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DEBT | 9 Months Ended
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Sep. 30, 2025
Debt Disclosure [Abstract] |
DEBT | 7. DEBT The following table summarizes the debt balances as of September 30, 2025 and December 31, 2024 and the debt activity for the nine months ended September 30, 2025 (in thousands):
|  |  |  | During the Nine Months Ended September 30, 2025 |  |
|  | Balances as of December 31, 2024 |  | Debt Issuances & Assumptions |  | Repayments (1) |  | Accretion & (Amortization) |  | Balances as of September 30, 2025
Mortgages Payable: |  |  |  |  |  |  |  |  |  |
Fixed rate mortgages payable |  | $ | 269,100 |  |  | $ | — |  |  | $ | (697) |  |  | $ | — |  |  | $ | 268,403 |
Variable rate mortgages payable |  | 171,346 |  |  | 42,285 |  |  | (6,250) |  |  | — |  |  | 207,381 |
|  | 440,446 |  |  | 42,285 |  |  | (6,947) |  |  | — |  |  | 475,784 |
Deferred debt origination costs — Mortgages Payable |  | (3,995) |  |  | (2,326) |  |  | — |  |  | 1,885 |  |  | (4,436) |
Total Mortgages Payable |  | 436,451 |  |  | 39,959 |  |  | (6,947) |  |  | 1,885 |  |  | 471,348 |
Secured Borrowings — Government Guaranteed Loans: |  |  |  |  |  |  |  |  |  |
Outstanding Balance |  | 1,361 |  |  | — |  |  | (38) |  |  | — |  |  | 1,323 |
Unamortized premiums |  | 22 |  |  | — |  |  | — |  |  | (2) |  |  | 20 |
Total Secured Borrowings — Government Guaranteed Loans |  | 1,383 |  |  | — |  |  | (38) |  |  | (2) |  |  | 1,343 |
Other Debt: |  |  |  |  |  |  |  |  |  |
Lending division revolving credit facility |  | — |  |  | 9,250 |  |  | — |  |  | — |  |  | 9,250 |
2022 credit facility revolver |  | 1,367 |  |  | — |  |  | (1,367) |  |  | — |  |  | — |
2022 credit facility term loan |  | 13,633 |  |  | — |  |  | (13,633) |  |  | — |  |  | — |
Junior subordinated notes |  | 27,070 |  |  | — |  |  | — |  |  | — |  |  | 27,070 |
SBA 7(a) loan-backed notes |  | 27,857 |  |  | — |  |  | (7,429) |  |  | — |  |  | 20,428 |
Deferred debt origination costs — other |  | (733) |  |  | — |  |  | 59 |  |  | 218 |  |  | (456) |
Discount on junior subordinated notes |  | (1,296) |  |  | — |  |  | — |  |  | 80 |  |  | (1,216) |
Total Other Debt |  | 67,898 |  |  | 9,250 |  |  | (22,370) |  |  | 298 |  |  | 55,076 |
Total Debt, Net |  | $ | 505,732 |  |  | $ | 49,209 |  |  | $ | (29,355) |  |  | $ | 2,181 |  |  | $ | 527,767 |
(1)The write-off of $59,000 of deferred debt issuance costs associated with the 2022 Credit Facility Term Loan (as defined below) resulting from the early extinguishment of debt incurred during the nine months ended September 30, 2025 is reflected here within deferred debt issuance costs — other. See further discussion under 2022 Credit Facility. Fixed Rate Mortgages Payable—The Company’s fixed rate mortgages payable are non-recourse and are secured by, among other things, first priority deeds of trust, security agreements or other similar security instruments on the fee simple interests in properties underlying such mortgages and assignments of rents receivable. As of September 30, 2025, the Company’s fixed rate mortgages payable had fixed interest rates of 6.25%, 4.14% and 7.41% per annum, with payments of interest only and maturity dates of June 7, 2026, July 1, 2026, and January 11, 2030, respectively. In regards to the mortgage payable with a balance of $66.3 million as of September 30, 2025 maturing on June 7, 2026 (the “1150 Clay Mortgage”), the Company executed the final one-year extension option under the mortgage in June 2025. The Company intends to work with the lender in order to refinance the 1150 Clay Mortgage beyond its stated maturity date of June 7, 2026. Although the Company believes it is likely it will be able to refinance the 1150 Clay Mortgage prior to June 7, 2026, there can be no assurance that such refinancing will occur. If the Company and the lender under the 1150 Clay Mortgage cannot agree on an extension of the mortgage and the Company fails to repay the loan in full upon its contractual maturity date, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, take possession of the property. In regards to the mortgage payable with a balance of $97.1 million as of September 30, 2025 maturing on July 1, 2026 (the “1 Kaiser Mortgage”), the Company intends to work with the lender in order to refinance the 1 Kaiser Mortgage beyond its stated maturity date of July 1, 2026. Although the Company believes it is likely it will be able to refinance the 1 Kaiser Mortgage prior to July 1, 2026, there can be no assurance that such refinancing will