Comstock Holding Companies Inc.

11/13/2025 | Press release | Distributed by Public on 11/13/2025 08:26

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements, the related notes thereto, and Management's Discussion and Analysis included in our 2024 Annual Report on Form 10-K, as well as our condensed consolidated financial statements and the related notes thereto included elsewhere in this document. Unless otherwise indicated, references to "2025" refer to the three and nine months ended September 30, 2025 and references to "2024" refer to the three and nine months ended September 30, 2024. The following discussion may contain forward-looking statements that reflect our plans and expectations. Our actual results could differ materially from those anticipated by these forward-looking statements. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
Overview
We are a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region. We have become the area's premier real estate service company by creating extraordinary places, delivering exceptional experiences, and generating excellent results for all stakeholders.
We provide a comprehensive suite of real estate services to our asset-owning clients, including asset management, property management, development and construction management, and more. Our client base is composed primarily of institutional real estate investors, high net worth family offices, financial institutions, and governmental bodies seeking to develop real estate they own through public-private partnerships. We employ a talented staff of real estate professionals that are led by our seasoned management team and are tasked with delivering high-quality services to the premium, strategically located assets in our managed portfolio.
We primarily operate under long-term asset management and property management agreements that provide recurring fee-based revenue streams.
•Our asset management services platform is anchored by a long-term, full-service asset management agreement with Comstock Partners, LC ("CP"), an affiliate entity controlled by our Chief Executive Officer Christopher Clemente, which includes a cost-plus fee structure and covers all of the properties in our Anchor Portfolio (the "2022 AMA" - See Note 12 in the Notes to Consolidated Financial Statements for additional information). We have entered into separate asset management agreements for non-Anchor Portfolio assets. We provide asset management services for market-rate fees to all the commercial and residential assets in our managed portfolio, as well as to certain assets managed by ParkX (see below).
•As a vertically integrated real estate services company, we perform all property management services through three wholly owned subsidiaries: CHCI Commercial, CHCI Residential, and ParkX Management ("ParkX"). All properties in our managed portfolio have entered into property management agreements that provide for market-rate fees related to our services.
Our asset-light, debt-free business model allows us to substantially mitigate risks that are typically associated with real estate development and operation. The fee-based approach we have adopted helps drive consistent top-line growth that, along with our streamlined balance sheet, provides maximum flexibility to explore growth opportunities outside of our core business operations.
We have directly aligned the equity ownership of our Company with the ownership interests of the affiliated assets that we manage in our Anchor Portfolio. This relationship, along with the baseline cost-plus feature and supplemental performance-based revenue opportunities provided by the 2022 AMA, provides us with a stable business platform on which we can (i) produce consistent, positive financial results, (ii) mature and expand our real estate service offerings, (iii) diversify and grow our managed portfolio of assets, both organically and through additional third-party relationships, (iv) pursue strategic investments and complimentary acquisitions, and (v) deliver exceptional value to our shareholders.
We distinguish ourselves from industry peers through an established standard of excellence that extends from who we hire to how we deliver our comprehensive suite of real estate services. We are able to maintain this high standard because We Show Up - every day, in person, in a collaborative environment that is structured to deliver on our mission to make a difference for our customers, our stakeholders, and in the communities that we serve.
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Managed Portfolio
The focus of our managed portfolio revolves primarily around high quality, mixed-use real estate properties and developments that are strategically located adjacent to Metro rail stations, providing convenient access to public transportation.
Our Anchor Portfolio (see below for details) includes, or will soon include, millions of square feet of Trophy and Class A office towers, luxury multi-family residential buildings, luxury hotels with branded condominium residences, high-end retail and entertainment options, amenity-rich public spaces, and commercial parking garages to serve all the properties. Over the twelve months of fiscal year 2024, Anchor Portfolio assets generated well over $100.0 million of gross revenue for the property owners.
