What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-21 · 150 added, 118 removed, 283 unchanged (49% of the section changed)

30 unchanged sentences

When effective, this strategy allows us to recapture refinancing opportunities, deleverage our balance sheet, and generate additional income streams through our capital-light Agency Business.

Income earned from our structured transactions.

Our structured transactions are primarily comprised of investments in equity affiliates, which represent unconsolidated joint venture investments formed to acquire, develop and/or sell real estate-related assets.

Income earned from other structured investments.

Our other structured investments are primarily comprised of investments in equity affiliates, which represent unconsolidated joint venture investments formed to acquire, develop and/or sell real estate-related assets.

Operating results from these investments can be difficult to predict and can vary significantly period-to-period.

When interest rates rise, the income from these investments can be significantly and negatively impacted, particularly from our investment in a residential mortgage banking business, since rising interest rates generally decrease the demand for residential real estate loans.

In addition, we periodically receive distributions from our equity investments.

We also periodically receive distributions from our equity investments.

It is difficult to forecast the timing of such payments, which can be substantial in any given quarter.

2 unchanged sentences

Effective portfolio management is essential to maximize the performance and value of our loan and investment and servicing portfolios.

Maintaining the credit quality of the loans in our

portfolios is of critical importance.

Maintaining the credit quality of the loans in our portfolios is of critical importance.

Loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity.

1 unchanged sentence

Financing and Capital Markets Activity.

• Unwound CLO 15, redeeming the remaining outstanding notes, and paid down outstanding notes totaling $1.65 billion on our other securitizations;

• Entered into three new debt facilities totaling $900.0 million of warehouse capacity, amended existing facilities resulting in a net $50.0 million increase in the committed amounts of these facilities and terminated three facilities totaling $400.0 million;

• Raised $100.0 million from the issuance of our 9.00% senior notes and repaid our 4.75% and 5.75% senior notes totaling $200.0 million;

• Entered into a new equity distribution agreement with JMP to sell up to 30,000,000 shares of our common stock and raised $10.0 million of capital under the plan from the issuance of 661,708 shares at an average price of $15.16 per share;

• Repurchased $11.4 million of our common stock at an average price of $12.19 per share.

• Entered into a $1.22 billion repurchase facility to refinance loans previously held in our CLOs.

The facility has a 24-month reinvestment period through March 2027.

The facility has an interest rate of SOFR plus 1.85% and matures at the latest maturity date of all purchased assets, which is currently June 2028;

• Terminated five credit and repurchase facilities with a total committed amount of $1.13 billion;

• Issued $500.0 million of 7.875% senior unsecured notes due 2030 and $400.0 million of 8.50% senior unsecured notes due 2028 through private offerings.

A portion of the net proceeds were used to repay the outstanding 7.50% convertible senior notes and the 7.75% senior notes, and will be used to repay the 5.00% senior notes due April 2026 totaling $557.5 million;

• Closed two new CLO vehicles (BTR CLO 1 and CLO 20) totaling $1.85 billion, of which $1.62 billion consisted of investment grade notes.

We retained $41.0 million of the investment grade notes, along with the below investment grade notes totaling $236.1 million;

• Unwound CLOs 14, 16 and 19, redeeming the remaining $1.56 billion of outstanding notes and paid down outstanding notes on existing securitizations totaling $841.7 million;

• Raised net proceeds of $70.6 million from the issuance of 5,898,957 shares of common stock under our ATM program at an average price of $11.97 per share.

Structured Business Activity.

• Reduced our balance sheet portfolio by 10% to $11.30 billion on loan runoff of $2.69 billion, which outpaced loan originations totaling $1.43 billion;

• Modified 106 loans with a total UPB of $4.12 billion.

Borrowers of 63 of these loans with a total UPB of $2.39 billion invested additional capital to recapitalize their deals in exchange for temporary rate relief, which we provided through a pay and accrual feature.

See Note 3 for details;

• Sold a real estate owned asset for $14.2 million and recognized a $3.8 million gain.

• Balance sheet portfolio of $12.11 billion, as loan originations of $3.52 billion outpaced loan runoff totaling $2.21 billion;

• Modified 43 loans with a total UPB of $1.71 billion, of which 36 loans were modified to provide temporary rate relief through a pay and accrual feature, see Note 3 for details;

• Received cash distributions totaling $81.5 million and recognized income of $54.3 million from our equity investments in the Lexford Portfolio ("Lexford") and a residential mortgage banking business, see Note 8 for details;

• Foreclosed on and took back the underlying collateral on 21 loans with a total net carrying value of $590.5 million and charged-off $52.8 million of specific CECL reserves.

We sold the underlying collateral on 8 of these foreclosures with a total net carrying value of $193.1 million.

In addition, we sold 2 existing REO assets with a net carrying value of $72.0 million.

Agency Business Activity.

• Loan originations totaled $4.47 billion and includes $1.58 billion of new agency loans that were recaptured from our Structured Business runoff;

• Grew our fee-based servicing portfolio 8%, or $2.49 billion, to $33.47 billion.

• Servicing portfolio of $36.20 billion (up $2.73 billion) with loan originations totaling $5.07 billion, which includes $669.4 million of new Agency loans that were recaptured from our Structured Business runoff.

