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Item 1A. Risk Factors

2026-02-27 compared with 2025-02-21 · 158 added, 130 removed, 521 unchanged (36% of the section changed)

The commercial real estate markets have experienced a prolonged dislocation due to inflation and high interest rates, which has resulted in decreased real estate values, increased delinquencies and defaults, and a disruption in the capital markets.

This environment has had a material adverse effect on our business, results of operations, financial condition, and liquidity.

If this environment persists, it is likely we will continue to experience an adverse impact on our business.

The risks associated with these types of markets, and other risks related to our business, are described below.

The risk factors listed below should not be considered an all-inclusive list.

New risk factors emerge periodically, and we cannot guarantee that the factors described below list all risks that may become material to us at any later time.

Some of the risk factors discussed below may have different impacts on our Structured and Agency Businesses.

The commercial real estate markets have experienced a prolonged dislocation driven by inflation and high interest rates, which has persisted longer than anticipated.

The elevated and unpredictable interest rate environment has resulted in, and may continue to result in, decreased real estate values, increased delinquencies and defaults, and a disruption in the capital markets.

This environment has had a material adverse effect on our business, results of operations, financial condition, and liquidity through increases in nonperforming loans, loan modifications, credit loss reserves and foreclosures.

If this environment persists, we are likely to continue experiencing adverse effects on our business.

The risks associated with these types of markets, along with other risks related to our business, are described below.

The risk factors presented should not be considered an all-inclusive list.

New risks emerge periodically, and we cannot guarantee that the factors described below list all risks that may become material to us in the future.

Certain risk factors may also affect our Structured and Agency Businesses differently.

Additionally, you should review “Current Market Conditions, Risks and Recent Trends” located in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the current adverse market conditions that we are currently experiencing, and may continue to experience in the future, that are having an adverse impact on our business.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussions of the adverse market conditions we are currently experiencing, and may continue to experience in the future, that are having an adverse impact on our business.

Risk Factor Summary

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An economic slowdown, a lengthy or severe recession, declining real estate values, or changes in short and/or long-term interest rates could harm our operations, affect our ability to obtain financing on reasonable terms and have other adverse effects on us.

If economic conditions deteriorate and/or we experience a turbulent economic environment, we will likely:

If economic conditions deteriorate, interest rates remain elevated and/or we experience a turbulent economic environment, we will likely:

(1) experience increases in loan loss reserves and other impairments;

(2) encounter difficulty estimating loan loss reserves;

and (3) experience an increase in loan delinquencies and loan modifications.

(3) experience increases in loan delinquencies, loan modifications and nonperforming loans and foreclosures;

(4) experience increased costs and risks associated with operating, managing and disposing of real estate owned (“REO”) assets;

and (5) experience evolving climate-related, environmental and cybersecurity risks affecting us, our borrowers, collateral properties and key third-party service providers.

In addition, such conditions may continue to negatively affect our liquidity, operating results and credit performance and may negatively impact expected recoveries on modified loans, and modified loans may continue to underperform, potentially increasing nonperforming assets, REO, and credit loss provisions.

Our growing SFR and construction/build‑to‑rent (“BTR”) lending exposes us to higher credit, development and concentration risks than stabilized multifamily loans.

Cost overruns, delays, permitting and contractor issues, and weaker lease-up or operating performance could increase delinquencies, defaults, modifications and foreclosures.

If we are unable to invest excess capital on acceptable terms, or at all, it would likely result in a declining portfolio and would adversely affect the returns from our investments and our operating results.

Our ability to accurately estimate current expected credit loss ("CECL") allowances is increasingly complex due to market volatility, commercial real estate prices and the impact of interest rates, and our actual credit losses may differ materially from estimates.

The real estate investment business is highly competitive, and our success depends on our ability to compete, including attracting and retaining qualified loan originators to grow and maintain our relationships with key customers and with the GSEs, U.S.

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Our business is subject to risk of loss in connection with defaults on loans, failed loan deliveries to GSEs and potential requirements to repurchase loans already sold to GSEs or other issuers of securitizations for a breach of representations or warranties.

We are subject to risks of fraud, misrepresentation and other misconduct by borrowers, brokers, guarantors and other third parties, which could increase delinquencies, defaults, restructurings and foreclosures, reduce recoveries on collateral and result in increased costs, repurchase or indemnification obligations, litigation and reputational harm.

Certain investments we make, including preferred equity and mezzanine

loans, involve a greater risk of loss than traditional mortgage financing and may result in reduced recoveries in the event of borrower distress, bankruptcy or other defaults.

If we fail to act proactively with delinquent borrowers in an effort to avoid defaults, the number of delinquent loans could increase, which could have a material adverse effect on our business.

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Any declines in the value of our servicing portfolio, including agreement terminations from breaches of servicing agreements, or a reduction in the fees paid for servicing the loans could have a material adverse effect on our results of operations and liquidity.

For most loans we service under the Fannie Mae and HUD programs, we are required to advance payments due to investors if the borrower is delinquent in making such payments, which requirement could adversely impact our liquidity and harm our results of operations.

Increased loss-sharing obligations under the Fannie Mae DUS program, or changes to required collateral levels, could further adversely affect our liquidity and results of operations.

For most loans we service under the Fannie Mae and HUD programs, we are required to advance payments due to investors if the borrower is delinquent in making such payments, which may adversely impact our liquidity and harm our results of operations.

Risks Related to Our Financing and Hedging Activities.

We finance a significant amount of our loans and investments through a variety of means, including CLOs, securitizations, credit facilities, equity capital, senior and convertible debt instruments, and other structured financings.

These vehicles may contain restrictive covenants and may require us to provide additional collateral or repurchase assets if the value of pledged assets, some of which we guarantee, decline in value.

If we are unable to acquire eligible investments, find

suitable replacement investments and access financing sources on favorable terms, or at all, we may not be able to obtain the level of leverage necessary to optimize our return on investment and cash available for distribution to our stockholders may decline.

These vehicles may contain restrictive covenants and may require us to provide additional collateral or repurchase assets if the value of pledged assets decline in value.