The following table summarizes the operating assets, categorized by asset type, that were included in our managed portfolio as of September 30, 2025:
Type # of Assets Size/Scale % Leased
Commercial(1)
14 2.3 million sqft. 82%
Residential(2)
7 2.0 million sqft. / 1,700+ units 96%
Hospitality(3)
1 290,000+ sqft. / 248 keys
ParkX - Garages(4)
32 ~24,000 spaces
ParkX - Security & Other(5)
37 ~5,500 hrs/week
Total 91
(1)
Commercial % leased includes 2024 delivery of a new office tower located in The Row at Reston Station, which is not yet stabilized. Our % leased for stabilized commercial assets is 93%.
(2)
# of Assets includes JW Marriott-branded luxury condominiums, newly added in September 2025 and for which we are providing property management services
(3)
Represents Virginia's only and first-ever JW Marriott Hotel, newly added in September 2025.
(4)
# of Assets includes 16 garages owned by unaffiliated third-party asset-owners
(5)
Includes parking/janitorial; # of Assets excludes 26 properties where parking management services are also provided to avoid double-counting; hours/week total is representative of all security & other locations, including duplicates.
In addition, we manage the following assets that are under construction and scheduled for delivery in the next 12 months:
•2commercial assets that represent approximately 260,000square feet;
•1residential asset with 419 units representing approximately 430,000 square feet; and
•1 commercial parking garage with approximately 1,200 spaces.
Our development pipeline currently includes 5 commercial assets that represent approximately 1.5 million square feet, 5 residential assets with more than 2,300 units that represent approximately 2.5 million square feet, and 1 dual-use hotel with 240 keys that represents approximately 220,000 square feet. At full build out, our managed portfolio of assets is currently projected to total 106 assets representing nearly 10 million square feet.
The following tables provide further details on the assets that comprise our managed portfolio:
Anchor Portfolio
Name Asset Status Description
Reston Station Operating +
Under Construction +
In Development 		Among the largest mixed-use, transit-oriented developments in the Washington, D.C. region, covering nearly 90 acres spanning the Dulles Toll Road and surrounding the Wiehle Reston-East Metro Station and strategically located mid-way between Tysons, Va. and Dulles International Airport on Metro's Silver Line (Fairfax County, Va.). Nearing completion of Phase II of five planned development phases. Includes Trophy-class office towers, luxury residential buildings and JW Marriott-brand luxury condominiums, premier retail offerings, and Virginia's first and only JW Marriott Hotel.
Loudoun Station Operating +
In Development 		Loudoun County's first and only mixed-use, Metro-connected development that is located adjacent to Ashburn Station at the terminus of Metro's Silver Line in Ashburn, Va. Includes premier office and residential buildings as well as a diverse array of retail and entertainment options.
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Other Portfolio Assets
Name Asset Status Description
The Hartford Operating Acquired in 2019, this 211,000 square foot mixed-use building is located adjacent to the Clarendon Station on Metro's Orange Line and is the subject of a joint venture with DivcoWest and Comstock Partners, LC. The premier office tower in the Ballston Corridor submarket of Arlington County, Va.
BLVD Forty Four Operating Acquired in 2021, this 15-story, mixed-use 250-unit, luxury high-rise apartment tower is located adjacent to BLVD Ansel and just 1 block from the Rockville Station on Metro's Red Line in Rockville, Md (Montgomery County) and is the subject of a joint venture with Comstock Partners, LC. The two-building complex is the premier residential offering in Rockville Town Center.
BLVD Ansel Operating Acquired in 2022, this 18-story, mixed-use 250-unit, luxury high-rise apartment tower is located adjacent to BLVD Forty Four and just 1 block from the Rockville Station on Metro's Red Line in Rockville, Md (Montgomery County) and is the subject of a joint venture with Comstock Partners, LC. The two-building complex is the premier residential offering in Rockville Town Center.
Comstock 41 Operating Acquired in 2023, this 18,150 square foot parcel located at 41 Maryland Ave. in Rockville, Md. and is adjacent to BLVD Forty Four; currently a surface parking lot operated by ParkX Management, LC; provides an excellent opportunity for significant value enhancement through by-right entitlements for approximately 117 residential units.
ParkX Operating Parking garages & buildings/public spaces for which ParkX Management provides supplemental property management services that include parking management, security, porter/janitorial, and more.
