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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-26 · 263 added, 324 removed, 543 unchanged (52% of the section changed)

9 unchanged sentences

federal income tax purposes since 2013.

The Company, through one or more subsidiaries which are each treated as a taxable REIT subsidiary ("TRS"), is indirectly subject to U.S.

The Company, through one or more subsidiaries which are each treated as a TRS, is indirectly subject to U.S.

federal, state and local income taxes.

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The Company has no employees.

We are managed by our Advisor pursuant to an Advisory Agreement (the "Advisory Agreement").

We are managed by our Advisor pursuant to the Advisory Agreement.

Our Advisor manages our affairs on a day-to-day basis.

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The Company invests in commercial real estate debt investments, which may include first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans.

The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") securitization transactions.

Historically this business has focused primarily on CMBS, commercial real estate collateralized loan obligation bonds ("CRE CLO bonds"), collateralized debt obligations ("CDOs") and other securities.

As a result of the October 2021 acquisition of Capstead Mortgage Corporation ("Capstead"), the Company acquired a portfolio of residential mortgage backed securities (“RMBS”) in the form of residential adjustable-rate mortgage pass-through securities ("ARM Agency Securities" or "ARMs") issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.

As of December 31, 2023, the Company has fully disposed of all of its ARM Agency Securities and is continuing to reinvest the proceeds from the sale of these securities in its other businesses.

The Company also owns real estate that was either acquired by the Company through foreclosure or deed in lieu of foreclosure, or that was purchased for investment, primarily subject to triple net leases.

The Company also originates conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions.

Historically this business has focused primarily on CMBS, CMBS bonds, CDOs and other securities.

The Company also owns real estate that was either acquired by the Company through foreclosure or deed-in-lieu of foreclosure, or that was purchased for investment.

Book Value Per Share

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Series H convertible preferred stock 5,370,498 5,370,498

Series I convertible preferred stock — 299,200

Total outstanding shares 88,437,287 88,122,411

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Set forth below is a summary of the critical accounting estimates that management believes are important to the preparation of our financial statements and require complex management judgment.

The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 – Summary of Critical Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K.

The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 – Summary of Significant Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K.

Credit Losses - Estimating Credit Losses

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The general allowance for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments, represents a lifetime estimate of expected credit losses.

Factors considered by the Company when determining the general allowance for credit losses reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and forward looking information through the use of projected macroeconomic scenarios over the reasonable and supportable forecasts.

Factors considered by the Company when determining the general allowance for credit losses reserve include loan-specific characteristics such as LTV ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and forward looking information through the use of projected macroeconomic scenarios over the reasonable and supportable forecasts.

The general allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments.

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The Company’s model to determine the general allowance for credit losses principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 2002 to 2021 provided by a reputable third party, forecasting the loss parameters based on a projected macroeconomic scenario using a probability-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.

For financial instruments assessed on an individual basis, including when it is probable that the Company will be unable to collect the full payment of principal and interest on the instrument, the Company applies a discounted cash flow (“DCF”) methodology.

Specific Allowance for credit losses

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Results of Operations

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

The Company conducts its business through the following segments:

1 unchanged sentence

• The real estate securities business focuses on investing in and asset managing real estate securities.

Historically this business has focused primarily on CMBS, CRE CLO bonds, CDO notes, and other securities.

As a result of the October 2021 acquisition of Capstead, the Company acquired a portfolio of ARM Agency Securities.

The portfolio was completely divested by the third quarter of 2023.

• The commercial real estate conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.

Historically this business has focused primarily on CMBS, CMBS bonds, CDO notes, and other securities.

securitization market at a profit.

The TRS may also hold certain mezzanine loans that don't qualify as good REIT assets due to any potential loss from foreclosure.

• The real estate owned business represents real estate acquired by the Company through foreclosure, deed-in-lieu of foreclosure, or purchase.

Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Net Interest Income

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The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the years ended December 31, 2024 and 2023 (dollars in thousands):

Year Ended December 31,

December 31, 2024 December 31, 2023

Average Carrying Value (1)

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Interest Income

Interest income for the years ended December 31, 2023 and 2022 totaled $552.5 million and $357.7 million, respectively, an increase of $194.8 million due primarily to an approximate 330 basis point increase in daily average SOFR and SOFR equivalent rates and the impact of $20.4 million from the collateral sale of the Brooklyn hotel loan in April 2023.

Interest income for the years ended December 31, 2024 and 2023, totaled $526.1 million and $552.5 million, respectively, a decrease of $26.4 million.

The decrease was primarily due to the recognition of a non-recurring item of $20.4 million of interest income from the sale of a Brooklyn hotel asset in the second quarter of 2023, coupled with an increase in the number of non-performing loans in 2024, which averaged $190.9 million in principal for the year ended December 31, 2024.

As of December 31, 2024, our portfolio consisted of (i) 155 commercial mortgage loans, held for investment, (ii) 11 real estate securities, available for sale, measured at fair value, and (iii) three commercial mortgage loans, held for sale, measured at fair value.

As of December 31, 2023, our portfolio consisted of (i) 144 commercial mortgage loans, held for investment and (ii) seven real estate securities, available for sale, measured at fair value.

As of December 31, 2022, our portfolio consisted of (i) 161 commercial mortgage loans, held for investment, (ii) two commercial mortgage loans, held for sale, measured at fair value, (iii) seven real estate securities, available for sale, measured at fair value and (iv) ARMs.

Interest Expense

Interest expense for the years ended December 31, 2023 and 2022 totaled $305.6 million and $160.5 million, respectively, an increase of $145.1 million due primarily to an increase of $256.1 million in the average carrying value of our collateralized loan obligations coupled with an approximate 330 basis point increase in average SOFR and SOFR equivalent rates partially offset by a decrease of $1.1 billion in the average carrying values of our repurchase agreements - commercial mortgage loans and real estate securities.

Interest expense for the years ended December 31, 2024 and 2023 totaled $338.5 million and $305.6 million, respectively, an increase of $32.9 million.

The increase was primarily due to an increase of $429.6 million in the average carrying value of our collateralized loan obligations ("CLOs") coupled with an increase in deferred fee amortization due to the utilization of expected duration of our CLOs compared to contractual duration, partially offset by a decrease of $144.0 million in the average carrying values of our repurchase agreements - commercial mortgage loans and real estate securities.

Revenue from Real Estate Owned

For the years ended December 31, 2023 and 2022, revenue from real estate owned was $17.0 million and $9.7 million, respectively, an increase of $7.3 million due primarily to rental income obtained from additional retail properties acquired as real estate owned.

Revenue from real estate owned for the years ended December 31, 2024 and 2023 totaled $22.8 million and $17.0 million, respectively.

The $5.8 million increase was primarily the result of rental income from obtaining possession of additional multifamily properties brought on as real estate owned, through foreclosure or deed-in-lieu of foreclosure, for the year ended December 31, 2024.

Provision/(Benefit) for Credit losses

Provision for credit losses was $33.7 million during the year ended December 31, 2023 compared to a provision of $36.1 million during the year ended December 31, 2022.

The following paragraphs set forth explanations for changes in the general and specific reserves for the years ended December 31, 2023 and 2022.

For the years ended December 31, 2023 and 2022, the increases in general CECL allowance of $21.4 million and $10.8 million, respectively, were primarily related to a more pessimistic view of the macroeconomic scenario utilized for the CECL model.

For the year ended December 31, 2023, this was partially offset by a decrease in the size of our loan portfolio compared to the preceding period.

For the year ended December 31, 2023, the increase in specific CECL allowance of $12.3 million was primarily related to one office loan located in Portland, OR.

For the year ended December 31, 2022, a specific CECL provision of $25.3 million was recorded for the loan collateralized by the Walgreens Portfolio.

Provision for credit losses for the years ended December 31, 2024 and 2023 totaled $35.7 million and $33.7 million, respectively.

General benefit for credit losses was $0.3 million for the year ended December 31, 2024 compared to a general provision of $21.4 million for the year ended December 31, 2023.

The $21.7 million decrease in general reserve was primarily due to the portfolio turnover of older vintage loans with newly originated loans coupled with a more favorable macro-economic outlook compared to the preceding period.

For the year ended December 31, 2024, the increase in specific reserve of $36.0 million was primarily related to two non-performing loans collateralized by office properties located in Colorado and Georgia.

For the year ended December 31, 2023, the increase in specific reserve of $12.3 million, compared to the prior year, was primarily related to one office loan located in Oregon.

Realized Gain/(Loss) on Extinguishment of Debt

Realized gain on extinguishment of debt for the year ended December 31, 2023 of $2.2 million was primarily related to the redemption of $17.5 million par value unsecured debt at a price equal to 75% of par value coupled with the repurchases of $2.3 million of bonds of BSPRT 2021-FL7 and $8.25 million of bonds of BSPRT 2019-FL5 partially offset by the redemption of BSPRT 2019-FL5.

Realized loss on extinguishment of debt for the year ended December 31, 2022 of $5.2 million was primarily related to the redemption of BSPRT 2018-FL4.

Realized Gain/(Loss) on Sale of Available for Sale Trading Securities

Realized gain on sale of available for sale trading securities for the year ended December 31, 2023 of $0.1 million was primarily related to the sale of 12 CRE CLO bonds.

There were no sales of available for sale trading securities during the year ended December 31, 2022.

The Company did not realize a gain or loss on extinguishment of debt for the year ended December 31, 2024.

Realized gain on extinguishment of debt for the year ended December 31, 2023 of $2.2 million was primarily related to the redemption of $17.5 million par value unsecured debt at a price equal to 75% of par value coupled with the repurchase of the Class E notes in our BSPRT 2021-FL7 CLO and $8.3 million of bonds of our BSPRT 2019-FL5 CLO partially offset by the redemption of BSPRT 2019-FL5.

Realized Gain/(Loss) on Real Estate Securities, Available for Sale

Realized gain on real estate securities, available for sale for the year ended December 31, 2024 of $0.1 million was primarily related to the sale of six CMBS bonds.

Realized gain on real estate securities, available for sale for the year ended December 31, 2023 of $0.1 million was primarily related to the sale of 12 CMBS bonds.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Investment

Realized gain on commercial mortgage loans, held for investment, for the year ended December 31, 2024 of $0.1 million was related to the disposition of two senior and one mezzanine commercial mortgage loans.

The Company did not have any dispositions of commercial mortgage loans for the year ended December 31, 2023.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale, Measured at Fair Value

Realized gain on commercial mortgage loans, held for sale, measured at fair value for the year ended December 31, 2024 of $13.1 million was related to the sale of $271.2 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $284.3 million.

Realized gain on commercial mortgage loans, held for sale,

measured at fair value for the year ended December 31, 2022 of $2.4 million was related to the sale of $368.9 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $370.2 million.

Realized gain on commercial mortgage loans, held for sale, measured at fair value for the year ended December 31, 2023 of $3.9 million was related to the sale of $118.1 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $122.1 million.

Gain/(Loss) on Other Real Estate Investments

Loss on other real estate investments for the year ended December 31, 2023 was $7.1 million compared to $0.7 million for the year ended December 31, 2022.

For the year ended December 31, 2023, the loss was primarily the result of the sale of two real estate owned, held for sale properties located in New Rochelle, NY and St.

Louis, MO, respectively, resulting in a total loss of $3.3 million, in addition to a $4.0 million impairment loss on our real estate owned, held for sale asset related to the Walgreens Portfolio.