If we are unable to acquire eligible investments, find suitable replacement investments and access financing sources on favorable terms, or at all, we may not be able to obtain the level of leverage necessary to optimize our return on investment and cash available for distribution to our stockholders may decline.

In certain circumstances, we employ hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads), including treasury futures, interest rate and credit default swaps, caps, floors and other derivative products.

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With cyber threats increasing in frequency and severity, potential breaches pose a significant threat to our operations, potentially leading to reputational damage, financial losses, and legal repercussions.

Our ability to monitor and influence the cybersecurity practices of third-party providers is limited, and while we seek to influence their practices through cybersecurity requirements and protocols in our contracts with such third-party providers, their security measures may not be sufficient to prevent or mitigate incidents, increasing operational risk.

Newly adopted regulatory disclosure requirements may subject us to additional liability in the event of a cybersecurity incident.

Risks Related to Our Corporate and Ownership Structure.

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Risks Related to Our Status as a REIT.

We conduct our operations to qualify as a REIT under the Internal Revenue Code.

If we fail to remain qualified as a REIT, we will be subject to corporate tax and could face a substantial tax liability, including taxable mortgage pools resulting from certain of our securitizations.

Even if we remain qualified as a REIT, we may face other tax liabilities, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes, all of which could reduce our cash flow and our distributions to stockholders.

We conduct a substantial portion of our operations to qualify as a REIT under the Internal Revenue Code.

If we fail to remain qualified as a REIT, a greater proportion of our income will be subject to corporate tax and we could face a substantial increase in our tax liability, including taxable mortgage pools resulting from certain of our securitizations.

flow and our distributions to stockholders.

Complying with REIT requirements may cause us to forego or liquidate otherwise attractive opportunities and investments.

The Agency Business may have adverse tax consequences to our business if its value, or the income generated thereby, increases relative to the value of our other REIT-compliant assets and income, which could cause us to fail to satisfy one or more of the Internal Revenue Code requirements applicable to REITs.

We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay dividends to our stockholders, resulting in the need to borrow funds to satisfy our REIT distribution requirements, which could cause a portion of our distributions to be treated as a return of capital.

We may be unable to generate sufficient cash flow from operations to pay our operating expenses and to pay dividends to our stockholders, resulting in the need to borrow funds to satisfy our REIT distribution requirements, which could cause a portion of our distributions to be treated as a return of capital.

General Risks.

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(9) changes to laws and regulations, including environmental, social and governance matters;

and (10) the effective development of artificial intelligence ("AI").

and (10) the impact of the continuing development of artificial intelligence ("AI").

Risks Related to Our Business

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Declining real estate values limit our new mortgage loan originations, since borrowers often use increases in the value of their properties to support the purchase of additional properties and significantly increase the likelihood that we will incur losses on defaulted loans because the value of our collateral may be insufficient to repay the loan in full.

Borrowers may also be less able

to pay principal and interest on our loans if the economy weakens.

Borrowers may also be less able to pay principal and interest on our loans if the economy weakens.

Any sustained period of increased payment delinquencies, foreclosures and resulting losses could adversely affect our net interest income as well as our ability to originate, sell and securitize loans, which could significantly harm our results of operations, financial condition, business and our ability to make distributions to stockholders.

Prolonged disruptions in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our common stock.

A prolonged disruption in the financial markets could affect our ability to obtain financing on reasonable terms and have other adverse effects on us and the market price of our common stock.

Commercial real estate can be adversely affected by a lack of liquidity caused by a prolonged economic downturn, which may limit our ability to raise equity or debt in the capital markets or obtain financing on favorable terms, if at all.

If we do issue equity, it may be dilutive to our existing stockholders or could result in the issuance of securities that have rights, preferences and privileges that are senior to those of our existing securities.

If we issue equity, it may be dilutive to our existing stockholders or could result in the issuance of securities that have rights, preferences and privileges that are senior to those of our existing securities.

If economic or market conditions deteriorate, lending institutions may choose to exit markets such as repurchase lending, become insolvent, further tighten their lending standards or increase the amount of equity capital required to obtain financing, and such events could make it more difficult for us to obtain financing on favorable terms or at all, in which event our profitability will be adversely affected.

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Allowance for credit losses are particularly difficult to estimate in a turbulent economic environment.

We estimate allowances for credit losses on our loans and investments under the current expected credit loss (“CECL”) methodology based on current expected credit losses for the life of the loan and investment.

We estimate allowances for credit losses on our loans and investments under the CECL methodology based on current expected credit losses for the life of the loan and investment.

This process utilizes information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future and requires certain estimates and judgments, which are more difficult to make during a period in which available commercial real estate credit is limited and commercial real estate transactions have decreased.

Our estimates and judgments are based on several factors, including projected cash flows from the collateral securing our loans, debt structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at loan maturity, potential for refinancing by other lenders and expected market discount rates for varying property types.

Our CECL methodology may not fully capture the severity or duration of adverse economic conditions and actual losses could exceed our allowance, particularly if commercial real estate values decline further, interest rates remain elevated, or our borrowers’ business plans fail to stabilize underlying properties.

If our estimates and judgments are not correct, our results of operations and financial condition could be severely impacted.

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Our financial performance is significantly influenced by movements in both short-term and long-term interest rates.

Since the vast majority of our structured loan portfolio is floating rate based on SOFR and a greater portion of our debt balances consist of fixed-rate instruments (such as convertible and senior unsecured notes), a rising interest rate environment generally has a positive impact on our net

interest income from our structured loan portfolio.

Since the vast majority of our structured loan portfolio is floating rate based on the Secured Overnight Financing Rate ("SOFR") and a significant portion of our debt balances consist of fixed-rate instruments (such as convertible and senior unsecured notes), a rising interest rate environment generally has a positive impact on our net interest income from our structured loan portfolio.

Furthermore, our earnings on escrows and cash balances also benefit from an elevated short-term rate environment.

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(2) increased loan modifications and foreclosures;

(3) an increase in real estate owned ("REO") assets;

(3) an increase in REO assets;

(4) declining real estate values of certain asset classes;

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Conversely, a high long-term interest rate environment would likely have an adverse impact on our fixed rate GSE/Agency business, as it will likely increase delinquencies and make it more costly for borrowers to refinance their balance sheet loans with fixed rate agency product.