Comstock 41 - Additional Information
Given its proximity to BLVD Forty Four, we acquired Comstock 41 with the intention to explore rezoning opportunities for this property that would allow for potential relocation of moderately-priced dwelling units from BLVD Forty Four to Comstock 41 as well as utilization of excess parking capacity at both BLVD Forty Four and BLVD Ansel. In conjunction with the acquisition, we entered into a contingent fee agreement with BLVD Forty Four should these pursuits prove successful. (See Note 12 in the Notes to Condensed Consolidated Financial Statements for additional information).
In November 2024, we entered into a definitive purchase agreement for Comstock 41 with SCG Development Holdings, LLC ("SCG") that is contingent upon the successful rezoning of the property to allow for the development of an affordable housing project at the site. Upon closing, we will enter into an operating agreement and a development agreement with SCG, under which we will provide construction management services for the affordable housing project that will be fully financed by SCG. We will also be entitled to provide property management services once the development is ready for occupancy.
Outlook
Our management team is committed to executing our goal to provide exceptional experiences to those we do business with while maximizing shareholder value. We believe that we are properly staffed for current and foreseeable market conditions and will maintain the ability to manage risk and pursue additional growth as opportunities arise. Our real estate development and asset management operations are primarily focused on the greater Washington, D.C. area, where we believe our decades of experience provides us with the best opportunity to continue developing, managing, and investing in high-quality real estate assets and capitalizing on positive growth trends.
Our growth will continue to be fueled by our Anchor Portfolio, which will continue to generate revenue as development and construction efforts are completed for all the planned Anchor Portfolio assets, allowing us to then lease, stabilize, and arrange permanent financing for each property. Importantly, the long-term asset management agreements covering the properties included in the Anchor Portfolio, when combined with our asset-light and debt-free business model, provide us with visibility to future revenue and earnings growth while mitigating the risk for potential losses.
We aspire to be among the most admired real estate asset managers, operators, and developers by creating extraordinary places, providing exceptional experiences, and generating excellent results for all stakeholders. Our commitment to this mission drives our ability to expand our managed portfolio of assets, grow revenue, and deliver value to our shareholders.
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Results of Operations
The following tables set forth consolidated statement of operations data for the periods presented (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Revenue $ 13,317 $ 12,995 $ 38,928 $ 34,386
Operating costs and expenses:
Cost of revenue 11,858 9,583 32,647 27,375
Selling, general, and administrative 725 507 1,869 1,588
Depreciation and amortization 73 77 231 218
Total operating costs and expenses 12,656 10,167 34,747 29,181
Income (loss) from operations 661 2,828 4,181 5,205
Other income (expense):
Interest income 218 169 622 476
Gain (loss) on real estate ventures 35 (75) 53 (369)
Other income (expense), net 77 23 132 56
Income (loss) from operations before income tax 991 2,945 4,988 5,368
Provision for (benefit from) income tax 450 568 1,412 1,135
Net income (loss) $ 541 $ 2,377 $ 3,576 $ 4,233
Comparison of the Three Months Ended September 30, 2025 and 2024
Revenue
The following table summarizes revenue by line of business (in thousands):
Three Months Ended September 30,
2025 2024 Change
Amount % Amount % $ %
Asset management $ 6,560 49.2 % $ 7,380 56.8 % $ (820) (11.1) %
Property management(1)
2,887 21.7 % 3,253 25.0 % (366) (11.3) %
ParkX management 3,870 29.1 % 2,362 18.2 % 1,508 63.8 %
Total revenue $ 13,317 100.0 % $ 12,995 100.0 % $ 322 2.5 %
(1)
CHCI Commercial and CHCI Residential
Revenue increased 2.5% in 2025. The $0.3 million comparative increase was driven by the continued expansion of our managed portfolio, resulting in a $0.9 million, or 29.6%, increase in recurring, fee-based property management services revenue from our Commercial, Residential, and ParkX operating subsidiaries and a $0.3 million increase in reimbursable expense revenue. In 2025, ParkX alone executed 11 new service contracts, 7 of which were with third-party customers. Partially offsetting our revenue growth was a $0.9 million comparative decrease in supplemental fee revenue stemming from a $1.0 million lease termination fee earned in the prior period. This same termination fee also drove a one-time $0.5 million property management fee in the prior period, resulting in the comparative $0.4 million decrease in property management revenue.
