| Schedule of Financial Statements included in Chapter 11 Cases |
The following table reconciles the enterprise value to the implied value of the Successor equity as of the Effective Date: | | | | | | | Enterprise Value | $ | 2,150,000 | | | Plus: Cash and cash equivalents | 45,799 | | | Plus: Fair value of our investment in unconsolidated joint venture | 12,764 | | | Less: Fair value of debt | (1,683,321) | | | Less: Fair value of New Warrants | (10,700) | | | Implied Successor equity value | $ | 514,542 | |
The following table reconciles the enterprise value to the reorganization value of the Successor’s assets to be allocated to our individual assets as of the Effective Date: | | | | | | | Enterprise Value | $ | 2,150,000 | | | Plus: Cash and cash equivalents | 45,799 | | | Plus: Accounts payable and other liabilities | 167,115 | | | Plus: Fair value of our investment in unconsolidated joint venture | 12,764 | | | Less: Fair value of New Warrants included in accounts payable and other liabilities | (10,700) | | | Reorganization value of Successor assets | $ | 2,364,978 | |
The following condensed consolidated balance sheet is as of June 17, 2026. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”), as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Effective Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for the assets and liabilities. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Predecessor | | Reorganization Adjustments | | Fresh Start Adjustments | | Successor | | ASSETS | | | | | | | | | | Real estate properties: | | | | | | | | | | Land | | $ | 706,623 | | | $ | (218,408) | | (a) | $ | 118,818 | | (k) | $ | 607,033 | | | Buildings and improvements | | 2,955,273 | | | (608,900) | | (a) | (1,849,262) | | (l) | 497,111 | | | Total real estate properties, gross | | 3,661,896 | | | (827,308) | | (a) | (1,730,444) | | | 1,104,144 | | | Accumulated depreciation | | (777,430) | | | 146,687 | | | 630,743 | | (m) | — | | | Total real estate properties, net | | 2,884,466 | | | (680,621) | | | (1,099,701) | | | 1,104,144 | | | | | | | | | | | | Investment in unconsolidated joint venture | | 17,457 | | | — | | | (4,693) | | (n) | 12,764 | | | Assets of properties held for sale | | — | | | 707,854 | | (a) | (412,740) | | (o) | 295,114 | | | Acquired real estate leases, net | | 134,160 | | | (7,409) | | (a) | 706,982 | | (p) | 833,733 | | | Cash and cash equivalents | | 68,349 | | | (22,550) | | (b) | — | | | 45,799 | | | Restricted cash | | 45,094 | | | 4,332 | | (c) | — | | | 49,426 | | | Rents receivable | | 165,849 | | | (11,503) | | (a) | (141,361) | | (q) | 12,985 | | | Due from related persons | | 924 | | | — | | | — | | | 924 | | | Deferred leasing costs, net | | 91,953 | | | (6,919) | | (a) | (85,034) | | (r) | — | | | Other assets, net | | 23,668 | | | (235) | | (d) | (13,344) | | (s) | 10,089 | | | Total assets | | $ | 3,431,920 | | | $ | (17,051) | | | $ | (1,049,891) | | | $ | 2,364,978 | | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | Secured debt, net | | $ | 1,010,588 | | | $ | 677,188 | | (e) | $ | (4,455) | | (t) | $ | 1,683,321 | | | Liabilities of properties held for sale | | — | | | 8,050 | | (a) | 2,583 | | (o) | 10,633 | | | Accounts payable and other liabilities | | 151,873 | | | (20,964) | | (f) | (10,382) | | (u) | 120,527 | | | Due to related persons | | 3,324 | | | — | | | — | | | 3,324 | | | Assumed real estate lease obligations, net | | 7,867 | | | (352) | | (a) | 25,116 | | (v) | 32,631 | | | Total liabilities not subject to compromise | | 1,173,652 | | | 663,922 | | | 12,862 | | | 1,850,436 | | | Liabilities subject to compromise | | 1,565,485 | | | (1,565,485) | | (g) | — | | | — | | | Total liabilities | | 2,739,137 | | | (901,563) | | | 12,862 | | | 1,850,436 | | | | | | | | | | | | Commitments and contingencies | | | | | | | | | | | | | | | | | | | Shareholders’ equity: | | | | | | | | | | Predecessor common shares | | 739 | | | (739) | | (h) | — | | | — | | | Predecessor additional paid in capital | | 2,659,524 | | | (2,659,524) | | (h) | — | | | — | | | Successor common shares | | — | | | 220 | | (i) | — | | | 220 | | | Successor additional paid in capital | | — | | | 514,322 | | (i) | — | | | 514,322 | | | Cumulative net loss | | (497,564) | | | 1,560,317 | | (j) | (1,062,753) | | (w) | — | | | Cumulative common distributions | | (1,469,916) | | | 1,469,916 | | (h) | — | | | — | | | Total shareholders’ equity | | 692,783 | | | 884,512 | | | (1,062,753) | | | 514,542 | | | Total liabilities and shareholders’ equity | | $ | 3,431,920 | | | $ | (17,051) | | | $ | (1,049,891) | | | $ | 2,364,978 | |