Subsequent Event.

• In January and February 2026, we repurchased 2,444,860 shares of our common stock under our share repurchase program at a total cost of $18.0 million and an average cost of $7.38 per share;

• In 2026, we foreclosed on two loans with a total UPB of $33.9 million.

Current Market Conditions, Risks and Recent Trends

The Federal Reserve lowered the federal funds rate three times during 2024 for a total reduction of 100 basis points, which marks the first rate cuts since 2020, and it is possible that they will continue to reduce short term rates in 2025.

Although short term rates have declined 100 basis points, we currently remain in a high interest rate environment which could remain higher for longer than expected if inflation and other economic indicators do not continue to meet the Federal Reserve’s expectations.

These adverse economic conditions have resulted in, and may continue to result in, a dislocation in capital markets, declining real estate values of certain asset classes, increased payment delinquencies and defaults and increased loan modifications and foreclosures, all of which has impacted, and may continue to impact, our future results of operations, financial condition, business prospects and our ability to make distributions to our stockholders.

We employ rigorous risk management and underwriting practices to proactively maintain the quality of our loan portfolio and work very closely with borrowers to mitigate potential losses, while safeguarding the integrity of our portfolio, which may include modifying original loan terms.

Given the current elevated interest rate environment, we cannot guarantee that our loan portfolio will perform under the current loan terms.

Additionally, over the last several months the five and ten-year interest rates have increased substantially with the ten-year rate moving from a low of 3.60% in September 2024 to a high of 4.80% in January 2025 and the forward yield curve is predicting the ten-year rate will remain above 4.50% for the balance of 2025.

As discussed earlier, the short term rate curve is expected to continue to decrease in 2025, but only by a nominal additional 25 basis points.

This current interest rate environment is creating increased headwinds for commercial real estate and is likely to result in decreased origination volumes, especially in our GSE/Agency business in 2025, which is a highly profitable segment of our overall business.

This rate environment will also affect the ability for borrowers to refinance their balance sheet loans with fixed rate agency product, which could increase our delinquencies and defaults and reduce available liquidity.

This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a material adverse effect on our future results of operations, financial condition, liquidity and our ability to make distributions to our stockholders.

Historically, the high interest rate environment has positively impacted our net interest income since our structured loan portfolio exceeds our corresponding debt balances and the vast majority of our loan portfolio is floating rate based on SOFR.

Additionally, since a greater portion of our debt consists of fixed-rate instruments (such as convertible and senior unsecured notes), as compared to our structured loan portfolio, the increase in interest income from high interest rates tends to outpace the rise in interest expense on our debt.

During 2025, the Federal Reserve has lowered the federal funds rate three times totaling a 75-basis point reduction.

General consensus is that the Federal Reserve may continue to lower rates during 2026.

The high-interest rate environment, that has persisted longer than anticipated, could persist even longer if certain key economic indicators, such as inflation, fail to align with the Federal Reserve’s expectations.

Although short-term interest rates have declined, long-term interest rates remain highly volatile since the announcement of the current administration's imposition of increased tariffs and macroeconomic uncertainty.

Analysts currently hold mixed expectations regarding the future trajectory of long-term rates in 2026 due to the uncertainty regarding long-term inflation, fiscal policy, increased federal spending and larger deficits as a result of the recent enactment of the OBBBA, as described below.

As a result of the significant volatility in rates, the unpredictable impact of the tariff negotiations, including certain litigations in connection with the tariffs, and the OBBBA, it is very difficult to predict where short and long-term rates will settle during 2026.

This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make distributions to our stockholders.

Additionally, this high-interest rate environment has limited our ability to resolve delinquent loans,

leading to additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our future results of operations, financial condition, liquidity and ability to make distributions to our stockholders.

When we foreclose on assets as REO, we typically seek to reposition them to maximize value and support an orderly disposition.

Our repositioning efforts may include implementing enhanced property management, completing targeted capital improvements and deferred maintenance, re-leasing vacant space, renewing or restructuring leases, and pursuing other stabilization initiatives intended to improve occupancy, cash flow and marketability.

Depending on market conditions and asset-specific considerations, we generally pursue a disposition strategy through sale to third parties, and in certain circumstances may explore alternative exit options such as recapitalizations, joint venture arrangements or other transactions intended to optimize recoveries and reduce our REO exposure.

Given the current elevated interest rate environment, we cannot guarantee that our loan portfolio will continue to perform under the current loan terms.

In general, a rising or high-interest rate environment positively impacts our net interest income since our structured loan portfolio exceeds our corresponding debt balances, and the vast majority of our loan portfolio is floating rate based on SOFR.

Additionally, since a sizable portion of our debt consists of fixed-rate instruments (such as senior unsecured notes), as compared to our structured loan portfolio, the increase in interest income from high interest rates tends to outpace the rise in interest expense on our debt.

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

However, the prolonged period of elevated interest rates has led to an increase in loan delinquencies, a decrease in loan originations and lower cash and escrow balances, which is having, and may continue to have, a negative impact on our net interest income.

Additionally, the prolonged high interest rate

environment has contributed to a decline in certain commercial real estate values, leading to increased reserves, as the collateral value is insufficient to fully repay the loans.