Loss on other real estate investments for the year ended December 31, 2024 was $8.0 million primarily due to sales and write offs related to the Walgreens Portfolio coupled with the onboarding of real estate owned, held for sale multifamily properties.

This is compared to a loss of $7.1 million for the year ended December 31, 2023 related to a sale of one real estate owned, held for sale property located in New Rochelle, NY resulting in a loss of $1.2 million in addition to impairments of our real estate owned, held for sale assets of $1.9 million related to the St.

Louis, MO office property and $4.0 million related to the Walgreens Portfolio.

Unrealized Gain/(Loss) on Commercial Mortgage Loans, Held for Sale, Measured at Fair Value

The Company did not hold any commercial mortgage loans, held for sale, measured at fair value as of December 31, 2023.

Unrealized gain for the year ended December 31, 2023 was $44.0 thousand related to the reversal of prior year unrealized gain/loss on a sale of a commercial real estate loan into the CMBS securitization market made in the first quarter of 2023.

Comparatively, unrealized gain for the year ended December 31, 2022 was $0.5 million related to changes in fair market values on loans held in the Company's TRS coupled with the reversal of unrealized gain/loss on a sale of commercial real estate loans into the CMBS securitization market.

The Company did not have any commercial mortgage loans, held for sale, measured at fair value held in an unrealized gain or loss position as of December 31, 2024 and 2023.

For the year ended December 31, 2023, unrealized gain on commercial

mortgage loans, held for sale, measured at fair value was $43.8 thousand primarily related to the reversal of unrealized gain/loss on sales of commercial real estate loans into the CMBS securitization market.

Trading Gain/(Loss)

Trading loss for the years ended December 31, 2023 and 2022 of $0.6 million and $119.2 million, respectively, was attributable to $17.6 million and $480.2 million of principal paydowns, respectively, $218.2 million and $3.8 billion of sales of ARM Agency Securities, respectively, and changes in market values on these securities.

We sold all remaining assets from our ARMs portfolio in the third quarter of 2023.

The Company did not hold any trading securities as of December 31, 2024 and 2023.

Trading loss for the year ended December 31, 2023 of $0.6 million was attributable to principal paydowns, changes in market values and gains on sales of residential adjustable-rate mortgage pass-through securities (“ARM Agency Securities” or “ARMs”) issued and guaranteed by government-sponsored enterprises or by an agency of the federal government ARM.

Net Result from Derivative Transactions

Net result from derivative transactions for the year ended December 31, 2023 of a $0.9 million gain was composed of a realized gain of $1.0 million due primarily to the termination and settlement of interest rate swap positions partially offset by an unrealized loss of $0.1 million.

This is compared to a net gain on our derivative portfolio of $44.2 million composed of a realized gain of $60.0 million due primarily to the termination and settlement of interest rate swap positions specifically designed to hedge the ARMs portfolio partially offset by an unrealized loss of $15.8 million for the year ended December 31, 2022.

Net result from derivative transactions for the year ended December 31, 2024 of a $0.2 million loss was composed of a realized loss of $1.3 million due primarily to the termination and settlement of credit default swaps and treasury yields, partially offset by an unrealized gain of $1.1 million.

This is compared to a net gain on our derivative portfolio of $0.9 million composed of a realized gain of $1.0 million due primarily to the termination and settlement of interest rate swap positions partially offset by an unrealized loss of $0.1 million for the year ended December 31, 2023.

(Provision)/Benefit for Income Tax

Benefit for income tax for the year ended December 31, 2023 was $2.8 million compared to a benefit of $0.4 million for the year ended December 31, 2022.

The difference is due to change in taxable income/loss in our TRS segment.

Provision for income tax for the year ended December 31, 2024 was $1.1 million compared to a benefit of $2.8 million for the year ended December 31, 2023.

The difference is due to changes in taxable income/loss in our TRS segment.

Net (Income)/Loss Attributable to Non-controlling Interest

Net loss attributable to non-controlling interest in our consolidated joint ventures for the year ended December 31, 2023 amounted to $0.7 million compared to a net loss attributable to non-controlling interest of $0.2 million for the year ended December 31, 2022.

Net loss attributable to non-controlling interest in our consolidated joint ventures for the years ended December 31, 2024 and 2023 totaled $3.5 million and $0.7 million, respectively.

Preferred Share Dividends

Preferred share dividends were $27.0 million for the year ended December 31, 2023 compared to $41.7 million for the year ended December 31, 2022, a decrease of $14.7 million due primarily to fewer preferred shares outstanding following the automatic conversion into Common Stock of the Company's Series F Convertible Preferred Stock in April 2022, Series C Convertible Preferred Stock in October 2022 and Series I Convertible Preferred Stock in January 2023 (see Note 9 - Redeemable Convertible Preferred Stock and Equity Transactions).

Preferred share dividends were $27.0 million for the years ended December 31, 2024 and 2023.

Expenses from Operations

Expenses from operations for the years ended December 31, 2024 and 2023 consisted of the following (dollars in thousands):

Year Ended December 31,

December 31, 2024 December 31, 2023

Asset management and subordinated performance fee $ 25,958 $ 33,847

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Total expenses from operations $ 86,444 $ 87,822

The increase in operating expense was primarily related to (i) an increase in asset management and subordinated performance fees due to incentive fees incurred during the year ended December 31, 2023 and (ii) an increase in other expenses due to expenses incurred in order to operate various REO investments in our portfolio partially offset by (iii) a decrease in professional fees primarily related to the reduction in legal costs associated with our recovery efforts related to a hotel asset and the Walgreens Portfolio.

For the year ended December 31, 2024, we incurred asset management and subordinated performance fees and administrative services expenses of $26.0 million and $9.7 million, respectively, which are payable to our Advisor under our asset management agreement.

For the year ended December 31, 2024 compared to 2023, asset management and incentive fees decreased due to the decrease in net income and applicable equity used to calculate the performance fee, coupled with a decrease in administrative services expenses due to less time spent on asset workout.

Refer to Note 11 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

The decrease in operating expense was partially offset by (i) an increase in share-based compensation due to equity awards issued under the Company's 2021 Incentive Plan during the year ended December 31, 2024 and (ii) an increase in other expenses related to property operating expenses and third party management fees incurred in order to operate various real estate owned investments in our portfolio.

Comparison of the Three Months Ended December 31, 2024 to the Three Months Ended September 30, 2024

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Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities and TRS segments.

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the three months ended December 31, 2023 and September 30, 2023 (dollars in thousands):

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the three months ended December 31, 2024 and three months ended September 30, 2024 (dollars in thousands):

Three Months Ended

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Interest Income

Interest income for the three months ended December 31, 2023 and September 30, 2023 totaled $132.0 million and $137.0 million, respectively, a decrease of $5.0 million due primarily to payoffs of two loans occurring in the third quarter of 2023 resulting in approximately $6.3 million of income.

As of December 31, 2023, our portfolio consisted of (i) 144 commercial mortgage loans, held for investment and (ii) seven real estate securities, available for sale, measured at fair value.

As of September 30, 2023, our portfolio consisted of (i) 145 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value and (iii) six real estate securities, available for sale, measured at fair value.

Interest income for the three months ended December 31, 2024 and September 30, 2024 totaled $127.8 million and $134.1 million, respectively, a decrease of $6.3 million.

The decrease was primarily due to an approximate 59 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a $274.4 million decrease in the average carrying value of our real estate debt.

As of September 30, 2024, our portfolio consisted of (i) 157 commercial mortgage loans, held for investment and (ii) ten real estate securities, available for sale, measured at fair value.

Interest Expense

Interest expense for the three months ended December 31, 2023 and September 30, 2023 totaled $81.2 million and $78.0 million, respectively, an increase of $3.2 million due primarily to an increase of $534.6 million in the average carrying value of our collateralized loan obligations partially offset by a decrease of $465.8 million in the average carrying value of our repurchase agreements - commercial mortgage loans.

Interest expense for the three months ended December 31, 2024 and September 30, 2024 totaled $80.5 million and $89.9 million, respectively, a decrease of $9.4 million due primarily to a decrease of $585.9 million in the carrying value of our repurchase agreements - commercial mortgage loans, partially offset by an increase of $455.2 million in the average carrying value of our collateralized loan obligations.

Revenue from Real Estate Owned

For the three months ended December 31, 2023 and September 30, 2023, revenue from real estate owned was $4.0 million and $3.3 million, respectively, an increase of $0.7 million due primarily to rental income obtained from the acquisition of an additional property as real estate owned.

For the three months ended December 31, 2024 and September 30, 2024, revenue from real estate owned was $8.7 million and $5.4 million, respectively.

The $3.3 million increase was primarily the result of rental income from onboarding multifamily properties brought on as real estate owned, through foreclosure or deed-in-lieu of foreclosure, during the three months ended December 31, 2024.

(Provision)/Benefit for Credit losses

Provision for credit losses was $5.4 million during the three months ended December 31, 2023 compared to a provision of $2.4 million during three months ended September 30, 2023.

The following paragraphs set forth explanations for changes in the general and specific reserves for the three months ended December 31, 2023 and September 30, 2023.

For the three months ended December 31, 2023 and September 30, 2023, the increases in general allowance of $5.4 million and $2.8 million, respectively, were primarily related to a more pessimistic view of the macroeconomic scenario utilized for the CECL model.

For the three months ended December 31, 2023, this was coupled with increases in the size of our loan portfolio compared to the preceding period.

For the three months ended December 31, 2023, the Company did not recognize specific CECL benefit or provisions.

Comparatively, for the three months ended September 30, 2023, the Company recognized $0.4 million of specific CECL benefit on one office loan located in Portland, OR.

Realized Gain/(Loss) on Extinguishment of Debt

The Company did not realized a gain or loss on extinguishment of debt for the three months ended December 31, 2023.

Realized loss on extinguishment of debt for the three months ended September 30, 2023 of $2.8 million was related to redemption of BSPRT 2019-FL5.

Realized Gain/(Loss) on Sale of Available for Sale Trading Securities

Realized loss on sale of available for sale trading securities for the three months ended December 31, 2023 of $30.0 thousand was primarily related to the sale of two CRE CLO bonds .

Realized loss on sale of available for sale trading securities for the three months ended September 30, 2023 of $0.5 million was primarily related to the sale of six CRE CLO bonds.

Provision for credit losses was $0.9 million during the three months ended December 31, 2024 compared to a benefit of $0.3 million during the three months ended September 30, 2024.

For the three months ended December 31, 2024 and September 30, 2024, general benefit for credit losses was $1.6 million and $0.8 million, respectively, an increase in benefit of $0.8 million primarily due to the portfolio turnover of older vintage loans with newly originated loans coupled with a more favorable macro-economic outlook compared to the preceding period.

For the three months ended December 31, 2024 and September 30, 2024, specific provision for credit losses was $2.5 million and $0.5 million, respectively.

For the three months ended December 31, 2024, the specific provision was primarily related to a non-performing loan collateralized by a multifamily property located in Texas.

For the three months ended September 30, 2024, the specific provision was primarily related to foreclosures on multifamily properties located in Oklahoma and North Carolina.

Realized Gain/(Loss) on Real Estate Securities, Available for Sale

The Company did not realize a gain or loss on real estate securities, available for sale for the three months ended December 31, 2024 .