Reorganization Adjustments (a)Represents reclassification of properties that met the held for sale criteria as of the Effective Date. (b)Changes in cash and cash equivalents include the following: | | | | | | | Cash proceeds from Rights Offering | $ | 33,584 | | | Release of funds held in segregated bank accounts to cash and cash equivalents | 22,768 | | Payment of lender professional fees and expenses, including lender success fees | (37,142) | | | Funding of the professional and success fee escrow, classified as restricted cash | (34,667) | | | Payment of accrued interest on certain prepetition debt | (5,876) | | | Payment of RMR business management fee | (1,167) | | | Payment of DIP Facility fees and expenses | (50) | | | Net change in cash and cash equivalents | $ | (22,550) | |
(c)Changes in restricted cash include the following: | | | | | | | Funding of the professional and success fee escrow, classified as restricted cash | $ | 34,667 | | | Release of funds held in segregated bank accounts to cash and cash equivalents | (22,768) | | Payment of lender professional fees and expenses | (5,107) | | | Payment of accrued interest on certain prepetition debt | (2,460) | | | Net change in restricted cash | $ | 4,332 | |
(d)Represents the payment of the RMR business management fee in accordance with the Amended Business Management Agreement, classified as a prepaid asset of $1,167 and reclassification of other assets, net for properties held for sale. (e)Changes in secured debt include the following: | | | | | | | Issuance of 2031 Secured Exit Notes | $ | 420,000 | | | Issuance of 2029 Secured Exit Notes | 385,000 | | | Settlement of DIP Facility | (127,812) | | | Net change in secured debt, net | $ | 677,188 | |
(f)Changes in accounts payable and other liabilities include the following: | | | | | | | Accrual of certain success fee | $ | 14,825 | | | Issuance of New Warrants | 10,700 | | | Accrual of settlement fee | 10,000 | | | Reinstatement of accounts payable from liabilities subject to compromise | 4,186 | | | Payment of accrued lender fees and expenses | (20,646) | | | Equitization of DIP Facility fees | (12,500) | | | Settlement of postpetition accrued interest | (11,495) | | | Reclassification of accounts payable and other liabilities for properties held for sale | (7,698) | | | Payment of accrued interest on certain prepetition debt from cash and cash equivalents | (5,876) | | | Payment of accrued interest on certain prepetition debt from restricted cash | (2,460) | | | Net change in accounts payable and other liabilities | $ | (20,964) | |
(g)LSTC settled in accordance with the Plan and the resulting gain were determined as follows: | | | | | | | Liabilities subject to compromise | $ | 1,565,485 | | | Less: Reinstatement of accounts payable from liabilities subject to compromise | (4,186) | | | | | Consideration provided to settle amounts per Plan: | | | Issuance of 2031 Secured Exit Notes | (420,000) | | | Issuance of 2029 Secured Exit Notes | (385,000) | | | Issuance of Reorganized Common Equity to holders of certain prepetition claims | (192,758) | | | Issuance of Reorganized Common Equity in connection with the Rights Offering | (48,856) | | | Cash proceeds from Rights Offering | 33,584 | | | Issuance of New Warrants | (10,700) | | | Recognition of settlement fee | (10,000) | | | Issuance of Reorganized Common Equity in connection with the Rights Offering backstop agreement | (3,500) | | | Net gain on settlement of liabilities subject to compromise | $ | 524,069 | |
(h)Represents the cancellation of Predecessor equity. (i)Changes in successor equity include the following: | | | | | | | Issuance of Reorganized Common Equity in connection with the settlement of DIP Facility and DIP Facility fee claims | $ | 259,137 | | | Issuance of Reorganized Common Equity to holders of prepetition claims | 192,758 | | | Issuance of Reorganized Common Equity in connection with the Rights Offering | 48,856 | | | Issuance of Reorganized Common Equity to RMR in connection with Amended Business Management Agreement | 10,291 | | | Issuance of Reorganized Common Equity in connection with the Rights Offering backstop agreement | 3,500 | | | Net change in successor equity | $ | 514,542 | |
