Great Elm Group Inc Aktie

Greetings. Welcome to the Great Elm Group Fiscal 2026 Fourth Quarter and Full Year Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Adam Yates, Managing Director. Thank you. You may begin.

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal Fourth Quarter and Full Year 2026 Earnings Conference Call. As a reminder, this conference call is being recorded on Thursday, August 27, 2026. If you would like to be added to our distribution list, you can e-mail [email protected] or sign up for alerts directly on our website at www.greatelmgroup.com. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. A link to the webcast is also available on our website as well as in the press release announcing our results.

Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward-looking statements unless required by law. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release. To obtain copies of our SEC filings, please visit Great Elm Group's website under Financial Information and select SEC filings. Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliates. Any such offer solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

On the call today, we have Jason Reese, CEO; Adam Kleinman, President and General Counsel; Nichole Milz, COO; and Keri Davis, CFO.

I will now turn the call over to Jason Reese, CEO.

Good morning, and thank you for joining us today. Fiscal 2026 was a year of meaningful progress across Great Elm's platform, although that progress was overshadowed by significant mark-to-market losses, primarily associated with our investments in GECC and GECC-related vehicles. Over the course of the year, GECC stock price declined from $10.67 to $5.45, a decrease of nearly 50%. Over the same period, the stock's discount to NAV widened from approximately 12% to approximately 31%. GECC's NAV at June 30, 2026, was $7.95 per share. These losses had a significant impact on our reported financial results, and we are not satisfied with the resulting fiscal year loss. At the same time, we made substantial progress building the underlying earnings power and scale of Great Elm.

During fiscal '26, GEG and its managed vehicles raised nearly $400 million of gross capital. Fee-paying AUM increased 7% to approximately $590 million, and we exited the year with improving momentum across both our real estate and alternative credit businesses.

I'll start with alternative credit. During the second half of the fiscal year, I assumed a more active leadership role at GECC, becoming Executive Chairman of GECC's Board on March 2 and CEO on May 4. My priorities at GECC remain straightforward. First, protect and grow NAV; second, generate sustainable income and throughout the process, maintain disciplined capital allocation, rigorous underwriting and clear accountability.

We saw tangible progress against those objectives during the fourth quarter. GECC's net assets increased approximately 3% sequentially. Portfolio performance improved and less than 1% of investments were on nonaccrual at quarter end. We also sourced and selectively deployed capital into new private investments that we believe offer attractive risk-adjusted returns. We also took important steps to strengthen GECC's capital structure and liquidity. During the year, GECC retired all $18.6 million of its notes maturing in 2026 and extended the maturity of its revolving credit facility, leaving no debt maturities until 2029.

Subsequent to the quarter end, GECC called an additional $6.5 million of its highest cost debt. At June 30, GECC also maintained substantial liquidity, including approximately $39 million of availability under its revolving credit facility. These actions are part of a broader effort to reposition GECC for more consistent long-term performance. We believe a strong portfolio, improved capital structure and disciplined investment approach should ultimately benefit both GECC shareholders and Great Elm through the value of our investments and fee-related earnings generated by our asset management business. We are exploring opportunities to expand our investment strategy and enhance the value proposition for GECC shareholders.

Importantly, our interests remain aligned with GECC shareholders. Great Elm Capital Management waived approximately $0.9 million of incentive fees in the fourth quarter. Bringing total incentive fees waived during fiscal 2026 to approximately $3.7 million or $0.26 per GECC share.

Turning to real estate. This was a particular area of strength during fiscal '26. Our partnership with Kennedy Lewis provided substantial growth capital and helped accelerate the expansion of the Monomoy platform. Across Monomoy REIT, Monomoy CRE, Monomoy BTS and Monomoy Construction Services, we are building an integrated real estate platform spanning acquisitions and asset management, development and construction.

Monomoy REIT had a record fourth quarter for capital deployments, completing 6 acquisitions, representing approximately $34 million of committed capital, including estimated future capital expenditures and tenant improvement commitments. We also continued value-add construction across the existing portfolio. Our focus remains on disciplined acquisitions where we believe active asset management can generate attractive risk-adjusted returns.

During the fourth quarter, we drew the remaining $50 million under our $150 million strategic financing with Kennedy Lewis, providing additional capital to fund the REIT's record acquisition activity and future growth. Combined with additional property level financings completed during the year, we believe Monomoy REIT is well positioned to continue scaling its IOS portfolio while maintaining a disciplined approach to capital deployment.

Monomoy CRE continued to benefit from that growth, generating approximately $1.1 million of investment and property management fees during the fourth quarter, up approximately 29% from the prior year period. For the full fiscal year, those fees totaled approximately $3.9 million, an increase of 19%. We're actively pursuing additional institutional capital to support continued growth and scale of the platform.

Our build-to-suit business also continued to demonstrate its ability to create value. Monomoy BTS sold its third development property in June for approximately $0.9 million gain following the profitable sale of its second project earlier in the fiscal year. During the fourth quarter, we commenced development on our fourth project in Texas and subsequent to year-end, acquired our fifth property for approximately $3 million.

Monomoy Construction Services had a slower ramp than we initially anticipated, generating approximately $0.4 million of revenue during the fourth quarter. However, we are encouraged by its developing pipeline with core tenants, IOS prospects and expanding consulting and predevelopment relationships.

Taken together, we believe these businesses provide Great Elm with a differentiated, fully integrated real estate platform and substantial opportunity for additional scale. Beyond our core operating businesses, our CoreWeave-related investment continued to create value during the quarter. Since April 1, we received approximately $3 million of distributions, bringing cumulative distributions since inception to approximately $8.6 million compared with our original $5 million investment. We also recognized approximately $2.1 million net gain on the investment during the fourth quarter and continue to retain meaningful upside potential.