Realized gain on real estate securities, available for sale for the three months ended September 30, 2024 of $0.1 million was primarily related to the sale of two CMBS bonds.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Investment

Realized gain on commercial mortgage loans, held for investment, for the three months ended December 31, 2024 of $0.1 million was related to the disposition of two senior and one mezzanine commercial mortgage loans.

The Company did not record any realized gains or losses on dispositions of commercial mortgage loans for the three months ended September 30, 2024.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale, Measured at Fair Value

Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended December 31, 2023 of $0.8 million was related to the sale of $26.3 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $27.0 million.

The Company did not realize any gain or loss on commercial mortgage loans, held for sale, measured at fair value for the three months ended December 31, 2024.

Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended September 30, 2024 of $6.2 million was related to the sale of $131.6 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $137.8 million.

Gain/(Loss) on Other Real Estate Investments

Gain on other real estate investments for the three months ended December 31, 2023 was $0.1 million.

This is compared to a loss of $4.1 million for the three months ended September 30, 2023 primarily due to an impairment on the Walgreens Portfolio, real estate owned, held for sale asset.

Gain on other real estate investments for the three months ended December 31, 2024 was $0.5 million primarily due to the onboarding of real estate owned, held for sale, multifamily properties partially offset by losses on the sales of three, held for sale, multifamily properties and one, held for sale, retail property from our Walgreens Portfolio.

This is compared to a loss of $2.2 million for the three months ended September 30, 2024 primarily due to write offs related to the Walgreens Portfolio coupled with the onboarding of real estate owned, held for sale, multifamily properties.

Unrealized Gain/(Loss) on Commercial Mortgage Loans, Held for Sale, Measured at Fair Value

The Company did not have any commercial mortgage loans, held for sale, measured at fair value held in an unrealized gain or loss position as of December 31, 2023 and September 30, 2023.

Trading Gain/(Loss)

The Company did not experience any trading losses during the three months ended December 31, 2023.

Trading loss for the three months ended September 30, 2023 of $2.6 million was attributable to $2.6 million of principal paydowns, $122.8 million of sales of ARM Agency Securities, and changes in market values on these securities.

The Company did not have any commercial mortgage loans, held for sale, measured at fair value held in an unrealized gain or loss position as of December 31, 2024.

Unrealized loss on commercial mortgage loans, held for sale, measured at fair value, for the three months ended September 30, 2024 was $0.6 million which is attributable to the reversal of previous unrealized gains due to sales into the CMBS securitization market.

Net Result from Derivative Transactions

Net result from derivative transactions for the three months ended December 31, 2023 of a $0.3 million gain was composed primarily of realized gains related to the termination and settlement of interest rate swap positions.

This is compared to a net loss on our derivative portfolio of $0.1 million composed of a realized gain of $0.1 million due primarily to the termination and settlement of interest rate swap positions offset by an unrealized loss of $0.2 million for the three months ended September 30, 2023 .

Net result from derivative transactions for the three months ended December 31, 2024 of a $1.0 million gain was composed primarily of unrealized gains on mark to market on credit default swaps, treasury note futures, and options.

This is compared to a net loss on our derivative portfolio of $1.3 million composed of a realized loss of $1.6 million primarily related to the termination and settlement of credit default swaps and treasury note futures, partially offset by an unrealized gain of $0.3 million for the three months ended September 30, 2024.

(Provision)/Benefit for Income Tax

Benefit for income tax for the three months ended December 31, 2023 was $0.3 million compared to a benefit of $1.8 million for the three months ended September 30, 2023.

The difference is due to change in taxable income/loss in our TRS segment.

Provision for income tax for each of the three months ended December 31, 2024 and September 30, 2024, was $0.2 million.

Net (Income)/Loss Attributable to Non-controlling Interest

Net income attributable to non-controlling interest in our consolidated joint ventures for the three months ended December 31, 2023 amounted to $16 thousand.

Comparatively, for the three months ended September 30, 2023, net loss attributable to non-controlling interest amounted to $0.8 million.

Preferred Share Dividends

Preferred share dividends were $6.7 million for each of the three months ended December 31, 2023 and September 30, 2023.

(see Note 9 - Redeemable Convertible Preferred Stock and Equity Transactions).

Net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended December 31, 2024 and September 30, 2024 totaled $0.4 million and $1.4 million, respectively.

Expenses from operations

10 unchanged sentences

Total expenses from operations $ 26,316 $ 21,780

Overall, operating expenses were consistent with prior quarter, with a decrease of approximately $0.8 million due to a decrease in other expenses from REO that was offset by Asset management and subordinated performance fee increases due to incentive fees.

For the three months ended December 31, 2024, we incurred asset management and subordinated performance fees and administrative services expenses of $6.9 million and $2.3 million, respectively, which are payable to our Advisor under our asset management agreement.

For the three months ended December 31, 2024 compared to September 30, 2024, asset management and incentive fees increased due to actual net income surpassing previously projected net income, while administrative services expenses decreased due to increases of non-reimbursable expenses.

Refer to Note 11 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

The increase in operating expense was also partially related to an increase in other expenses due to expenses related to property operating expenses and third party management fees incurred in order to operate various real estate owned investments in our portfolio.

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

See Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023, for a discussion of the comparison of the year ended December 31, 2022 to the year ended December 31, 2021.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 26, 2024, for a discussion of the comparison of the year ended December 31, 2023 to the year ended December 31, 2022.

As of December 31, 2024 and 2023, our portfolio consisted of 155 and 144 commercial mortgage loans, held for investment, respectively.

The commercial mortgage loans held for investment, net of allowance for credit losses, as of December 31, 2024 and 2023, had a total carrying value of $4,908.7 million and $4,989.8 million, respectively.

As of December 31, 2023 the Company did not hold any commercial mortgage loans, held for sale.

As of December 31, 2022, the contractual principal balance outstanding of commercial mortgage loans, held for sale, measured at fair value was $15.6 million, comprised of two loans, neither of which were in default or greater than ninety days past due.

As of December 31, 2024, our commercial mortgage loans, held for sale, measured at fair value, were comprised of three loans with a total fair value of $87.3 million.

As of December 31, 2023, the Company did not hold any commercial mortgage loans, held for sale, measured at fair value.

As of December 31, 2024 and 2023, we had $203.0 million and $242.6 million, respectively, of real estate securities, available for sale, measured at fair value.

As of December 31, 2023 and 2022, our real estate owned, held for investment portfolio was composed of three and 11 properties, respectively, with carrying values of $115.8 million and $127.8 million, respectively.

As of December 31, 2023 and 2022, we had 23 and two properties classified as real estate owned, held for sale, respectively, with combined carrying values of $103.7 million and $36.5 million, respectively.

As of December 31, 2023, the Company did not hold any real estate securities, trading, measured at fair value.

As of December 31, 2022, the Company had real estate securities, trading, measured at fair value of $235.7 million.

During the year ended December 31, 2023, the Company fully disposed of the remaining ARM Agency Securities portfolio acquired from the Capstead merger that resulted in (i) $17.6 million of principal paydowns, (ii) $218.2 million of sales and (iii) $0.6 million of net trading losses related to principal paydowns, changes in market values and sales of these securities.

As of December 31, 2024 and 2023, our real estate owned, held for investment portfolio was composed of three properties, with carrying values of $113.2 million and $115.8 million, respectively.

As of December 31, 2024 and 2023, we had twelve and twenty-three properties classified as real estate owned, held for sale, respectively, with combined carrying values of $222.9 million and $103.7 million, respectively.

As of December 31, 2024, we had three loans (one secured by a multifamily property and two secured by office properties), designated as non-performing status with a total amortized cost of $133.2 million.

As of December 31, 2023, we had two loans, designated as non-performing status with a total amortized cost of $78.2 million.

As of December 31, 2023, no specific allowance for credit losses were recorded on the two non-performing loans, all of which were senior mortgage notes secured by multifamily properties.

As of December 31, 2023 and 2022, our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 9.2% and 8.3% and a weighted average remaining life of 0.9 years and 1.4 years, respectively.

As of December 31, 2024, three loans designated as non-performing and put on cost recovery status were determined to have a combined $31.2 million specific allowance for credit losses.

During the year ended December 31, 2023, no specific allowance for credit losses were recorded on the two non-performing loans, all of which were senior mortgage notes secured by multifamily properties.

As of December 31, 2024 and 2023, our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 8.0% and 9.2%, respectively, and a weighted average remaining life of 1.1 years and 0.9 years, respectively.

The following charts summarize our commercial mortgage loans, held for investment, by coupon rate type, collateral type geographical region and state as of December 31, 2024 and 2023:

(1) Regions included:

New England, Plains, Rocky Mountain

An investments region classification is defined according to the below map based on the location of investments secured property.

1 unchanged sentence

The following table shows selected data from our commercial mortgage loans, held for investment in our portfolio as of December 31, 2024 (dollars in thousands):

Loan Type Risk Rating (1)

Property Type State Par Value Amortized

Cost Origination Date (2)

Fully Extended Maturity (3)

Type State Par

Value Amortized

Cost Origination

Interest Rate

Effective Yield (6)

Loan to Value (7)

Senior Debt 1 3 Hospitality Wisconsin $4,586 $4,586 11/30/2017 3/9/2024 Adj.

1M SOFR Term + 4.00% 9.47% 77.0%

Senior Debt 2 3 Multifamily Ohio 35,212 35,212 4/23/2018 9/9/2025 1M SOFR Term + 4.50% 9.85% 83.6%

Senior Debt 1 2 Hospitality Louisiana 21,477 21,477 6/28/2018 9/9/2025 1M SOFR Term + 4.25% 8.58% 68.8%

Senior Debt 4 2 Office New Jersey 13,937 13,937 8/28/2018 9/9/2024 1M SOFR Term + 5.50% 10.85% 70.0%

Senior Debt 5 2 Office Maryland 41,185 41,185 4/30/2019 5/9/2025 1M SOFR Term + 3.56% 8.91% 71.0%

Senior Debt 6 4 Hospitality Texas 18,398 18,398 7/18/2019 1/9/2024 1M SOFR Term + 3.84% 9.19% 62.6%

Senior Debt 2 2 Hospitality Michigan 12,816 12,816 9/17/2019 10/9/2025 1M SOFR Term + 4.41% 8.74% 56.4%

1 unchanged sentence

Senior Debt 4 2 Office Arizona 13,766 13,766 11/22/2019 6/9/2025 1M SOFR Term + 4.00% 8.33% 70.9%

Senior Debt 10 4 Office Georgia 24,444 24,442 12/17/2019 1/9/2025 Adj.

1M SOFR Term + 4.35% 9.82% 64.9%

Senior Debt 5 5 Office Georgia 23,444 22,837 12/17/2019 1/9/2026 1M SOFR Term + 2.25% 6.58% 64.9%

Senior Debt 6 2 Manufactured Housing Arkansas 1,270 1,270 4/22/2020 5/9/2025 5.50% 5.50% 62.8%

Senior Debt 12 3 Self Storage New York 27,440 27,440 9/3/2020 1/9/2026 Adj.

1M SOFR Term + 5.00% 10.47% 58.8%

Senior Debt 7 3 Office Texas 16,703 16,703 10/6/2020 10/9/2025 Adj.

2 unchanged sentences

Senior Debt 9 3 Office Michigan 25,559 25,559 10/14/2020 4/9/2026 1M SOFR Term + 2.81% 8.13% 66.0%

Senior Debt 16 2 Office Texas 9,175 9,175 11/6/2020 11/9/2025 Adj.

