CIM GROUP, INC. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying consolidated financial statements and notes thereto. See also the Cautionary Note Regarding Forward-Looking Statements section preceding Part I of this Annual Report on Form 10-K. For a comparison of the years ended December 31, 2024 and 2023, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. 58 Table of Contents Overview We are a non-traded REIT that seeks to attain attractive risk-adjusted returns and create long term value for our stockholders by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. Subject to market conditions, we expect to pursue a listing of our common stock on a national securities exchange at such time as our Board determines that such a listing would be in the best interests of our stockholders, though we can provide no assurance that a listing will happen in a particular timeframe or at all. We were formed on July 27, 2010, and we elected to be taxed, and conduct our operations to qualify, as a REIT for U.S. federal income tax purposes. We are externally managed by CMFT Management and, with respect to investments in securities and certain other investments of ours, our Investment Advisor, each of which is an affiliate of CIM Group, a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer. As of December 31, 2025, our loan portfolio consisted of 78 loans with a net book value of $3.5 billion, and investments in real estate-related securities of $169.2 million. The Company conducts and expects to continue to conduct its commercial real estate lending business through CLR, a Maryland statutory trust and subsidiary of the Company which we expect to be taxed as a REIT for U.S. federal income tax purposes. As of December 31, 2025 , CLR holds a diversified portfolio of approximately $1.6 billion, which includes first mortgage loans with a net book value of $1.4 billion, CMBS with an estimated fair value of $64.2 million, and an investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the consolidated financial statements in this Annual Report on Form 10-K) with a carrying value of $138.7 million. As of December 31, 2025, we owned 202 commercial real estate properties, which consisted of 187 retail properties, eight office properties, and seven industrial properties, representing 22 industry sectors and comprising approximately 6.7 million rentable square feet of commercial space located in 37 states, with a net book value of $1.1 billion. As of December 31, 2025, we owned condominium developments with a net book value of $12.0 million. During the year ended December 31, 2025, we disposed of five properties encompassing 402,000 gross rentable square feet, and 16 condominium units for total consideration of $181.1 million, as further discussed in Note 4 — Real Estate Assets to the consolidated financial statements in this Annual Report on Form 10-K. Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest expense on our indebtedness and credit investments and other operating expenses. In general, our business model is such that rising interest rates will correlate to increases in our net income, while declining interest rates will correlate to decreases in our net income. As of December 31, 2025, 92.4% of our CMBS and loans held-for-investment by carrying value earned a floating rate of interest, indexed to Secured Overnight Financing Rate (“SOFR”), and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans. CMFT Management reviews our investment portfolio and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. In addition, as 96.5% of our rentable square feet was under lease, including any month-to-month agreements, as of December 31, 2025, with a weighted average remaining lease term of 10.1 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors. Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports on the tenant or guarantor, the operating history of the property with such tenant, the tenant’s market share and track record within its industry segment, the general health and outlook of the tenant’s industry segment and other information for changes and possible trends. If our manager identifies significant changes or trends that may adversely affect the creditworthiness of a tenant, it will gather a more in-depth knowledge of the tenant’s financial condition and, if necessary, attempt to mitigate the tenant credit risk by evaluating the possible sale of the property or identifying a possible replacement tenant should the current tenant fail to perform on the lease. Recent Developments Macroeconomic Environment The year 2025 was characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, continued high interest rates, slowing economic growth, uncertainty around the impacts of imposed tariffs , political and regulatory uncertainty and geopolitical conditions have persisted. 59 Table of Contents Heightened inflation caused the Federal Reserve to raise interest rates in 2022 and 2023. Although the majority of our business model is such that elevated interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect the ability of our existing borrowers to pay debt service, tenants and property values of our own portfolio and the assets that serve as collateral for our loans. The Federal Reserve began to decrease interest rates in the second half of 2024 and in September, November, and December 2025, however the timing, direction and extent of any future interest rate changes remains uncertain. In a period of declining interest rates, our interest income on floating-rate investments may generally decrease, subject to the impact of interest rate floors in our investment portfolio. In addition, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce. These negative factors have been considered in the determination of our CECL allowance. We may be required to record further increases to our current expected credit loss reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve. Any such reserve increases are difficult to predict. Operating Highlights and Key Performance Indicators 2025 Activity Operating Results: • Net income attributable to the Company of $52.4 million, or $0.12 per share. • Redeemed 6.8 million shares under the share redemption program for $37.1 million at an average price of $5.47 per share. • Declared aggregate distributions of $0.34 per share. Credit Portfolio Investment Activity: • Originated $609.9 million of first mortgage loans, $55.0 million of which was a result of a loan modification that was accounted for as a new loan for GAAP purposes. • Funded $91.7 million in existing first mortgage loans. • Invested $1.3 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $5.1 million. • Invested $125.6 million in corporate senior loans. • Received principal repayments on loans held-for-investment of $562.0 million. • Invested $26.7 million in CMBS, received principal repayments on CMBS of $128.8 million