offset by an increase in interest and other income and a decline in operating expenses primarily relating to cost of services and property operating expenses. See “Results of Operations” above for further discussion.

Liquidity and Capital Resources

Overview

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations and other general business needs.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Filing Compare · Broad Street Realty, Inc.