1M SOFR Term + 5.00% 10.47% 67.8%

Senior Debt 10 2 Multifamily Texas 11,412 11,412 1/22/2021 2/9/2026 Adj.

1M SOFR Term + 4.55% 9.00% 73.0%

Senior Debt 18 2 Multifamily Florida 21,000 21,000 12/31/2020 1/9/2025 Adj.

1M SOFR Term + 4.60% 10.07% 66.7%

Senior Debt 19 2 Office California 10,855 10,855 12/31/2020 1/9/2024 1M SOFR Term + 5.56% 10.91% 63.9%

Senior Debt 20 4 Office Colorado 44,913 44,892 3/1/2021 3/9/2026 Adj.

1M SOFR Term + 3.97% 9.43% 53.9%

Senior Debt 21 3 Multifamily Arizona 34,476 34,457 2/2/2021 2/9/2026 1M SOFR Term + 8.00% 13.35% N/A

Senior Debt 22 2 Hospitality North Carolina 23,000 22,992 2/24/2021 3/9/2024 Adj.

1M SOFR Term + 5.79% 11.26% 57.2%

Senior Debt 11 5 Office Colorado 44,913 43,650 3/1/2021 3/9/2026 5.50% 5.50% 53.9%

Senior Debt 12 2 Multifamily Texas 34,190 34,190 3/5/2021 3/9/2025 1M SOFR Term + 4.10% 8.43% 78.2%

2 unchanged sentences

1M SOFR Term + 3.39% 7.84% 70.6%

Senior Debt 26 2 Multifamily Pennsylvania 8,898 8,893 3/23/2021 4/9/2026 Adj.

1M SOFR Term + 3.80% 9.27% 69.9%

Senior Debt 15 3 Multifamily Texas 19,519 19,519 3/25/2021 1/9/2025 Adj.

12 unchanged sentences

1M SOFR Term + 2.95% 7.40% 71.7%

Senior Debt 34 2 Multifamily Texas 35,466 35,459 4/1/2021 4/9/2026 Adj.

1M SOFR Term + 2.95% 8.42% 71.7%

Loan Type Risk Rating (1)

Property Type State Par Value Amortized

Cost Origination Date (2)

Fully Extended Maturity (3)

Interest Rate (4) (5)

Effective Yield (6)

Loan to Value (7)

Senior Debt 35 2 Multifamily Texas 33,588 33,582 4/1/2021 4/9/2026 Adj.

1M SOFR Term + 2.95% 8.42% 72.2%

Senior Debt 36 2 Multifamily Florida 152,112 151,644 5/26/2021 6/9/2026 1M SOFR Term + 4.55% 9.90% 47.8%

Senior Debt 37 2 Hospitality Florida 36,750 36,713 5/20/2021 6/9/2026 Adj.

1M SOFR Term + 6.25% 11.72% 59.2%

Senior Debt 22 3 Multifamily North Carolina 35,116 35,095 7/22/2021 3/9/2027 Adj.

1M SOFR Term + 8.00% 13.47% N/A

Senior Debt 39 2 Multifamily Texas 16,453 16,453 10/6/2021 10/9/2026 Adj.

1M SOFR Term + 5.00% 9.45% —%

Senior Debt 40 2 Multifamily Pennsylvania 47,984 47,901 9/10/2021 10/9/2026 Adj.

1M SOFR Term + 3.15% 8.62% 71.0%

Senior Debt 41 2 Multifamily South Carolina 41,650 41,650 9/2/2021 9/9/2025 Adj.

1M SOFR Term + 3.40% 8.87% 79.9%

Senior Debt 23 2 Multifamily Texas 16,222 16,222 10/6/2021 10/9/2026 Adj.

1M SOFR Term + 3.75% 8.20% 76.9%

Senior Debt 43 2 Multifamily Oregon 8,500 8,489 9/8/2021 9/9/2026 Adj.

1M SOFR Term + 3.75% 9.22% 79.4%

Senior Debt 24 3 Multifamily Texas 34,647 34,647 9/20/2021 1/9/2025 Adj.

10 unchanged sentences

1M SOFR Term + 3.10% 7.55% 67.2%

Senior Debt 50 2 Multifamily Texas 38,242 38,116 10/14/2021 11/9/2026 Adj.

1M SOFR Term + 2.90% 8.37% 72.2%

Senior Debt 51 3 Multifamily Texas 55,394 55,394 11/23/2021 1/9/2027 Adj.

1M SOFR Term + 3.10% 8.57% 67.2%

Senior Debt 30 3 Multifamily Arizona 37,355 37,355 11/16/2021 12/9/2026 Adj.

2 unchanged sentences

1M SOFR Term + 2.85% 7.30% 70.6%

Senior Debt 54 2 Multifamily Texas 32,567 32,510 11/23/2021 12/9/2026 Adj.

1M SOFR Term + 3.25% 8.72% 80.0%

Senior Debt 32 2 Multifamily South Carolina 61,100 61,100 11/10/2021 11/9/2026 Adj.

4 unchanged sentences

1M SOFR Term + 3.45% 7.90% 74.8%

Senior Debt 58 2 Multifamily New Jersey 86,000 85,959 2/25/2022 3/9/2026 1M SOFR Term + 3.24% 8.59% 60.0%

Senior Debt 59 3 Manufactured Housing Georgia 6,700 6,688 12/13/2021 12/9/2026 Adj.

1M SOFR Term + 4.50% 9.97% 77.9%

Senior Debt 60 2 Multifamily Texas 58,680 58,677 12/10/2021 1/9/2027 Adj.

1M SOFR Term + 3.45% 8.92% 74.8%

Senior Debt 61 2 Multifamily Georgia 26,068 26,068 11/30/2021 3/9/2024 Adj.

1M SOFR Term + 2.90% 8.37% 72.1%

Senior Debt 35 3 Multifamily Kentucky 14,933 14,933 11/19/2021 1/9/2027 Adj.

6 unchanged sentences

1M SOFR Term + 2.88% 7.33% 75.5%

Senior Debt 66 2 Multifamily Texas 66,742 66,742 11/30/2021 12/9/2026 Adj.

1M SOFR Term + 2.88% 8.35% 75.5%

Senior Debt 39 2 Multifamily Texas 18,500 18,500 12/30/2021 1/9/2027 1M SOFR Term + 3.50% 7.83% 71.7%

Senior Debt 68 3 Multifamily Michigan 59,232 59,175 12/9/2021 12/9/2026 Adj.

1M SOFR Term + 2.75% 8.22% 73.9%

Senior Debt 40 3 Multifamily Pennsylvania 22,240 22,240 12/16/2021 1/9/2027 1M SOFR Term + 2.96% 7.29% 79.4%

Senior Debt 41 2 Multifamily Texas 31,428 31,428 12/16/2021 1/9/2027 1M SOFR Term + 3.20% 7.53% 74.2%

Loan Type Risk Rating (1)

Property Type State Par Value Amortized

Cost Origination Date (2)

Fully Extended Maturity (3)

Interest Rate (4) (5)

Effective Yield (6)

Loan to Value (7)

Senior Debt 71 2 Multifamily Texas 32,428 32,425 12/16/2021 1/9/2027 1M SOFR Term + 3.20% 8.55% 74.2%

Senior Debt 42 2 Multifamily Florida 78,584 78,414 12/21/2021 1/9/2027 1M SOFR Term + 3.45% 7.78% 78.8%

1 unchanged sentence

Senior Debt 44 2 Multifamily North Carolina 24,000 24,000 12/17/2021 1/9/2027 1M SOFR Term + 3.10% 7.43% 72.7%

Senior Debt 75 2 Retail New York 31,000 30,946 12/23/2021 1/9/2027 1M SOFR Term + 3.29% 8.64% 42.5%

Senior Debt 45 3 Multifamily Texas 37,605 37,605 5/12/2022 2/9/2027 1M SOFR Term + 3.55% 7.88% 66.2%

1 unchanged sentence

Senior Debt 47 2 Multifamily North Carolina 10,978 10,978 1/14/2022 2/9/2027 1M SOFR Term + 3.30% 7.63% 75.7%

Senior Debt 79 3 Multifamily Texas 47,444 47,442 12/21/2021 1/9/2027 1M SOFR Term + 2.86% 8.21% 68.2%

Senior Debt 80 2 Multifamily Texas 36,824 36,821 12/22/2021 1/9/2027 1M SOFR Term + 2.86% 8.21% 69.7%

Senior Debt 48 3 Hospitality North Carolina 10,800 10,798 1/19/2022 2/9/2027 1M SOFR Term + 5.30% 9.63% 68.2%

3 unchanged sentences

Senior Debt 52 2 Multifamily Arizona 34,859 34,859 3/2/2022 3/9/2027 1M SOFR Term + 2.95% 7.28% 63.1%

Senior Debt 86 2 Mixed Use New York 19,000 18,991 3/7/2022 3/9/2026 1M SOFR Term + 3.42% 8.78% 65.1%

Type State Par

Value Amortized

Cost Origination

Interest Rate

Senior Debt 53 2 Multifamily North Carolina 85,500 85,500 2/24/2022 3/9/2027 1M SOFR Term + 3.15% 7.48% 69.6%

Senior Debt 54 2 Multifamily North Carolina 31,900 31,900 3/29/2022 4/9/2027 1M SOFR Term + 3.30% 7.63% 76.9%

Senior Debt 89 2 Hospitality Colorado 30,021 29,741 5/20/2022 6/9/2027 1M SOFR Term + 7.05% 12.40% N/A

Senior Debt 90 2 Multifamily Texas 13,558 12,691 7/20/2022 4/9/2027 1M SOFR Term + 6.75% 12.10% N/A

Senior Debt 55 2 Hospitality Colorado 41,000 40,913 5/20/2022 6/9/2027 1M SOFR Term + 7.05% 11.38% —%

Senior Debt 56 2 Multifamily Texas 49,088 48,895 7/20/2022 4/9/2027 1M SOFR Term + 6.75% 11.08% —%

Senior Debt 57 2 Hospitality Georgia 50,926 50,926 3/30/2022 4/9/2027 1M SOFR Term + 4.90% 9.23% 61.1%

2 unchanged sentences

Senior Debt 60 4 Multifamily Virginia 56,616 56,579 4/29/2022 5/9/2027 1M SOFR Term + 3.95% 8.28% 73.2%

Senior Debt 95 3 Multifamily Texas 29,905 29,816 10/21/2022 11/9/2027 1M SOFR Term + 4.00% 9.35% 70.9%

Senior Debt 61 3 Multifamily Texas 30,187 30,187 10/21/2022 11/9/2026 7.00% 7.00% 70.9%

Senior Debt 62 3 Multifamily North Carolina 57,159 57,159 8/23/2022 7/9/2028 1M SOFR Term + 6.70% 11.03% 46.5%

1 unchanged sentence

Senior Debt 64 2 Industrial Florida 18,724 18,724 9/13/2022 9/9/2027 1M SOFR Term + 4.90% 9.23% 64.6%

Senior Debt 99 2 Multifamily Tennessee 19,899 19,875 5/18/2022 6/9/2027 1M SOFR Term + 3.50% 8.85% 64.5%

Senior Debt 65 3 Multifamily Texas 28,979 28,979 5/26/2022 6/9/2027 1M SOFR Term + 3.65% 7.98% 71.0%