(j)Reflects the Plan effects on cumulative net income as follows: | | | | | | | Gain on settlement of liabilities subject to compromise | $ | 524,069 | | | Gain on settlement of postpetition accrued interest | 11,495 | | | Loss on settlement of DIP Facility claims, including fees and expenses | (118,825) | | | Recognition of lender professional fees and expenses, including lender success fees | (21,653) | | | Recognition of certain success fee | (14,825) | | | Issuance of Reorganized Common Equity to RMR in connection with Amended Business Management Agreement | (10,291) | | | Total reorganization items, net | 369,970 | | | Cancellation of Predecessor equity (direct to cumulative net income) | 1,190,347 | | | Net change in cumulative net income | $ | 1,560,317 | |
Fresh Start Adjustments We have applied fresh start accounting in accordance with ASC 852. Fresh start accounting requires the revaluation of our assets and liabilities on the basis of fair value and the assignment of the Successor's reorganization value to identifiable tangible and intangible assets. These adjustments reflect the actual amounts recorded as of the Effective Date. (k)Reflects the removal of historical basis and step-down to estimated fresh start value of land under the purchase price allocation. (l)Reflects the removal of historical basis and step-down to estimated fresh start value of buildings and improvements under the purchase price allocation. (m)Reflects the elimination of historical accumulated depreciation in connection with the fresh start value of the related real estate. (n)Reflects the fresh start adjustment to the investment in unconsolidated joint venture. (o)Reflects the fresh start adjustment to assets and liabilities held for sale. (p)Reflects the fresh start adjustment to acquired real estate leases, net, representing acquired in place leases and above-market lease intangibles recognized at emergence. (q)Reflects the elimination of rents receivable, including straight line rent, which has no continuing fresh start value at emergence. (r)Reflects the elimination of historical deferred leasing costs, net, which have no continuing fresh start value at emergence. (s)Reflects the fresh start adjustment to other assets, net, consisting of adjustments to deferred financing fees on the secured line of credit and other assets. (t)Reflects the fresh start adjustment to secured debt. (u)Reflects the fresh start adjustment to accounts payable and other liabilities for below-market lease intangibles recognized at emergence. (v)Reflects the fresh start adjustment to assumed real estate lease obligations, net. (w)The table below reflects the fresh start adjustments impact on cumulative net income discussed above: | | | | | | | Fresh start adjustment to land | $ | 118,818 | | | Fresh start adjustment to buildings and improvements | (1,849,262) | | | Fresh start adjustment to accumulated depreciation | 630,743 | | | Fresh start adjustment to investment in unconsolidated joint venture | (4,693) | | | Fresh start adjustment to assets of properties held for sale | (412,740) | | | Fresh start adjustment to acquired real estate leases, net | 706,982 | | | Fresh start adjustment to rents receivable | (141,361) | | | Fresh start adjustment to deferred leasing costs, net | (85,034) | | | Fresh start adjustment to other assets, net | (13,344) | | | Fresh start adjustment to secured debt, net | 4,455 | | | Fresh start adjustment to liabilities of properties held for sale | (2,583) | | | Fresh start adjustment to accounts payable and other liabilities | 10,382 | | | Fresh start adjustment to assumed real estate lease obligations, net | (25,116) | | | Total fresh start adjustments, net | $ | (1,062,753) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Successor | | | Predecessor | | Successor | | | | | Predecessor | | Period from June 18 through June 30, 2026 | | | Period from April 1 through June 17, 2026 | | Period from June 18 through June 30, 2026 | | | | | Period from January 1 through June 17, 2026 | | Professional fees | $ | 894 | | | | $ | 84,919 | | | $ | 894 | | | | | | $ | 142,748 | | | Debt issuance costs | — | | | | 3,528 | | | — | | | | | | 5,465 | | | Interest income earned on debtor-in-possession borrowings | — | | | | (72) | | | — | | | | | | (306) | | | Net gain on the settlement of liabilities subject to compromise | — | | | | (524,069) | | | — | | | | | | (524,069) | | | Net loss on fresh start adjustments | — | | | | 1,062,753 | | | — | | | | | | 1,062,753 | | | Loss on settlement of DIP Facility claims, including fees and expenses | — | | | | 118,825 | | | — | | | | | | 118,825 | | | Other items, net | — | | | | (542) | | | — | | | | | | (542) | | | Total reorganization items, net | $ | 894 | | | | $ | 745,342 | | | $ | 894 | | | | | | $ | 804,874 | |
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