and sold CMBS for an aggregate gross sales price of $75.6 million. • Received proceeds from the repayment of portfolio investments on the CLO subordinated note of $6.1 million (see Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements in this Annual Report on Form 10-K for additional details). • Funded an additional $26.5 million in NP JV Holdings (as defined in Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements in this Annual Report on Form 10-K). Real Estate Portfolio Investment Activity: • Acquired 18 properties for an aggregate purchase price of $58.1 million. • Took control of assets securing two risk-rated 5 first mortgage loans, comprised of two office buildings, through deeds-in-lieu of foreclosure with an aggregate fair value of $151.0 million. During the year ended December 31, 2025, the Company disposed of one of the properties acquired via deed-in-lieu of foreclosure for an aggregate sales price of $91.3 million. • Disposed of four additional net lease properties for an aggregate sales price of $15.8 million. • Disposed of 16 condominium units for an aggregate sales price of $74.0 million. Financing Activity: • Decreased total debt by $80.4 million, reducing our ratio of debt to total gross assets net of gross intangible lease liabilities to 62.5%. 60 Table of Contents Portfolio Information The following table shows the net book value of our portfolio by investment type as of December 31, 2025 and 2024 (dollar amounts in thousands): As of December 31, 2025 2024 Asset Count Net Book Value Asset Count Net Book Value Loan Held-For-Investment First mortgage loans 35 $ 3,361,679 71.7 % 33 $ 3,466,929 72.7 % Liquid corporate senior loans 8 26,909 0.6 % 15 41,467 0.9 % Corporate senior loans 35 363,879 7.8 % 20 254,617 5.3 % Less: Current expected credit losses (297,878) (6.3) % (392,136) (8.2) % Total loans held-for-investment and related receivable, net 78 3,454,589 73.8 % 68 3,370,877 70.7 % Real Estate-Related Securities and Other CMBS 9 293,866 6.2 % 16 396,819 8.3 % CLO subordinated note 1 19,555 0.4 % 1 26,901 0.6 % Equity securities 4 37,889 0.8 % 4 32,170 0.7 % Less: Current expected credit losses (182,104) (3.9) % (110,062) (2.3) % Total real estate-related securities and other, net 14 169,206 3.5 % 21 345,828 7.3 % Real Estate Total real estate assets and intangible lease liabilities, net 202 1,062,631 22.7 % 187 1,048,194 22.0 % Total Investment Portfolio (1)(2) 294 $ 4,686,426 100.0 % 276 $ 4,764,899 100.0 % ____________________________________ (1) Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements in this Annual Report on Form 10-K), which had a carrying value of $149.2 million, $138.7 million of which is held through CLR as of December 31, 2025. (2) As of December 31, 2025, first mortgage loans with a net book value of $1.4 billion and CMBS with an estimated fair value of $64.2 million were held through CLR. Credit Portfolio Information The following table details overall statistics for our credit portfolio as of December 31, 2025 (dollar amounts in thousands): CRE Loans (1)(2) Liquid Corporate Senior Loans Real Estate Related Securities and Other (2) Corporate Senior Loans Number of investments (3) 35 8 14 35 Principal balance $ 3,377,417 $ 27,386 $ 413,938 $ 368,341 Net book value $ 3,074,451 $ 22,664 $ 169,206 $ 357,474 Unfunded loan commitments (4) $ 165,818 $ — — $ 51,464 Weighted-average interest rate (5)(6) 7.0 % 10.0 % 6.0 % 9.5 % Weighted-average maximum years to maturity (6)(7) 2.5 3.0 11.8 3.0 ____________________________________ (1) As of December 31, 2025, 91.1% of our loans by principal balance earned a floating rate of interest indexed to SOFR. (2) Maximum maturity date assumes all extension options are exercised by the borrowers and assumes all relevant conditions are met for such extensions; however, our loans and CMBS may be repaid prior to such date. 61 Table of Contents (3) Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the consolidated financial statements in this Annual Report on Form 10-K), which had a carrying value of $149.2 million as of December 31, 2025. (4) Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying consolidated balance sheets. (5) The weighted-average interest rate is based on the relevant fixed rate or floating benchmark plus a spread. Excludes loans on nonaccrual status. (6) Does not include the CLO subordinated note. As of December 31, 2025, the CLO subordinated note had an initial maturity date of July 2037 and an estimated effective yield of 15.4%. (7) Does not include positions in maturity default. As of December 31, 2025, our CRE loans had the following characteristics based on carrying values (dollar amounts in thousands): Collateral Property Type As of December 31, 2025 Office $ 1,817,049 54.1 % Multifamily 659,487 19.6 % Industrial 426,801 12.7 % Hospitality 311,702 9.3 % Mixed Use 85,717 2.5 % Self-Storage 60,923 1.8 % Total first mortgage loans $ 3,361,679 100.0 % Less: current expected credit losses (287,228) Total first mortgage loans, net $ 3,074,451 Geographic Location As of December 31, 2025 South $ 1,455,667 43.3 % West 942,804 28.0 % East 555,594 16.5 % Various 407,614 12.2 % Total first mortgage loans $ 3,361,679 100.0 % Less: current expected credit losses (287,228) Total first mortgage loans, net $ 3,074,451 Real Estate Portfolio Information As of December 31, 2025, we owned 202 commercial real estate properties located in 37 states, the gross rentable square feet of which was 96.5% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.1 years. During the year ended December 31, 2025, we disposed of five properties for an aggregate gross sales price of $107.1 million. Additionally, during the year ended December 31, 2025, we sold 16 condominium units for an aggregate gross sales price of $74.0 million. The following table shows the property statistics of our real estate assets as of December 31, 2025 and 2024: As of December 31, 2025 2024 Number of commercial properties 202 187 Rentable square feet (in thousands) (1) 6,664 5,821 Percentage of rentable square feet leased 96.5 % 100.0 % Percentage of investment-grade tenants (2) 28.4 % 30.8 % ____________________________________ (1) Includes square feet of buildings on land parcels subject to ground leases. 