Senior Debt 66 3 Multifamily Texas 16,967 16,967 5/26/2022 6/9/2028 1M SOFR Term + 3.65% 7.98% 73.9%

Senior Debt 102 2 Multifamily Georgia 70,750 70,673 5/18/2022 6/9/2027 1M SOFR Term + 3.80% 9.15% 77.9%

Senior Debt 67 3 Multifamily North Carolina 44,583 44,583 6/1/2022 6/9/2027 1M SOFR Term + 2.75% 7.08% 75.9%

Senior Debt 104 3 Multifamily North Carolina 45,469 45,414 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 75.9%

Senior Debt 105 4 Multifamily North Carolina 58,003 57,930 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 73.7%

Senior Debt 106 3 Multifamily North Carolina 20,716 20,688 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 75.1%

Loan Type Risk Rating (1)

Property Type State Par Value Amortized

Cost Origination Date (2)

Fully Extended Maturity (3)

Interest Rate (4) (5)

Effective Yield (6)

Loan to Value (7)

Senior Debt 107 2 Multifamily Various 146,810 146,608 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 67.8%

Senior Debt 108 2 Multifamily Kentucky 56,000 55,938 6/1/2022 6/9/2027 1M SOFR Term + 3.80% 9.15% 73.8%

Senior Debt 109 2 Multifamily North Carolina 11,675 11,661 11/3/2022 11/9/2027 1M SOFR Term + 4.45% 9.80% 74.8%

Senior Debt 68 2 Multifamily Georgia 66,750 66,750 6/14/2022 6/9/2027 1M SOFR Term + 3.45% 7.78% 71.6%

Senior Debt 69 2 Hospitality District of Columbia 39,525 39,454 8/2/2022 8/9/2027 1M SOFR Term + 5.00% 9.33% 71.2%

Senior Debt 112 (8)

2 Multifamily Pennsylvania — — 2/17/2023 9/9/2026 1M SOFR Term + 6.31% 11.66% N/A

Senior Debt 70 2 Multifamily Pennsylvania 27,865 27,683 2/17/2023 9/9/2026 1M SOFR Term + 6.31% 10.64% —%

Senior Debt 71 2 Hospitality Alabama 18,219 18,219 9/20/2022 10/9/2027 1M SOFR Term + 5.75% 10.08% 62.1%

Senior Debt 114 2 Manufactured Housing Florida 11,617 11,587 9/13/2022 9/9/2027 1M SOFR Term + 4.75% 10.10% 53.8%

Senior Debt 115 (8)

2 Hospitality Texas — — 1/31/2023 11/9/2027 1M SOFR Term + 7.50% 12.85% 6.2%

Senior Debt 72 2 Hospitality Texas 31,600 31,600 1/31/2023 11/9/2027 1M SOFR Term + 7.50% 11.83% 6.2%

Senior Debt 73 2 Multifamily North Carolina 49,990 49,989 12/29/2022 1/9/2028 1M SOFR Term + 4.20% 8.53% 70.1%

1 unchanged sentence

Senior Debt 75 2 Multifamily South Carolina 14,635 14,633 12/16/2022 1/9/2027 1M SOFR Term + 4.25% 8.58% 68.1%

Senior Debt 119 2 Hospitality North Carolina 28,300 28,297 12/15/2022 1/9/2025 1M SOFR Term + 5.25% 10.60% 54.9%

Senior Debt 76 3 Multifamily Arizona 55,500 55,468 4/10/2023 4/9/2026 1M SOFR Term + 3.85% 8.18% 44.7%

Senior Debt 121 2 Hospitality Florida 10,500 10,465 4/4/2023 4/9/2028 1M SOFR Term + 5.50% 10.85% 39.6%

Senior Debt 77 2 Hospitality Various 111,000 110,758 2/9/2023 2/9/2028 1M SOFR Term + 4.90% 9.23% 53.6%

Senior Debt 123 2 Multifamily Florida 64,500 64,388 4/19/2023 5/9/2025 1M SOFR Term + 5.00% 10.35% 62.3%

Senior Debt 124 2 Hospitality New York 39,549 39,661 4/17/2023 12/27/2024 1M SOFR Term + 3.75% 9.10% 39.1%

Senior Debt 78 2 Multifamily Texas 14,750 14,718 6/28/2024 7/9/2029 1M SOFR Term + 2.80% 7.13% 71.5%

Senior Debt 79 3 Multifamily District of Columbia 21,700 21,670 6/30/2023 7/9/2027 1M SOFR Term + 3.95% 8.28% 29.4%

4 unchanged sentences

Senior Debt 84 2 Hospitality Georgia 12,420 12,355 8/17/2023 9/9/2028 1M SOFR Term + 4.85% 9.18% 53.5%

Senior Debt 85 2 Industrial South Carolina 13,562 13,265 3/21/2024 10/9/2027 1M SOFR Term + 4.75% 9.50% —%

Senior Debt 86 2 Multifamily Texas 38,750 38,664 10/18/2023 11/9/2026 1M SOFR Term + 4.50% 9.00% 62.4%

4 unchanged sentences

Senior Debt 91 2 Hospitality Tennessee 41,194 41,045 11/14/2023 12/9/2028 1M SOFR Term + 3.65% 7.98% 50.0%

Senior Debt 92 2 Multifamily Texas 36,380 36,339 2/14/2024 2/9/2025 9.00% 9.00% 84.4%

Senior Debt 93 2 Hospitality Colorado 28,512 28,392 2/5/2024 2/9/2029 1M SOFR Term + 4.50% 8.83% 41.6%

Senior Debt 94 2 Hospitality Nevada 25,750 25,668 12/15/2023 1/9/2028 1M SOFR Term + 3.95% 8.28% 42.4%

Senior Debt 95 2 Industrial California 11,105 10,716 3/19/2024 10/6/2026 11.99% 11.99% 8.6%

Senior Debt 96 (8)

2 Multifamily Florida — — 2/12/2024 8/9/2028 1M SOFR Term + 5.50% —% —%

Senior Debt 97 2 Multifamily Florida 50,750 50,603 2/9/2024 8/9/2026 1M SOFR Term + 3.75% 8.08% 56.7%

Senior Debt 98 3 Multifamily Texas 79,515 79,210 2/16/2024 3/9/2029 1M SOFR Term + 3.65% 7.98% 53.3%

Senior Debt 99 2 Industrial Various 111,953 111,542 4/5/2024 4/9/2028 1M SOFR Term + 3.15% 7.48% 63.8%

Senior Debt 100 2 Multifamily Florida 67,000 66,796 2/29/2024 3/9/2029 1M SOFR Term + 3.25% 7.58% 58.7%

Senior Debt 101 2 Industrial North Carolina 75,000 74,858 3/7/2024 3/9/2029 1M SOFR Term + 2.70% 7.03% 58.6%

Senior Debt 102 2 Multifamily Texas 20,807 20,659 3/7/2024 3/9/2029 1M SOFR Term + 3.75% 8.08% 57.2%

Senior Debt 103 2 Multifamily Texas 40,000 39,863 4/24/2024 5/9/2028 1M SOFR Term + 2.95% 7.28% 70.4%

Senior Debt 104 2 Multifamily Ohio 44,361 44,173 4/29/2024 5/9/2029 1M SOFR Term + 2.90% 7.23% 72.2%

Senior Debt 105 2 Multifamily Texas 17,524 17,406 4/30/2024 5/9/2029 1M SOFR Term + 3.75% 8.08% 55.8%

Senior Debt 106 2 Multifamily California 40,000 39,855 5/24/2024 6/9/2028 1M SOFR Term + 2.77% 7.10% 60.9%

Senior Debt 107 2 Multifamily Connecticut 116,500 116,113 5/10/2024 5/9/2029 1M SOFR Term + 2.50% 6.83% 50.7%

Type State Par

Value Amortized

Cost Origination

Interest Rate

Senior Debt 108 2 Hospitality Florida 49,950 49,745 5/9/2024 6/9/2029 1M SOFR Term + 4.50% 8.83% 62.8%

Senior Debt 109 2 Hospitality Various 23,084 23,148 6/6/2024 6/9/2029 1M SOFR Term + 4.43% 8.76% 44.6%

Senior Debt 110 2 Multifamily Florida 8,430 8,378 6/3/2024 6/9/2029 1M SOFR Term + 2.95% 7.28% 56.0%

Senior Debt 111 2 Multifamily Texas 22,219 22,092 6/7/2024 6/9/2029 1M SOFR Term + 2.85% 7.18% 64.5%

Senior Debt 112 2 Multifamily Texas 21,874 21,770 5/30/2024 6/9/2029 1M SOFR Term + 3.25% 7.58% 68.8%

Senior Debt 113 2 Multifamily Indiana 17,781 17,713 6/28/2024 7/9/2028 1M SOFR Term + 3.05% 7.38% 68.2%

Senior Debt 114 2 Retail Wisconsin 1,986 1,992 6/20/2024 7/9/2026 5.50% 5.50% 73.0%

Senior Debt 115 2 Multifamily Texas 7,500 7,481 6/25/2024 7/9/2027 1M SOFR Term + 3.80% 8.13% 80.0%

Senior Debt 116 2 Hospitality Oregon 7,050 7,001 6/28/2024 7/9/2028 1M SOFR Term + 4.50% 8.83% 53.1%

Senior Debt 117 2 Multifamily New Jersey 3,263 2,853 7/1/2024 7/9/2029 1M SOFR Term + 5.50% 9.83% 10.3%

Senior Debt 118 2 Retail Various 43,627 43,747 7/1/2024 8/9/2025 6.00% 6.00% 67.3%

Senior Debt 119 2 Multifamily North Carolina 24,474 24,321 6/28/2024 7/9/2029 1M SOFR Term + 3.75% 8.08% 69.3%

Senior Debt 120 2 Industrial California 13,240 13,176 7/11/2024 7/9/2029 1M SOFR Term + 4.25% 8.58% 61.9%

Senior Debt 121 2 Hospitality Texas 17,000 17,067 7/25/2024 8/9/2027 8.50% 8.50% 90.0%

Senior Debt 122 2 Multifamily North Carolina 16,640 16,563 9/16/2024 10/9/2027 1M SOFR Term + 2.75% 7.08% 78.1%

Senior Debt 123 2 Multifamily Tennessee 21,420 21,326 9/18/2024 10/9/2029 1M SOFR Term + 3.10% 7.43% 59.4%

Senior Debt 124 2 Multifamily Florida 5,780 5,629 7/30/2024 8/9/2027 1M SOFR Term + 8.30% 12.63% 31.3%

Senior Debt 125 2 Multifamily Florida 38,570 38,471 9/6/2024 9/9/2028 1M SOFR Term + 2.75% 7.08% 71.0%

Senior Debt 126 2 Multifamily Florida 70,787 70,601 9/6/2024 9/9/2028 1M SOFR Term + 2.75% 7.08% 72.7%

Senior Debt 127 2 Multifamily Florida 21,797 21,728 9/6/2024 9/9/2028 1M SOFR Term + 2.75% 7.08% 71.3%

Senior Debt 128 2 Multifamily New York 11,089 11,017 8/7/2024 8/9/2029 1M SOFR Term + 5.25% 9.58% 53.6%

Senior Debt 129 2 Hospitality Texas 14,130 14,072 8/9/2024 8/9/2028 1M SOFR Term + 4.00% 9.00% 63.7%