Capital allocation remains another key priority. We repurchased shares for the 11th consecutive quarter, reflecting our view that our shares continue to represent an attractive use of capital at current valuation levels. During the fourth quarter, we repurchased approximately 265,000 shares at an average price of $2.18 per share, representing roughly 1% of the shares outstanding at June 30. Since the inception of the repurchase program in 2023 through August 24, we have repurchased approximately 8.1 million shares for $16.1 million at an average price of approximately $2 per share. Our Board has authorized up to $40 million of total repurchases, leaving nearly $24 million of remaining capacity. We intend to continue evaluating repurchases alongside our other investment opportunities based on where we believe we can generate the best risk-adjusted return for shareholders.

As we enter fiscal 2027, Great Elm has growing fee-paying assets, improving operating momentum and substantial financial flexibility. We ended June with approximately $53.5 million of cash and equivalents, providing meaningful capacity to invest in our existing businesses, pursue new opportunities and continue disciplined capital allocation.

Our priorities for fiscal '27 are clear: continue growing AUM and fee-related earnings, scale our real estate and alternative credit platforms, improve the performance and value of our existing investments and selectively pursue new opportunities where our capital, relationships and operating capabilities provide an advantage.

Fiscal '26 demonstrated both the volatility that can result from our balance sheet investments and the progress occurring across our underlying businesses. Our focus is squarely on converting the operational progress into stronger, more consistent financial performance and long-term value for Great Elm shareholders.

With that, I'll turn the call over to Keri for a review of our financial results.

Thank you, Jason. I'll provide a brief overview of the fourth quarter and of course, welcome all of you to review our filings for additional detail or reach out to our team with any questions.

Fiscal fourth quarter revenue was $10.6 million compared to $5.6 million in the prior year period, representing an 88% increase year-over-year. For the fourth quarter, net income was approximately $1.1 million compared to net income of $13.6 million in the prior year period. The change in net income primarily reflected lower net unrealized gains on the company's investments compared with the prior year period. Adjusted EBITDA for the quarter was approximately $0.3 million compared to $1.5 million in the prior year period. Fee-paying AUM and AUM were approximately $590 million and $771 million, respectively, as of June 30, 2026, representing an increase of 7% and 2% from the prior year period. We ended the fiscal year with approximately $53.5 million of cash and cash equivalents. This strong liquidity position provides substantial financial flexibility to support growth initiatives across our platform.

Please refer to the earnings release, accompanying investor presentation and our Form 10-K for a more detailed summary of our financial position.

This concludes my financial review. With that, we will turn the call over to the operator to open the line for questions.

[Operator Instructions] At this time, there are no questions. I would like to turn the floor back over to Jason Reese for closing comments.

Thank you again for joining us today. Before we conclude, I wanted to reiterate that fiscal '26 included challenges and our reported results were not where we would like them to be. We enter fiscal '27 from a position of strength. We have growing fee-paying assets under management, substantial liquidity, improving momentum across both real estate and alternative credit and significant capacity to invest in our businesses and repurchase shares when we believe doing so creates attractive value for shareholders.

Our focus is execution. We intend to continue scaling our existing platforms, growing fee-related earnings, improving the performance and value of our investments and selectively deploying our capital into opportunities where we believe our relationships and capabilities provide a differentiated advantage.

Ultimately, our objective is straightforward, translate the progress we have made across the platform into stronger and more consistent financial performance and long-term value for Great Elm shareholders.

We look forward to keeping you updated on our progress. Thank you for your time and continued support.

Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a great day.

Greetings, and welcome to Great Elm Group Fiscal 2026 Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Adam Yates, Managing Director. Thank you. You may begin.

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal 2026 Third Quarter Earnings Conference Call. As a reminder, this conference call is being recorded on Thursday, May 7, 2026. If you would like to be added to our distribution list, you can e-mail [email protected] or you can sign up for alerts directly on our website, www.greatelmgroup.com.

The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results.

Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward-looking statements unless required by law.

In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release. To obtain copies of our SEC filings, please visit Great Elm Group's website under Financial Information and select SEC filings.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliates. Any such offer or solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

On the call today, we have Jason Reese, CEO; Adam Kleinman, President and General Counsel; Nichole Milz, COO; and Keri Davis, CFO.

I will now turn the call over to Jason Reese, CEO.

Thank you, Adam. Good morning, and thank you for joining us today. This quarter, Great Elm made meaningful progress advancing our strategic initiatives, while operating against a challenging backdrop.

Fiscal third quarter 2026 was marked by heightened volatility across the BDC sector, driven by broader concerns around private credit quality. GECC, our public BDC, was not insulated from that volatility. Our reported results reflect approximately $9.8 million of unrealized losses primarily related to our holdings in GECC common stock and related SPVs. Despite these noncash mark-to-market losses, our balance sheet remains strong with over $45 million of cash and equivalents. This liquidity provides us with significant flexibility to support our growth initiatives and pursue attractive opportunities as we move forward.

In this environment, we continue to build momentum across our alternative asset management platform. In March, I assumed the role of Executive Chairman of GECC at an important inflection point for the company. On May 4, I was appointed CEO. The company was established to create income and protect and grow NAV.

In the near term, I'm reprioritizing. We will protect and grow NAV first and secondarily create income. We will accomplish this by strengthening oversight, protecting shareholder value and reinforcing accountability across the platform. We are already making tangible progress across each of these efforts.

At GECC, we took decisive steps during the quarter to strengthen the balance sheet and improve overall portfolio quality. We substantially delevered the capital structure by calling and repurchasing all near-term funded debt, and GECC will soon have no debt maturities until 2029. This eliminates near-term refinancing risk and enhances our ability to deploy capital in a disciplined and opportunistic manner.

We also advanced our portfolio rotation strategy, exiting select investments and increasing portfolio quality by redeploying capital into predominantly senior secured positions. As a result, first lien investments now comprise nearly 75% of GECC's corporate credit portfolio, the highest level in recent history.