occur. If the Company and the lender under the 1 Kaiser Mortgage cannot agree on an extension of the mortgage and the Company fails to repay the loan in full upon its contractual maturity date, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, take possession of the property. Variable Rate Mortgages Payable—The Company’s variable rate mortgages payable are non-recourse and are secured by, among other things, first priority deeds of trust, security agreements or other similar security instruments on the Company’s fee simple and leasehold interests in its hotel asset and adjacent parking garage and by a deed of trust on and assignment of rents receivable from a multifamily property. As of September 30, 2025, the Company’s variable rate mortgages payable had a variable interest rate of SOFR plus 4.35%, SOFR plus 3.36%, SOFR plus 3.00% and SOFR plus 2.95%, with a maturity date of January 1, 2027, January 31, 2027, February 14, 2027 and April 3, 2028, respectively. The mortgages with maturity dates of January 1, 2027, January 31, 2027, and February 14, 2027 have monthly payments of interest only, while the mortgage with a maturity date of April 3, 2028 has monthly payments of interest plus $50,000 of principal. With regards to the mortgage payable with a balance of $81.0 million as of September 30, 2025 secured by a multifamily property in Oakland,California, (the “Channel House Mortgage”), on August 4, 2025 the Company reached an agreement with the lender to extend the maturity date through January 31, 2027 (the “Channel House Mortgage Extension”). In connection with the Channel House Mortgage Extension, the Company made a repayment of $6.0 million under the Channel House Mortgage, reducing it from its previous balance of $87.0 million. Secured Borrowings—Government Guaranteed Loans—Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. As of September 30, 2025, the Company’s secured borrowings-government guaranteed loans included $340,000 of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 8.21% at September 30, 2025, and $983,000 of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 5.85% at September 30, 2025. Lending Division Revolving Credit Facility—In June 2025, a subsidiary of the Company, as borrower, entered into an agreement (the “Lending Division Revolving Credit Facility”) with a bank that included a $20.0 million revolving credit facility secured by the unguaranteed portion of certain of such subsidiary’s SBA 7(a) loans receivable and other assets of such subsidiary, subject to a borrowing base calculation, and fully guaranteed by the Company. Loans included in the borrowing base calculation may not be included for more than 12 calendar months unless certain financial ratios are met and in no case can loans be included for more than 18 months. The Lending Division Revolving Credit Facility bears interest at (i) the base rate plus 2.00% or (ii) SOFR plus 3.00%, at the borrower’s election, and has an initial maturity date of June 13, 2027, with two one-year extension options. As of September 30, 2025, the effective interest rate for the Lending Division Revolving Credit Facility was 7.19% and, pursuant to the borrowing base calculation, there was no availability for additional borrowings under the Lending Division Revolving Credit Facility. In connection with the Company’s guaranty of the Lending Division Revolving Credit Facility (the “Parent Guaranty”), the Company is subject to certain financial covenants, including maintenance of (i) a consolidated fixed charge coverage ratio of at least 1.05 to 1.00, (ii) a minimum net worth of $200.0 million, (iii) a total leverage ratio no greater than 2.50 to 1.00 and (iv) $10.0 million of liquidity. If the Company fails to comply with the financial covenants set forth in the Parent Guaranty, the lender under the Lending Division Revolving Credit Facility has the right to require the Company to post cash collateral for the benefit of the lender in an amount equal to 105% of the outstanding principal balance under the facility plus all accrued and unpaid interest under such facility. On October 22, 2025, the Company entered into an amendment to the Parent Guaranty to modify the Parent Guaranty’s consolidated fixed charge coverage ratio covenant. Pursuant to the amendment, the Company must maintain a consolidated fixed charge coverage ratio of (x) for the fiscal quarters ending September 30, 2025 and December 31, 2025, not less than 1.00 to 1.00, and (y) for any fiscal quarter ending after December 31, 2025, not less than 1.15 to 1.00. 