62 Table of Contents (2) Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable. The weighted average credit rating is weighted based on annualized rental income and is for only those tenants rated by Standard & Poor’s. The following table summarizes our real estate acquisition activity during the years ended December 31, 2025 and 2024: As of December 31, 2025 (1) 2024 Commercial properties acquired 18 2 Purchase price of acquired properties (in thousands) $ 58,077 $ 44,148 Rentable square feet (in thousands) 450 105 (1) Excludes two properties acquired through deeds-in-lieu of foreclosure, with an aggregate fair value at the time of acquisition of $151.0 million and 794,000 of rentable square feet, as further discussed in Note 4 — Real Estate Assets to the consolidated financial statements in this Annual Report on Form 10-K. The following table shows the tenant diversification of our real estate portfolio, based on annualized rental income, as of December 31, 2025: 2025 2025 Percentage of Total Leased Annualized Annualized 2025 Number Square Feet Rental Income Rental Income Annualized Tenant of Leases (1) (in thousands) (2) (in thousands) per Square Foot (2) Rental Income CVS 33 421 $ 8,852 $ 21.03 9 % Cabela’s 1 403 7,198 17.86 7 % United Oil 2 38 6,508 171.26 6 % Lowe’s 8 1,073 5,988 5.58 6 % Walgreens 11 162 3,884 23.98 4 % BJ’s Wholesale Club, Inc. 2 225 3,246 14.43 3 % Valvoline Oil Change 1 162 3,060 18.89 3 % Tractor Supply 11 213 2,888 13.56 3 % Bob Evans 2 76 2,826 37.18 3 % AAA 1 120 2,811 23.43 3 % Other 98 3,538 52,988 14.98 53 % 170 6,431 $ 100,249 $ 15.59 100 % ____________________________________ (1) Includes leases which are master lease agreements. (2) Includes square feet of the buildings on land parcels subject to ground leases. 63 Table of Contents The following table shows the tenant industry diversification of our real estate portfolio, based on annualized rental income, as of December 31, 2025: 2025 2025 Percentage of Total Leased Annualized Annualized 2025 Number Square Feet Rental Income Rental Income Annualized Industry of Leases (1) (in thousands) (2) (in thousands) per Square Foot (2) Rental Income Manufacturing 10 1,295 $ 12,804 $ 9.89 13 % Retail Trade - Health and Personal Care Stores 44 584 12,736 21.81 13 % Retail Trade - Sporting Goods, Hobby, and Musical Instrument Retailers 3 504 9,072 18.00 9 % Retail Trade - Warehouse Clubs, Supercenters, and Other General Merchandise Retailers 23 837 8,617 10.30 9 % Automotive Repair and Maintenance 8 308 7,442 24.16 7 % Retail Trade - Gasoline Stations 5 52 7,272 139.85 7 % Professional, Scientific, and Technical Services 10 153 7,010 45.82 7 % Retail Trade - Grocery Stores 8 699 5,996 8.58 6 % Retail Trade - Building Material and Supplies Dealers 8 1,073 5,988 5.58 6 % Retail Trade - Lawn and Garden Equipment and Supplies Stores 12 278 4,297 15.46 4 % Other 39 648 19,015 29.34 19 % 170 6,431 $ 100,249 $ 15.59 100 % ____________________________________ (1) Includes leases which are master lease agreements. (2) Includes square feet of the buildings on land parcels subject to ground leases. The following table shows the geographic diversification of our real estate portfolio, based on annualized rental income, as of December 31, 2025: 2025 2025 Percentage of Total Rentable Annualized Annualized 2025 Number of Square Feet Rental Income Rental Income Annualized Location Properties (in thousands) (1) (in thousands) per Square Foot (1) Rental Income Virginia 11 691 $ 16,157 $ 23.38 16 % Ohio 18 1,120 12,330 11.01 12 % Wisconsin 9 890 8,370 9.40 8 % Illinois 10 634 7,237 11.41 7 % California 28 72 7,164 99.50 7 % Florida 8 596 5,812 9.75 6 % Texas 24 189 4,873 25.78 5 % Alabama 19 398 4,601 11.56 5 % Kentucky 3 188 3,632 19.32 4 % Nebraska 2 193 3,539 18.34 4 % Other 70 1,693 26,534 15.67 26 % 202 6,664 $ 100,249 $ 15.04 100 % ____________________________________ (1) Includes square feet of the buildings on land parcels subject to ground leases. 64 Table of Contents The following table shows the property type diversification of our real estate portfolio, based on annualized rental income, as of December 31, 2025: 2025 2025 Percentage of Total Rentable Annualized Annualized 2025 Number of Square Feet Rental Income Rental Income Annualized Property Type Properties (in thousands) (1) (in thousands) per Square Foot (1) Rental Income Retail 166 4,151 $ 63,989 $ 15.42 64 % Office 8 1,340 25,584 19.09 26 % Industrial 7 1,070 6,448 6.03 6 % Restaurant 21 103 4,228 41.05 4 % 202 6,664 $ 100,249 $ 15.04 100 % ____________________________________ (1) Includes square feet of the buildings on land parcels subject to ground leases. Leases Although there are variations in the specific terms of the leases of our properties, the following is a summary of the general structure of our current leases. Generally, the leases of the properties acquired provide for initial terms of ten or more years and provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions as the initial lease term. Certain leases also provide that in the event we wish to sell the property subject to that lease, we first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which we intend to accept for the sale of the property. The properties are generally leased under net leases pursuant to which the tenant bears responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation, including utilities, property taxes and insurance, while certain of the leases require us to maintain the roof, structure and parking areas of the building. Additionally, certain leases provide for increases in rent as a result of fixed increases, increases in the consumer price index, and/or increases in the tenant’s sales volume. The leases of the properties provide for annual rental payments (payable in monthly installments) ranging from $47,000 to $3.1 million (average of $399,000). Certain leases provide for limited increases in rent as a result of fixed increases or increases in the consumer price index. The following table shows lease expirations of our real estate portfolio, as of December 31, 2025, during each of the next ten years and thereafter, assuming no exercise of renewal options: 2025 Total Leased Annualized 2025 Percentage of Number Square Feet Rental Income Annualized 2025 of Leases Expiring Expiring Rental Income Annualized Year of Lease Expiration Expiring (1) (in thousands) (2) (in thousands) per Square Foot (2) Rental Income 2026 3 299 $ 3,444 $ 11.52 3 % 2027 6 241 4,898 20.32 5 % 2028 5 20 767 38.35 1 % 2029 6 259 4,391 16.95 4 % 2030 9 125 3,229 25.83 3 % 2031 4 80 3,928 49.10 4 % 2032 9 363 7,439 20.49 7 % 2033 11 414 4,513 10.90 5 % 2034 13 141 9,393 66.62 9 % 2035 11 244 6,060 24.84 6 % Thereafter 93 4,245 52,187 12.29 53 % 170 6,431 $ 100,249 $ 15.59 100 % ____________________________________ (1) Includes leases which are master lease agreements. (2) Includes square feet of the buildings on land parcels subject to ground leases. 65 Table of Contents The following table shows the economic metrics of our real estate assets as of and for the years ended December 31, 2025 and 2024: 2025 2024 Economic Metrics Weighted-average lease term (in years) (1) 10.1 10.5 Lease rollover (1)(2) : Annual average 3.4% 2.9% Maximum for a single year 4.9% 5.9% ____________________________________ (1) Based on annualized rental income of our real estate portfolio as of December 31, 2025 and 2024. (2) Through the end of the next five years as of the respective reporting date. Results of Operations Overview We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and heightened interest rates and uncertainty around the impacts of imposed tariffs and other changes to trade policy in the U.S. and other jurisdictions, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in Part I, Item 1A. Risk Factors . For a comparison of the years ended December 31, 2024 and 2023, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Our operating segments include Credit and Real Estate. Refer to Note 18 — Segment Reporting to our consolidated financial statements in this Annual Report on Form 10-K for further discussion of our operating segments. 