Additionally, we are expanding our proprietary sourcing effort. During the quarter, we closed 3 transactions sourced through institutional partners. We closed another proprietary private investment in April and expect to close on an additional investment in the near future. Our focus remains on rigorous underwriting, enhanced portfolio diversification and increasing cash-generative secured credit investments. We believe these actions position GECC for an improved trajectory with durable performance.

Within our private credit strategy, the Great Elm Credit Income Fund, which we launched in November '23, began an orderly wind down last quarter. We offered third-party investors an early redemption option and all have since exited the fund, leaving Great Elm Group's approximately $7 million investment at quarter end. The fund generated a net return of over 20% from inception through March 31, '26.

In real estate, Great Elm Real Estate Ventures delivered another strong quarter driven by continued execution across the Monomoy platform. Monomoy CRE generated approximately $1 million of investment and property management fees in the quarter, growing more than 20% from the prior year period. Monomoy REIT closed on 5 acquisitions in the quarter, deploying approximately $28 million and surpassing its full year 2025 acquisition activity.

Monomoy BTS delivered a third development property in Florida to an investment-grade tenant with rent commencing in March. During the quarter, the team also advanced its fourth design-build project in Texas following the land acquisition. The real estate platform continues to build a robust pipeline of additional build-to-suit opportunities, spurred by its strong execution track record and high tenant satisfaction. Lastly, Monomoy Construction Services completed its fourth full quarter of operations, adding $0.7 million in total revenue.

Outside of our core platform, our CoreWeave-related investment continues to perform well with cumulative distributions of $6.8 million to date, exceeding our initial $5 million investment. We continue to see upside potential based on current trading levels, and we are encouraged by CoreWeave's recent stock price rebound and successful capital raises.

Turning to capital allocation. We believe our shares remain materially undervalued and continue to prioritize share repurchases accordingly. Our Board recently approved a $15 million increase in our stock repurchase program, bringing the total authorization to $40 million. This marks our 10th consecutive quarter of share repurchases, underscoring both our conviction in the business and our commitment to enhancing shareholder value.

During the quarter, we repurchased approximately 1.4 million shares or over 4% of shares outstanding at an average price of $2.04 per share. Through May 4, we have repurchased approximately 7.8 million shares at an average price of $2 per share, representing $15.6 million deployed since inception. This leaves approximately $24.4 million of remaining capacity, and we intend to remain active under the program at current valuation levels.

As we enter the fourth quarter of our fiscal year, we remain focused on growing fee-paying AUM, scaling our alternative credit and real estate businesses and sourcing new investment opportunities.

Looking ahead, we seek to expand our platform and add accretive differentiated investment solutions with attractive risk-adjusted return profiles.

With that, I'll now turn the call over to our CFO, Keri Davis.

Thank you, Jason. I'll provide a brief overview of the quarter and, of course, welcome all of you to review our filings for additional detail or reach out to our team with any questions.

Fiscal third quarter revenue was $3.4 million compared to $3.2 million in the prior year period, a 7% increase, driven primarily by growth in MCS construction management fees. Estimated fee-paying AUM and AUM were $528 million and $744 million, respectively, as of March 31, 2026. These figures represent a decrease of 7% and 3%, respectively, compared to the prior year period.

We reported a net loss of $13.5 million for the quarter compared to a net loss of $4.5 million a year ago. The change was primarily driven by $9.8 million of unrealized losses, including consolidated funds, the majority of which were associated with the company's investments in GECC common stock and related SPVs.

Adjusted EBITDA for the quarter was negative $1.6 million compared to positive $0.5 million in the prior year period. As of March 31, 2026, we held approximately $45.5 million of cash and cash equivalents on our balance sheet to deploy across our growing alternative asset management platform.

Please refer to the earnings release and our Form 10-Q for a more detailed summary of our financial position.

This concludes my financial review of the quarter. With that, we will turn the call over to the operator to open for questions.

[Operator Instructions]

There are no questions at this time. At this point, I'd like to turn the call back over to Jason Reese for closing comments.

Thank you again for joining us today. We remain confident in the strategic direction of our business. Our credit and real estate platforms continue to execute, and with the strength of our balance sheet. We are taking disciplined actions to position the platform for long-term success. We look forward to keeping you updated on our progress. Thank you for your time and continued support.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Greetings, and welcome to the Great Elm Group Fiscal 2026 Second Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Adam Yates, Managing Director. Thank you, sir. You may begin.

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal 2026 Second Quarter Earnings Conference Call. As a reminder, this conference call is being recorded on Thursday, February 5, 2026. If you would like to be added to our distribution list, you can e-mail [email protected], where you can sign up for alerts directly on our website, www.greatelmgroup.com.

The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results.

Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward-looking statements, unless required by law. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release. To obtain copies of our SEC filings, please visit Great Elm Group's website under Financial Information and select SEC filings.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliate. Any such offer or solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

On the call today, we have Jason Reese, CEO; Adam Kleinman, President and General Counsel; Nichole Milz, COO; and Keri Davis, CFO. I will now turn the call over to Jason Reese, CEO.

Good morning, and thank you for joining us today. While Great Elm made meaningful progress during the quarter to advance our strategic goals, I want to acknowledge the reality of the environment we operated in during the quarter.

Fiscal second quarter '26 unfolded against a challenging backdrop for BDCs, marked by heightened volatility, meaningful pressure on public valuations and concerns over private credit quality deterioration. As a result, we recorded significant unrealized losses during the quarter, particularly related to our investment in GECC common stock, investments in special purpose vehicles related to GECC common stock and our CoreWeave-related investment. While these valuation changes materially impacted our reported results for the quarter, it's important to emphasize that they were primarily noncash in nature and driven by market-based movements.