As discussed earlier, the Federal Reserve began lowering short term interest rates in 2024 and may continue to cut interest rates during 2025.

These rate reductions have resulted in and will continue to result in a decrease in the net interest income on our floating rate loan book and reductions in the earnings on our cash and escrow balances.

For additional details, please see “Quantitative and Qualitative Disclosures about Market Risk” below.

Inflation, high interest rates, bank failures, and geopolitical uncertainty has caused significant disruptions in many market segments, including the financial services, real estate and credit markets, which has, and may continue to, result in a further dislocation in capital markets and a continued reduction of available liquidity.

However, the prolonged period of elevated interest rates has also led to a significant increase in loan delinquencies, modifications, foreclosures and decreases in loan originations and cash and escrow balances, which is having, and may continue to have, a negative impact on our net interest income.

Additionally, the prolonged high-interest rate environment has contributed to a decline in certain commercial real estate values, leading to increased reserves, when the collateral value is considered insufficient to fully repay the loans.

The above mentioned short-term interest rate reductions have resulted, and will continue to result, in a decrease in the net interest income on our floating rate loan book and reductions in the earnings on our cash and escrow balances.

For additional details, see “Quantitative and Qualitative Disclosures about Market Risk” below.

The elevated and volatile interest rates, along with geopolitical uncertainty, has caused some disruptions in certain segments of the financial services, real estate and credit markets.

As stated earlier, this environment has also caused a decrease in the performance of certain of our assets, leading to increased defaults and delinquencies.

If our borrowers and their tenants continue to be impacted by these adverse economic and market conditions, or by the other risks disclosed in our filings with the SEC, it could have a material adverse effect on our liquidity and capital resources.

Despite these periodic disruptions, we have been successful in raising capital through various vehicles, when needed, to continue to operate and strengthen our business.

Instability in the banking sector, such as the multiple regional bank failures and consolidations, further contributed to the tightening liquidity conditions in the equity and capital markets and has affected the availability, and increased the cost, of capital.

The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all.

Additionally, although the majority of our cash is currently on deposit with major financial institutions, our balances often exceed insured limits.

We limit the exposure relating to these balances by diversifying them among various counterparties.

Generally, deposits may be redeemed upon demand and are maintained at financial institutions with reputable credit and therefore we believe bear minimal credit risk.

Generally, deposits may be redeemed upon demand and are maintained at financial institutions with reputable credit and, therefore, we believe we bear minimal credit risk.

We are a national originator with Fannie Mae and Freddie Mac, and the GSEs remain the most significant providers of capital to the multifamily market.

5 unchanged sentences

Our originations with the GSEs are highly profitable executions as they provide significant gains from the sale of our loans, non-cash gains related to MSRs, and servicing revenues.

As discussed above, the current high interest rate environment could lead to a decline in our GSE originations, which could negatively impact our financial results.

We are also unsure whether FHFA will impose stricter limitations on GSE multifamily production volume in the future.

On July 4, 2025, the OBBBA was enacted into law.

This comprehensive legislation introduces wide-ranging changes to federal tax policy, entitlement programs, immigration enforcement and infrastructure investment.

The OBBBA includes potential changes to broader corporate tax provisions that may affect certain aspects of our business operations and tax exposure over the course of the next few years.

Additionally, various indirect components of the legislation, such as modifications to entitlement funding, increased federal spending and shifts in fiscal and regulatory priorities, may influence the capital markets, interest rate environment and demand for commercial real estate finance.

We are reviewing the potential implications of the new law, including interpretive guidance related to corporate taxation, and as a result of the complexity of the legislation and the evolving nature of its implementation, it is difficult to predict the effects of this legislation on our business, financial condition, results of operations or the real estate markets in general.

Changes in Financial Condition

1 unchanged sentence

Our Structured loan and investment portfolio balance was $12.11 billion and $11.30 billion at December 31, 2025 and 2024, respectively.

This decrease was primarily due to loan runoff exceeding loan originations by $1.27 billion.

See below for details.

Our portfolio had a weighted average current interest pay rate of 6.90% and 8.42% at December 31, 2024 and 2023, respectively.

This increase was primarily due to loan originations exceeding loan runoff by $1.31 billion (see below for details), partially offset by loans we foreclosed on and received ownership of the underlying collateral as REO assets.

The portfolio had a weighted average current interest pay rate of 6.49% and 6.90% at December 31, 2025 and 2024, respectively.

Including certain fees earned and costs, the weighted average current interest rate was 7.08% and 7.80% at December 31, 2025 and 2024, respectively.

13 unchanged sentences

Number of loans 294 318

Loans held-for-sale from the Agency Business decreased $115.9 million, primarily from loan sales exceeding originations as noted in the following table.

Loans held-for-sale from the Agency Business decreased $26.7 million, primarily from loan sales exceeding originations by $30.2 million as noted in the following table.

Activity from our Agency Business portfolio is comprised of the following ($ in thousands):

3 unchanged sentences

Freddie Mac 1,924,773 2,081,749

Private Label 151,936 124,286

FHA 78,145 128,282

Private Label 44,925 —

SFR - Fixed Rate 43,762 43,762

Total $ 5,074,264 $ 5,104,490

Capitalized mortgage servicing r ights decreased $22.6 million, primarily due to amortization and prepayment write-downs totaling $76.9 million exceeding additions from new originations of $54.3 million.

