REAL ESTATE

9 Months Ended

Sep. 30, 2025

As of September 30, 2025, the Company consolidated six office complexes, encompassing, in the aggregate, 1.8 million rentable square feet and these properties were 66% occupied. In addition, the Company owned one residential home portfolio consisting of 2,078 residential homes, and one apartment property, containing 317 units, which were 92% and 86% occupied, respectively. The Company also owned one hotel property with 196 rooms, three investments in undeveloped land with 247 developable acres, and one office/retail development property. The following table summarizes the Company’s real estate held for investment as of September 30, 2025 and December 31, 2024, respectively (in thousands):


	September 30, 2025		December 31, 2024
Land	$	149,441	$	158,755
Buildings and improvements	566,308		669,556
Tenant origination and absorption costs	3,695		10,602
Total real estate, cost	719,444		838,913
Accumulated depreciation and amortization	(73,573)		(113,212)
Total real estate held for investment, net	$	645,871	$	725,701

Operating Leases

Certain of the Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of September 30, 2025, the leases, excluding options to extend, apartment leases and residential home leases, which have terms that are generally one year or less, had remaining terms of up to 14.9 years with a weighted-average remaining term of 3.6 years. Some of the leases have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from tenants in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash and assumed in real estate acquisitions related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets totaled $6.1 million and $4.4 million as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, was $10.8 million and $12.6 million, respectively, and is included in rents and other receivables in the accompanying consolidated balance sheets. The cumulative deferred rent balance included $1.5 million of unamortized lease incentives as of September 30, 2025 and December 31, 2024.

As of September 30, 2025, the future minimum rental income from the Company’s office complexes held for investment, under non-cancelable operating leases was as follows (in thousands):



October 1, 2025 through December 31, 2025	$	10,444
2026	39,754
2027	35,102
2028	29,378
2029	23,602
Thereafter	48,366
	$	186,646

Geographic Concentration Risk

As of September 30, 2025, the Company’s real estate investments in Texas represented 13% or $114.0 million, Tennessee represented 12% or $104.5 million, and in California represented 11% or $93.4 million of the Company’s total assets. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in these real estate markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Hotel Property

The following table provides detailed information regarding the Company’s hotel revenues during the three and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Hotel revenues:
Room	$	835	$	994	$	4,933	$	5,407
Other	165		192		689		818
Hotel revenues	$	1,000	$	1,186	$	5,622	$	6,225

During the three months ended September 30, 2025, there was no advanced deposits as hotel revenues recognized. During the nine months ended September 30, 2025, the Company recognized hotel advanced deposits as hotel revenues of $0.3 million in the accompanying consolidated statements of operations.

During the three months ended September 30, 2024, there was no advanced deposits as hotel revenues recognized. During the nine months ended September 30, 2024, the Company recognized hotel advanced deposits as hotel revenues of $0.5 million in the accompanying consolidated statements of operations.

Contract Liabilities

The Company’s contract liabilities are comprised of: hotel advanced deposits, deferred proceeds received from the buyers of the Park Highlands land sales, and value of Park Highlands land that was contributed to a master association. As of September 30, 2025 and December 31, 2024, contract liabilities were $23.1 million and $25.7 million, respectively, which are included in other liabilities on the accompanying consolidated balance sheets.

During the three months ended September 30, 2025, there was no gain on sale of real estate recognized. During the nine months ended September 30, 2025, the Company recognized $1.2 million related to Park Highlands land contributed to a master association, as a gain on sale of real estate in the accompanying consolidated statements of operations.

Impairment of Real Estate

During the three and nine months ended September 30, 2025, the Company recorded impairment charges on real estate and related intangibles of $76.8 million and $128.8 million, respectively, to write down the carrying value of eight and nine, respectively, of the Company’s strategic opportunistic properties and one hotel to their estimated fair values due to declines in market conditions and projected cash flows, changes in sales comparisons, and also based on quoted prices.

During the three and nine months ended September 30, 2024, the Company recorded impairment charges on real estate and related intangibles of $15.8 million and $76.1 million, respectively, to write down the carrying value of four and five, respectively, of the Company’s strategic opportunistic properties and one hotel to their estimated fair values due to declines in market conditions and projected cash flows, changes in sales comparisons, and also based on a quoted price.

Real Estate Sales

In July 2025, the Company sold Georgia 400 Center, from the strategic opportunistic properties segment, for gross sale proceeds of $39.1 million, before closing costs and credits and recognized a loss on sale of real estate of $7.6 million. In connection with the sale, the Company repaid $39.5 million of the outstanding principal due under the secured mortgage loan and recognized a gain on extinguishment of debt of $0.9 million. The purchaser was not affiliated with the Company or Pacific Oak Capital Advisors and as a result of the sale, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets as of December 31, 2024.

In September 2024, the Company sold the Lofts at NoHo Commons, from the strategic opportunistic properties segment for gross sale proceeds of $92.5 million, before closing costs and credits and recognized a loss on sale of real estate of $0.4 million. In connection with the sale, the Company repaid $68.5 million of the outstanding principal due under the secured mortgage loan. The purchaser was not affiliated with the Company or Pacific Oak Capital Advisors.

Real Estate Held for Sale

As of September 30, 2025, two office complexes, within the strategic opportunistic properties segment met the held for sale criteria and the Company reclassified these properties in the accompanying consolidated balance sheets. The two office complexes were under contract to sell and are expected to close within twelve months. There can be no assurance that the Company will complete these transactions.