What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-11 compared with 2020-03-17 · 29 added, 101 removed, 64 unchanged (67% of the section changed)

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

No public trading market currently exists for the Company's shares of common stock and the Company currently has no immediate plans to list these shares on a national securities exchange.

No public trading market currently exists for the Company's shares of common stock and the Company currently has no immediate plans to list our shares of common stock on a national securities exchange.

Until our shares are listed on a national securities exchange, if ever, the Company's stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase requirements.

On November 12, 2019, the board of directors, upon the recommendation of the Advisor, unanimously approved and established an estimated NAV per share of the Company’s common stock of $18.57 .

On November 2, 2020, the board of directors, upon the recommendation of the Audit Committee of the board, unanimously approved and established the estimated NAV per share of the Company’s common stock proposed by the Advisor of $17.88.

The estimated per share NAV is based upon the estimated value of the Company’s assets less the Company’s liabilities as of September 30, 2020.

This valuation was performed in accordance with the provisions of Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013, including the use of an independent third-party valuation firm to estimate the fair value of our commercial real estate debt investments and commercial mortgage backed securities.

See our current report on Form 10-Q filed with the SEC on November 13, 2019 for the Company's methodology for calculating our estimated per-share NAV.

This valuation was performed in a manner consistent with the provisions of Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013, including the use of independent third-party valuation firms to estimate the fair value of our loan portfolio, securities portfolio and real estate owned portfolio.

See our Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020 for the Company's methodology for calculating our estimated per-share NAV.

There is no public trading market for the shares at this time, and there can be no assurance that stockholders would receive $17.88 per share if such a market did exist and they sold their shares or that they will be able to receive such amount for their shares in the future.

2 unchanged sentences

The Company is currently offering our shares for $17.88 pursuant to the DRIP.

As of February 28, 2020 , the Company had 44,385,162 shares of common stock outstanding held by a total of 16,223 stockholders.

As of February 28, 2021 , the Company had 44,135,876 shares of common stock outstanding held by a total of 16,061 stockholders of record.

Distributions

4 unchanged sentences

federal income and excise taxes on any undistributed income.

In 2019, the Company paid monthly distributions at a rate equivalent to $1.44 per annum, per share of common stock.

In April 2020, the Company’s board of directors unanimously approved a transition in the timing of the dividend payments, to holders of the Company’s common stock from a monthly payment with daily accruals to a quarterly accrual and payment basis, starting with the second quarter 2020 dividend that was paid in July 2020.

Similarly, the Company began paying accrued and unpaid dividends on Preferred Stock on a quarterly basis.

The monthly distributions for the first quarter of 2020 were paid at a daily rate equivalent to $1.44 per annum, per share of common stock.

Starting with the second quarter 2020 distribution, the 2020 quarterly distributions were paid at a quarterly rate of $0.275 per share of common stock (equivalent to $1.10 per annum).

Distribution payments are dependent on the availability of funds.

1 unchanged sentence

Subject to the terms of the Preferred Stock, dividends on the Company’s Preferred Stock are generally paid on an as-converted basis with the common stock.

Distributions are generally payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month.

The below table reflects distributions paid in cash and through the DRIP to common stockholders during the years ended December 31, 2019 and 2018 (dollars in thousands):

Distributions are generally payable by the fifth day following each quarter end to stockholders of record at the close of business each day during the prior quarter.

The below table reflects the value of distributions paid in cash and through the DRIP to common stockholders during the years ended December 31, 2020 and 2019 (dollars in thousands):

Year Ended December 31,

4 unchanged sentences

Source of Distribution Coverage:

Net Income (Loss)

Available cash on hand

Net Income $ 36,798 80.6 % $ 45,763 76.7 %

Common stock issued under DRIP 8,883 19.4 % 13,901 23.3 %

15 unchanged sentences

The following table provides information about our common stock that may be issued under our RSP as of December 31, 2020:

Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise of Price of Outstanding Options, Warrants, and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise of Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans

Equity compensation plans approved by security holders — — —

Equity compensation plans not approved by security holders — — 3,977,510

Recent Sales of Unregistered Equity Securities

Commencing in February 2018, the Company has been offering common stock and Series A Preferred Stock and commencing in October 2019, the Company has been offering Series C Preferred Stock, in private placements exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") pursuant to Section 4(a)(2) of the Securities Act and certain rules and regulations promulgated thereunder.

Pursuant to these private placements, for the year ended December 31, 2019 , the Company made the following sales to institutional and individual investors:

Class of Security

Number of Shares

$76.9 Million

Series A Preferred Stock

$56.2 Million (1)

Series C Preferred Stock

$7.0 Million (1)

________________________

(1) Includes accrued div idends as of settlement paid as part of purchase price.

Conversion Terms of the Preferred Stock

Immediately prior to a “Liquidity Event” (defined as (i) the listing of the Company's common stock on a national securities exchange or quotation on an electronic inter-dealer quotation system;

(ii) a merger or business combination involving the Company pursuant to which outstanding shares of common stock are exchanged for securities of another company which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system;

or (iii) any other transaction or series of transactions that result in all shares of common stock being transferred or exchanged for cash or securities which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system), each outstanding share of Series A Preferred Stock shall convert (the “Mandatory Conversion”) into 299.2 shares of the Company's common stock, subject to anti-dilution adjustments (the “Conversion Rate”).