Senior Debt 130 2 Industrial Texas 25,991 25,809 10/9/2024 10/9/2029 1M SOFR Term + 3.75% 8.08% 71.7%

Senior Debt 131 2 Multifamily New York 21,795 21,690 11/22/2024 12/9/2027 1M SOFR Term + 3.75% 8.50% 29.2%

Senior Debt 132 2 Multifamily Texas 18,523 18,433 11/12/2024 11/9/2029 1M SOFR Term + 2.95% 7.28% 66.9%

Senior Debt 133 2 Hospitality Florida 13,621 13,488 11/6/2024 11/9/2029 1M SOFR Term + 4.75% 9.08% 75.8%

Senior Debt 134 2 Multifamily New York 34,118 33,942 11/19/2024 12/9/2029 1M SOFR Term + 2.95% 7.28% 80.8%

Senior Debt 135 2 Multifamily Florida 29,808 29,663 12/5/2024 12/9/2027 1M SOFR Term + 3.50% 7.83% 67.7%

Senior Debt 136 2 Multifamily Georgia 53,973 53,723 11/1/2024 11/9/2029 1M SOFR Term + 2.95% 7.28% 71.1%

Senior Debt 137 2 Multifamily Georgia 28,685 28,475 11/8/2024 11/9/2029 1M SOFR Term + 2.75% 7.08% 63.5%

Senior Debt 138 2 Multifamily North Carolina 18,100 18,024 11/25/2024 12/9/2028 5.50% 5.50% 70.6%

Senior Debt 139 2 Mixed Use New York 58,685 58,412 12/4/2024 12/9/2025 1M SOFR Term + 5.35% 9.68% 53.3%

Senior Debt 140 2 Industrial Tennessee 13,441 13,368 12/6/2024 12/9/2027 1M SOFR Term + 3.50% 7.83% 59.7%

Senior Debt 141 2 Multifamily South Carolina 24,359 24,239 12/9/2024 12/9/2028 1M SOFR Term + 3.25% 7.58% 76.3%

Senior Debt 142 2 Multifamily North Carolina 31,162 29,250 12/20/2024 1/9/2028 4.25% 4.25% 87.3%

Senior Debt 143 2 Hospitality Texas 14,409 14,337 12/27/2024 1/9/2028 1M SOFR Term + 3.25% 7.58% 40.3%

Senior Debt 144 2 Multifamily North Carolina 17,263 17,144 12/30/2024 1/9/2030 1M SOFR Term + 3.25% 7.58% 69.5%

Senior Debt 145 3 Hospitality Illinois 16,378 16,378 12/4/2017 5/6/2026 5.99% 5.99% 52.9%

Mezzanine Loan 1 2 Retail New York 3,000 2,994 12/23/2021 1/9/2027 1M SOFR Term + 12.00% 17.35% 46.6%

Mezzanine Loan 2 2 Mixed Use New York 1,000 1,000 3/7/2022 3/9/2026 1M SOFR Term + 11.00% 16.35% 68.5%

Mezzanine Loan 1 2 Hospitality New York 1,350 1,348 11/8/2022 11/9/2027 1M SOFR Term + 9.25% 13.58% 64.6%

Mezzanine Loan 4 (8)

2 Hospitality Texas — — 1/31/2023 11/9/2027 1M SOFR Term + 10.00% 15.35% 6.2%

Mezzanine Loan 5 3 Multifamily Ohio 2,378 2,378 3/9/2023 9/9/2025 1M SOFR Term + 4.50% 9.85% 58.2%

Loan Type Risk Rating (1)

Property Type State Par Value Amortized

Cost Origination Date (2)

Fully Extended Maturity (3)

Interest Rate (4) (5)

Effective Yield (6)

Loan to Value (7)

Mezzanine Loan 2 2 Hospitality Texas 7,900 7,900 1/31/2023 11/9/2027 1M SOFR Term + 10.00% 14.33% 6.2%

Mezzanine Loan 3 3 Multifamily District of Columbia 11,700 11,684 6/30/2023 7/9/2027 1M SOFR Term + 3.95% 8.28% 45.2%

$5,045,036 $5,036,942 9.18% 65.4%

Mezzanine Loan 4 2 Multifamily California 4,000 3,986 5/24/2024 6/9/2028 1M SOFR Term + 3.67% 8.00% 60.9%

Mezzanine Loan 5 (8)

2 Multifamily New Jersey — — 7/1/2024 7/9/2029 1M SOFR Term + 11.90% 16.23% 10.3%

Mezzanine Loan 6 2 Industrial California 2,180 2,171 7/11/2024 7/9/2029 15.00% 15.00% 72.1%

Mezzanine Loan 7 2 Multifamily New York 1,264 1,256 8/7/2024 8/9/2029 1M SOFR Term + 12.75% 17.08% 59.6%

Mezzanine Loan 8 2 Multifamily New York 2,055 2,044 11/19/2024 12/9/2029 1M SOFR Term + 8.23% 12.56% 85.6%

Mezzanine Loan 9 2 Mixed Use New York 7,527 7,491 12/4/2024 12/9/2025 16.00% 16.00% 60.2%

Mezzanine Loan 10 2 Hospitality Texas 1,417 1,409 12/27/2024 1/9/2028 1M SOFR Term + 10.51% 14.84% 44.3%

Total/Weighted Average $4,999,854 $4,986,750 7.97% 62.9%

_______________________

8 unchanged sentences

When interest rates rise, the value of an interest rate cap will increase, thereby reducing the borrower's exposure to rising interest rates.

(5) On March 5, 2021, the Financial Conduct Authority of the U.K.

(the “FCA”) announced that LIBOR tenors would cease to be published or no longer be representative.

The Alternative Reference Rates Committee (the “ARRC”) interpreted this announcement to constitute a benchmark transition event.

The benchmark index of LIBOR interest rate will convert from LIBOR to compounded SOFR, plus a benchmark adjustment of 11.448 basis points.

(5) As of December 31, 2024, all of our commercial mortgage loans, held for investment which had been indexed at LIBOR were converted to SOFR utilizing the 11.448 basis points adjustment and the applicable spreads remain unchanged.

2 unchanged sentences

(6) Effective yield is calculated as the spread of the loan plus the greater of the applicable index or index floor.

(7) Loan-to-value percentage ("LTV") represents the ratio of the loan amount to the appraised value of the property at the time of origination.

(7) LTV represents the ratio of the loan amount to the appraised value of the property at the time of origination.

However, for predevelopment construction loans at origination, LTV is not applicable and is therefore nil.

(8) Commitment on the loan was unfunded as of December 31, 2024.

The following table shows selected data from our commercial mortgage loans, held for sale, measured at fair value as of December 31, 2024 (dollars in thousands):

Loan Type Property Type State Par Value Interest Rate Effective Yield Loan to Value (1)

TRS Senior Debt 1 Mixed Use Maryland $ 70,000 6.99% 6.99% 55.8%

TRS Senior Debt 2 Multifamily Pennsylvania 5,000 7.58% 7.58% 43.9%

TRS Senior Debt 3 Multifamily Arizona 12,270 6.96% 6.96% 55.6%

Total/Weighted Average $ 87,270 7.02% 7.02% 55.10%

________________________

(1) Loan to value percentage (LTV) represents the ratio of the loan amount to the appraised value of the property at the time of origination.

The following table shows selected data from our real estate owned, held for investment assets in our portfolio as of December 31, 2024 (dollars in thousands):

3 unchanged sentences

Real Estate Owned 3 October 2023 Lubbock, TX Multifamily 11,543 — 11,543

$ 115,830 $ 42,793 $ 158,623

Total $ 113,160 $ — $ 113,160

The following table shows selected data from our real estate owned, held for sale assets in our portfolio as of December 31, 2024 (dollars in thousands):

1 unchanged sentence

Real Estate Owned, held for sale 1 Various Various Retail $ 14,472 $ 1,291

The following table shows selected data from our real estate securities, CRE CLO bonds, measured at fair value as of December 31, 2023 (dollars in thousands):

Real Estate Owned, held for sale 2 Various Various Multifamily 211,024 4,528

Total $ 225,496 $ 5,819

The following table shows selected data from our real estate securities, available for sale, measured at fair value as of December 31, 2024 (dollars in thousands):

Type Interest Rate Maturity Par Value Fair Value Effective Yield

CRE CLO bond 1 1 month SOFR + 2.78% 8/19/2035 $ 30,000 $ 30,040 8.14%

CRE CLO bond 2 1 month SOFR + 3.23% 8/19/2035 25,000 24,637 8.59%

CRE CLO bond 3 1 month SOFR + 2.90% 10/19/2039 28,340 28,310 8.30%

CRE CLO bond 4 1 month SOFR + 3.20% 5/25/2038 50,000 49,875 8.55%

CRE CLO bond 5 1 month SOFR + 2.37% 4/16/2028 45,000 44,911 7.72%

CRE CLO bond 6 1 month SOFR + 2.27% 9/19/2038 53,000 52,827 7.63%

CRE CLO bond 7 1 month SOFR + 3.10% 9/19/2038 12,000 11,969 8.46%

$ 243,340 $ 242,569 8.12%

CMBS bond 1 1 month SOFR + 2.78% 8/19/2035 $ 20,000 $ 20,021 7.12%

CMBS bond 2 1 month SOFR + 2.90% 10/19/2039 24,556 24,587 7.23%

CMBS bond 3 1 month SOFR + 3.20% 5/25/2038 43,333 43,388 7.53%

CMBS bond 4 1 month SOFR + 2.36% 4/16/2028 39,061 39,116 6.70%

CMBS bond 5 1 month SOFR + 2.27% 9/19/2038 9,663 9,685 6.61%

CMBS bond 6 1 month SOFR + 3.11% 9/19/2038 12,000 12,047 7.44%

CMBS bond 7 1 month SOFR + 1.36% 11/15/2036 15,887 15,648 5.70%

CMBS bond 8 1 month SOFR + 1.64% 4/15/2029 5,000 4,989 5.97%

CMBS bond 9 1 month SOFR + 2.99% 8/15/2039 3,800 3,812 7.32%

CMBS bond 10 1 month SOFR + 2.84% 8/15/2029 7,396 7,408 7.17%

CMBS bond 11 1 month SOFR + 2.94% 1/15/2030 22,309 22,272 7.27%

Total/Weighted Average $ 203,005 $ 202,973 7.02%

Liquidity and Capital Resources

13 unchanged sentences

(1) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, less cash and cash equivalents, to (ii) total equity and total redeemable convertible preferred stock, at period end .

Recourse net debt-to-equity ratio was 0.2x and 0.7x as of December 31, 2023 and December 31, 2022, respectively.

Recourse net debt-to-equity ratio was 0.3x and 0.2x as of December 31, 2024 and 2023, respectively.

(2) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, to (ii) total equity and total redeemable convertible preferred stock, at period end.

Recourse leverage ratio was 0.4x and 0.8x as of December 31, 2023 and December 31, 2022, respectively.

Recourse leverage ratio was 0.4x and 0.4x as of December 31, 2024 and 2023, respectively.

Sources of Liquidity

Our primary sources of liquidity include unrestricted cash, capacity in our collateralized loan obligations available for reinvestment, and funds available and in progress on financing lines.