Our increasing use of loan modifications for borrowers experiencing financial difficulty could adversely affect our operating results, financial condition, liquidity and our ability to achieve expected recoveries.

In recent periods, we have increasingly addressed borrower stress through loan modifications, including payment deferrals, term extensions, interest‑rate reductions and other concessions.

While these modifications may improve our ultimate recovery and avoid immediate foreclosure, they can also reduce our current interest income, delay the timing of expected repayments and increase the complexity of estimating credit losses.

There is no assurance that our borrowers will perform under modified loans or that we will achieve the recoveries we anticipate.

If economic and market conditions worsen, the performance of modified loans could deteriorate further, which would likely increase our level of non‑performing loans, REO and credit‑loss provisions and could adversely affect our results of operations, liquidity and financial condition.

We are increasingly exposed to risks associated with owning and operating real estate acquired through foreclosure, which could subject us to losses and liabilities in excess of those associated with our loans.

When a loan defaults, we may seek to protect our investment by foreclosing and operating it as REO until it can be sold or otherwise resolved.

In recent periods, we have acquired a growing number of properties as REO, and our REO balance has increased.

Owning and operating REO subjects us to many of the risks associated with direct real estate ownership, including, among others, risks related to leasing, property management, insurance, real estate taxes, utilities and other operating costs, capital expenditures, environmental liabilities, zoning and other regulatory compliance, casualty events and litigation.

We may not be able to sell REO assets at prices or within time frames that are attractive to us, particularly in markets or property types that are experiencing declining values or weak demand.

In addition, REO properties may require significant additional investment to stabilize operations or comply with regulatory requirements, which may not be fully recoverable.

While we may obtain mortgage financing secured by REO properties, we may also choose or be required to fund operating deficits, capital expenditures or debt service

shortfalls from our own capital.

Any failure to effectively manage, finance and dispose of REO assets could result in losses that are greater than those we would have incurred had we not foreclosed.

Our growing single‑family rental BTR and construction lending activities expose us to higher credit, development and concentration risks that could increase losses and volatility of earnings.

A growing portion of our Structured Business consists of loans secured by SFR and construction or BTR properties.

These loans generally involve greater risk than loans on stabilized multifamily properties because repayment often depends on successful completion, lease‑up and ongoing performance of the underlying projects, as well as the financial strength and execution capability of the sponsors.

Construction and BTR loans are particularly sensitive to cost overruns, delays, entitlement and permitting risks, contractor performance, and changes in labor, materials and insurance costs.

If interest reserves or borrower equity are insufficient to absorb these pressures, or if rent growth or occupancy is weaker than expected, borrowers may be unable to service or refinance their loans, leading to increased delinquencies, defaults, loan modifications, extensions and foreclosures.

In addition, our SFR and construction lending may result in greater geographic or sponsor concentration and may be disproportionately affected by local economic conditions, housing supply‑demand imbalances, regulatory and zoning changes, and shifts in homeownership or rental demand.

Deterioration in the performance or valuations of these assets, or in the ability to finance or securitize them on acceptable terms, could require us to increase our allowances for credit losses, recognize charge‑offs, or take title to additional SFR or development assets as REO, which may require active property‑level management and additional capital expenditures.

Any of these events could increase the volatility of our results of operations and liquidity and could adversely affect our business, financial condition and ability to make distributions to our stockholders.

We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key customers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.

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There can be no assurance that our due diligence process will uncover all relevant facts or that any investment will be successful.

Preferred equity investments involve a greater risk of loss than traditional mortgage financing.

In our Structured Business, we may invest in preferred equity investments, which involve a higher degree of risk than traditional mortgage financing.

Such investments are usually subordinate to other loans and are not secured by the property underlying the investment.

Should the issuer default on our investment, we can only proceed against the entity in which we have an interest, and not the underlying property.

As a result, we may not recover some or all of our investment.

We invest in mezzanine loans which are subject to a greater risk of loss than loans secured by a first priority mortgage lien.

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As a result, we may not recover some or all of our investment.

In addition, mezzanine loans

may have higher loan to value ratios than mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.

In addition, mezzanine loans may have higher loan to value ratios than mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.

Preferred equity investments involve a greater risk of loss than traditional mortgage financing.

In our Structured Business, we invest in preferred equity investments, which involve a higher degree of risk than traditional mortgage financing.

Such investments are usually subordinate to other loans and are not secured by the property underlying the investment.

Should the issuer default on our investment, we can only proceed against the entity in which we have an interest, and not the underlying property.

As a result, we may not recover some or all of our investment.

Volatility in values of multifamily and commercial properties may adversely affect our loans and investments.

Multifamily and commercial property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including fires and other casualties, natural disasters, acts of war and/or terrorism, adverse economic conditions, local real estate conditions (such as an oversupply of similar properties), changes or continued weakness in specific industry segments, construction quality, construction cost, age and design, demographic factors, retroactive changes to building or similar codes, increases in operating expenses (such as insurance, energy costs and real estate tax increases) and other factors that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investment.

Multifamily and commercial property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including fires and other casualties, natural disasters, acts of war and/or terrorism, adverse economic conditions, adoption of, or changes in, rent control or rent stabilization laws, local real estate conditions (such as an oversupply of similar properties), changes or continued weakness in specific industry segments, construction quality, construction cost, age and design, demographic factors, retroactive changes to building or similar codes, increases in operating expenses (such as insurance, energy costs and real estate tax increases) and other factors that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investment.

In the event a property’s net operating income decreases, a borrower may have difficulty repaying our loan, which could result in losses to us.

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Under the full risk-sharing formula, we absorb the first 5% of any losses on the UPB of a loan at the time of loss settlement, and above 5% we share the loss with Fannie Mae, with our maximum loss capped at 20% of the original UPB of a loan.

Our Agency Business has modified its risk-sharing obligations on some Fannie Mae DUS loans to reduce potential loss exposure on those loans.

In addition, Fannie Mae can increase our risk-sharing obligations if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae.

Our Agency Business has modified its risk-sharing obligations on some Fannie Mae DUS loans to reduce potential loss exposure on those loans, which, in turn, results in a lower servicing fee.