Liquidity across the platform remains strong and our balance sheets at the holding company and both of our primary investment vehicles are well positioned to grow our platform and invest opportunistically as we move forward. Against that backdrop, Great Elm has executed operationally. We continue to advance our alternative asset management platform, expanding both our real estate and credit businesses, and grew fee-paying assets under management on a year-over-year basis. At the end of December, estimated assets under management stood at $740 million, while estimated fee-paying assets under management grew 4% year-over-year to approximately $561 million.

Great Elm Real Estate Ventures had another strong quarter, marked by continued execution across the Monomoy platform. Monomoy BTS completed its third design build property located in Florida and has begun actively marketing the property for sale, with an expected exit in the second half of fiscal 2026. We are also engaged with a high-quality tenant on a fourth design build project and continue to see a robust and expanding pipeline of development opportunities supported by a broader tenant base.

Monomoy Construction Services completed its third full quarter of operations, contributing approximately $400,000 in revenue. With construction capabilities now fully integrated in-house, we are able to deliver comprehensive turnkey solutions for tenants, capture additional value across the property life cycle and support disciplined execution as our project pipeline continues to scale.

At Monomoy CRE, total investment management and property management fees increased over 15% from the prior year period, driven by the growth in fee-paying AUM and higher gross rents. During the quarter, Monomoy REIT acquired 3 properties at attractive cap rates for approximately $8.9 million, including development costs, while continuing renovations and design build initiatives further enhanced by the capabilities of MCS.

Turning to our alternative credit business, it's important to acknowledge that the BDC experienced a challenging finish to calendar '25, driven largely by CoreWeave stocks declining nearly 50% in the quarter, CLO equity underperforming the broader credit markets in the quarter and continued dispersion in leveraged credit, including first grant impacts. GECC plans to report earnings in early March, and we'll provide additional details at that time. That said, we believe we have taken actions to position the platform for success as we move into '26. We fortified the team in September by hiring a new head of research with over 25 years of credit analysis experience.

During the quarter, the investment team reunderwrote the entire portfolio and continue to work deliberately to further diversify our investments, with a particular focus on senior secured opportunities. The team worked to optimize the portfolio to improve overall credit quality, trimming or exiting high-risk positions. These steps were taken with a long-term mindset, and position the BDC with a stronger foundation from which to rebuild in 2026.

While syndicated credit spreads remain near historic tights, we have redoubled our effort to shift the portfolio towards private transactions that offer stronger lender protections, tighter covenants and reduce the risk of liability management transactions. We believe this approach is increasingly important given the lender and lender violence and structural erosion we continue to see in broadly syndicated markets.

The BDC maintained significant liquidity, providing ample flexibility as opportunities arise. As a reminder, in the prior quarter, GECC materially lowered its cost of capital through the refinancing of its highest cost debt. Taken together, these initiatives leave GECC in a position of strength with a healthy balance sheet, meaningful deployable cash and additional capacity to invest in attractive income-generating opportunities.

In our private credit strategy, the Great Elm Credit Income Fund launched in November '23, began an orderly wind down in response to recent portfolio events and market conditions. As the fund had not yet reached scale, we decided to begin monetizing investments in a disciplined manner. The fund recorded a net return of over 20% for the 26 months from inception through December 31, 2025.

Outside of our core business, our CoreWeave-related investment continues to be a compelling success despite significant market volatility during the quarter. From September 30 to December 31, CoreWeave's common stock declined nearly 50%, resulting in market-based valuation movements that generated a $6.7 million of unrealized losses in our investment, offset by $2.2 million of realized gains from distributions. Notwithstanding this volatility, we have received distributions totaling approximately 115% of our original $5 million investment to date, and we continue to believe there is meaningful upside potential based on current trading levels. Since December 31, CoreWeave stock price has rebounded significantly, reinforcing our conviction in the long-term value of the investment.

In addition, we recorded net unrealized mark-to-market losses of $4 million and $3 million in our GECC common stock and related SPV investments, respectively. These valuation changes echo broader market trading levels for BDCs, and we expect recovery in time as GECC rebuilds its NAV.

We also continue to deploy capital in a disciplined manner to enhance shareholder value. Our share repurchase program has been highly effective since inception, underscoring our conviction in the intrinsic value of the business and our long-term outlook. During the quarter, we repurchased approximately 1.1 million shares of GEG stock at an average price of $2.47 per share. From inception of the program through February 3, Great Elm has repurchased approximately 6.4 million shares at an average price of $1.99 per share, representing a total capital deployment of $12.7 million. In aggregate, these repurchases equate to nearly 20% of our shares outstanding, materially enhancing per share value for shareholders.

As we enter the second half of fiscal 2026, Great Elm is well positioned with $51.2 million in cash, providing us with ample flexibility to support our growth initiatives and take advantage of attractive opportunities sourced via our sophisticated network. We remain focused on growing fee-paying AUM, scaling our alternative credit and real estate businesses and sourcing new investment opportunities. Looking ahead, we seek to expand our platform and add accretive differentiated product offerings with attractive risk-adjusted return profiles.

With that, I'll now turn the call over to our CFO, Keri Davis.

Thank you, Jason. I will provide a brief overview of the quarter, and of course, welcome all of you to review our filings in greater detail or reach out to our team with any questions.

Fiscal second quarter revenue was $3 million compared to $3.5 million for the prior year period. The decrease was primarily driven by $0.6 million in property sales and $0.5 million of incentive fees in the prior year period that were not recognized in the current quarter, offset by $0.4 million in new construction management revenue from MCS acquired in February 2025. Estimated AUM and fee-paying AUM totaled approximately $740 million and $561 million, respectively, with fee-paying AUM up 4% from the prior year quarter end.