66 Table of Contents The following table compares our summarized results of operations for the years ended December 31, 2025 and 2024 by operating segment (amounts in thousands): For the Year Ended December 31, 2025 2024 Change Revenues: Credit Segment $ 304,321 $ 389,988 $ (85,667) Real Estate Segment 111,615 93,525 18,090 Corporate 68 387 (319) 416,004 483,900 (67,896) Expenses: Credit Segment 261,696 603,837 (342,141) Real Estate Segment 91,983 122,779 (30,796) Corporate 41,278 51,802 (10,524) 394,957 778,418 (383,461) Other income (expense): Credit Segment 18,460 (10,034) 28,494 Real Estate Segment 1,717 2,268 (551) Corporate 11,151 9,994 1,157 31,328 2,228 29,100 Net income (loss) 52,375 (292,290) 344,665 Net income allocated to non-controlling interest 19 11 8 Net income (loss) attributable to the Company $ 52,356 $ (292,301) $ 344,657 Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Credit Segment Revenues The decrease in our Credit segment revenues of $85.7 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to a decrease in the overall size of our investment portfolio and a decline in interest rates during the year ended December 31, 2025. As of December 31, 2025, we held credit investments with an outstanding principal balance of $4.2 billion compared to credit investments with an outstanding principal of $4.4 billion as of December 31, 2024. Expenses Expenses for our Credit segment consist primarily of interest expense, increases (decreases) to our provision for credit losses, management fees, and general and administrative expenses. The decrease in our Credit segment expenses of $342.1 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to a $272.0 million decrease in the provision for credit losses, primarily due to six first mortgage loans that were moved to a risk rating of 5 during the year ended December 31, 2024, compared to no downgrades to a risk rating of 5 during the year ended December 31, 2025. The decrease was further driven by a $65.2 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the year ended December 31, 2025. 67 Table of Contents Net Interest Income (amounts in thousands): For the Year Ended December 31, 2025 2024 Change Interest income from loans held-for-investment $ 282,467 $ 349,426 $ (66,959) Interest income from real estate-related securities and other 21,854 40,562 (18,708) Interest expense (151,008) (216,218) 65,210 Net interest income $ 153,313 $ 173,770 $ (20,457) For the year ended December 31, 2025, net interest income for our Credit segment decreased $20.5 million. While decreases in average outstanding balances were the primary drivers of the declines in both interest income and interest expense, net interest income was adversely impacted by a larger decline in weighted average interest rates earned on credit investments relative to the decline in weighted average borrowing rates. Although interest expense declined due to lower borrowing rates and a meaningful reduction in average outstanding borrowings used to fund our credit investments, these impacts only partially offset the decline in interest income. Other Income (Expense) Other income (expense) for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) on equity securities, and loss on extinguishment of debt, along with dividend income from equity securities owned. Our credit segment had other income of $18.5 million during the year ended December 31, 2025, as compared to other expense of $10.0 million during the year ended December 31, 2024. The increase in our Credit Segment other income (expense) of $28.5 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to an unrealized gain on equity securities of $5.7 million during the year ended December 31, 2025 as compared to an unrealized loss on equity securities of $15.9 million during the year ended December 31, 2024, largely driven by the change in market value of our investment in an equity security of a public company. The increase was further driven by other income of $3.9 million, consisting of $756,000 in loss on sale of CMBS and liquid corporate senior loans, during the year ended December 31, 2025, as compared to other expense of $6.8 million, consisting of $17.3 million in loss on sale of CMBS and liquid corporate senior loans during the year ended December 31, 2024. The decrease in the loss on sale of CMBS and liquid corporate senior loans was slightly offset by a decrease in interest income of $4.4 million. The increase in other income (expense) was partially offset by a $4.5 million decrease in gain on investment in unconsolidated entities and a decrease of $676,000 in loss on extinguishment of debt during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Real Estate Segment Revenues The increase in our Real Estate segment revenues of $18.1 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to the addition of 20 properties subsequent to December 31, 2024. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”. Expenses The decrease in our Real Estate segment expenses of $30.8 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to a decrease in impairment charges of $42.4 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, as four properties were deemed to be impaired during the year ended December 31, 2025, resulting in impairment charges of $9.9 million, as compared to ten properties that were deemed to be impaired during the year ended December 31, 2024, resulting in impairment charges of $52.2 million. The decrease in Real Estate segment expenses was partially offset by an increase in depreciation and amortization expense of $4.4 million and an increase in property operating expenses of $4.8 million driven by the addition of 20 properties subsequent to December 31, 2024. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”. 