In addition, Fannie Mae can increase our risk-sharing obligations or require us to repurchase loans if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae.

At December 31, 2025, the Agency Business had pledged $100.9 million in restricted liquidity as collateral against future losses under $24.09 billion of loans outstanding that are subject to risk-sharing obligations.

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Our Agency Business could also be subject to a loss of its contractual servicing fee, and for its loss sharing obligations to Fannie Mae.

These events could have a negative impact on our cash flows and on the net carrying value of the MSRs on our balance sheet and could result in a reduction to our earnings.

These events could have a negative impact on our cash flows and on the

net carrying value of the MSRs on our balance sheet and could result in a reduction to our earnings.

As a result of the foregoing, a rise in delinquencies could have a material adverse effect on our Agency Business.

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Our Agency Business sells loans directly to Freddie Mac who may choose to hold, sell or later securitize such loans.

We believe terms set by Freddie Mac are influenced by similar market factors as those that impact the price of Fannie Mae insured or Ginnie Mae

securities, although the pricing process differs.

We believe terms set by Freddie Mac are influenced by similar market factors as those that impact the price of Fannie Mae insured or Ginnie Mae securities, although the pricing process differs.

With respect to loans that are placed with institutional investors, the origination fees that we receive from borrowers are determined through negotiations, competition and other market conditions.

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We must make certain representations and warranties concerning each loan we originate for the GSE or HUD programs.

The representations and warranties relate to our practices in the origination and servicing of the loans and the accuracy of the information being provided by us.

The representations and warranties relate to our practices in the origination, underwriting and servicing of the loans and the accuracy of the information being provided by us.

For example, we are generally required to provide the following, among other, representations and warranties:

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and we do not know of any issues regarding the loan that are reasonably expected to cause the loan to be delinquent or unacceptable for investment or adversely affect its value.

In the event of a breach of any representation or warranty, investors could, among other things, require us to repurchase the loan or seek indemnification for losses or, in the case of Fannie Mae, increase the level of risk-sharing on the loan.

In the event of a breach of any representation or warranty, whether because of fraud or negligence, investors could, among other things, require us to repurchase the loan or seek indemnification for losses or, in the case of Fannie Mae, increase the level of risk-sharing on the loan.

Our obligation to repurchase the loan is independent of our risk-sharing obligations.

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Any significant repurchase or indemnification obligations imposed on us could have a material adverse effect on the Agency Business.

We are subject to risks of fraud, misrepresentation and other misconduct by borrowers, brokers, guarantors and other third parties, which could result in credit losses and litigation and may not be fully covered by contractual remedies or insurance.

Our lending and investment activities expose us to the risk that borrowers, brokers, guarantors and other third parties may engage in fraud, intentional misrepresentation, collusion or other misconduct.

Such conduct may include, among other things;

(1) providing inaccurate or falsified financial statements, rent rolls, leases, draw requests, budgets or project status reports;

(2) misrepresenting the condition, occupancy or value of collateral;

(3) diverting construction proceeds;

(4) submitting forged or altered documents;

or (5) engaging in undisclosed conflicts of interest or kickback arrangements.

If fraud or other misconduct occurs, we may experience delays in detecting problems, increased delinquencies, defaults, restructurings and foreclosures, reduced recoveries on collateral and higher costs to service or resolve affected loans.

We may also incur expenses and management time associated with investigations, workout activities and litigation or other proceedings, and we could suffer reputational harm.

Although we may have recourse, such parties may be unable to satisfy judgments or indemnification obligations, and our recoveries, if any, may not be sufficient to fully compensate us for losses and related costs.

In addition, in certain circumstances (including in connection with loans sold or securitized), fraud or other misconduct may trigger repurchase, indemnification or other obligations that could require us to take back loans and hold them on our balance sheet.

If we are required to repurchase or otherwise reacquire a loan that is impaired, non-performing or otherwise viewed as ineligible collateral, we may be unable to finance it through our existing facilities or securitizations or may only be able to do so on unfavorable terms, which could increase costs, reduce liquidity and result in additional credit loss provisions or write-downs.

As a result, any significant fraud or misconduct involving our counterparties could materially and adversely affect our business, results of operations, financial condition and liquidity.

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We finance our Structured Business loans and investments through a variety of means, including CLOs, securitizations, credit facilities, equity capital, and senior and convertible debt instruments.

We finance our Agency Business loan originations, prior to sale to, or securitization by, an agency, through credit facilities provided by commercial banks.

We finance our Agency Business loan originations, prior to sale to, or securitization by, an agency, through credit facilities provided by commercial banks, as well as the As Soon as Pooled ® Plus ("ASAP") agreement we have with Fannie Mae.

Our access to these sources of funding can be impacted by conditions in the financing markets that are beyond our control, including lack of liquidity and wider credit spreads, which we have experienced in the past.

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Further, lenders may require us to maintain a certain amount of uninvested cash or set aside unlevered assets sufficient to maintain a specified liquidity position.

As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets.

As a result, we may not be able to leverage our assets as effectively as we would choose, which could reduce our return on assets.

In the event that we are unable to meet these collateral obligations, our financial condition could deteriorate rapidly.

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Failure to obtain favorable terms with regard to these matters may adversely affect our cash flow and profitability.

We may not be able to find suitable replacement investments during CLO reinvestment periods.

CLOs have defined periods during which principal payments on assets held in the CLO can be reinvested, commonly referred to as a reinvestment period.

Our ability to find investments during the reinvestment period that meet the criteria set forth in the CLO governing documents may determine the success of our CLOs.

Our potential inability to find suitable investments may cause, among other things, lower returns, interest deficiencies, hyper-amortization of the senior CLO liabilities and may cause us to reduce the life of the CLO and accelerate the amortization of certain fees and expenses.

We may be required to repurchase loans that we have sold or to indemnify holders of our CLOs.

If any of the loans we originate or acquire and sell or securitize through CLOs do not comply with representations and warranties we make about the loans, the borrowers and the underlying properties, we may be required to repurchase those loans, replace them with substitute loans or indemnify persons for losses or expenses incurred as a result of a breach of a representation or warranty.

