Broad Street Realty, Inc. SEC 10-K Report

Broad Street Realty, Inc., a company specializing in grocery-anchored and mixed-use properties in densely populated technology and education hubs, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces.

Financial Highlights

• Total Revenues: $41.3 million, a decrease of 2% compared to the previous year due to lower transaction volume of leasing and the sale of two properties.
• Operating (Loss) Gain: $(0.3) million, a decrease from a gain of $5.4 million in the previous year, primarily due to a decrease in total revenues and an increase in general and administrative expenses.
• Net Loss: $(14.8) million, increased by 111% compared to the previous year, mainly due to a decrease in income tax benefit and total revenues.
• Net Loss Per Share Attributable to Stockholders - Diluted: $(0.80), compared to $(0.60) in the previous year, reflecting the increased net loss.
• FFO Attributable to Common Shares and OP Units: $0.1 million, decreased by 96% compared to the previous year, primarily due to a decrease in income tax benefit and total revenues.

Business Highlights

• Portfolio Overview: As of December 31, 2024, the company owned 15 properties across four states, focusing on grocery-anchored and mixed-use assets in densely populated technology and education hubs in the Mid-Atlantic, Southeast, and Colorado markets.
• Leasing Performance: The total portfolio was 92.1% leased and 89.5% occupied, with retail properties showing a 90.9% lease rate and residential properties fully leased at 100%.
• Retail Portfolio Details: The retail portfolio, including both operating and redeveloping properties, had a total rentable square footage of 1,649,000, with anchor spaces accounting for 854,000 square feet and inline spaces for 795,000 square feet.
• Residential Segment: Midtown Row's residential portion, serving the College of William and Mary, was 100% leased with 240 units and 620 beds, generating an annualized base rent of $9.5 million.
• Geographical Concentration: The Washington-Baltimore-Arlington MSA accounted for 41.9% of the total GLA and 46.9% of the total annualized base rent, indicating a strong presence in this region.
• Tenant Diversification: The top 20 tenants occupied 39.7% of the total GLA and contributed 33.9% of the total annualized base rent, with no single tenant accounting for more than 4% of the total rent.
• Lease Expirations: Approximately 9.0% of the leases are set to expire by the end of 2025, with a weighted average remaining lease term of 5.2 years for the retail portfolio.
• Operational Strategy: The company focuses on acquiring properties in established and developing neighborhoods leased to necessity-based tenants, with plans to expand into new markets, particularly in the Southeastern United States.
• Property Management: The company manages or co-manages its portfolio properties and three additional properties, with a focus on increasing operating cash flows through effective leasing and property management strategies.
• Future Outlook: The company aims to grow its portfolio through strategic acquisitions and enhance property value through repositioning, refurbishing, and redevelopment efforts, while maintaining a focus on necessity-based retail tenants.

Strategic Initiatives

• Strategic Initiatives: The company is focused on growing its portfolio through the acquisition of strategically positioned properties in established and developing neighborhoods, primarily leased to necessity-based tenants. It aims to expand in existing markets and new markets, including the Southeastern United States. The company also provides commercial real estate brokerage services for its own portfolio and third-party operators.
• Capital Management: The company has engaged in several refinancing activities, including extending the maturity dates of certain loans and refinancing existing loans to secure better terms. It has a significant amount of mortgage and other indebtedness, with a focus on managing debt maturities and interest rates. The company has also entered into agreements to sell certain interests and warrants to manage its capital structure effectively. Additionally, the company is structured as an 'Up-C' corporation, conducting operations through its Operating Partnership and subsidiaries, and has a preferred equity investment agreement with a member that includes specific return and redemption terms.
• Future Outlook: The company plans to meet its long-term liquidity requirements through net cash from operations, additional secured and unsecured debt, and potentially issuing additional shares of common stock, preferred stock, or OP units. It is also exploring joint ventures or syndicated structures for future acquisitions. The company is working on refinancing certain loans and managing its capital structure to ensure compliance with debt covenants and maintain financial flexibility. The company is also addressing compliance issues related to its stock trading on the OTCQX market.

Challenges and Risks

• Financial Performance Risks: The company has a history of net losses and expects to continue incurring losses in the near term. This may necessitate additional financing, which could be dilutive to stockholders and may not be available on favorable terms.
• Capital and Financing Risks: The company relies heavily on external sources of capital to fund acquisitions and repay debt. Difficulties in obtaining capital could hinder the company's ability to refinance debt, make investments, or pay dividends. The limited trading market for the company's stock further constrains access to equity financing.
• Geographic Concentration Risks: The company's properties are concentrated in the Mid-Atlantic and Colorado regions, making it vulnerable to adverse economic or regulatory developments in these areas.
• Tenant and Lease Risks: The company depends on tenant leases for revenue. Lease terminations or tenant defaults, especially by significant tenants, could adversely affect financial performance. The company also faces competition from university-owned student housing, which may impact occupancy and rental rates.
• Indebtedness Risks: The company has substantial indebtedness, which could limit operational flexibility and increase vulnerability to economic conditions. Secured debt obligations expose the company to foreclosure risks.
• Operational and Management Risks: The Eagles Sub-OP Operating Agreement grants substantial rights to Fortress, which could impede operations and strategic decisions. Covenants in debt agreements may also restrict business activities.
• Market and Economic Risks: The company is exposed to risks from changes in market conditions, such as interest rate fluctuations, competition, and economic downturns, which could impact property values and rental income.
• Regulatory and Environmental Risks: Compliance with environmental laws and regulations could result in significant costs. The company also faces risks from natural disasters and climate change, which could damage properties and increase operating costs.
• Cybersecurity Risks: The company is vulnerable to cybersecurity incidents, which could disrupt operations and damage reputation.
• Stock Market Risks: The limited trading market for the company's stock and potential downgrades in market tier could affect stock liquidity and value.

SEC Filing: Broad Street Realty, Inc. [ BRST ] - 10-K - Mar. 28, 2025