68 Table of Contents Other Income Other income for our Real Estate segment primarily consists of gain on disposition of real estate and other income. The decrease in our Real Estate segment other income of $551,000 for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to the disposition of five properties resulting in a net gain of $1.5 million during the year ended December 31, 2025, compared to the disposition of seven properties resulting in a net gain of $1.9 million during the year ended December 31, 2024. Corporate and Other Revenues Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, decreased $319,000 during the year ended December 31, 2025 as compared to the year ended December 31, 2024, The Company disposed of 16 condominium units during the year ended December 31, 2025 and two units remained as of December 31, 2025. Expenses Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses and impairment on our condominium and rental units acquired via foreclosure. The decrease in corporate expenses of $10.5 million during the year ended December 31, 2025 as compared to the year ended December 31, 2024, was partially due to no impairment charges related to condominium units during the year ended December 31, 2025, as compared to $9.1 million during the year ended December 31, 2024. The decrease was further driven by decreases of $2.1 million and $537,000 in property operating expense and real estate tax expense, respectively, related to the disposition of 16 condominium units during the year ended December 31, 2025. The decrease was partially offset by an increase in general and administrative expenses of $1.5 million, primarily in connection with restricted stock unit related expenses recorded during the year ended December 31, 2025, as well as increases in professional and escrow and trustee fees. Other Income The increase in corporate other income of $1.2 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily driven by the disposition of 16 condominium units resulting in a net gain of $6.6 million during year ended December 31, 2025, compared to the disposition of 11 condominium units resulting in a net gain of $4.8 million during the year ended December 31, 2024. The increase was partially offset by a decrease in other income of $736,000 primarily due to a decrease in interest income generated by short-term liquid investments included in cash and cash equivalents on the consolidated balance sheets during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Same Store Analysis Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate company’s operating performance. Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties. We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our calculation of net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income. In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment. 69 Table of Contents Comparison of the Years Ended December 31, 2025 and 2024 The following table reconciles our Real Estate segment net income (loss), calculated in accordance with GAAP, to net operating income (in thousands): Total For the Year Ended December 31, 2025 2024 Change Net income (loss) $ 21,349 $ (26,986) $ 48,335 Other expense, net (177) (413) 236 Gain on disposition of real estate and condominium developments, net (1,540) (1,855) 315 Real estate impairment 9,860 52,243 (42,383) Depreciation and amortization 36,402 31,981 4,421 Transaction-related expenses 169 — 169 Management fees 9,348 8,218 1,130 General and administrative expenses 255 399 (144) Interest expense, net 23,274 23,248 26 Net operating income $ 98,940 $ 86,835 $ 12,105 A total of 181 properties were acquired before January 1, 2024 and represent our “same store” properties during the years ended December 31, 2025 and 2024. “Non-same store” properties, for purposes of the table below, include properties acquired or disposed of on or after January 1, 2024. The following table details the components of our Real Estate segment net operating income broken out between same store and non-same store properties (in thousands): Total Same Store Non-Same Store For the Year Ended December 31, For the Year Ended December 31, For the Year Ended December 31, 2025 2024 Change 2025 2024 Change 2025 2024 Change Rental and other property income $ 111,615 $ 93,525 $ 18,090 $ 86,333 $ 85,912 $ 421 $ 25,282 $ 7,613 $ 17,669 Property operating expenses 8,437 3,639 4,798 3,098 2,969 129 5,339 670 4,669 Real estate tax expenses 4,238 3,051 1,187 2,291 2,443 (152) 1,947 608 1,339 Total property operating expenses 12,675 6,690 5,985 5,389 5,412 (23) 7,286 1,278 6,008 Net operating income $ 98,940 $ 86,835 $ 12,105 $ 80,944 $ 80,500 $ 444 $ 17,996 $ 6,335 $ 11,661 Net Operating Income Same store property net operating income remained relatively consistent during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Non-same store property net operating income increased $11.7 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase was primarily due to the acquisition of 20 properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $209.1 million subsequent to December 31, 2024, partially offset by the disposition of five properties for an aggregate gross sales price of $107.1 million subsequent to December 31, 2024. Distributions Our Board authorizes distributions on a quarterly basis, which are paid out on a monthly basis. Our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, for the periods indicated below: 70 Table of Contents Period Commencing Period Ending Monthly Distribution Amount January 2023 September 2023 $0.0350 October 2023 December 2023 $0.0367 January 2024 December 2024 $0.0375 January 2025 June 2026 $0.0283 As of December 31, 2025, we had distributions payable of $14.5 million. The following table presents distributions and source of distributions for the periods indicated below (dollar amounts in thousands): Year Ended December 31, 2025 2024 Amount Percent Amount Percent Distributions paid in cash $ 121,293 80 % $ 154,040 78 % Distributions reinvested 31,217 20 % 42,635 22 % Total distributions $ 152,510 100 % $ 196,675 100 % Source of distributions: Net cash provided by operating activities (1) (2) $ 152,510 100 % $ 196,675 100 % Total sources $ 152,510 100 % $ 196,675 100 % ____________________________________ (1) Net cash provided by operating activities for the years ended December 31, 2025 and 2024 was $136.0 million and $161.2 million, respectively. (2) Our distributions covered by cash flows include cash flows from operating activities in excess of distributions from prior periods of $16.5 million and $35.4 million for the years ending December 31, 2025 and 2024, respectively. We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including proceeds from asset sales, proceeds from loan repayments, and borrowings. Distributions at any point in time may not reflect the current performance of our assets or our current operating cash flows. Share Redemptions During the year ended December 31, 2025, we received valid redemption requests under our share redemption program totaling approximately 179.5 million shares, of which we redeemed approximately 4.9 million shares as of December 31, 2025 for $25.8 million (at an average redemption price of $5.23 per share) and approximately 1.5 million shares subsequent to December 31, 2025 for $7.9 million (at an average redemption price of $5.22 per share). The remaining redemption requests relating to approximately 173.0 