Repurchased loans typically require a significant allocation of working capital to carry on our books, and our ability to borrow against such assets is limited.

Repurchased loans typically require a significant allocation of working capital to carry on our books, and our ability to borrow against such assets may be limited.

Any significant repurchases or indemnification payments could adversely affect our financial condition and operating results.

Our results of operations and cash flows could be adversely affected if the reinvestment period of our CLOs expire without available capacity in existing CLOs, or the issuance of new CLOs.

CLO reinvestment periods provide us with the flexibility to manage our structured loan portfolio effectively as we are able to replace loans that have matured or paid off with newly originated loans and existing loans in our portfolio.

If our CLO reinvestment periods end without availability in other existing CLOs, or the establishment of new CLOs, we may face liquidity constraints, reduced investment opportunities, higher borrowing costs, and limited cash available for distribution to our stockholders .

Our results of operations, cash flows and liquidity could be adversely affected if we are unable to reinvest CLO collateral proceeds in eligible assets during reinvestment periods or if reinvestment periods expire without capacity in existing CLOs or access to new CLO issuance on acceptable terms.

Our CLOs have defined periods during which principal payments and other collections on assets held in the CLO may be reinvested in new eligible collateral, commonly referred to as a reinvestment period.

Our ability to identify and acquire or originate investments during these reinvestment periods that satisfy the eligibility criteria, concentration limits and other requirements set forth in the applicable CLO governing documents is an important determinant of the performance of our CLOs and our ability to manage our structured loan portfolio.

If we are unable to find sufficient suitable investments, or if market conditions, underwriting standards, asset supply or CLO eligibility constraints limit our reinvestment opportunities, our CLOs may experience lower returns, interest shortfalls or interest deficiencies, reduced excess cash flow and, in certain circumstances, accelerated amortization or “hyper-amortization” of senior CLO liabilities.

In addition, our inability to reinvest collateral proceeds may shorten the effective life of a CLO and may require us to accelerate the amortization or recognition of certain fees and expenses.

Furthermore, if reinvestment periods expire and we do not have capacity in other existing CLOs or are unable to establish or issue new CLOs on acceptable terms, we may be required to hold additional assets outside of CLO structures or finance them through alternative facilities, which may be more expensive or less available.

This could result in liquidity constraints, reduced investment

flexibility, higher borrowing costs and less cash available for distribution to our stockholders, any of which could materially and adversely affect our results of operations, cash flows and financial condition.

Through our Private Label platform we engage in securitization transactions relating to real estate mortgage loans that expose us to potential material risks.

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The securitization market is subject to an evolving regulatory environment that may affect certain aspects of these activities.

As a result of past dislocation of the credit markets, the securitization market has become subject to additional regulation.

As a result of past dislocation of the credit markets, the securitization market is subject to regulation.

In particular, pursuant to the Dodd-Frank Act, various federal agencies have promulgated rules that require issuers in securitizations to retain at least 5% of the risk associated with the securities.

To the extent we utilize the securitization market and retain this risk of loss through subordinate interests or B Piece bonds in our securitized debt transactions, this could reduce our returns on these transactions.

To the extent we utilize the securitization market and retain this risk of loss through subordinate interests or B Piece bonds in our securitized debt transactions, we are exposed to losses earlier and to a greater extent than holders of more senior interests, which could reduce our returns on these transactions.

Our loans and investments may be subject to fluctuations in interest rates which may not be adequately protected, or protected at all, by our hedging strategies.

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However, depending on market conditions, fixed rate assets may become a greater portion of our new loan originations.

We may employ hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads),

including treasury futures, interest rate and credit default swaps, caps, floors and other derivative products, however, no strategy can completely insulate us from the risks associated with interest rate changes.

We may employ hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads), including treasury futures, interest rate and credit default swaps, caps, floors and other derivative products, however, no strategy can completely insulate us from the risks associated with interest rate changes.

Hedging involves certain additional risks such as counterparty risk, the legal enforceability of hedging contracts, the early repayment of hedged transactions and the risk that unanticipated and significant changes in interest rates may cause a significant loss of basis in the contract and a change in current period expense.

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Default by our counterparty may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then current market price.

Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the counterparty, and we may not be able to enter into an offsetting contract to cover our risk.

Although generally we will seek to reserve

the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the counterparty, and we may not be able to enter into an offsetting contract to cover our risk.

We cannot assure that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.

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These economic losses will be reflected in our financial results of operations, and our ability to fund these obligations will depend on the liquidity of our assets and access to capital at the time, and the need to fund these obligations could adversely impact our financial condition.

Our investments financed in foreign locations may involve significant risks.

We have financed, and, if the opportunities exist in the future, we may continue to finance, certain investments outside of the U.S.

Financing investments in foreign locations may expose us to additional risks not typically inherent in the U.S.

These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets, the lack of available information, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

Transactions may be denominated in a foreign currency, which would subject us to the risk that the value of a particular currency may change in relation to the U.S.

We may employ hedging techniques to minimize such risk, but we can offer no assurance that we will, in fact, hedge currency risk or, that if we do, such strategies will be effective.

As a result, a change in currency exchange rates may adversely affect our profitability if future transactions outside the U.S.

are denominated in a foreign currency.

Risks Relating to Regulatory Matters

If our Agency Business fails to comply with the regulations and program requirements of the GSEs and HUD, we may lose our approved lender status with these entities and fail to gain additional approvals or licenses for our business.

We are also subject to changes in laws, regulations and existing GSE and HUD program requirements, including potential increases in reserve and risk retention requirements that could increase our costs and affect the way we conduct the Agency Business, which could materially and adversely affect our financial results.

Our Agency Business is subject to federal, state and local laws and regulations, and the regulations and policies of the GSEs and HUD.

These laws, regulations, rules and policies impose, among other things, minimum net worth, operational liquidity and collateral requirements.

Fannie Mae requires the Agency Business to maintain operational liquidity based on a formula that considers the balance of the loan and the level of credit loss exposure (level of risk sharing).

Fannie Mae also requires its DUS lenders to maintain collateral,

which may include pledged securities, for their risk-sharing obligations.