We reported a net loss of $16.5 million for the quarter versus net income of $1.4 million a year ago. Our loss for the quarter was primarily driven by unrealized losses of $14.4 million and realized gains of $2.2 million from GEG's investments, including the company's investments in consolidated funds. This compares to an unrealized gain from the company's investments in the prior year period of $2.4 million, including its investments in consolidated funds. The unrealized losses from GEG's investments in the recent quarter were largely attributable to market-based valuation movements, including $4 million related to GECC common stock, $3 million related to special purpose vehicles invested in GECC common stock and $6.7 million related to our CoreWeave-related investments.

Adjusted EBITDA for the quarter was a loss of $1.6 million compared to a gain of $1 million in the prior year period. As of December 31, 2025, we held approximately $51.2 million of cash on our balance sheet to deploy across our growing alternative asset management platform.

Please refer to Slide 6 for a summary of our financial position and book value per share of approximately $1.79.

This concludes my financial review of the quarter. With that, we will turn the call over to the operator to open for questions.

[Operator Instructions] There are no questions at the moment. I would like to turn it back to management for closing comments.

Thank you again for joining us today. We remain confident in the strategic direction of our business. We continue to advance our credit and real estate platforms, strengthen our balance sheet and deliver sustained value for our shareholders over time. We look forward to keeping you updated on our progress. Thank you for your time and continued support.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Greetings, and welcome to the Great Elm Group Fiscal 2026 First Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Yates, Managing Director. Thank you. You may begin.

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal 2026 First Quarter Earnings Conference Call. As a reminder, this conference call is being recorded on Thursday, November 13, 2025. If you would like to be added to our distribution list, you can e-mail [email protected] or you can sign up for alerts directly on our website, www.greatelmgroup.com.

The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results.

Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward-looking statements unless required by law.

In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release. To obtain copies of our SEC filings, please visit Great Elm Group's website under Financial Information and select SEC filings.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliates. Any such offer, solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

On the call today, we have Jason Reese, CEO; Adam Kleinman, President and General Counsel; Nicole Milz, COO; and Keri Davis, CFO.

I will now turn the call over to Jason Reese, CEO.

Good morning, and thank you for joining us today. Great Elm made significant progress across our strategic initiatives in the fiscal first quarter, building on the momentum from our record year in fiscal '25. During the quarter, we advanced our goals to expand our platform, grow assets under management and enhance our profitability. Notably, we raised nearly $250 million of debt and equity capital across our credit and real estate platforms through both private investments from strategic partners and public raises through GECC's at-the-market equity program and a new baby bond.

Fee-paying assets under management grew 9% year-over-year to approximately $594 million or 10% on a pro forma basis to approximately $601 million. As I have reviewed on prior calls, in July, we established a transformative partnership with Kennedy Lewis Investment Management, which invested in both GEG and Monomoy REIT, committing up to $150 million in leverageable capital to Monomoy REIT to accelerate our real estate platform expansion and purchasing 1.3 million shares of GEG common stock.

This partnership is a true catalyst for growth, bringing not only capital but also deep institutional expertise in scaling real estate platforms. As part of this partnership, Lloyd Nathan joined the Board of GEG and Ludwig Schrittenloher joined the Board of Monomoy REIT.

In August, Woodstead Value Fund purchased 4 million newly issued shares of GEG common stock at $2.25 per share, raising approximately $9 million in equity capital. Alongside the investment, Booker Smith joined our Board to help advance and expand our key verticals.

Great Elm also issued 10-year warrants to Woodstead for an additional 2 million shares of GEG common stock, 1 million struck at $3.50 and 1 million at $5, further aligning their interest with those of all shareholders. Great Elm Real Estate Ventures continued to ramp during the quarter. Monomoy BTS sold its second build-to-suit development property in Canton, Mississippi for over $7 million, generating a gain of over $0.5 million.

Construction on the third BTS property is nearing completion with a robust pipeline of development opportunities behind it. Monomoy Construction Services completed its second full quarter since inception, contributing approximately $700,000 in revenue. With construction capabilities fully integrated in-house, we can offer tenants comprehensive turnkey solutions, capture more value through the property life cycle and execute on our growing project pipeline.

At Monomoy CRE, investment management and property management fees increased 12% over the prior year period, driven by the growth in fee-paying AUM and growing rental income. The REIT deployed over $13 million to acquire 7 new properties at attractive cap rates and acquired a land parcel adjacent to an existing asset to accommodate a tenant expansion under a new 10-year lease. This transaction demonstrates our ability to meet tenants' needs while enhancing portfolio value.

In our alternative credit business, GECC delivered a strong quarter in terms of capital formation and balance sheet optimization. GECC raised approximately $28 million in equity proceeds, including a $15 million private placement and a $13 million through its at-the-market equity program. In August, GECC doubled the borrowing capacity under its revolver to $50 million from $25 million, reducing the revolver interest rate by 50 basis points and has the ability to further expand the facility to $90 million under certain circumstances.

In September, GECC refinanced its highest cost debt, the $40 million of 8.75% notes due in September '28 with a $57.5 million of 7.75% notes due in December '30, reducing annual cash interest expense by 100 basis points and extending its debt maturity profile.

GECC's operating results for the quarter were impacted by First Brands, which traded down sharply in late September before filing for bankruptcy at the end of the quarter. GECC held exposure to First Brands through syndicated loans. Consequently, NAV was negatively affected and GECC placed its First Brands investments on nonaccrual at the end of September. Despite this operating setback, the capital initiatives executed in the quarter leave GECC in a position of strength with a strong balance sheet, ample deployable cash and capacity to invest in income-generating opportunities in the coming quarters.

Meanwhile, our Great Elm private credit strategy continued with strong performance, returning 15.2% net calendar year-to-date through September 30. Since inception, we have made income distributions exceeding 15% of original invested capital to investors in the strategy, highlighting disciplined deployment and a focus on value preservation.