Series C Preferred Stock will convert into the same amount of shares of common stock on the one-year anniversary of a Liquidity Event, subject to the Company’s right to accelerate the conversion to a date no earlier than six months after the Liquidity Event, upon at least ten days prior notice to the holders of the Series C Preferred Stock.

If there has not been a Liquidity Event within six years from the initial issuance of the Preferred Stock, each holder of Preferred Stock shall have the right to convert all, but not less than all, of the Preferred Stock held by such holder into the Company's common stock at the Conversion Rate.

Each holder also has the option to convert its shares of Preferred Stock into common stock upon a Change in Control (as defined in the Articles Supplementary) of the Company.

In addition, neither the Company nor a holder of shares of Preferred Stock may redeem shares of the Preferred Stock until six years from the initial issuance of the Preferred Stock, except in cases of a Change in Control (as defined in the respective Articles Supplementary for the Series A and Series C Preferred Stock).

Total — — 3,977,510

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

10 unchanged sentences

Repurchases pursuant to the SRP, when requested, generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”).

Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any

fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year.

Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year.

Funding for repurchases pursuant to the SRP for any given fiscal semester will be limited to proceeds received during that same fiscal semester through the issuance of common stock pursuant to any DRIP in effect from time to time, provided that the Company's board of directors has the power, in its sole discretion, to determine the amount of shares repurchased during any fiscal semester as well as the amount of funds to be used for that purpose.

6 unchanged sentences

Share repurchase activity under the SRP during the year ended December 31, 2020 was as follows:

Number of Shares Repurchased

Average Price per Share

Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs

Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs

Number of Shares Repurchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs

January 1 - January 31, 2020 373,135 $ 18.56 373,135 —

February 1 - February 28, 2019

March 1 - March 31, 2019

April 1 - April 30, 2019

May 1 - May 31, 2019

June 1 - June 30, 2019

February 1 - February 28, 2020 — N/A — —

March 1 - March 31, 2020 — N/A — —

April 1 - April 30, 2020 — N/A — —

May 1 - May 31, 2020 — N/A — —

June 1 - June 30, 2020 — N/A — —

July 1 - July 31, 2020 206,332 $ 16.25 206,332 —

August 1 - August 31, 2019

September 1 - September 30, 2019

October 1 - October 31, 2019

November 1 - November 30, 2019

December 1 - December 31, 2019

August 1 - August 31, 2020 — N/A — —

September 1 - September 30, 2020 — N/A — —

October 1 - October 31, 2020 — N/A — —

November 1 - November 30, 2020 — N/A — —

December 1 - December 31, 2020 — N/A — —

Total 579,467 579,467

For additional details about the SRP, see “Share Repurchase Program” in “Note 9 - Stock Transactions” to our consolidated financial statements included in this Annual Report on Form 10-K.

Selected Financial Data.

The following selected financial data should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations".

The following consolidated balance sheets as of December 31, 2019 and 2018 and consolidated statements of operations the for the years ended December 31, 2019 , 2018 , 2017, 2016 and 2015 were derived from our consolidated financial statements.

Balance sheet data (dollars in thousands)

Commercial mortgage loans, held for investment, net

Commercial mortgage loans, held-for-sale, measured at fair value

Real estate securities, available for sale, measured at fair value

Collateralized loan obligations

Repurchase agreements - commercial mortgage loans

Other financing and loan participation - commercial mortgage loans

Repurchase agreements - real estate securities

Total liabilities

Total stockholders' equity

Year Ended December 31,

Operating data (dollars in thousands)

Interest income:

Interest income

Interest expense

Net interest income

Revenue from real estate owned

Asset management and subordinated performance fee

Acquisition fees and acquisition expenses

Administrative services expenses (1)

Other expenses

Total expenses

Other (income)/loss:

Loan loss provision/(recovery)

Realized (gain)/loss on sale of real estate securities

Realized (gain)/loss on sale of commercial mortgage loan held-for-sale

Realized (gain)/loss on sale of commercial mortgage loan, held-for-sale, measured at fair value

Impairment losses on real estate securities

Unrealized (gain)/loss on commercial mortgage loans held-for-sale

Unrealized (gain)/loss on commercial mortgage loans, held-for-sale, measured at fair value

Unrealized (gain)/loss on other real estate investments, measured at fair value

Unrealized (gain)/loss on derivatives

Realized (gain)/loss on derivatives

Total other (income)/loss

Income/(loss) before taxes

Provision/(benefit) for income tax

Preferred stock dividends

Undistributed earnings allocated to preferred stock

Net income applicable to common stock

Basic net income per share

Diluted net income per share

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Distributions per common share

________________________

(1) During the year ended December 31, 2015 the Company previously reported Administrative services expenses within the Professional fees line.

For the year ended December 31, 2016 the amounts are presented separately and the change was applied retrospectively.

For the year ended December 31, 2014, the Company did not incur administrative services expenses.

Intentionally Omitted.

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 5. Market for Registrant’s Common Equity