Real estate owned, net increased $89.6 million, primarily from the foreclosure of three structured bridge loans where we took back the underlying collateral as REO assets.

Due from related party decreased $51.6 million, primarily due to funds from loan payoffs being remitted to us by our affiliated servicing operations related to real estate transactions.

Other assets increased $78.2 million, primarily due to additional fundings of unsecured line of credit loans totaling $41.7 million and an increase in deferred interest on modified loans.

Investments in equity affiliates decreased $18.3 million, primarily due to $22.0 million in distributions received from the completed sale of the residential mortgage banking business.

Real estate owned increased $322.4 million, primarily due to the foreclosure of sixteen multifamily bridge loans totaling $441.0 million, through which we took back the underlying collateral, partially offset by the sale of five multifamily properties.

Liabilities – Comparison of balances at December 31, 2025 to December 31, 2024:

Credit and repurchase facilities increased $321.7 million, primarily due to refinancing loans from the unwind of CLOs in our Structured Business, substantially offset by loan sales exceeding originations in our Agency Business.

Securitized debt decreased $2.31 billion, primarily due to the unwind of CLO 15 and paydowns on existing securitizations totaling $1.65 billion.

Senior unsecured notes decreased $97.8 million, primarily due to the repayment of our 4.75% and 5.75% notes totaling $200.0 million, partially offset by the issuance of $100.0 million of our 9.00% notes.

Mortgage notes payable - real estate owned increased $30.6 million primarily due to financing placed on two new REO assets.

Due to borrowers decreased $74.1 million, primarily due to the funding of previously unfunded loan commitments in our Structured Business.

Other liabilities decreased $18.5 million, primarily due to a decrease in accrued interest payable as a result of the unwind of CLO 15 and paydowns on remaining securitizations, along with a decrease in deferred tax liabilities.

Credit and repurchase facilities increased $1.59 billion, primarily due to refinancing loans from the unwind of three CLOs and loan originations exceeding runoff in our Structured Business, partially offset by the issuance of BTR CLO 1 and CLO 20.

Securitized debt decreased $1.15 billion, primarily due to the unwind of three CLOs totaling $1.56 billion and paydowns on our existing securitizations of $841.7 million, partially offset by the issuances of BTR CLO 1 and CLO 20 where we issued $1.46 billion of notes to third-party investors.

Senior unsecured notes increased $792.9 million, primarily due to our issuance of $900.0 million of senior unsecured notes, partially offset by the settlement of our $95.0 million 7.75% senior unsecured notes.

In August 2025, we fully redeemed our 7.50% convertible senior notes with a remaining outstanding balance of $287.5 million with a portion of the net proceeds received from our 7.875% senior unsecured notes that were issued in July 2025.

Notes payable - real estate owned increased $148.1 million, primarily due to the addition of notes payable totaling $197.2 million on new REO assets and financing received on an existing REO asset, partially offset by the payoff of $49.1 million of notes payable associated with the sale of REO assets.

See Note 17 for details of our stock transactions, dividends declared and deferred compensation transactions during 2025.

28 unchanged sentences

At December 31, 2025 and 2024, delinquent loans totaled $959.0 million and $524.5 million, respectively.

At December 31, 2024, there were two loans totaling $4.8 million in bankruptcy and six loans totaling $28.2 million have been foreclosed.

At December 31, 2023, there were two loans totaling $4.8 million in bankruptcy and no loans in foreclosure.

At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were foreclosed.

At December 31, 2024, there were two loans totaling $4.8 million in bankruptcy and six loans totaling $28.2 million were foreclosed.

Our Agency Business servicing portfolio represents commercial real estate loans, which are generally transferred or sold within 60 days from the date the loan is funded.

13 unchanged sentences

Property operating income 21,347 7,226 14,121 195 %

(Loss) gain on derivative instruments, net (8,543) 6,763 (15,306) nm

Gain (loss) on derivative instruments, net 1,259 (8,543) 9,802 nm

Other income, net 14,801 8,083 6,718 83 %

3 unchanged sentences

Selling and administrative 59,805 54,931 4,874 9 %

Property operating expenses 7,394 5,897 1,497 25 %

Property operating expenses 27,980 7,394 20,586 nm

Depreciation and amortization 23,214 9,555 13,659 143 %

Provision for loss sharing (net of recoveries) 11,782 15,695 (3,913) (25) %

Provision for credit losses (net of recoveries) 68,543 73,446 (4,903) (7) %

Impairment loss on real estate owned 20,500 — 20,500 nm

Provision for loss sharing, net 24,259 11,782 12,477 106 %

Provision for credit losses, net 42,696 68,543 (25,847) (38) %

Total other expenses 372,599 333,899 38,700 12 %

Income before extinguishment of debt, gain on real estate, income from equity affiliates and income taxes 288,224 405,183 (116,959) (29) %

Loss on extinguishment of debt (412) (1,561) 1,149 (74) %

Gain on real estate 3,813 — 3,813 nm

Income from equity affiliates 5,772 24,281 (18,509) (76) %

Income before extinguishment of debt, (loss) gain on real estate, income from equity affiliates and income taxes 137,798 288,224 (150,426) (52) %