Operating costs and expenses
The following table summarizes operating costs and expenses (in thousands):
Three Months Ended September 30, Change
2025 2024 $ %
Cost of revenue $ 11,858 $ 9,583 $ 2,275 23.7 %
Selling, general, and administrative 725 507 218 43.0 %
Depreciation and amortization 73 77 (4) (5.2) %
Total operating costs and expenses $ 12,656 $ 10,167 $ 2,489 24.5 %
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Operating costs and expenses increased 24.5% in 2025. The $2.5 million comparative increase was primarily due to a $1.7 million net increase in personnel-related expenses, $1.5 million of which was directly related to payroll and onboarding costs for 139 new ParkX employees hired in the period to meet required staffing for a new porter/janitorial service offering.
Other income (expense)
The following table summarizes other income (expense) (in thousands):
Three Months Ended September 30, Change
2025 2024 $ %
Interest income $ 218 $ 169 $ 49 29.0 %
Gain (loss) on real estate ventures 35 (75) 110 146.7 %
Other income (expense), net 77 23 54 234.8 %
Total other income (expense) $ 330 $ 117 $ 213 182.1 %
Other income (expense) changed by $0.2 million in 2025, primarily driven by a combined $0.1 million net improvement in mark-to-market valuation impacts of equity method investments in real estate ventures.
Income tax
Provision for income tax was $0.5 million in 2025, compared to $0.6 million in 2024. The $0.1 million decrease stems from a $0.4 million tax benefit stemming from lower taxable income and the impact of an additional $1.0 million valuation allowance release in the current period. Partially offsetting the decrease was an incremental $0.3 million tax provision related to finalizing the fiscal year 2024 tax return.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Revenue
The following table summarizes revenue by line of business (in thousands):
Nine Months Ended September 30,
2025 2024 Change
Amount % Amount % $ %
Asset management $ 20,556 52.8 % $ 19,626 57.1 % $ 930 4.7 %
Property management(1)
8,748 22.5 % 8,701 25.3 % 47 0.5 %
ParkX management 9,624 24.7 % 6,059 17.6 % 3,565 58.8 %
Total revenue $ 38,928 100.0 % $ 34,386 100.0 % $ 4,542 13.2 %
(1)
CHCI Commercial and CHCI Residential
Revenue increased 13.2% in 2025. The $4.5 million comparative increase was primarily driven by the continued expansion of our managed portfolio, resulting in a $2.7 million, or 36.8%, increase in recurring, fee-based property management services revenue and a $0.8 million increase in reimbursable expense revenue from our Commercial, Residential, and ParkX operating subsidiaries. In 2025, ParkX alone executed 33 new service contracts, 20 of which were with third-party customers. Also contributing to the variance was a $0.5 million increase in supplemental fee revenue, stemming from a $1.0 million loan origination fee earned in the current period and a $0.5 million increase in leasing fee revenue.
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Operating costs and expenses
The following table summarizes operating costs and expenses (in thousands):
Nine Months Ended September 30, Change
2025 2024 $ %
Cost of revenue $ 32,647 $ 27,375 $ 5,272 19.3 %
Selling, general, and administrative 1,869 1,588 281 17.7 %
Depreciation and amortization 231 218 13 6.0 %
Total operating costs and expenses $ 34,747 $ 29,181 $ 5,566 19.1 %
Operating costs and expenses increased 19.1% in 2025. The $5.6 million increase was primarily due to a $4.4 million net increase in personnel expenses, $2.9 million of which was directly related to payroll and onboarding costs for 221 additional ParkX employees, 139 of which were hired in Q3 2025 to meet required staffing for a new porter and janitorial service offering.