2022 Credit Facility—In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility (the “2022 Credit Facility”), entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which were collectively subject to a borrowing base calculation. At the time the 2022 Credit Facility was entered into, it was collateralized by six of the Company’s office properties, as well as the Company’s hotel property and adjacent parking garage (the “Hotel Properties”). The 2022 Credit Facility originally had a maturity date in December 2025 and provided for two one-year extension options. In December 2024, using proceeds from the closing of a variable rate mortgage on the Hotel Properties and a fixed rate mortgage on three of the Company’s office properties, the Company repaid $111.7 million on the 2022 Credit Facility Revolver and $42.6 million on the 2022 Credit Facility Term Loan. On April 3, 2025, the Company completed the refinancing of an office property in Austin, Texas and used a portion of the proceeds from such refinancing to repay the 2022 Credit Facility in full and, in connection with such repayment, the 2022 Credit Facility was terminated. In connection with termination of the 2022 Credit Facility, the Company recorded a loss on early extinguishment of debt during the nine months ended September 30, 2025 of $88,000 related to the write-off of deferred debt origination costs of $29,000 associated with the 2022 Credit Facility Revolver and $59,000 associated with the 2022 Credit Facility Term Loan. Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at the Company’s option. SBA 7(a) Loan-Backed Notes—On March 9, 2023, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $54.1 million of unguaranteed SBA 7(a) loan-backed notes (the “SBA 7(a) Loan-Backed Notes”) (with net proceeds of approximately $43.3 million, after payment of fees and expenses in connection with the securitization and the funding of a reserve account and an escrow account). The SBA 7(a) Loan-Backed Notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of the Company’s SBA 7(a) loans receivable. The SBA 7(a) Loan-Backed Notes mature on March 20, 2048, with monthly payments due as payments on the collateralized loans are received. The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%. As of September 30, 2025, the variable interest rate was 7.15%. The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheet and the SBA 7(a) Loan-Backed Notes as debt on its consolidated balance sheet. The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) Loan-Backed Notes was $3.6 million as of September 30, 2025. Other—Deferred debt issuance costs, which represent legal and third-party fees incurred in connection with the Company’s borrowing activities, are capitalized and amortized to interest expense on a straight-line or effective interest method over the life of the related loan. Deferred debt issuance costs are presented net of accumulated amortization and are a reduction to total debt. As of September 30, 2025 and December 31, 2024, accrued interest and unused commitment fees payable of $2.4 million and $1.1 million, respectively, were included in accounts payable and accrued expenses. Future principal payments on the Company’s debt (face value) as of September 30, 2025 are as follows (in thousands):
Years Ending December 31, |  | Mortgage Payable (1) |  | Secured Borrowings Principal (2) |  | Lending Division Revolving Credit Facility |  | Other (2) (3) |  | Total
2025 (Three months ending December 31, 2025) |  | $ | 150 |  |  | $ | 25 |  |  | $ | — |  |  | $ | 1,020 |  |  | $ | 1,195 |
2026 |  | 164,004 |  |  | 102 |  |  | — |  |  | 8,504 |  |  | 172,610 |
2027 |  | 176,230 |  |  | 108 |  |  | 9,250 |  |  | 7,235 |  |  | 192,823 |
2028 |  | 30,400 |  |  | 116 |  |  | — |  |  | 3,669 |  |  | 34,185 |
2029 |  | — |  |  | 123 |  |  | — |  |  | — |  |  | 123 |
Thereafter |  | 105,000 |  |  | 849 |  |  | — |  |  | 27,070 |  |  | 132,919 |
|  | $ | 475,784 |  |  | $ | 1,323 |  |  | $ | 9,250 |  |  | $ | 47,498 |  |  | $ | 533,855 |
______________________ (1)In regards to the $66.3 million 1150 Clay Mortgage, which matures on June 7, 2026, see the discussion under Fixed Rate Mortgages Payable. In regards to the $97.1 million 1 Kaiser Mortgage, which matures on July 1, 2026, see the discussion under Fixed Rate Mortgages Payable. (2)Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and/or loan liquidations or charge-offs. (3)Represents the junior subordinated notes and SBA 7(a) Loan-Backed Notes.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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