Outside of our core business, our CoreWeave-related investment remains a significant success story. We have already received over 100% of our initial $5 million investment in distributions to date, and we continue to see meaningful upside potential despite recent volatility in CoreWeave stock price that contributed to unrealized losses in this investment and GEG's net loss for the quarter.

Shifting back to Great Elm. Our balance sheet also remains solid, ending the quarter with approximately $53.5 million in cash, providing us with ample flexibility to support our growth initiatives and take advantage of attractive opportunities as they arise. In July, our Board expanded our stock repurchase program by $5 million to $25 million in total.

Through November 11, we have repurchased 5.6 million shares for $10.9 million at an average price of $1.93 per share, leaving $14.1 million in remaining program capacity. These repurchases reflect our continued confidence in the company's long-term value and are a highly accretive use of capital.

As we move through fiscal '26, we remain focused on growing fee-paying AUM, scaling our credit and real estate platforms and translating our strategic progress into sustained financial performance as we seek to create enduring value for our shareholders.

With that, I'll hand it over to Keri.

Thank you, Jason. I will provide a brief overview of the quarter and of course, welcome all of you to review our filings in greater detail or reach out to our team with any questions. Fiscal first quarter revenue was $10.8 million compared to $4 million for the prior year period. The increase was primarily driven by $7.4 million in revenue recognized from the sale of our second Monomoy BTS build-to-suit property. AUM and fee paying AUM totaled approximately $785 million and $594 million, respectively, with fee paying AUM up 9% from the prior year quarter end.

On a pro forma basis, AUM and fee-paying AUM totaled approximately $792 million and $601 million, up 7% and 10% from the prior year period, respectively. These figures incorporate the pro forma impact of GECC financing activities. We reported a net loss of $7.9 million for the quarter versus net income of $3 million a year ago, primarily due to unrealized losses on GEG's investments in GECC common stock and our CoreWeave-related related investment.

Adjusted EBITDA for the quarter was a loss of $0.5 million compared to a gain of $1.3 million in the prior year period. As of September 30, 2025, we held approximately $53.5 million of cash on our balance sheet to deploy across our growing alternative asset management platform. Please refer to Slide 6 for a summary of our financial position and book value per share of approximately $2.30.

This concludes my financial review of the quarter. With that, we will turn the call over to the operator to open for questions.

[Operator Instructions]

We have a question from Nat Stewart of N.A.S. Capital.

I've been following Great Elm Group for quite a while, and I'm pretty interested in the evolution the business has had lately. I was just trying to figure out kind of where you are in the growth picture. And obviously, with the asset management businesses, if you manage to keep the fixed costs at least relatively flat and grow AUM and revenue, it's going to create a lot of earnings growth.

So I was just curious what you guys think about your current overhead and expense structure and kind of like just as a -- from a financial point of view, like where are you on this growth trajectory in terms of growing the REIT, growing the BDC, other opportunities? Kind of what clues can you give us about where you see this going and when we're going to really see some operating leverage kick in?

Thanks, Nat. It's Jason Reese. I think best to say, we have spent a lot of time and effort building all the back office infrastructure. As you know, as you stated, this business is a high fixed cost and then low marginal cost going forward. I think we have the bulk of our fixed costs in place, and now the strategy is all about growing. As I think you've seen this past quarter, we made a major growth move on the real estate side. We're now putting that capital to work as we look to raise additional capital for the REIT.

And on the BDC, kind of the same thing. We've done quite a bit of capital raising over the last 15 months. We hope to accelerate that. We do not think we need to come anywhere near growing the costs that we have in the past. So we think we're in a great spot going forward to leverage.

Okay. Just like a little follow-up question. Obviously, there's a lot of public information on the BDC. The strategy there looks very good with that setback you had this quarter. I know I listened to that call, they talked about they need to diversify and maybe reduce some of the position sizes, which makes a lot of sense.

On the Monomoy REIT side, I could be wrong, perhaps I just am not seeing it, but I'd be interested in just learning more about that business. Like it doesn't seem to have a lot of a public-facing information about it. Am I just missing it or not seeing it? Or is that kind of -- how do we learn more about that and what's going on there? Just a little more in-depth understanding of that.

Well, let me give you a minute or 2, but I'd be happy to get on a call separately with you and get Chris [ Massey ], who is the head of that business on the call. But it is a private REIT. So there's not a lot of public information about it. But it focuses on the industrial outside storage space. The REIT has been operating for approximately 11 years. We have over 150 million -- 150 buildings that are -- we own in that REIT and growing. A lot of our focus is on the equipment rental space. Our largest tenant in this space is United Rentals, which the second largest tenant is Sunbelt Rentals in that space.

And we've taken the time to build. We're not just an asset manager there. We have built our BTS business or build-to-suit where we're building our own properties for -- that will then go in the REIT or get sold to third parties, but for servicing the tenants. And we've also -- if you remember, in January, we purchased a construction business that we were using from the outside, so that we brought all of that in-house to have the capabilities to do everything from kind of cradle to grave with properties.

We think it's a great business. We think it could be a public vehicle at some point in time. We're probably not quite at the scale I would want it to be before we took it public. But that is a possibility in the future. At that point, there would be the ultimate disclosure about it, obviously. But I'd be happy, Nat, if you want to e-mail me after the call, to set up a separate call and go in depth with you on Monomoy, if you'd like to know more.

Okay. Yes. Is that -- what -- if I just e-mail the IR, will that -- IR e-mail, will that get through?

It will get through...

At this time, there are no further questions. And I would like to turn the floor back over to Jason Reese for closing remarks.

Thank you again for joining us today. We remain confident in the strategic direction of our business. We continue to raise significant capital, advance our credit and real estate platforms and strengthen our balance sheet. We are committed to executing on our growth strategy, scaling fee-paying assets under management and delivering sustained value for our shareholders over time. We look forward to keeping you updated on our progress. Thank you for your time and continued support.

That concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Greetings, and welcome to the Great Elm Group Fiscal 2025 Earnings and Strategic Investment Call. [Operator Instructions] I'd now like to turn the conference over to your host, Adam Yates, Managing Director. Thank you. You may begin.

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal 2025 Earnings and Strategic Investment Conference Call. As a reminder, this conference call is being recorded on Wednesday, September 3, 2025. If you would like to be added to our distribution list, you can e-mail [email protected] or you can sign up for alerts directly on our website, www.greatelmgroup.com. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results.

Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward-looking statements unless required by law. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release. To obtain copies of our SEC filings, please visit Great Elm Group's website under Financial Information and select SEC filings.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliates. Any such offer solicitation will only be made pursuant to the applicable offering documents for such investment vehicle. On the call today, we have Jason Reese, CEO; Adam Kleinman, President and General Counsel; Nicole Milz, COO; and Keri Davis, CFO. I will now turn the call over to Jason Reese, CEO.

Good morning, and thank you for joining us. Fiscal '25 was a record year for Great Elm, the strongest in our history. We delivered a record $15.7 million of net income from continuing operations in the final quarter and increased book value per share 24% year-over-year, driving momentum into fiscal '26 with over $100 million of capital raises completed in July and August across our credit and real estate platforms. In credit, GECC generated record investment income and incentive fees, raised over $75 million of new capital, upsized and reduced the cost of its revolving credit facility and increased its dividend, highlighting the sustainability of its performance.

Our Great Elm Credit Income Fund also delivered top-tier returns. In real estate, we launched Monomoy Construction Services, rounding out our fully integrated platform. MCS is already contributing meaningful revenue, expanding its pipeline and positioning us to scale rapidly while serving our industrial outside storage tenants and customers. Finally, just after year-end, we executed on 3 value-creating initiatives. First, in July, we entered a strategic partnership with Kennedy Lewis Investment Management, who invested in both GEG and Monomoy REIT, committing up to $150 million to accelerate our real estate platform growth. And in August, we completed 2 significant capital raises at GEG and GECC that provide meaningful new growth capital and expertise across our core businesses.

We believe fiscal '25 was an inflection point, as we delivered record results, scaled both credit and real estate and secured new capital and partnerships to fuel our next phase of growth. With momentum in both businesses and the strongest foundation in our history, we are well positioned to drive meaningful growth and create lasting value for our shareholders. Let me now walk through the details of our performance and strategy. Net income from continuing operations was $15.7 million in the fourth quarter, a significant improvement over last year. Excluding onetime property sales, revenue in the quarter grew over 140% over the prior year period, led by record management and incentive fees at GECC and new contributions from Monomoy Construction Services.

Book value per share rose approximately 24% year-over-year to $2.65 as of June 30. Book value as of June 30, pro forma for the 2 GEG issuances in July and August remained solid at $2.58 per share. We also closed the year with strong balance sheet, including $31 million of cash to support our expanding businesses or over $40 million on a pro forma basis after the 2 issuances. In addition, our Board expanded our stock purchase program by $5 million in July, bringing the total program size to $25 million. Through August, we have repurchased 5.1 million shares for $9.3 million at an average of $1.85 per share, leaving $15.7 million in remaining program capacity.

Repurchasing shares at a discount to book value has been directly accretive, contributing to the step-up in book value we delivered over the past year. We view these repurchases as an attractive use of capital, underscoring our confidence in long-term shareholder value. A key driver of profitability this year was the unrealized gains from our CoreWeave-related investment, which added more than $11 million to earnings. This $5 million investment made in May '24, sourced through a strategic relationship is a notable example of how we can use Great Elm's balance sheet and extensive network to capture unique opportunities that are not broadly available in the market.

Our returns in CoreWeave have translated to significant gains for our shareholders. And while these are currently unrealized gains, they highlight our ability to create value by selectively deploying capital into high-conviction investments. Importantly, we view these types of investments as complementary to our recurring fee revenue business in credit and real estate. Strategic, high conviction opportunities such as the CoreWeave investment, not only enhance our return profile, but also give us a differentiated engine of growth and value creation for shareholders.

Turning now to credit. This business was our biggest driver of growth in '25. GECC delivered the best year in its history, generating record management and incentive fees for GEG as well as its highest ever total investment income with more than 90% coming from cash income. Net investment income exceeded its quarterly distribution, supporting a 6% increase in GECC's dividend to $0.37 per share. Over the fiscal year, GECC also completed 4 capital raises totaling over $75 million and launched a $100 million at-the-market equity program, providing capital for growth.

Just after year-end, GECC upsized its revolving credit facility from $25 million to $50 million with room to expand further, while also reducing its borrowing cost by 50 basis points. These capital raises, combined with enhancing financial flexibility and record performance, position us to drive fee revenue growth from GECC, scale our credit platform and increase contributions to Great Elm's overall earnings trajectory. Meanwhile, our Great Elm Credit Income Fund continued its outstanding performance, posting net returns of 21% for the 6 months ended June 30, driven by unrealized appreciation in its core REIT-related investments following 12% net returns in calendar '24.

Taken together, our credit business is scaling rapidly, generating recurring cash flow, enhancing profitability and positioning Great Elm for sustained long-term fee growth. Now to real estate, where we achieved a major milestone this year with the launch of Monomoy Construction Services, or MCS, in February. We created MCS by acquiring our long-term partner, Greenfield CRE and combining it with our existing construction management business. The launch of MCS added in-house construction and predevelopment capabilities to our existing asset management and development businesses to complete a fully integrated end-to-end real estate platform to serve our IOS tenants and customers.