The amount of collateral required under the Fannie Mae DUS program is calculated at the loan level and is based on the balance of the loan, the level of risk-sharing, the seasoning of the loans and the rating of the Fannie Mae DUS lender.

Regulatory authorities also require the Agency Business to submit financial reports and to maintain a quality control plan for the underwriting, origination and servicing of loans.

The Agency Business is also subject to inspection by the GSEs, HUD, and regulatory authorities.

Any failure to comply with these requirements could lead to, among other things, the loss of a license as an approved GSE or HUD lender, the inability to gain additional approvals or licenses, the termination of contractual rights without compensation, demands for indemnification or loan repurchases, class action lawsuits and administrative enforcement actions.

If our Agency Business fails to comply with GSE and HUD program requirements, guidelines or oversight or is adversely affected by changes in applicable regulations or program standards, our costs could increase and our ability to conduct the Agency Business could be restricted, which could materially and adversely affect our results.

Our Agency Business is subject to the requirements, guidelines and oversight of the GSEs and HUD.

These requirements include, among other things, minimum net worth, operational liquidity and collateral standards and quality control, reporting and recordkeeping obligations, and our compliance is subject to review and inspection by the GSEs, HUD and other regulatory authorities.

These program requirements and regulations are subject to change and may impose additional capital, liquidity, reserve or collateral requirements, or otherwise increase the costs and operational burdens of originating, selling and servicing loans.

If we fail to satisfy, or are unable to continue to satisfy, these requirements, we could be subject to heightened supervisory scrutiny, remedial actions, operational restrictions, sanctions or other enforcement measures, any of which could limit our ability to conduct Agency Business and could materially and adversely affect our business and financial results.

Failure to maintain certain qualifications and licenses could adversely affect our results of operations.

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If we were required to register as an investment company, we would become subject to regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Act) and portfolio composition, including restrictions with respect to diversification and industry concentration and other matters.

One of our subsidiaries is required to register under the Investment Advisers Act, and is subject to regulation under that Act.

One of our subsidiaries is required to register, and is subject to regulation, under the Investment Advisers Act.

One of our subsidiaries is subject to the extensive regulation prescribed by the Investment Advisers Act of 1940 (the “Advisers Act”).

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Even if a sanction imposed against our subsidiary or its personnel involves a small monetary amount, the adverse publicity related to such sanction could harm our reputation and our relationship with our investors and impede our ability to raise additional capital.

In addition, compliance with the Advisers Act may require us to incur additional costs, and these costs may be material.

In addition, compliance with the Advisers Act requires us to incur additional costs, and these costs may be material.

The effects of government regulation could negatively impact the market value of loans.

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Several of the bills require the wind down or receivership of the GSEs within a specified period of enactment and place certain restrictions on the GSEs’ activities prior to being wound down or placed into receivership.

The Trump Administration has made recent comments indicating that housing finance reform may be on its agenda, however, it is unclear at this time what the Trump Administration’s views are with respect to the future of the GSEs.

The Trump Administration has made comments indicating that housing finance reform may be on its agenda, however, it is unclear at this time what the Trump Administration’s views are with respect to the future of the GSEs.

We expect Congress will continue to consider housing finance reform, including conducting hearings and considering legislation that could alter the housing finance system, including the activities or operations of the GSEs.

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Cybersecurity incidents and cyberattacks, which include malicious software, ransomware or terrorists attacks, unauthorized attempts to gain access to sensitive, confidential or otherwise protected information related to us and our customers, have been occurring globally at a more frequent and severe level and are expected to continue to increase in frequency and severity in the future.

In the course of our business, we gather, transmit and retain confidential information through our information systems.

Although we endeavor to protect confidential information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could penetrate our security systems and access sensitive information about our business, borrowers and employees.

Any misappropriation, loss or unauthorized disclosure of confidential information gathered, stored or used by us could have a material impact on the operation of our business, including damaging our reputation with our borrowers, employees, third parties and investors.

In addition, we could become subject to litigation from any cybersecurity breach.

We have not experienced any material misappropriation, loss or unauthorized disclosure of confidential or personally identifiable information as a result of a cybersecurity breach or other act, however, a cybersecurity breach or other act and/or disruption to our information technology systems could have a material adverse effect on our business, financial condition or results of operations.

In the course of our business, we gather, transmit and retain confidential information through our information systems and through the systems of various third-party vendors and service providers on whom we rely, including cloud-based technology providers, data processors, property managers, servicers and other counterparties.

Although we endeavor to protect confidential information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could penetrate our security systems or those of our third-party providers and access sensitive information about our business, borrowers and employees.

Any misappropriation, loss or unauthorized disclosure of confidential information gathered, stored or used by us or by our third-party providers could have a material impact on the operation of our business, including damaging our reputation with our borrowers, employees, third parties and investors.

We could also incur significant costs in implementing additional security measures and organizational changes, implementing additional protection technologies, training employees or engaging consultants and addressing disruptions to critical services, loan closings or servicing activities resulting from cybersecurity incidents involving third-party providers.

In addition, we could become subject to litigation from any cybersecurity breach or from disruptions caused by third-party cybersecurity incidents.

We have not experienced any material misappropriation, loss or unauthorized disclosure of confidential or personally identifiable information as a result of a cybersecurity breach or other act, however, a cybersecurity breach or other act and/or disruption to our information technology systems or to the information technology systems of our third-party providers could have a material adverse effect on our business, financial condition or results of operations.

Additionally, the regulatory and disclosure landscape related to cybersecurity continues to evolve.

Recently adopted rules require additional disclosures in our periodic reports about our cybersecurity risk management, strategy and governance and about material cybersecurity incidents.

Failure to maintain effective cybersecurity controls, to properly assess and manage cyber risks, or to timely detect, respond to and disclose cybersecurity incidents in accordance with applicable laws and regulations could subject us to regulatory investigations or enforcement actions, stockholder or other litigation, and reputational damage, any of which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Corporate and Ownership Structure

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Our Board of Directors is divided into three classes of directors.

The current terms of the Class I, Class II and Class III directors will expire in 2025, 2026 and 2027, respectively.

The current terms of the Class II, Class III and Class I directors will expire in 2026, 2027 and 2028, respectively.

