Broad Street Realty Reports 92% Revenue Decline and $44.7M Net Income Due to Eagles Sub-OP Deconsolidation

Broad Street Realty, Inc. reported significant financial changes in its latest 10-Q filing for the quarter ending June 30, 2025, primarily due to the deconsolidation of its Eagles Sub-OP. The company recorded total revenues of $841,000 for the three months ended June 30, 2025, a decrease of approximately 92% compared to $10.1 million in the same period last year. This decline was largely attributed to the absence of rental income, which fell from $9.3 million to zero, as the Eagles Sub-OP, which owned all income-producing real estate assets, was deconsolidated on April 1, 2025. Commissions also decreased by 44% to $459,000, while management fees and other income saw a slight increase.

Operating expenses for the second quarter of 2025 decreased by 76% to $2.5 million, down from $10.6 million in the prior year. This reduction was driven by lower property operating expenses and depreciation, both of which were impacted by the deconsolidation. The company reported an operating loss of $1.7 million, compared to a loss of $458,000 in the same quarter of 2024. However, the filing noted a substantial gain of $56.9 million from the deconsolidation of the Eagles Sub-OP, which significantly improved the net income to $44.7 million, compared to a net loss of $4.5 million in the previous year.

In terms of operational metrics, Broad Street Realty's total assets plummeted to $37.6 million as of June 30, 2025, from $345.3 million at the end of 2024. The company’s liabilities also decreased significantly, from $263.6 million to $5.7 million, reflecting the removal of the Eagles Sub-OP's debt from its balance sheet. The company’s cash and cash equivalents stood at $726,000, a notable decline from $16.2 million at the end of the previous fiscal year. The filing indicated that the company is currently dependent on cash flows from the Eagles Sub-OP to meet its working capital requirements.

Strategically, the deconsolidation of the Eagles Sub-OP has led to a shift in Broad Street Realty's operational focus, as it will now account for its investment in the Eagles Sub-OP using the equity method. This change is expected to affect the comparability of future results with prior periods. The company is also in discussions with the Fortress Member regarding future funding arrangements for general and administrative expenses, as it currently lacks sufficient cash flow to cover its obligations. The Fortress Member has indicated it will fund certain expenses temporarily, but there is no assurance that this support will continue.

Looking ahead, Broad Street Realty faces substantial uncertainty regarding its ability to continue as a going concern. The company has expressed doubts about its capacity to meet its financial obligations over the next twelve months without securing additional equity or debt financing. The ongoing discussions with the Fortress Member regarding property sales and funding arrangements will be critical in determining the company's financial stability moving forward.