Other income (expense)
The following table summarizes other income (expense) (in thousands):
Nine Months Ended September 30, Change
2025 2024 $ %
Interest income $ 622 $ 476 $ 146 30.7 %
Gain (loss) on real estate ventures 53 (369) 422 114.4 %
Other income (expense), net 132 56 76 135.7 %
Total other income (expense) $ 807 $ 163 $ 644 395.1 %
Other income (expense) changed by $0.6 million in 2025, primarily due to a combined $0.4 million net improvement in the valuations of our equity method investments in real estate ventures.
Income taxes
Provision for income tax was $1.4 million in 2025, compared to $1.1 million in 2024. The $0.3 million increase primarily stems from an incremental $0.3 million tax provision related to finalizing the fiscal year 2024 tax return.
Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), specifically Adjusted EBITDA.
We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and gain (loss) on equity method investments.
We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute Adjusted EBITDA consistently using the same methods each period.
We believe Adjusted EBITDA is a useful measure because it permits investors to better understand changes over comparative periods by providing financial results that are unaffected by certain non-cash items that are not considered by management to be indicative of our operational performance.
While we believe that Adjusted EBITDA is useful to investors when evaluating our business, it is not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. Adjusted EBITDA should not be considered in isolation, or as a substitute, for other financial performance measures presented in accordance with GAAP. Adjusted EBITDA may differ from similarly titled measures presented by other companies.
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The following table presents a reconciliation of net income (loss), the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Net income (loss) $ 541 $ 2,377 $ 3,576 $ 4,233
Interest income (218) (169) (622) (476)
Income taxes 450 568 1,412 1,135
Depreciation and amortization 73 77 231 218
Stock-based compensation 255 205 794 741
(Gain) loss on real estate ventures (35) 75 (53) 369
Adjusted EBITDA $ 1,066 $ 3,133 $ 5,338 $ 6,220
The decrease in Adjusted EBITDA for the three and nine months ended September 30, 2025 is primarily driven by lower net income due to a significant increase in operating costs from our ParkX subsidiary. This cost increase stems directly from significant payroll and onboarding costs incurred to staff and setup a new porter/janitorial service offering.
Liquidity and Capital Resources
Liquidity is defined as the current amount of readily available cash and the ability to generate adequate amounts of cash to meet the current needs for cash. We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating activities.
Our principal sources of liquidity as of September 30, 2025 were our cash and cash equivalents of $26.2 million and our $10.0 million of available borrowings on our Credit Facility. (See Note 5 in the Notes to Consolidated Financial Statements for additional information).
Significant factors which could affect future liquidity include the adequacy of available lines of credit, cash flows generated from operating activities, working capital management, and investments.
Our primary capital needs are for working capital obligations and other general corporate purposes, including investments and capital expenditures. Our primary sources of working capital are cash from operations and distributions from investments in real estate ventures. We have historically financed our operations with internally generated funds and, more rarely and only when necessary, borrowings from our Credit Facility. We believe we currently have adequate liquidity and availability of capital to fund our present operations.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended September 30,
2025 2024 Change
Net cash provided by (used in) operating activities $ (460) $ 2,905 $ (3,365)
Net cash provided by (used in) investing activities (1,655) (139) (1,516)
Net cash provided by (used in) financing activities (475) (503) 28
Net increase (decrease) in cash and cash equivalents $ (2,590) $ 2,263 $ (4,853)
Operating Activities
The $3.4 million variance in net operating cash activity was driven by a $2.6 million incremental cash outflow stemming from changes to our net working capital and a $0.7 million decrease in net income after adjustments for non-cash items. The net working capital decrease was primarily influenced by a decrease in related party accounts receivable collections. The cash net income decrease was primarily driven by higher operating expenses from our ParkX subsidiary due to payroll and onboarding costs incurred to staff and setup a new porter/janitorial service offering.
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Investing Activities
The $1.5 million variance in net investing cash activity was primarily driven by a $1.0 million refundable deposit made on a potential multifamily property acquisition and a $0.6 million decrease in distributions received from investments in real estate ventures stemming from Investors X residential lot sales recognized in the prior period.
Financing Activities
The immaterial variance in net financing cash activity was due to a $0.1 million increase in equity award-related proceeds collected, partially offset by an immaterial increase in cash paid for taxes related to the net share settlement of equity awards.
Comstock Holding Companies Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 14:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]