Directors of each class are chosen for three-year terms upon the expiration of their current terms, and each year one class of directors is elected by the stockholders.

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In addition, although dividends payable by TRSs constitute qualifying income for purposes of the 95% REIT gross income test, they are non-qualifying income for purposes of the 75% REIT gross income test.

Accordingly, if the value of our Agency Business or the income generated thereby increases relative to the value of our other, REIT-compliant assets and income, we or ARSR may fail to satisfy one or more of the Internal Revenue Code requirements applicable to REITs.

applicable to REITs.

Although the Agency Business is not expected to adversely affect our ability, or that of ARSR, to continue to qualify as a REIT in the future, no assurances can be given in that regard.

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We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.

The present U.S.

federal income tax treatment of REITs and their stockholders may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S.

federal income tax treatment of an investment in our shares.

federal income tax rules, including those dealing with REITs, are constantly under review by persons involved in the legislative process, the Internal Revenue Service and the U.S.

Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations.

The Tax Cuts and Jobs Act enacted in 2017 made substantial changes to the Internal Revenue Code.

Among those changes for corporations, beginning in 2018, the corporate federal tax rate (which impacts our TRS) was reduced from 35% to 21%;

various deductions were eliminated or modified, including substantial limitations on the deductibility of interest;

and the deductions of net operating losses became subject to certain additional limitations.

Ordinary dividends paid by a REIT (including dividends that we pay that are not capital gain dividends or “qualified dividend income”) are generally eligible for a 20% deduction from the applicable marginal rate.

Therefore, the top marginal rate on such dividends is generally 29.6% (80% of the top marginal rate of 37%).

A portion of our dividends (including dividends received from our TRS) may be eligible for preferential rates as “qualified dividend income,” which has a top individual tax rate of 20% to U.S.

Congress has enacted, and may continue to enact, significant tax legislation that could affect REITs, their stockholders and our TRS.

The Tax Cuts and Jobs Act enacted in 2017 (the “TCJA”) made substantial changes to the Internal Revenue Code, including reducing the corporate federal income tax rate (which impacts our TRSs) from 35% to 21%, limiting the deductibility of business interest expense and net operating losses, and providing a deduction generally equal to 20% of ordinary REIT dividends (other than capital gain dividends or “qualified dividend income”), which reduced the top marginal federal income tax rate on such dividends for individual U.S.

stockholders.

In addition, certain U.S.

stockholders who are individuals, trusts or estates, and whose income exceeds certain thresholds, are required to pay a 3.8% medicare tax on our dividends and gain from the sale of our stock.

The Inflation Reduction Act of 2022 (“IRA”) enacted in August 2022 introduced various new provisions to the Internal Revenue Code.

Among those new provisions affecting corporations include the corporate book minimum tax and an excise tax on net stock repurchases effective January 1, 2023.

As REITs, we and our subsidiary, ARSR are exempt from these provisions.

While such provisions may be applicable to our TRSs, as of the date of this Annual Report, we do not expect the IRA to have a material impact on our consolidated financial statements.

The Trump Administration and certain members of the U.S.

Congress have stated that one of their top legislative priorities is significant reform of the Internal Revenue Code and other federal tax laws.

Among other things, the new administration and the U.S.

Congress may pursue tax policies seeking to alter the income tax rates and brackets applicable to individuals and corporations, exempt certain types of income from taxation, eliminate clean energy subsidies enacted by the Inflation Reduction Act of 2022, provide tax incentives for domestic production and impose significant new tariffs on foreign goods.

Both the timing and the details of any such tax reform are unclear.

The impact of any potential tax reform on us and our investments is uncertain and could be adverse.

A portion of our dividends (including dividends attributable to our TRSs) may also qualify as “qualified dividend income,” which is currently subject to preferential tax rates, and certain U.S.

stockholders may be subject to an additional 3.8% Medicare tax on dividends and gains from the sale of our common stock.

Subsequent legislation has introduced additional complexity and uncertainty.

The Inflation Reduction Act of 2022 (the “IRA”) added, among other provisions, a corporate alternative minimum tax based on book income and an excise tax on certain stock repurchases, effective beginning in 2023.

In addition, the American Rescue Plan Act of 2021 (the “ARPA”) expanded the scope of Section 162(m) of the Internal Revenue Code to include five additional covered employees, with such expansion scheduled to take effect beginning in 2027.

Although these limitations were not applicable to us in prior periods, changes to the definition of a controlled group under the One Big Beautiful Bill Act enacted in July 2025 (the “OBBBA”) will subject both the REIT and our TRSs to the compensation deduction limitations under Section 162(m) of the Internal Revenue Code, including the expanded group of covered employees.

As a result, these provisions could increase our effective tax rate and adversely affect the overall tax efficiency of our corporate structure.

The OBBBA also permanently extended certain provisions of the TCJA, modified and reinstated favorable tax treatment for certain business-related items, and imposed new limitations and conditions on various tax deductions, with key provisions becoming effective beginning in 2026.

Future legislative, regulatory or administrative changes, including amendments to or reinterpretations of the TCJA, IRA, ARPA, OBBBA and Section 162(m), or other tax laws, could alter the tax treatment of REITs, our TRSs or our stockholders.

Any such changes could increase our tax liability, reduce cash available for distribution, adversely affect the after-tax return to our stockholders, or otherwise negatively impact our business, financial condition, results of operations and the market price of our common stock.

General Risks

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The market value of our stock is based primarily on the market’s perception of our growth potential and our current and future earnings and dividends.

Consequently, our common stock may trade at prices that are higher or lower than our book value per share of common stock.

Consequently, our common stock may trade at prices that are higher or lower than our book value per share of

common stock.

If our future earnings or dividends are less than expected, it is likely that the market price of our common stock will diminish.

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and global economies.

For example, the COVID-19 pandemic, resulted in travel bans, quarantines, layoffs and shutdowns, causing negative long-term macroeconomic effects on inflation, interest rates, capital markets, labor shortages, property values and global supply chains, which had

an adverse impact on our business, results of operations and financial condition.