Loss on extinguishment of debt (2,919) (412) (2,507) nm

(Loss) gain on real estate (9,151) 3,813 (12,964) nm

Income from equity affiliates 50,880 5,772 45,108 nm

Provision for income taxes (18,779) (13,478) (5,301) 39 %

21 unchanged sentences

Structured Business interest-bearing liabilities:

CLO $ 5,762,959 $ 420,137 7.27 % $ 7,081,594 $ 496,049 7.00 %

Credit and repurchase facilities $ 4,111,154 $ 304,341 7.40 % $ 2,827,184 $ 235,909 8.32 %

CLO 3,787,182 247,124 6.53 % 5,762,959 420,137 7.27 %

Unsecured debt 1,670,096 111,281 6.66 % 1,564,112 98,187 6.26 %

Q Series securitization 172,965 14,230 8.20 % 229,734 17,158 7.47 %

Trust preferred 154,336 11,670 7.56 % 154,336 13,205 8.53 %

Q Series securitization 26,501 2,225 8.40 % 172,965 14,230 8.20 %

Total interest-bearing liabilities $ 9,749,269 676,641 6.94 % $ 10,481,556 781,668 7.44 %

5 unchanged sentences

The decrease in interest income was mainly due to a $221.8 million decrease from our Structured Business.

The decline was primarily from a decrease in the average balance of our core interest-earning assets as loan runoff exceeded loan originations, as well as a decrease in the average yield on core interest-earning assets from a rise in non-performing and other non-accrued loans.

The decrease in interest expense was mainly due to a $98.9 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities from loan runoff and note paydowns in our securitizations and senior unsecured notes, partially offset by an increase in the average cost of interest-bearing liabilities, mainly from lower rate debt tranches being paid down from CLO runoff.

The decline was primarily due to a decrease in the average yield on core interest-earning assets and, to a lesser extent, a decrease in the average balance of our core interest-earning assets (loan runoff exceeded loan originations in 2024) and lower average bank balances.

The decrease in the average yield was mainly from a decrease in SOFR, the reversal of interest that was previously accrued on modified loans and a reduction in back interest earned on delinquent and modified loans, as well as an increase in new delinquencies and modified loans at lower rates.

The decrease in interest expense was mainly due to a $105.0 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities (from a decrease in the average loan portfolio and note paydowns in our securitizations) and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).

Agency Business Revenue

The increase in gain on sales, including fee-based services, net was primarily due to a 10% increase in the sales margin from 1.48% to 1.63%, partially offset by a 6% decrease in loan sales volume ($279.5 million).

The decrease in income from MSRs was primarily due to a 15% decrease in loan commitment volume ($763.2 million) and a 14% decrease in the MSR rate from 1.34% to 1.15%.

The decrease in the MSR rate was primarily due to a higher percentage of Freddie Mac loan commitments, which contain lower servicing fees.

The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and lower prepayment fees, partially offset by an increase in servicing fees due to growth in our servicing portfolio.

The decrease in gain on sales, including fee-based services, net was primarily due to a 15% decrease in the sales margin from 1.63% to 1.38%, partially offset by an 11% increase in loan sales volume ($494.8 million).

The decrease in the sales margin was mainly due to the sales volume product mix and larger portfolio deals in 2025 that produced lower margins.

The increase in income from MSRs was primarily due to a 15% increase in loan commitment volume ($659.9 million), partially offset by a 7% decrease in the MSR rate from 1.15% to 1.07%.

The decrease in the MSR rate was mainly due to a decrease in the Fannie Mae MSR rates from lower servicing rates on newer loans, as a result of larger portfolio deals in 2025 that produced lower MSR rates.

The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate, partially offset by an increase in servicing fees due to growth in our servicing portfolio.

Other Income (Loss)

The (loss) gain on derivative instruments in both 2024 and 2023 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates as well as from the timing of GSE Agency loan sales.

The increases in property operating income and expenses were due to the addition of several new REO assets, which also resulted in an increase in depreciation and amortization.

The gains and losses on derivative instruments in 2025 and 2024 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates.

The increase in other income, net was primarily due to increases in the fair values of our Private Label loans and loan fees from higher loan originations and modified loans.

Other Expenses

The increase in employee compensation and benefits expense was primarily due to increases in incentive compensation and commissions from higher bonus allocation targets and annual merit increases.

The increase in selling and administrative expenses was primarily due to increases in professional and legal costs.

The decreases in our CECL provisions were primarily due to a decrease in general reserves as a result of a decline in the structured portfolio as well as general improvements in the forecasted outlook for commercial real estate, as compared to 2023.

The decrease in employee compensation and benefits expense was primarily due to decreases in commissions and incentive compensation from lower GSE/Agency loan sales volume and bonus allocation targets.

The increase in selling and administrative expenses was primarily due to increases in professional fees and other general corporate expenses, such as business development and travel related costs.

In 2025, we recorded a $20.5 million impairment loss related to certain REO assets that we acquired through foreclosure, which represents the extent to which the carrying value exceeded its estimated fair value.

The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in the current year period.

