A focused approach on multi-family assets and proactive liability management defines the company’s latest quarterly performance.

May 8, 2026

Financial Performance and Revenue Streams

For the three months ending March 31, 2026, the company generated total revenues of approximately $9.4 million, a slight increase from the $9.3 million reported during the same period in the previous year. Rental income served as the primary driver, contributing $9.2 million to the total. Despite the modest rise in revenue, Highlands REIT recorded a net loss of approximately $2.6 million, or $0.00 per share, compared to a net loss of $2.25 million in the first quarter of 2025.

The widening net loss was primarily attributed to an increase in total expenses, which rose to $10.4 million from $10.0 million year-over-year. Property operating expenses saw a notable jump, while general and administrative costs remained relatively stable. Interest expense for the quarter was $1.7 million, down slightly from the $1.8 million recorded in the prior year’s first quarter.

A key metric used by the company to evaluate performance is Net Operating Income, which excludes certain non-cash items and corporate-level expenses. The following areas were highlighted in the performance review:

• Multi-family segment: Produced a Net Operating Income of $2.2 million for the quarter.
• Other property categories: Contributed $2.6 million to the total operating income.
• Tenant Concentration: Specific properties, including an Allendale-based residential asset and two commercial properties, each accounted for more than ten percent of the total quarterly revenue.

Strategic Debt Management and Liquidity

One of the most significant developments during the quarter involved the company’s proactive handling of its mortgage obligations. Highlands REIT successfully completed a long-term extension on the mortgage debt for its Trimble office property. This $20.0 million loan, which was previously guaranteed by the parent company, has now been restructured to remove the payment guarantee and extends the maturity date to April 2029.

Furthermore, the company recently secured a new $25.0 million mortgage loan for Sherman Plaza, a retail property located in Evanston, Illinois. This loan, which closed in late April 2026, carries an interest-only payment structure through its initial three-year term and features two optional twelve-month extensions. An associated swap arrangement has fixed the all-in interest rate at 5.90%.

These moves are critical as the company faces other upcoming maturities in late 2026. Management has indicated plans to either refinance these obligations or potentially sell the underlying assets to satisfy the debt. The company’s ability to successfully navigate these maturities is central to its financial health, as it relies on the value of its properties and its ability to access credit markets.

Portfolio Composition and Operational Focus

The company’s portfolio is currently organized into two primary segments: multi-family and other. The multi-family properties generally operate under short-term leases of one year or less, providing the company with the flexibility to adjust rents more frequently in response to market conditions. In contrast, the commercial assets feature longer-term leases ranging from less than a year to fourteen years.

Highlands REIT also maintains a specialized interest in a correctional facility and a parcel of unimproved land. While these assets represent a smaller portion of the overall strategy compared to the residential portfolio, they contribute to the diversification of the company’s income streams. The company continues to operate as a real estate investment trust for federal tax purposes, a status that requires the firm to distribute at least ninety percent of its taxable income to shareholders annually.

Future Outlook and Stockholder Value

A recurring theme in the company’s communications is the pursuit of liquidity options for its stockholders. Following a successful self-tender offer in late 2023, management has expressed a commitment to exploring additional ways to provide value and liquidity. An announcement regarding a potential new liquidity option is expected later in 2026, although the company cautioned that external economic factors will influence the timing and feasibility of such events.

The company’s leadership also underwent transitions recently, with a separation and consulting agreement established for the former President and Chief Executive Officer. This agreement includes ongoing consulting fees through 2027 and the repurchase of a significant block of common shares originally held by the former executive.

As Highlands REIT moves forward, its success appears tied to its ability to maintain high occupancy and rental rates within its multi-family assets while effectively managing its debt profile in a fluctuating interest rate environment. The strategic extensions of major mortgage loans and the securing of new financing for key retail assets provide the company with a clearer runway as it approaches its year-end obligations.