Great Elm Group, Inc. 7.25% Notes due 2027

What they do

GEG operates as an alternative asset management company, managing primarily two investment vehicles: GECC, a publicly-traded business development company focused on credit, and Monomoy UpREIT, an industrial outdoor storage real estate investment trust. Its wholly-owned subsidiaries GECM and MCRE earn management, property management, incentive, and administration fees based on assets under management, rent collected, and investment performance. The company also engages in build-to-suit real estate development through Monomoy BTS Corporation, and it recently formed Monomoy Construction Services after acquiring assets from Greenfield CRE. As of March 31, 2026, total AUM was approximately $744 million.

Revenue drivers

• Management fees from GECC (Alternative Credit segment) — GEG owns ~12.4% of GECC and earns management and incentive fees from managing this BDC. Quarterly revenue growth was driven by fee income, though incentive fees declined compared to the prior-year quarter.
• Management and property fees from Monomoy UpREIT (Real Estate segment) — Monomoy UpREIT is an IOS-focused REIT; GEG earns property management and development fees. The real estate segment is expanding with acquisitions and build-to-suit projects, and MBTS began development of a fourth build-to-suit property.
• Build-to-suit development and construction services — MBTS acquires land, constructs build-to-suit improvements, and sells developed properties with leases. It sold one development in June 2024, the lease for another commenced in December 2024, and MCS provides construction services to third parties.
• Other investments and capital deployment — Income from investments such as a CoreWeave-related investment (distributions exceeding initial investment) and potential dividends from GECC shares add to revenue, though these are not recurring fee-based revenue.

Recent performance

For the fiscal third quarter ended March 31, 2026, GEG reported total revenue of $3.4 million, up 7% from $3.2 million a year earlier. Net loss widened to $13.5 million from $4.5 million, driven primarily by a $9.8 million unrealized loss on investments in GECC common stock and SPVs. For the nine months ended March 31, 2026, revenue was $17.2 million (up 61% year-over-year) and net loss was $38.0 million. Adjusted EBITDA for the quarter was negative $1.6 million versus positive $0.5 million in the prior-year period. Cash and equivalents totaled $45.5 million as of March 31, 2026.

Strategy

GEG aims to grow its alternative asset management platform by expanding its credit and real estate businesses, with a focus on building AUM and fee-related earnings. In real estate, Monomoy continues its acquisition and development pipeline, and the company is exploring additional capital raising opportunities. Management is actively repurchasing stock, repurchasing 1.4 million shares in the quarter (over 4% of shares outstanding) and increasing its repurchase authorization to $40 million. They also seek to deploy cash into attractive investments, such as the CoreWeave-related position and secured credit opportunities within GECC.

Risks

• GECC share price volatility — A $9.8 million unrealized loss in the quarter was driven primarily by declines in GECC's share price, directly impacting GEG's net income and investment value.
• Private credit market sentiment — Management cited 'volatility and market negativity towards private credit' as a headwind for the quarter, which could persist.
• Concentration in GECC ownership — GEG owns ~12.4% of GECC, and its performance is heavily tied to that single BDC, including its dividend and liquidity position.
• Limited scale and competition — GEG competes with larger, well-financed global asset managers, which could limit its ability to grow AUM and attract capital.

Outlook

Management expects continued market volatility impacting GECC's share price but believes GECC has ample liquidity and is positioned for improved long-term performance. In real estate, Monomoy closed five acquisitions in the quarter, surpassing all of calendar 2025, and is actively pursuing additional capital raising opportunities. The company continues to source unique investments through its proprietary network, and remains focused on deploying capital selectively and growing AUM and fee-related earnings. With $25 million remaining under its repurchase program, GEG plans to continue repurchasing shares.