The decrease in the provision for credit losses, net primarily reflects a decrease in specifically impaired loans and a decrease in general reserves as a result of improvements in the forecasted outlook for commercial real estate, as compared to the prior year forecasted outlook, partially offset by additional provisions recorded upon foreclosure of REO assets.

Loss on Extinguishment of Debt

The loss on extinguishment of debt in both 2024 and 2023 represents deferred financing fees recognized in connection with the unwind of CLOs.

Gain on Real Estate

In 2024, we recorded a $3.8 million gain on real estate from the sale of an REO asset for $14.2 million.

The loss on extinguishment of debt in both 2025 and 2024 reflects deferred financing fees recognized in connection with the unwind of CLOs.

(Loss) Gain on Real Estate

The loss on real estate in 2025 is comprised of a $4.9 million loss on below market debt related to financing the sale of several REO assets and a $4.3 million net loss on the foreclosure and sale of REO assets.

In 2024, we sold a real estate owned asset for $14.2 million and recognized a $3.8 million gain.

Income from Equity Affiliates

Income from equity affiliates in 2024 primarily reflects $9.0 million in distributions received from our Lexford joint venture, partially offset by losses totaling $3.5 million from our investments in AMAC III and a residential mortgage banking business.

Income in 2023 primarily reflects $14.5 million received from equity participation interests on properties that were sold and $12.2 million in distributions received from our Lexford joint venture.

Income from equity affiliates in 2025 primarily reflects $56.0 million of income recognized related to the cash distributions received from our Lexford joint venture, partially offset by losses from our investments in AMAC III and a residential mortgage banking business totaling $5.3 million;

while income in 2024 primarily reflects $9.0 million in distributions received from our Lexford joint venture, partially offset by losses totaling $3.5 million from our investments in AMAC III and a residential mortgage banking business.

Provision for Income Taxes

In 2024, we recorded a tax provision of $13.5 million, which consisted of a current tax provision of $25.1 million and a deferred tax benefit of $11.6 million.

In 2025, we recorded a tax provision of $18.8 million, which consisted of a current tax provision of $15.0 million and a deferred tax provision of $3.8 million.

In 2024, we recorded a tax provision of $13.5 million, which consisted of a current tax provision of $25.1 million and a deferred tax benefit of $11.6 million.

Net Income Attributable to Noncontrolling Interest

The noncontrolling interest relates to the outstanding operating partnership units (“OP Units”) issued as part of the 2016 acquisition of ACM’s agency platform (the “Acquisition”).

There were 16,293,589 OP Units outstanding at both December 31, 2024 and 2023, which represented 7.9% and 8.0% of our outstanding stock at December 31, 2024 and 2023, respectively.

The noncontrolling interest relates to the outstanding operating partnership units (“OP Units”) issued as part of the 2016 acquisition of ACM’s agency platform.

There were 16,169,858 and 16,293,589 OP Units outstanding at December 31, 2025 and 2024, respectively, which represented 7.6% and 7.9% of our outstanding stock at December 31, 2025 and 2024, respectively.

Comparison of Results of Operations for Years Ended December 31, 2024 and 2023

2 unchanged sentences

Sources of Liquidity.

Liquidity is a measure of our ability to meet our potential cash requirements, including ongoing commitments to repay borrowings, satisfaction of collateral requirements under the Fannie Mae DUS risk-sharing agreement and, as an approved designated seller/servicer of Freddie Mac’s SBL program, operational liquidity requirements of the GSE agencies, fund new loans and investments, fund operating costs and distributions to our stockholders, fund capital expenditures and other property level costs associated with REO assets (including tenant improvements and rehabilitation/ renovation costs) and to fund draws due under unfunded loan commitments, as well as other general business needs.

Our primary sources of funds for liquidity consist of proceeds from equity and debt offerings, proceeds from CLOs and securitizations, debt facilities and cash flows from operations.

We closely monitor our liquidity position and believe our existing sources of funds and access to additional liquidity will be adequate to meet our liquidity needs.

The ongoing adverse economic and market conditions, including inflation, high interest rate environment, bank failures and geopolitical uncertainty, has caused significant disruptions and liquidity constraints in many market segments, including the financial services, real estate and credit markets.

These conditions have created, and may continue to create, further dislocations in capital markets and a continual reduction of available liquidity.

Instability in the banking sector, such as the regional bank failures and consolidations, further contributed to the tightening liquidity conditions in the equity and capital markets and has affected the availability and increased the cost of capital.

The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all.

If our financing sources, borrowers and their tenants continue to be impacted by these adverse economic and market conditions, or by the other risks disclosed in our filings with the SEC, it would have a material adverse effect on our liquidity and capital resources.

The elevated and volatile interest rates, along with geopolitical uncertainty, has caused some disruptions in certain segments of the financial services, real estate and credit markets.

As stated earlier, this environment has also caused a decrease in the performance of certain of our assets, leading to increased delinquencies, defaults and foreclosures.

As described in Note 11, certain of our repurchase facilities include margin call provisions associated with changes in interest spreads which are designed to limit the lenders credit exposure.

5 unchanged sentences

At December 31, 2025, we had $1.91 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.

As of February 19, 2025, we had approximately $435 million in cash and liquidity.