Our current sources of near-term liquidity as of December 31, 2023 and December 31, 2022 are set forth in the following table (dollars in millions):

Our current sources of near-term liquidity as of December 31, 2024 and 2023 are set forth in the following table (dollars in millions):

December 31, 2024 December 31, 2023

16 unchanged sentences

Collateralized Loan Obligations

During the year ended December 31, 2023, the Company raised $896.6 million through the issuance of BSPRT 2023-FL10 Issuer, LLC.

During the year ended December 31, 2024, the Company raised $1.0 billion through the issuance of our CLO, BSPRT 2024-FL11 Issuer, LLC.

Additionally, as of December 31, 2024, the Company had $12.2 million of reinvestment capital available across all outstanding collateralized loan obligations.

1 unchanged sentence

CLO Name Debt Amount Reinvestment End Date

2019-FL5 Issuer (1)

2021-FL6 Issuer $ 344.4 Ended

2021-FL7 Issuer $ 720.0 01/08/24

2022-FL8 Issuer $ 960.0 03/08/24

2021-FL7 Issuer $ 392.8 Ended

2022-FL8 Issuer $ 796.9 Ended

2022-FL9 Issuer $ 519.5 Ended

2023-FL10 Issuer $ 717.2 04/08/25

2024-FL11 Issuer $ 886.2 10/08/27

________________________

(1) On July 17, 2023, the Company called all of the outstanding notes issued by BSPRT 2019-FL5 Issuer, Ltd, a wholly owned indirect subsidiary of the Company.

Repurchase Agreements and Revolving Credit Facilities ( “ Repo and Revolving Credit Facilities ” )

7 unchanged sentences

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Repurchase Agreements, Commercial Mortgage Loans $ 604,421 $ 695,039 $ 249,345 $ 299,707 $ 725,300 $ 796,659 $ 816,929 $ 278,168

Repurchase Agreements and Revolving Credit Facilities - Commercial Mortgage Loans $ 412,556 $ 762,437 $ 183,761 $ 329,811 $ 382,313 $ 671,561 $ 799,861 $ 237,888

Repurchase Agreements, Real Estate Securities 194,769 243,646 241,266 236,608 217,012 249,442 259,977 264,514

Repurchase Agreements, Real Estate Securities held as trading 121,000 113,000 — — 149,387 117,159 57 —

Total $ 607,325 $ 1,006,083 $ 425,027 $ 566,419 $ 599,325 $ 921,003 $ 1,059,838 $ 502,402

2 unchanged sentences

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Repurchase Agreements, Commercial Mortgage Loans $ 522,890 $ 832,034 $ 699,408 $ 680,859 $ 813,144 $ 834,337 $ 709,679 $ 729,329

Repurchase Agreements and Revolving Credit Facilities - Commercial Mortgage Loans $ 604,421 $ 695,039 $ 249,345 $ 299,707 $ 725,300 $ 796,659 $ 816,929 $ 278,168

Repurchase Agreements, Real Estate Securities 107,934 176,993 240,010 174,055 217,389 209,025 349,878 263,769

4 unchanged sentences

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Repurchase Agreements, Commercial Mortgage Loans $ 152,925 $ 287,462 $ 550,156 $ 1,019,600 $ 340,485 $ 282,891 $ 331,871 $ 959,729

Repurchase Agreements and Revolving Credit Facilities - Commercial Mortgage Loans $ 522,890 $ 832,034 $ 699,408 $ 680,859 $ 813,144 $ 834,337 $ 709,679 $ 729,329

Repurchase Agreements, Real Estate Securities 54,610 53,288 112,613 222,864 44,744 54,033 53,688 174,389

17 unchanged sentences

Under the Company's dividend reinvestment and direct stock purchase plan ("DRIP"), the Company may elect to supply shares for reinvestment via newly issued shares of common stock under the DRIP or via shares of common stock acquired by the DRIP administrator on the open market.

During the years ended December 31, 2023, 2022 and 2021, the Company issued 61,866 shares, 72,764 shares and zero shares, respectively, of common stock under the dividend reinvestment component of DRIP.

For the year ended December 31, 2024, 0 and 163,952 shares of common stock were issued by the Company and purchased in the open market by the DRIP administrator and allocated to DRIP participants, respectively, under the dividend reinvestment component of DRIP.

During the year ended December 31, 2024 and 2023, the Company paid an aggregate of $117.9 million and $118.0 million, respectively, of common stock distributions.

The following table sets forth changes in cash, cash equivalents and restricted cash for the years ended December 31, 2023 and 2022:

The following table sets forth changes in cash, cash equivalents and restricted cash for the years ended December 31, 2024 2023, and 2022, respectively

For the Year Ended December 31,

2024 2023 2022

Cash flows from operating activities $ 57,233 $ 197,387 $ 152,515

3 unchanged sentences

Cash Flows from Operating Activities

Our cash flows from operating activities were primarily driven by net income of $144.5 million, net proceeds of $19.5 million related to originations and sales of commercial mortgage loans, measured at fair value and $33.7 million related to provision for credit losses which is a non-cash transaction.

During the year ended December 31, 2022, cash flows from operating activities were primarily driven by net income of $14.2 million, net proceeds of $18.1 million related to originations and sales of commercial mortgage loans, measured at fair value and $119.2 million related to trading losses on real estate securities.

During the year ended December 31, 2024, cash inflows of $57.2 million from operating activities were primarily driven by (i) net income of $92.4 million and (ii) certain non-cash expenses, partially offset by net cash outlay of $74.1 million related to originations, sales and repayment of commercial mortgage loans, held for sale, measured at fair value.

During the year ended December 31, 2023, cash inflows of $197.4 million from operating activities were primarily driven by (i) net income of $144.5 million, (ii) net proceeds of $19.5 million related to originations, sales and repayment of commercial mortgage loans, held for sale, measured at fair and (iii) certain non-cash expenses.

Cash Flows from Investing Activities

Our cash flows from investing activities consisted of cash inflows primarily driven by proceeds from principal repayments of $1,065.5 million received on commercial mortgage loans, held for investment, proceeds received from the sale of real estate securities of $418.8 million, proceeds from the sale of other real estate investments of $39.8 million and $17.7 million received from principal collateral on mortgage investments.

Inflows were partially offset by the origination and acquisition of $936.3 million of commercial mortgage loans, held for investment and the purchase of real estate securities for $223.8 million.

During the year ended December 31, 2022, cash inflows were primarily driven by proceeds from principal repayments of $1,258.4 million received on commercial mortgage loans, held for investment, proceeds received from the sale of real estate securities of $3,731.7 million, $545.4 million received from principal collateral on mortgage investments and proceeds from sale of commercial mortgage loans, held for sale, of $9.3 million.

Inflows were partially offset by the origination and acquisition of $2,227.7 million of commercial mortgage loans, held for investment and the purchase of real estate securities for $220.6 million.

During the year ended December 31, 2024 cash outflows of $155.5 million from investing activities were primarily driven by (i) the origination and purchase of commercial mortgage loans, held for investment for $1.8 billion, (ii) the purchase of real estate securities, available for sale for $79.5 million and (iii) the purchase of equity method investment in real estate for $13.4 million.

Outflows were partially offset by (i) proceeds from principal repayments of $1.5 billion received on commercial mortgage loans, held for investment, (ii) proceeds received from the sale or paydown of real estate securities, available for sale of $120.0 million, (iii) proceeds from the sale of real estate owned, held for sale assets of $34.4 million and (iv) proceeds from the sale of commercial mortgage loans, held for investment of $33.4 million.

During the year ended December 31, 2023, cash inflows of $380.8 million from investing activities were primarily driven by (i) proceeds from principal repayments of $1.1 billion received on commercial mortgage loans, held for investment, (ii) proceeds from the sale or paydown of real estate securities, available for sale of $418.8 million, (iii) proceeds from the sale of real estate owned, held for sale assets of $39.8 million and (iv) $17.7 million received from principal collateral on mortgage investments.

Inflows were partially offset by (i) the origination and purchase of commercial mortgage loans, held for investment for $936.3 million and (ii) the purchase of real estate securities, available for sale for $223.8 million.

Cash Flows from Financing Activities

Our cash outflows from financing activities were primarily driven by net repayments on repurchase agreements for real estate securities, commercial mortgage loans and other financings of $266.0 million, $381.2 million and $39.8 million, respectively, $144.3 million in cash distributions to stockholders, repayments on unsecured debt of $13.4 million, deferred financing cost payments of $12.9 million and $12.5 million of common stock repurchases.

Outflows were partially offset by net proceeds of $448.1 million received from repurchase agreements on CLOs.

During the year ended December 31, 2022, cash outflows were primarily driven by net payments on repurchase agreements for real estate securities and commercial mortgage loans of $3,738.8 million and $$338.7 million, respectively, $139.4 million in cash distributions to stockholders and $16.6 million of common stock repurchases.

Outflows were partially offset by $38.5 million of proceeds received from borrowings on other financing and loan participation for commercial mortgage loans and net proceeds of $968.2 million received from repurchase agreements on CLOs.

During the year ended December 31, 2024 cash outflows of $48.6 million from financing activities were primarily driven by (i) repayments on our other financings of $23.7 million, (ii) $144.9 million of distributions paid to shareholders, (iii) $16.2 million of distributions paid to non-controlling interest, (iv) payments of deferred financing costs of $9.3 million and (v) $4.9 million of common stock repurchases.

Outflows were partially offset by (i) net borrowings on collateralized loan obligations of $59.1 million, (ii) net borrowings on repurchase agreements for real estate securities of $62.6 million and (iii) net borrowings on repurchase agreements and revolving credit facilities for commercial mortgage loans of $30.1 million.

During the year ended December 31, 2023, cash outflows of $425.0 million from financing activities were primarily driven by (i) net repayments on repurchase agreements for real estate securities of $266.0 million, (ii) net repayments on repurchase agreements and revolving credit facilities for commercial mortgage loans of $381.2 million, (iii) net repayments on our other financings of $39.8 million, (iv) $144.3 million of distributions paid to shareholders, (v) repayments on unsecured debt of $13.4 million, (vi) payments of deferred financing costs of $12.9 million and (vii) $12.5 million of common stock repurchases.

Outflows were partially offset by net borrowings on collateralized loan obligations of $448.1 million.

Election as a REIT

37 unchanged sentences

During the term of the amended Advisory Agreement, the Advisor shall not, directly or indirectly, manage or advise another REIT that is engaged in the business of the Company in any geographical region in which the Company has a significant investment, or provide any services related to fixed-rate conduit lending to any other person, subject to certain conditions.

Advisory Agreement Fees and Reimbursements

Pursuant to the Advisory Agreement, the Company is or was required to make the following payments and reimbursements to the Advisor:

• The Company reimburses the Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to the Company's executive officers.

• The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholders' equity as calculated pursuant to the Advisory Agreement.

• The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital (as defined in the Advisory Agreement) exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return;

provided that in no event will the annual subordinated performance fee payable to the Advisor exceed 10.0% of the aggregate total return for such year.

• The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company's behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments.

Other Transactions

In the third quarter of 2021, the Company and an affiliate of the Company entered into the Jeffersonville JV to acquire a $139.5 million triple net lease property in Jeffersonville, GA.

The Company has a 79% interest in the Jeffersonville JV, while the affiliated fund has a 21% interest.

The Company invested a total of $109.8 million, made up of $88.7 million in debt and $21.1 million in equity, representing 79% of the ownership interest in the Jeffersonville JV.