The integration brings 3 clear advantages: accelerating development time lines, capturing construction margins in-house and providing turnkey solutions that deepen tenant relationships. In its first few months, MCS contributed nearly $1 million in revenue and has already grown its project pipeline by more than 50%. Looking ahead, we expect MCS to more than double its revenue in fiscal '26, and we believe it will be a central driver of our long-term goal of scaling real estate revenues. Beyond MCS growth, our broader Monomoy platform advanced significantly during the quarter.

Monomoy CRE delivered stable fee revenue, contributing approximately $800,000 for the fourth quarter. Monomoy REIT executed on both acquisitions and dispositions, acquiring a $1.3 million property at an attractive cap rate and realizing on a $15.3 million sale versus a $9.2 million purchase price. We also strengthened the REIT's capital position by expanding its warehouse facility from $25 million to $50 million at an improved interest rate. Meanwhile, Monomoy BTS advanced its development pipeline, placing a second property under contract for sale, continuing construction on a third, gathering specifications on a fourth and capturing new tenant-driven opportunities nationwide.

Finally, I would like to provide a detailed overview of the important strategic capital raises and partnerships we closed over the last few weeks. Our partnership with Kennedy Lewis Investment Management and our August transactions with Woodstead Value Fund and Booker Smith. In July 25, we entered a strategic partnership with Kennedy Lewis, an institutional alternative investment firm managing over $30 billion in assets. As part of the partnership, Kennedy Lewis purchased 4.9% of Great Elm's common stock and will invest up to $150 million in Monomoy Properties REIT to accelerate the expansion of our real estate platform under the Monomoy brand.

In addition to these investments, Kennedy Lewis appointed representatives to the Boards of both GEG and Monomoy REIT. The structure of this transaction included a $100 million term loan to Monomoy Properties REIT with an option for an additional $50 million in the future, a 15% profits interest with the potential to increase up to 20% based on additional capital investment in our newly formed Great Elm Real Estate Venture subsidiary, which now houses Monomoy CRE, our investment manager; Monomoy BTS, our developer and Monomoy Construction Services, our construction manager and as mentioned, a strategic equity investment in Great Elm itself.

This partnership is a game changer. Kennedy Lewis brings not only capital, but also a proven track record of scaling institutional real estate platforms. Their success with the launch and IPO of Millrose Properties, a $5 billion REIT spun out from Lennar Corporation serves as a powerful example of their ability to transform institutional platforms into market-leading public companies. With their support and the current favorable economic backdrop, we are well positioned to supercharge Monomoy REIT growth toward our target of $1 billion in assets and a potential future IPO as well as to accelerate the expansion of our broader real estate platform under the Monomoy brand.

In August 25, we announced 2 additional strategic investments, providing a significant new growth capital to expand our assets under management and improve profitability. At GEG, Woodstead Value Fund purchased 4 million newly issued shares of GEG common stock at $2.25 per share, raising $9 million in equity capital. Alongside the investment, Booker Smith, a seasoned credit and real estate investor, joined the Great Elm Board to support our core verticals. Great Elm also issued Woodstead 10-year warrants for an additional 1 million shares of GEG common stock struck at $3.50 and 1 million shares of GEG common stock struck at $5.

These warrants serve to further align Woodstead with GEG's shareholders. In a separate transaction, GECC sold 9.9% of its outstanding common stock or 1.3 million newly issued shares at $11.65 per share to an affiliate of Booker Smith. This issuance provides GECC with $15 million of equity capital to be levered to pursue attractive investment opportunities. The fresh capital investments from Woodstead and Booker Smith not only strengthen our balance sheet but also position us to scale our credit and real estate platforms. The addition of Booker Smith as a GEG Director further deepens the experience and strategic relationships of our Board.

In summary, fiscal '25 was transformative. We delivered record financial results, scaled both our credit and real estate platforms and further strengthened our balance sheet. We also launched Monomoy Construction Services and forged strategic partnerships that position us for continued growth. We enter fiscal '26 with strong momentum, a solid balance sheet and confidence in our ability to deliver sustained long-term value to our shareholders. With that, I'll turn it over to Keri.

Thank you, Jason. I will provide a brief overview of the quarter and of course, welcome all of you to review our filings in greater detail or reach out to our team with any questions. Fiscal fourth quarter revenue was $5.6 million compared to $8.9 million for the prior year period. Revenue in the prior year period benefited from Monomoy BTS' first build-to-suit property sale, which generated approximately $6.6 million. Excluding this sale, revenue growth over the prior year period was over 140% or $3.3 million, primarily driven by record management incentive fees paid by GECC and revenue contributed from MCS launched in February of this year.

AUM and fee-paying AUM totaled approximately $759 million and $553 million, up 4% and 5%, respectively, from the prior year quarter end. Great Elm Group generated net income from continuing operations of $15.7 million for the quarter as compared to net loss from continuing operations of $0.6 million for the prior year period. The increase in net income was primarily driven by the unrealized gains on GEG's CoreWeave-related investment that Jason previously reviewed as well as strong GECC investment performance. Adjusted EBITDA for the quarter was $1.5 million compared to $1.2 million in the prior year period.

As of June 30, we had approximately $31 million of cash on our balance sheet to deploy across our growing alternative asset management platform. Please refer to Slide 6 that provides an overview of our financial position and highlights our book value per share of approximately $2.65, more than a 24% increase from March 31, 2025. As Jason mentioned previously, incorporating the 2 share issuances in July and August, book value per share as of June 30 is $2.58 per share and cash exceeds $40 million on a pro forma basis. This concludes my financial review of the quarter. With that, we will turn the call over to the operator to open for questions.

[Operator Instructions] Mr. Reese, there are no questions at this time. I'll turn the floor back to you for any final comments.

Thank you again for joining us today. Fiscal '25 was a landmark year for Great Elm with continued growth across all facets of our businesses, and we have positioned the company to drive growth in fiscal '26 and beyond. We look forward to keeping you updated on our progress. Thank you for your time and continued support.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.