In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $33.47 billion agency servicing portfolio at December 31, 2024, which is mostly prepayment protected and generates approximately $126.5 million per year in recurring gross cash flow.

To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our taxable income.

In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.20 billion agency servicing portfolio at December 31, 2025, which is mostly prepayment protected, and escrow/cash balances that generates approximately $200 million per year in recurring gross cash flow.

To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT-taxable income.

These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations.

However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital and liquidity requirements.

Cash flows provided by operating activities totaled $461.5 million during 2024 and consisted primarily of net income of $283.9 million, as well as certain other non-cash net income adjustments, partially offset by net cash outflows of $108.6 million as a result of loan originations exceeding loan sales in our Agency Business.

Cash flows provided by investing activities totaled $1.15 billion during 2024.

Cash flows provided by operating activities totaled $372.4 million during 2025 and consisted primarily of net income (adjusted for the increase in CECL reserves of $67.0 million) of $224.8 million, cash distributions of $59.0 million received from our Lexford investment and net cash inflows of $23.1 million from loan sales exceeding loan originations in our Agency Business.

Cash flows used in investing activities totaled $1.28 billion during 2025.

Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities.

Loan payoffs and paydowns from our Structured Business totaling $2.78 billion, net of originations of $1.60 billion, resulted in net cash inflows of $1.18 billion.

Cash flows used in financing activities totaled $2.49 billion during 2024 and consisted primarily of $2.32 billion of payoffs and paydowns of securitized debt, $394.8 million of distributions to our stockholders and OP Unit holders and $100.0 million from senior unsecured notes activity, partially offset by net cash inflows of $325.4 million from debt facility activities (financed loan originations were greater than facility paydowns).

Loan originations from our Structured Business totaling $3.69 billion, net of payoffs and paydowns of $2.42 billion, resulted in net cash outflows of $1.27 billion.

Cash flows provided by financing activities totaled $798.8 million during 2025 consisted primarily of net cash inflows of $1.64 billion from debt facility activities (financed loan originations were greater than facility paydowns), $805.0 million cash inflow from senior unsecured notes (proceeds exceeded payoffs) and net cash inflows of $101.7 million from notes payable - REO activities (proceeds exceeded payoffs and paydowns), partially offset by $1.15 billion of net securitized debt activity (payoffs and paydowns exceeded proceeds), $319.9 million of distributions to our stockholders and OP Unit holders and $287.5 million payoff of our convertible notes.

Unencumbered Assets.

At December 31, 2025, we had total unencumbered assets with a carrying value of $3.23 billion, consisting of cash and cash equivalents of $482.9 million, loans of $816.8 million, securitization investments of $1.18 billion, MSRs of $340.8 million and $402.2 million of other assets not encumbered by any portion of secured indebtedness.

Our unencumbered assets to unsecured debt ratio was 1.57x at December 31, 2025, or 1.72x after the payoff of our 5.00% senior notes due April 2026, compared to the required minimum of 1.20x.

Agency Business Requirements.

16 unchanged sentences

Senior unsecured notes 2,050,000 2,050,000 — 2026 - 2030

Convertible senior unsecured notes 287,500 287,500 — 2025

Junior subordinated notes 154,336 154,336 — 2034 - 2037

Mortgage notes payable - real estate owned 74,897 74,897 — 2025

Notes payable - real estate owned 222,965 222,965 — 2026 - 2027

Structured Business total 13,394,475 10,684,081 2,710,394

6 unchanged sentences

These maturity dates exclude extension options.

(3) Commitment totals include available overadvances.

(4) Maturity dates represent the weighted average remaining maturity based on the underlying collateral at December 31, 2025.

1 unchanged sentence

We utilize our credit and repurchase facilities primarily to finance our loan originations on a short-term basis prior to loan securitizations, including through CLOs.

The timing, size and frequency of our securitizations impact the balances of these borrowings and produce some fluctuations.

The timing, size and frequency of our securitizations impact the balances of these borrowings

and produce some fluctuations.

The following table provides additional information regarding the balances of our borrowings ($ in thousands):

15 unchanged sentences

At December 31, 2025, we had no off-balance-sheet arrangements.

Although rates have started to decline, we currently remain in a high interest rate environment which could remain higher for longer than expected if inflation and other

economic indicators do not continue to meet the Federal Reserve’s expectations.

If these rate reductions continue, this would likely lead to immediate decreases in net interest income on our floating rate loan book and reduce earnings on our cash and escrow balances.

However, if a prolonged rate cut occurs, this could lead to increases in our loan origination business and improved credit, resulting in decreases in delinquencies and potential future losses.

The short term rate curve is expected to continue to decrease in 2025, but only by a nominal additional 25 basis points.

During 2025, the Federal Reserve has lowered the federal funds rate three times totaling a 75-basis point reduction.

General consensus is that the Federal Reserve may continue to lower rates during 2026.

This high-interest rate environment, that has persisted longer than anticipated, could persist even longer if certain key economic indicators, such as inflation, fail to align with the Federal Reserve’s expectations.

Although short-term interest rates have declined, long-term interest rates remain highly volatile since the announcement of the current administrations imposition of increased tariffs and macroeconomic uncertainty.

This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and

defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have

impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make

distributions to our stockholders.