The affiliated fund made up the remaining $29.8 million composed of a $24.0 million mortgage note payable and $5.8 million in non-controlling interest.

The Company has majority control of Jeffersonville JV and, therefore, consolidates the accounts of Jeffersonville JV in its consolidated financial statements.

The Company's $88.7 million mortgage note payable to Jeffersonville JV is eliminated in consolidation (see Note 7 - Debt).

Pursuant to the Company's 2021 Incentive Plan, in the first quarter of 2023, the Company issued awards of restricted stock units to its officers and certain other personnel of the Advisor who provide services to the Company under the Advisory Agreement.

As of December 31, 2023, our commercial mortgage loans, held for investment, includes an aggregate of $124.1 million carrying value of loans to affiliates of our Advisor.

The Company recognized $10.0 million and $5.0 million in interest income from these loans for the year ended December 31, 2023 and 2022 respectively, in the consolidated statements of operations.

As disclosed in Note 3 - Commercial Mortgage Loans in April 2022, the Company fully funded a $113.2 million first mortgage consisting of the Walgreens Portfolio with various locations throughout the United States.

The Company entered into a joint venture agreement and formed a joint venture entity, BSPRT Walgreens Portfolio, LLC to acquire 75.618% ownership interest in the Walgreens Portfolio, while the affiliated fund has 24.242% interest (see Note 5 - Real Estate Owned).

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the years ended December 31, 2023, 2022 and 2021 and the associated amounts payable as of December 31, 2023 and 2022 (dollars in thousands).

See Note 11 - Related Party Transactions and Arrangements for further detail.

Year Ended December 31, Payable as of December 31,

2023 2022 2021 2023 2022

Acquisition expenses (1)

$ 1,241 $ 1,360 $ 1,203 $ — $ —

Administrative services expenses 14,440 12,928 7,658 3,447 3,526

Asset management and subordinated performance fee 33,847 26,157 28,110 15,014 8,843

Other related party expenses (2)(3)

1,192 875 355 855 3,060

Total related party fees and reimbursements $ 50,720 $ 41,320 $ 37,326 $ 19,316 $ 15,429

______________________

(1) Total acquisition fees and expenses paid during the years ended December 31, 2023, 2022 and 2021 were $5.8 million, $11.7 million and $15.0 million respectively, of which $4.6 million, $10.3 million and $13.8 million were capitalized in Commercial mortgage loans, held for investment and Real estate securities, available for sale, measured at fair value in the consolidated balance sheets for the years ended December 31, 2023, 2022 and 2021.

(2) These are related to reimbursable costs incurred for the increase in loan origination activities and are included in Other expenses in the consolidated statements of operations.

(3) As of December 31, 2023 and December 31, 2022, the related party payable includes $0.7 million and $2.9 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company.

The payables as of December 31, 2023 and 2022 in the table above are included in Due to affiliates in the consolidated balance sheets.

Off Balance Sheet Arrangements

We currently have no off balance sheet arrangements as of December 31, 2023 and through the date of the filing of this Form 10-K.

We had no off balance sheet arrangements as of December 31, 2024 and through the date of the filing of this Form 10-K.

Non-GAAP Financial Measures

Distributable Earnings and Run-Rate Distributable Earnings

Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans, derivatives and ARMs, including CECL reserves and impairments, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) loan workout charges, (vii) realized gains and losses on debt extinguishment and CLO calls, (viii) actual realized cash loss on a specific real estate owned ("REO") investment, (ix) impairments of acquisition assets related to the Capstead merger and (x) certain other non-cash items.

Further, Run-Rate Distributable Earnings, a non-GAAP measure, presents Distributable Earnings before (i) trading and derivative gain/loss on ARMs and (ii) realized cash gain/loss adjustments on REO.

The Company believes that Distributable Earnings and Run-Rate Distributable Earnings provide meaningful information to consider in addition to the disclosed GAAP results.

The Company believes Distributable Earnings is a useful financial metric for existing and potential future holders of its common stock as historically, over time, Distributable Earnings has been an indicator of dividends per share.

Distributable Earnings and Distributable Earnings to Common

Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans and derivatives, including CECL reserves and impairments, net of realized gains and losses, as described further below, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) realized gains and losses on debt extinguishment and CLO calls, and (vii) certain other non-cash items.

Further, Distributable Earnings to Common, a non-GAAP measure, presents Distributable Earnings net of (i) perpetual preferred stock dividend payments and (ii) non-controlling interests in joint ventures.

As noted above, we exclude unrealized gains and losses on loans and other investments, including CECL reserves and impairments, from our calculation of Distributable Earnings and include realized gains and losses.

The nature of these adjustments is described more fully in the footnotes to our reconciliation tables.

GAAP loan loss reserves and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing definition of Distributable Earnings.

We expect to only recognize such potential credit or property impairment losses in Distributable Earnings if and when such amounts are deemed nonrecoverable upon a realization event.

This is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold.

Amounts may also be deemed non-recoverable if, in our determination, it is nearly certain the carrying amounts will not be collected or realized.

The realized loss amount reflected in Distributable Earnings will generally equal the difference between the cash received and the

Distributable Earnings basis of the asset.

The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding loss reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.

The Company believes that Distributable Earnings and Distributable Earnings to Common provide meaningful information to consider in addition to the disclosed GAAP results.

The Company believes Distributable Earnings and Distributable Earnings to Common are useful financial metrics for existing and potential future holders of its common stock as historically, over time, Distributable Earnings to Common has been an indicator of common dividends per share.

As a REIT, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock.

Further, Distributable Earnings helps investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's board of directors considers when dividends are declared.

The Company believes Run-Rate Distributable Earnings is a useful financial metric because it presents the Distributable Earnings of its core businesses, net of the impacts of realized cash gain/loss adjustments on REO as well as the realized trading and derivative gain/loss on the residential adjustable-rate mortgage securities acquired from Capstead Mortgage Corporation, which the Company has liquidated from its portfolio.

Distributable Earnings and Run-Rate Distributable Earnings do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss).

The methodology for calculating Distributable Earnings and Run-Rate Distributable Earnings may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.

The following table provides a reconciliation of GAAP net income to Distributable Earnings for the years ended December 31, 2023, 2022, and 2021 (dollars in thousands):

Further, Distributable Earnings to Common helps investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's board of directors considers when dividends are declared.

Distributable Earnings and Distributable Earnings to Common do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss).

The methodology for calculating Distributable Earnings and Distributable Earnings to Common may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.

The following table provides a reconciliation of GAAP net income to Distributable Earnings and Distributable Earnings to Common for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands):

Year Ended December 31,

2024 2023 2022

GAAP Net Income $ 144,509 $ 14,215 $ 25,702

Depreciation and amortization 7,128 5,408 2,107

Impairment of Acquired Assets — — 88,282

GAAP net income (loss) $ 92,403 $ 144,509 $ 14,215

CLO amortization acceleration (1)

3 unchanged sentences

Unrealized (gain)/loss - ARMs — 415 43,557

Subordinated performance fee (3)

6,171 (8,380) 9,846

Non-Cash Compensation Expense 4,762 3,485 —

(Reversal of)/provision for credit losses 35,699 33,738 36,115

Loan workout charges/(loan workout recoveries) (4)

Non-cash compensation expense 8,173 4,762 3,485

Depreciation and amortization 5,630 7,128 5,408

Subordinated performance fee (3)

(7,551) 6,171 (8,380)

Realized (gain)/loss on debt extinguishment / CLO call — (2,201) —

Realized trading and derivatives (gain)/loss on ARMs 677 21,726 13,600

Run Rate Distributable Earnings (5)

Realized gain/(loss) adjustment on loans and REO (4)

(40,605) (1,571) —

Realized trading and derivatives gain/(loss) on ARMs (677) (21,726) (13,600)

Realized cash gain/(loss) adjustment on REO (6)

Loan workout charges/(loan workout recoveries) (5)

— (5,105) 5,104

Distributable Earnings $ 100,682 $ 189,510 $ 116,076

7.5% Cumulative Redeemable Preferred Stock, Series E Dividend $ (19,367) $ (19,367) (4,842)

7.5% series E cumulative redeemable preferred stock dividend (19,367) (19,367) (19,367)

Non-controlling interests in joint ventures net (income) / loss 3,475 (602) 216

Depreciation and amortization attributed to non-controlling interests of joint ventures (31) (1,415) —

Non-controlling interests in joint ventures adjusted net (income) / loss DE Adjustments (3,717) (31) (1,415)

Distributable Earnings to Common $ 81,073 $ 169,510 $ 95,510

Average Common Stock and Common Stock Equivalents 1,403,558 1,456,871 1,146,009

Average common stock & common stock equivalents (6)

1,363,621 1,403,558 1,456,871

GAAP net income/(loss) ROE 5.6 % 8.9 % (0.3) %

Run-Rate Distributable Earnings ROE 12.2 % 8.0 % 12.4 %

Distributable earnings ROE 5.9 % 12.1 % 6.6 %

2 unchanged sentences

$ 0.87 $ 1.42 $ (0.06)

Run-Rate Distributable Earnings Per Share, Fully Converted (7)

$ 1.94 $ 1.31 $ 2.23

Distributable earnings per share, fully converted (7)

1 unchanged sentence

________________________

(1) Adjusted for non-cash CLO amortization acceleration to effectively amortize issuance costs of our CLOs over the expected lifetime of the CLOs.

We assume our CLOs will be outstanding for four years and amortized the financing costs over four years in our distributable earnings as compared to effective yield methodology in our GAAP earnings.

(1) Before Q1 2024, we adjusted GAAP income for non-cash CLO amortization acceleration to effectively amortize the issuance costs of our CLOs over the expected lifetime of the CLOs.

We assume our CLOs will be outstanding for approximately four years and amortized the financing costs over approximately four years in our distributable earnings as compared to effective yield methodology in our GAAP earnings.

Starting in Q1 2024, we amortized the issuance costs incurred on our CLOs over the expected lifetime of the CLOs in our GAAP presentation, making our previous adjustment no longer necessary.

(2) Represents unrealized gains and losses on (i) commercial mortgage loans, held for sale, measured at fair value, (ii) other real estate investments, measured at fair value and (iii) derivatives.

(3) Represents accrued and unpaid subordinated performance fee.

In addition, reversal of subordinated performance fee represents cash payments of the subordinated performance fee made during the period.

In addition, reversal of subordinated performance fee represents cash payment obligations during the period.

(4) Represents amounts deemed nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold.

Amounts may also be deemed non-recoverable if, in our determination, it is nearly certain the carrying amounts will not be collected or realized upon sale.

Amount may be different than the GAAP basis.

As of December 31, 2024, the Company has $11.9 million of GAAP loss adjustments that would run through distributable earnings if and when cash losses are realized.

(5) Represents loan workout charges the Company incurred, which the Company deemed likely to be recovered.

1 unchanged sentence

During the second quarter of 2023, the Company recovered $5.1 million of loan workout charges, in aggregate, related to the loan workout charges incurred in 2022.

(5) Distributable Earnings before realized trading and derivative gain/loss on residential adjustable-rate mortgage securities (“Run-Rate Distributable Earnings”) (a non-GAAP financial measure).

(6) Represents the actual realized cash loss on a specific REO investment.

(6) Represents the average of all classes of equity except the Series E Preferred Stock.

(7) Fully Converted assumes conversion of our series of convertible preferred stock and full vesting of our outstanding equity compensation awards.

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