11 unchanged sentences
We seek to mitigate these risks by monitoring the debt capital markets to inform our decisions on the amount, timing and terms of capital we raise.
−Removed: The COVID-19 pandemic has resulted in extreme volatility in a variety of global markets, including the real estate-related debt markets.
+Added: Market uncertainty and volatility may cause fluctuation in market value of certain asset classes within our portfolio.
We have and may continue to receive margin calls from our lenders as a result of the decline in the market value of the assets pledged by us to our lenders under our repurchase agreements and warehouse credit facilities, and if we fail to resolve such margin calls when due by payment of cash or delivery of additional collateral, the lenders may exercise remedies including demanding payment by us of our aggregate outstanding financing obligations and/or taking ownership of the loans or other assets securing the applicable obligations and liquidating them at inopportune prices.
−Removed: As a result of the closing of the Capstead merger on October 19, 2021 we hold a significant amount of ARM securities.
+Added: As a result of the closing of the Capstead merger on October 19, 2021 we hold ARM Agency securities.
Changes in the level of interest rates and spreads can significantly impact the value of these assets.
We may utilize a variety of financial instruments in order to limit the adverse effects of interest rates on our results.
+Added: During the year ended December 31, 2022, we have made significant strides in unwinding our ARMs portfolio and continue to mitigate our market exposure as part of our business strategy.
Interest Rate Risk
7 unchanged sentences
As of December 31, 2022 and 2021, our portfolio included 157 and 161 variable rate investments, respectively, based on LIBOR and SOFR (or "indexing rates") for various terms.
−Removed: Borrowings under our repurchase agreements are also based on indexing rates.
+Added: Borrowings under our financing arrangements are also based on LIBOR and SOFR.
The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 50 or 100 basis points or decrease by 25 basis points, assuming that our current balance sheet was to remain constant and no actions were taken to alter our existing interest rate sensitivity.
−Removed: For the indexing rate sensitivity range, a reduction of the indexing rates results in an increase in our portfolio return.
−Removed: This is driven by the indexing rates floor in place for majority of our commercial mortgage loans, held for investment.
−Removed: In contrast, the majority of our financing instruments do not have floors.
−Removed: The presence of a indexing rate floors on interest-bearing assets coupled with lack of indexing rate floors on the majority of interest bearing liabilities allows the portfolio to generate a higher return for a basis point decrease in indexing rates compared to increase in basis points for the indexing rates range presented:
+Added: The changes in the portfolio for each basis points increase/decrease is a change from the base scenario.
Estimated Percentage Change in Interest Income Net of Interest Expense
4 unchanged sentences
(+) 100 Basis Points 6.98 % (1.64) %
+Added: Real Estate Risk
+Added: The market values of commercial mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, the impacts of the COVID-19 pandemic, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors);
+Added: local real estate conditions;
+Added: changes or continued weakness in specific industry segments;
+Added: and demographic factors.
+Added: In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.
Financial Statements and Supplementary Data.
2 unchanged sentences
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.