Additionally, this high-interest rate environment has limited our ability to resolve delinquent loans, leading to additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our future results of operations, financial condition, liquidity and ability to make distributions to our stockholders.

For additional details, please see “Current Market Conditions, Risks and Recent Trends” above and “Quantitative and Qualitative Disclosures about Market Risk” below.

11 unchanged sentences

These estimates are subject to change in the future if any of the underlying assumptions or factors change.

Our allowance for credit loss estimate is critical because it requires significant judgment in applying the CECL model, including judgments regarding portfolio pooling, selection of key model inputs and macroeconomic variables, the reasonable and supportable forecast period and the manner in which expected losses revert to historical experience.

The allowance for credit loss is recorded for our structured loans and investments (including unfunded loan commitments), loss-sharing obligations related to the Fannie Mae DUS program and held-to-maturity debt securities and reflects expected credit losses over the contractual life of the applicable asset or exposure, based on information about past events, current conditions and reasonable and supportable forecasts.

For pooled assets that share similar risk characteristics, we use a third-party CECL model that incorporates historical loss information and produces probability of default and loss given default metrics to develop loss factors (the “general reserve”).

In applying this model, management uses judgment to determine appropriate portfolio pools and to select and evaluate the relevance of forecast inputs, which currently include commercial real estate price indices, unemployment rates and interest rates.

We currently use a one-year reasonable and supportable forecast period, and for periods beyond the forecast horizon we generally revert expected losses to historical experience using a straight-line method.

We may also apply adjustments to reflect differences in the risk characteristics of our current portfolio (including loan-to-value and debt service coverage ratios, among other factors) and may apply qualitative adjustments based on internal and external information, including loan- and property-specific developments and market conditions (such as refinance activity, planned sale, loan modifications and bankruptcy).

For assets that no longer share similar risk characteristics with pooled assets, and for certain loans evaluated on an individual basis, we may determine that a loan is collateral dependent and measure expected credit losses using the CECL practical expedient based on the difference between the fair value of the collateral and the amortized cost basis of the loan, adjusted for estimated costs to sell when repayment is dependent on a sale rather than operations.

If foreclosure is probable, expected credit losses are measured using the fair value of the collateral as of the reporting date.

Estimating collateral fair value involves significant judgment and may be based on third-party appraisals and other valuation information, including assumptions related to capitalization and market discount rates and the borrower’s operating income and cash flows, as well as whether the valuation is based on “as-is” or “stabilized value.”

Our allowance for credit loss also includes expected credit losses associated with unfunded loan commitments, which reflect our obligation to extend credit as borrowers meet certain requirements.

Expected credit losses related to these unfunded commitments are assessed and adjusted quarterly and correspond to the associated outstanding loans.

In addition, we may modify loans to borrowers experiencing financial difficulty, including through payment deferrals, term extensions, principal forgiveness and/or interest rate reductions.

Such modifications are considered in our allowance for credit loss estimate under the same CECL methodology applied to other loans.

Because these estimates are subject to change as facts, conditions, forecasts and the composition and risk characteristics of our portfolio change, changes in these judgments and assumptions can significantly affect expected credit losses and the amount of the allowance for credit loss recorded in our consolidated financial statements.

Non-GAAP Financial Measures

2 unchanged sentences

Dividends are one of the principal reasons investors invest in REITs.

To maintain REIT status, REITs are required to distribute at least 90% of their taxable income.

To maintain REIT status, REITs are required to distribute at least 90% of their REIT-taxable income.

We consider distributable earnings in determining our quarterly dividend and believe that, over time, distributable earnings is a useful indicator of our dividends per share.

14 unchanged sentences

Income from mortgage servicing rights (54,532) (51,272) (69,912)

Deferred tax benefit (11,613) (7,349) (1,741)

Deferred tax provision (benefit) 3,773 (11,613) (7,349)

Amortization and write-offs of MSRs 81,113 76,922 77,829

3 unchanged sentences

(Gain) loss on derivative instruments, net (3,379) 9,212 (8,844)

Loss on real estate 27,338 — —

Stock-based compensation 13,789 14,232 14,940

2 unchanged sentences

Convertible notes dilution (2) — — (17,294,392)

Diluted weighted average shares outstanding - distributable earnings (1) 205,526,610 201,549,221 182,224,404

Diluted weighted average shares outstanding (1)(2) 209,733,331 205,526,610 201,549,221

Diluted distributable earnings per share (1) $ 1.07 $ 1.74 $ 2.25

2 unchanged sentences

The OP Units are redeemable for cash, or at our option for shares of our common stock on a one-for-one basis.

(2) The diluted weighted average shares outstanding were adjusted to exclude the potential shares issuable upon conversion and settlement of our convertible senior notes principal balance.

No adjustment was necessary for the year ended December 31, 2024, as their effect was anti-dilutive and not reflected in the GAAP diluted weighted average shares outstanding.

(2) The diluted weighted average shares outstanding were adjusted to exclude the potential shares issuable upon conversion and settlement of our convertible senior notes principal balance, which were fully settled in the third quarter of 2025.

No adjustments were necessary for the years ended December 31, 2025 and 2024, as their effect was anti-dilutive and not reflected in the diluted weighted average shares outstanding.

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 7. Management’s Discussion and Analysis