Financial Analysis

2. Term Loans Payable and Senior Notes TPG Term Loans On February 26, 2026 (the Closing Date), the Company entered into a Credit Agreement (the Credit Agreement) with Alter Domus (US) LLC, as administrative agent (the Agent), and Silver Oak Capital LLC, an affiliate of TPG Credit (collectively, the lenders from time to time party thereto, the Lenders). The Credit Agreement provides for a secured credit facility (the Credit Facility) for aggregate principal commitments of up to $320 million, consisting of (i) initial term loans in an aggregate principal amount of $275 million (the Initial Term Loans), and (ii) delayed draw term loans available upon the approval of the Lenders after the Closing Date in an aggregate principal amount of up to $45 million (the Delayed Draw Term Loans and together with the Initial Term Loans, the Term Loans). The Delayed Draw Term Loans may be used, subject to certain conditions, to fund tenant improvements, leasing commissions, building improvements and other uses approved by the Lenders. The Term Loans are not subject to amortization and have an initial stated maturity date of February 26, 2029. The maturity date is subject to potential extension of up to one year at the option of the Company, subject to the satisfaction of certain conditions (the Extension Option). Borrowings under the Credit Facility bear interest at an initial interest rate of 9.0% per annum. The Initial Term Loans were issued with original issue discount of 6.0% of the princi …

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5. Income Taxes General The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the Code). As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only. The Company must comply with a variety of restrictions to maintain its status as a REIT. These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Companys taxable income that must be distributed annually. One such restriction is that the Company generally cannot own more than 10% of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (TRS). In the case of TRSs, the Companys ownership of securities in all TRSs generally cannot exceed 20% (25% of taxable years beginning on or before December 31, 2017) of the value of all of the Companys assets and, when considered together with other non-real estate assets, cannot exceed 25% of the value of all of the Companys assets. FSP Investments LLC and FSP Protective TRS Corp. are the Companys taxable REIT subsidiaries operating as taxable corporations under the Code. The TRSs have gross amounts of net operating losses (NOLs) available to those taxable corporations of $5.0 million …

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Recent Accounting Standards In October 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SECs Disclosure Update and Simplification Initiative (ASU 2023-06). ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission. The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). ASU 2024-03 requires public business entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The guidance in ASU 2024-03 is required to be applied prospectively and entities may apply it retrospectively. ASU 2024-03 is effective for public entities for …

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8. Segment Information The Company is a REIT focused on real estate investments primarily in the office market and currently operates in one segment: real estate operations. Each of the Companys properties qualify as an operating segment but are aggregated together because they exhibit similar economic characteristics and operating similarities. The chief operating decision maker (CODM) of the Company is the Companys Chief Executive Officer. The CODM measures the performance and profit or loss for the Companys reportable segment using a measure referred to as Segment Net Operating Income (Segment NOI). The CODM utilizes Segment NOI when considering the deployment of the Companys capital resources on a property-by-property basis. The significant expense categories which the Companys CODM examines when measuring the segments performance include real estate operating expenses and real estate taxes and insurance. Asset information by segment is not reported because the Company does not use this measure to assess performance. The total assets of the Companys reportable segment can be found on the Companys consolidated balance sheets. Segment NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus selling, general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equ …

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4. Stockholders Equity As of June 30, 2026, the Company had 104,011,708 shares of common stock outstanding. The Company declared and paid dividends as follows (in thousands, except per share amounts): Dividends Per Total Quarter Paid Share Dividends 2026: First quarter of 2026 $ 0.01 $ 1,037 2025: First quarter of 2025 $ 0.01 $ 1,036 Second quarter of 2025 $ 0.01 $ 1,035 Equity-Based Compensation On May 20, 2002, the stockholders of the Company approved the 2002 Stock Incentive Plan (the Plan). The Plan is an equity-based incentive compensation plan and provides for the grants of up to a maximum of 2,000,000 shares of the Companys common stock (Awards). All of the Companys employees, officers, directors, consultants and advisors are eligible to be granted Awards. Awards under the Plan are made at the discretion of the Companys Board of Directors, and have no vesting requirements. Upon granting an Award, the Company will recognize compensation cost equal to the fair value of the Companys common stock, as determined by the Companys Board of Directors, on the date of the grant. On May 30, 2025 and May 28, 2026, the Company granted shares under the Plan to non-employee directors with the compensation cost related to such grants indicated in the table below, which was recognized during the three months ended June 30, 2025 and June 30, 2026, respectively, and is included in general and administrative expenses for such period. Such shares were fully vested on the date of issuance. S …

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9. Subsequent Events On July 8, 2026, the Company sold its Greenwood Plaza property located in Englewood, Colorado for a gross sales price of $19.4 million at a loss of approximately $7.7 million, which had been recorded as an impairment as of June 30, 2026. On July 8, 2026, the Company used approximately $8.5 million of the net proceeds from the disposition for the repayment of the Initial Term Loans, including interest and fees. …

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