million shares went unfulfilled. During the year ended December 31, 2024, we received valid redemption requests under our share redemption program totaling approximately 151.9 million shares, of which we redeemed approximately 5.6 million shares as of December 31, 2024 for $33.9 million (at an average redemption price of $6.09 per share) and approximately 1.8 million shares subsequent to December 31, 2024 for $11.1 million (at an average redemption price of $6.09 per share). The remaining redemption requests relating to approximately 144.5 million shares went unfulfilled. See the discussion of our share redemption program in Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Share Redemption Program in this Annual Report on Form 10-K. Liquidity and Capital Resources General We expect to utilize proceeds from net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions from certain investments, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness, distributions, redemptions and for general corporate uses. The sources of our operating cash flows will primarily be provided by interest income from our portfolio of credit investments and the rental and other property income received from current and future leased properties. 71 Table of Contents Sources of Liquidity Our primary sources of liquidity include cash and cash equivalents and available borrowings under our debt facilities, which are set forth in the following table (in thousands): December 31, 2025 December 31, 2024 Cash and cash equivalents $ 184,674 $ 181,291 Unused borrowing capacity (1) 52,776 91,786 $ 237,450 $ 273,077 ____________________________________ (1) Reflects the total borrowing capacity approved by the lenders related to the assets pledged as collateral, less the drawn amount. See Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K for additional details regarding our repurchase facilities, notes payable and credit facilities. The following table details our outstanding financing arrangements and borrowing capacity as of December 31, 2025 (in thousands): Portfolio Financing Outstanding Principal Balance Maximum Capacity (1) Notes payable – variable rate debt $ 378,775 $ 378,775 ABS mortgage notes 758,520 758,520 Credit facilities 187,500 318,000 Repurchase facilities 1,777,400 2,984,256 (2) Total portfolio financing $ 3,102,195 $ 4,439,551 ___________________________________ (1) Subject to borrowing availability. (2) Facilities under the J.P. Morgan Repurchase Facility carry no maximum facility size. Variance between Average and Quarter-End Repurchase Facility Borrowings Outstanding The following table compares the average amount outstanding under our Repurchase Facilities (as defined in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K) during each quarter and the amount outstanding as of the end of each quarter, together with an explanation of significant variances (amounts in thousands): Quarter Ended Quarter-End Balance Weighted-Average Balance During Quarter Variance December 31, 2024 $ 1,693,142 $ 1,779,490 $ (86,348) (1) March 31, 2025 $ 1,688,721 $ 1,681,737 $ 6,984 June 30, 2025 $ 1,693,710 $ 1,621,436 $ 72,274 September 30, 2025 $ 1,613,093 $ 1,618,193 $ (5,100) December 31, 2025 $ 1,777,400 $ 1,641,465 $ 135,935 (2) ____________________________________ (1) Variance driven by late quarter timing of CMBS sales and debt pay downs, primarily in connection with the Master Repurchase Agreement with Wells Fargo and the amended and restated Master Repurchase Agreement with Barclays Bank (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K). (2) Variance driven by late quarter timing of the origination of six first mortgage loans funded, primarily in connection with the Master Repurchase Agreements with Wells Fargo and Citibank (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K). Capital Resources Our principal demands for funds will be for the acquisition or origination of credit investments and real estate, and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions, redemptions and interest and 72 Table of Contents principal on current and any future debt financings, including principal repayments of $1.7 billion within the next 12 months, $44.9 million of which has a rolling term that resets monthly, as further discussed in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K. Generally, we expect to meet our liquidity requirements through net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses. We expect that substantially all net cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, including tenant improvements and leasing commissions, are paid; however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on our unencumbered assets. To the extent that cash flows from operations are lower, distributions paid to our stockholders may be lower. We expect that substantially all net cash flows from the Secondary DRIP Offering or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders. We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months. Contractual Obligations As of December 31, 2025, we had debt outstanding with a carrying value of $3.1 billion and a weighted average interest rate of 5.0%. See Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K for certain terms of our debt outstanding, including extension options. Our contractual obligations as of December 31, 2025 were as follows (in thousands): Payments due by period (1) Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Unfunded loan commitments (2) $ 226,283 $ 12,000 $ 74,785 $ 106,686 $ 32,812 Principal payments — variable rate debt 378,776 174,600 204,176 — — Principal payments — ABS mortgage notes 758,519 — 303,408 455,111 — Principal payments — credit facilities 232,424 44,924 187,500 — — Principal payments — repurchase facilities 1,732,476 1,489,889 242,587 — — Interest payments (3) 236,705 131,765 70,311 27,182 7,447 Total $ 3,565,183 $ 1,853,178 $ 1,082,767 $ 588,979 $ 40,259 ____________________________________ (1) The table does not include amounts due to CMFT Management or its affiliates pursuant to our Management Agreement because such amounts are not fixed and determinable. (2) Comprised of our unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of December 31, 2025. The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the final maturity date; however, we may be obligated to fund these commitments earlier than such date. This table does not include $60.3 million of unfunded commitments related to the NewPoint JV (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the consolidated financial statements in this Annual Report on Form 10-K). (3) Interest payments on the variable rate debt, credit facilities and repurchase facilities have been calculated based on outstanding balances as of December 31, 2025 through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest rates could vary over time. We expect to incur additional