For example, the COVID-19 pandemic resulted in travel bans, quarantines, layoffs and business shutdowns, causing negative long-term macroeconomic effects on inflation, interest rates, capital markets, labor shortages, property values and global supply chains, which had an adverse impact on our business, results of operations and financial condition.

Depending on the severity and duration, any such major public health crisis, including any consequential adverse macroeconomic effects, has caused, and may in the future, cause the following:

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Unfavorable global economic and political conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy, the global financial markets and the global political conditions.

Such conditions could include political unrest, war, such as the ongoing war with Russia and Ukraine or the ongoing war and tensions in the Middle East, natural disasters or global pandemics.

and global economies are facing higher inflation and interest rates and potential recession.

A weak or declining economy or political disruption, including any international trade disputes, could exacerbate supply chain constraints that could ultimately harm our business.

Our results of operations could be adversely affected by general conditions in the global economy, the global financial markets and global political conditions.

Such conditions could include, among others, political unrest, war, such as the ongoing war with Russia and Ukraine, ongoing tensions in the Middle East, and tensions between the U.S.

and Venezuela, among others, tariff and trade disputes, or natural disasters or global pandemics.

and global economies are facing higher inflation and interest rates and recession risks.

Such factors include a weak or declining economy or political disruption, including any international trade disputes, could exacerbate constraints that could adversely affect our business.

Major bank failure or sustained financial market illiquidity could adversely affect our business, financial condition and results of operations.

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Our future success depends, to a significant extent, on our ability to hire and retain a sufficient number of qualified personnel, including our executive officers.

The nature of our executive officers’ experience and the extent of the relationships they have developed with owners of multifamily and commercial properties and financial institutions are important to our success.

The nature of our executive officers’ experience and the extent of the relationships they have developed

with owners of multifamily and commercial properties and financial institutions are important to our success.

We cannot assure their continued employment as our officers.

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The Terrorism Risk Insurance Act (“TRIA”) requires insurers to make terrorism insurance available under their property and casualty insurance policies in order to receive federal compensation under TRIA for insured losses.

However, this legislation does not regulate the

pricing of such insurance.

However, this legislation does not regulate the pricing of such insurance.

The absence of affordable insurance coverage may adversely affect the real estate lending market, lending volume and the market’s overall liquidity and may reduce the number of suitable investment opportunities available to us and the pace at which we are able to make investments.

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Environmental, social and governance matters may cause us to incur additional costs and affect the attractiveness of our stock to investors.

Shareholder, public and governmental expectations and pressure have been increasing with respect to corporate responsibility, sustainability and other environmental, social and governance (“ESG”) matters.

Shareholder advisory services and other organizations have developed and published, and others may in the future develop and publish, rating systems and other scoring and reporting mechanisms to evaluate and compare our ESG performance with that of others in our industry.

Stockholder, public and governmental expectations and pressure have been increasing with respect to corporate responsibility, sustainability and other environmental, social and governance (“ESG”) matters.

Stockholder advisory services and other organizations have developed and published, and others may in the future develop and publish, rating systems and other scoring and reporting mechanisms to evaluate and compare our ESG performance with that of others in our industry.

These ratings systems frequently change, and scores are often based on a relative ranking which may cause our scores to deteriorate if peer rankings improve.

In addition, current shareholders and prospective investors may use these ratings, and/or their own internal ESG benchmarks, to determine whether, and to what extent, they may choose to invest in our securities, engage with us to advocate for improved ESG performance or disclosure, make voting decisions as shareholders, or take other actions to hold us and our Board of Directors accountable with respect to ESG matters.

In addition, current stockholders and prospective investors may use these ratings, and/or their own internal ESG benchmarks, to determine whether, and to what extent, they may choose to invest in our securities, engage with us to advocate for improved ESG performance or disclosure, make voting decisions as stockholders, or take other actions to hold us and our Board of Directors accountable with respect to ESG matters.

Some legislatures, government agencies and listing exchanges have mandated or proposed, and others may in the future further mandate, certain ESG disclosure or performance.

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that may conflict with other regulatory requirements, resulting in regulatory uncertainty.

As a result, our selection of ESG disclosure frameworks and topics may change from time to time, may result in a lack of comparative data from period to period, or differ from the expectations of our shareholders and other stakeholders.

We may also face reputational damage in the event our corporate responsibility initiatives or objectives do not meet the standards or expectations of shareholders, prospective investors, lawmakers, listing exchanges or other stakeholders, including third party rating services.

We may also face reputational damage in the event our corporate responsibility initiatives or objectives do not meet the standards or expectations of stockholders, prospective investors, lawmakers, listing exchanges or other stakeholders, including third-party rating services, and our actions or disclosures that are intended to address the expectations of certain stakeholders may be viewed by others as insufficient, excessive or misaligned with their views.

Failure to comply with ESG-related or anti-ESG-related laws, exchange policies or stakeholder expectations could materially and adversely impact the value of our stock and related cost of capital, and limit our ability to fund future growth, or result in increased investigations and litigation or threats thereof.

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• damage to our reputation, including due to any perception that our business practices are contrary to the preferences of different stakeholders.

We are incorporating AI into some of our computer systems, and challenges with properly managing its use and failing to effectively develop AI, could result in reputational harm, competitive harm and legal liability, and adversely affect our results of operations.

Some of our computer systems currently, and may in the future, incorporate AI solutions, including machine learning and generative AI tools that collect, aggregate, and analyze data to assist in the development of our services and products and in the use of internal tools that support our business.

AI is still in its early stages, and the introduction and incorporation of AI technologies may result in unintended consequences or other new or expanded risks and liabilities.

We continue to incorporate AI solutions, and challenges with properly managing its use and failing to effectively develop AI, could result in reputational harm, competitive harm and legal liability, and adversely affect our results of operations.

We continue to incorporate AI solutions, including machine learning and generative AI tools that collect, aggregate, and analyze data to assist in the development of our services and products and in the use of internal tools that support our business.

The introduction and incorporation of AI technologies may result in unintended consequences or other new or expanded risks and liabilities.

If the content, analyses or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in AI algorithms, insufficient or biased base data or flawed training methodologies, our business, financial condition, results of operations and reputation may be adversely affected.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors