0001628280-26-031845
SEC filingRevenue grew modestly while operating income and net income declined sharply, reflecting the impact of higher interest expense from development properties placed in service in late 2025 — a dynamic consistent with the company’s active development strategy and near-term lease-up phase.
All three recently completed development properties — Alera, Bandera Ridge, and Merano — are currently in lease-up and are expected to stabilize in 2026. This phase reflects the natural timing of new asset delivery: revenue generation lags placement in service, and occupancy builds gradually. The increase in interest expense contributing to lower operating income is directly tied to these Development Properties, which were placed in service in the fourth quarter of 2025. Management has explicitly linked this cost pressure to the capitalization of interest during construction and subsequent accruals post-stabilization.
Net cash used in operating activities improved to -$2.9M from -$7.4M year-over-year. This improvement is associated with the repayment of the mortgage on 770 South Post Oak in 2025, which reduced related debt service obligations and altered the timing of accounts payable disbursements. While the authoritative packet does not quantify current cash or receivables balances, the improvement in operating cash flow reflects a measurable shift in working capital dynamics following that repayment.
The company continues executing its dual-pronged investment strategy: acquiring existing income-producing properties and developing new assets on owned or acquired land. Mountain Creek — a 234-unit multifamily project in Dallas — remains under construction and is scheduled for completion in 2027. This sustained development activity underscores management’s commitment to long-term portfolio growth, even as near-term metrics reflect transitional costs associated with lease-up and financing.