borrowings in the future to acquire additional properties and credit investments. There is no limitation on the amount we may borrow against any single improved property. As of December 31, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 62.5%. Cash Flow Analysis Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Operating Activities. Net cash provided by operating activities decreased by $25.2 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily due to a decrease in interest income of 73 Table of Contents $85.7 million, driven by a net decrease in credit investments of $194.6 million during the year ended December 31, 2025. The decrease in credit investments was a result of a net decrease of $182.8 million in real estate-related securities and other, a net decrease of $106.0 million in first mortgage loans, partially related to the Company taking possession of the underlying assets of two first mortgage loans through deeds-in-lieu of foreclosure, and a net decrease of $15.3 million in liquid corporate senior loans. The decrease in credit investments was partially offset by an increase in corporate senior loans of $109.5 million. The decrease was further driven by a decline in interest rates during the year ended December 31, 2025 as compared to the year ended December 31, 2024. The change was partially offset by an increase in rental and other property income, driven by the net acquisition of 15 properties subsequent to December 31, 2024. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance. Investing Activities. For the year ended December 31, 2025, net cash provided by investing activities decreased by $609.9 million, as compared to the year ended December 31, 2024. The decrease was primarily due to a $200.9 million net investment in loans held-for-investment during the year ended December 31, 2025, as compared to $627.3 million in net proceeds from loans held-for-investment during the year ended December 31, 2024. The decrease was partially offset by an increase in net proceeds received from the disposition of real estate-related securities and other of $97.9 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was further offset by $33.5 million in net proceeds on the investment in unconsolidated entities during the year ended December 31, 2025, as compared to a $54.6 million net investment in unconsolidated entities during the year ended December 31, 2024. In addition, the decrease was offset by an increase in net proceeds from real estate assets and condominium units of $30.6 million, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Financing Activities. For the year ended December 31, 2025, net cash used in financing activities decreased by $714.6 million, as compared to the year ended December 31, 2024. The change was primarily due to a decrease in net repayments on the repurchase facilities, notes payable and credit facilities of $676.1 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The change was further driven by a decrease in distributions to shareholders of $32.7 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. Election as a REIT We elected to be taxed, and operate our business to qualify, as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2012. To maintain our qualification as a REIT, we must continue to meet certain requirements relating to our organization, sources of income, nature of assets, distributions of income to our stockholders and recordkeeping. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains). If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax on our taxable income at regular corporate rates. We will not be able to deduct distributions paid to our stockholders in any year in which we fail to maintain our qualification as a REIT. We also will be disqualified for the four taxable years following the year during which qualification was lost, unless we are entitled to relief under specific statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to maintain our qualification as a REIT for federal income tax purposes. No provision for federal income taxes has been made in our accompanying consolidated financial statements. We are subject to certain state and local taxes related to the operations of properties in certain locations, which have been provided for in our accompanying consolidated financial statements. Related-Party Transactions and Agreements We have entered into agreements with CMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management, the Investment Advisor or their affiliates. In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition of real estate from funds that are advised by an affiliate of CMFT Management. See Note 13 — Related-Party Transactions and Arrangements to our consolidated financial statements in this Annual Report on Form 10-K for a discussion of the various related-party transactions, agreements and fees. Conflicts of Interest Richard S. Ressler, the chairman of our Board, chief executive officer and president, who is also a founder and principal of CIM Group and is an officer/director of certain of its affiliates, is the vice president of our manager. Through his affiliation with Orchard Capital Corporation, Mr. Ressler chairs the executive committee of Orchard First Source Asset Management Holdings, 74 Table of Contents LLC, the holding company of our Investment Advisor. Additionally, one of our directors, Jason Schreiber, is an employee of CIM Group. Nathan D. DeBacker, our chief financial officer, principal accounting officer and treasurer, is an employee of CIM Group, the vice president of our manager, and is an officer of certain of its affiliates. As such, there may be conflicts of interest where CMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for CIM Group or another program sponsored or operated by affiliates of our manager, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others. The compensation arrangements between affiliates of CMFT Management and these other real estate programs sponsored or operated by affiliates of our manager could influence the advice provided to us. See Part I, Item 1. Business — Conflicts of Interest and Part I, Item 1A. Risk Factors — Risks Related to Conflicts of Interest of this Annual Report on Form 10-K. Critical Accounting Policies and Significant Accounting Estimates Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements in this Annual Report on Form 10-K. Current Expected Credit Losses The current expected credit loss is our current estimate of potential credit losses related to our loans held-for-investment, CMBS and CLO subordinated note. We estimate our CECL reserve for our senior loans and mezzanine loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board Staff Q&A Topic 326, No. 1. For our liquid corporate senior loans and corporate senior loans, we use a probability of default and loss given default method. CMBS and CLO subordinated note credit losses, if any, are estimated by calculating the difference between (i) the present value of estimated cash flows expected to be collected from the security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) the net amortized cost basis of the security. The risks and uncertainties involved in applying the principles related to CECL reserves include, but are not limited to, the following: • The historical loan loss data used in estimating our CECL reserve. To estimate the historical loan losses relevant to our portfolio, we have utilized historical loan performance with market loss data from 1998 through 2025. Within this database, we focused on the applicable subset of available loan data, which we determined based on loan metrics that are most comparable to our loan portfolio including asset type, loan structure, credit rating and years to maturity; • The expected repayments over the contractual term of each loan, CMBS and CLO subordinated note. As part of our quarterly review of our loan and CMBS portfolios, we assess the expected repayment date of each position, which is used to determine the contractual term for purposes of computing our CECL reserve; • The current credit quality and performance expectations of our loan, CMBS and CLO subordinated note portfolios, as well as market conditions over the relevant time period and its impact on our portfolios are estimated by management; and • The expectations of performance and market conditions. Our CECL reserve is adjusted to reflect our estimation of the current and future economic conditions that impact the performance of the commercial real estate assets securing our loans. These estimations include unemployment rates, interest rates, inflation, and other macroeconomic factors impacting the likelihood and magnitude of potential credit losses for our loans during their anticipated term. In addition to the CRE data we have licensed from Trepp LLC, we have also licensed certain macroeconomic financial forecasts to inform our view of the potential future impact that broader economic conditions may have on our loan 75 Table of Contents portfolio’s performance. We may also incorporate information from other sources, including information and opinions available to our Investment Advisor, to further inform these estimations. This process requires significant judgments about future events that, while based on the information available to us as of the balance sheet date, are ultimately indeterminate and the actual economic condition impacting our portfolios could vary significantly from the estimates we made as of December 31, 2025. • For collateral-dependent loans where foreclosure of the collateral is deemed probable, expected credit losses are measured as the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans where foreclosure is not considered probable, we apply a practical expedient to estimate expected losses based upon the difference between the collateral’s fair value (reduced by certain adjustments such as estimated costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. A loan is determined to be collateral-dependent if (i) the borrower or sponsor is experiencing financial difficulty, and (ii) repayment is expected to be provided through the sale of the underlying collateral. This assessment requires the use of significant judgment and is subject to uncertainty. In evaluating whether a borrower is experiencing financial difficulty, we consider various factors including, but not limited to, the sufficiency of the borrower’s operating cash flows to meet current and future debt service requirements, the borrower’s ability to refinance the loan, market liquidity conditions, and other circumstances that may affect the borrower’s ability to satisfy its contractual obligations under the loan agreement. Recoverability of Real Estate Assets We acquire real estate assets and subsequently monitor those assets quarterly for impairment, including the review of real estate properties subject to direct financing leases, if applicable. Additionally, we record depreciation and amortization related to our assets. The risks and uncertainties involved in applying the principles related to real estate assets include, but are not limited to, the following: • The estimated useful lives of our depreciable assets affects the amount of depreciation and amortization recognized on our assets; • The review of impairment indicators and subsequent determination of the undiscounted future cash flows could require us to reduce the carrying value of assets held and used to a fair value estimated by management and recognize an impairment loss. The process for evaluating real estate impairment requires management to make significant assumptions related to certain inputs, including holding periods; • The fair value of held for sale assets is estimated by management. This estimated value could result in a reduction of the carrying value of the asset; and • Changes in assumptions based on actual results may have a material impact on our financial results. Allocation of Purchase Price of Real Estate Assets In connection with our acquisition of real estate assets or after taking control of real assets through deeds-in-lieu of foreclosure, we allocate the purchase price to the tangible and intangible assets and liabilities acquired based on their respective relative fair values. Tangible assets consist of land, buildings, fixtures and tenant improvements. Intangible assets consist of above- and below-market lease values and the value of in-place leases. Our purchase price allocations are developed utilizing third-party appraisal reports, industry standards and management experience. The risks and uncertainties involved in applying the principles related to purchase price allocations include, but are not limited to, the following: • The value allocated to land, as opposed to buildings, fixtures and tenant improvements, affects the amount of depreciation expense we record. If more value is attributed to land, depreciation expense is lower than if more value is attributed to buildings, fixtures and tenant improvements; • Intangible lease assets and liabilities can be significantly affected by estimates including market rent, lease terms including renewal options at rental rates below estimated market rental rates, carrying costs of the property during a hypothetical expected lease-up period, and current market conditions and costs, including tenant improvement allowances and rent concessions; and • We determine whether any financing assumed is above- or below-market based upon comparison to similar financing terms for similar types of debt financing with similar maturities. Recently Issued Accounting Pronouncements Recently issued accounting pronouncements are described in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements in this Annual Report on Form 10-K. 76 Table of Contents