What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-07-28 compared with 2025-04-28 · 139 added, 97 removed, 263 unchanged (47% of the section changed)

31 unchanged sentences

Market Conditions.

CRE investors entered 2025 with cautious optimism.

By the end of 2024, citing progress towards attaining its 2% inflation target, the Federal Open Market Committee, or FOMC, lowered the targeted federal funds rate by a combined 100 basis points, providing borrowers relief from a sustained period of elevated borrowing costs.

Despite falling short of many borrowers’ expectations, the FOMC’s initial reduction gave borrowers a level of certainty and conviction around buy, sell or refinance decisions, and debt liquidity continued to return to the market.

Tab le of Contents

Despite increasing delinquency rates within certain segments of the market, in particular for recent vintage multifamily loans, property fundamentals overall have continued to improve.

Supply and demand imbalances, specifically for multifamily and industrial properties, have been showing signs of leveling off with property values trending upwards.

Strong investor demand for CMBS and CRE collateralized loan obligations, or CLO, bonds and fresh allocations from life insurance companies and agency lenders such as Fannie-Mae and Freddie-Mac helped to drive credit spreads and borrowing costs downward, increasing financing activity for much of the quarter.

The cautious optimism that was common in the markets earlier in the year has now begun to wane as investors direct their attention to the administration’s new trade policies and recent tariff announcements.

Although we believe markets had already priced in a baseline level of tariffs, the ultimate scope and magnitude of the announced rates were unexpected, creating new uncertainty and capital markets volatility.

The FOMC’s dual mandate to ensure price stability and to maximize employment is again in focus.

An increased risk of an economic recession may lead to job losses and the FOMC may need to consider lowering the target federal funds rate, a potentially welcome outcome for leveraged property owners.

Alternatively, widespread tariffs, if prolonged, may contribute to greater inflation, which could cause the FOMC to consider maintaining or even increasing rates to slow potential, long-term inflationary pressures.

With close to $2 trillion in CRE debt scheduled to mature over the next two years, property owners may face difficult decisions if market volatility persists.

At the beginning of the year, borrowers believed they had a clear view on the path of short-term rates while 5 and 10-year U.S.

Treasury yields remained somewhat elevated.

Today, it is much less clear what the FOMC’s intentions are going forward and what the outlook is for short-term interest rates in the current economic climate.

As for longer term interest rates, the 5 and 10-year U.S.

Treasury yields continue to be elevated and quite volatile, making it difficult for borrowers that must refinance maturing loans to lock in long-term fixed rates in this environment.

Despite the fact that many uncertainties exist today, we continue to believe that the CRE debt markets, property owners and lenders are well positioned to handle these uncertain times and conditions as we move deeper into 2025.

trade and fiscal policy, coupled with ongoing geopolitical tensions, has caused uncertainty in financial markets.

As a result, we believe many CRE investors continue to remain on the sidelines, waiting until they have greater clarity on the outcomes of negotiations with U.S.

trade partners, new tariff announcements, domestic fiscal policy initiatives and the path of interest rates to make buy and sell decisions.

However, the Federal Open Market Committee, or FOMC, has indicated that the U.S.

economy is on solid footing, allowing it to be patient and wait to measure the impact of tariff driven price increases before determining the future path of interest rates.

Despite the current macroeconomic uncertainty, CRE debt markets continue to function well.

The relative risk versus reward in CRE debt investments has led to healthy loan demand from various types of lenders, including banks, securitized lenders, life insurance companies, private debt funds and mortgage REITs.

With fewer sale transactions to finance and strong debt capital market liquidity, borrowers with well-performing collateral properties are benefiting from increased competition amongst lenders, which has driven credit spreads and whole loan rates downward.

Changes in Interest Rates.

8 unchanged sentences

The interest income on our loans and interest expense on our borrowings float with benchmark rates, such as SOFR.

Because we generally intend to leverage approximately 75% of the amount of our investments, as benchmark rates increase above the floors of our loans, our income from investments, net of interest and related expenses, will increase.

Because we generally intend to leverage up to 80% of the amount of our investments, as benchmark rates increase above the floors of our loans, our income from investments, net of interest and related expenses, will increase.

Decreases in benchmark rates are mitigated by interest rate floor provisions in all but one of our loan agreements with borrowers, ranging from 0.25% to 5.20%;

therefore, changes to income from investments, net, may not move proportionately with the increase or decrease in benchmark rates.

As of March 31, 2025, SOFR was 4.32%, and as a result, one of our loan investments had an active interest rate floor.

As of June 30, 2025, SOFR was 4.32%, and as a result, one of our loan investments had an active interest rate floor.

Size of Portfolio .

4 unchanged sentences

Also, if the aggregate principal balance of our loan portfolio grows but the number of our loans or the number of our borrowers does not grow, we could face increased risk by reason of the concentration of our investments.

Tab le of Contents

Prepayment Risk.

4 unchanged sentences

Our Loan Portfolio

The table below details overall statistics for our loan portfolio as of March 31, 2025 and December 31, 2024:

As of March 31, 2025 As of December 31, 2024

The table below details overall statistics for our loan portfolio as of June 30, 2025 and December 31, 2024:

As of June 30, 2025 As of December 31, 2024

Number of loans 23 21

15 unchanged sentences

(4) LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.

Tab le of Contents

Loan Portfolio Details

The table below details our loan portfolio as of March 31, 2025:

The table below details our loan portfolio as of June 30, 2025:

# Location Property Type Origination Date Committed Principal Amount Principal

6 unchanged sentences

4 Boston, MA Hotel 12/16/2024 45,000 39,800 S + 3.95% S + 4.39% 12/16/2029 49 % 3

5 Brandywine, MD Retail 03/29/2022 42,500 42,200 S + 3.85% S + 4.78% 03/29/2027 62 % 3

5 Oxford, MS Multifamily 11/26/2024 42,000 42,000 S + 2.95% S + 3.33% 11/26/2029 75 % 2

1 unchanged sentence

7 Farmington Hills, MI Multifamily 05/24/2022 30,520 29,501 S + 3.15% S + 3.56% 05/24/2027 75 % 3

9 Downers Grove, IL (4)

Office 09/25/2020 30,000 29,500 S + 5.00% S + 5.31% 05/23/2025 67 % 4

8 Anaheim, CA Hotel 11/29/2023 29,000 29,000 S + 4.00% S + 4.56% 11/29/2028 55 % 2

9 San Antonio, TX Industrial 06/13/2025 28,000 22,800 S + 3.40% S + 3.88% 06/13/2030 62 % 3

10 Fountain Inn, SC Industrial 07/13/2023 27,500 24,300 S + 4.25% S + 4.87% 07/13/2026 76 % 1

11 Plano, TX Office 07/01/2021 27,385 26,569 S + 3.75% S + 3.76% 07/01/2026 78 % 4

13 Las Vegas, NV Multifamily 06/10/2022 25,992 25,448 S + 3.30% S + 4.07% 06/10/2027 60 % 3

12 Downers Grove, IL Office 09/25/2020 27,000 26,500 S + 5.00% S + 5.15% 05/22/2026 67 % 4

13 Fayetteville, GA Industrial 10/06/2023 25,250 25,250 S + 3.35% S + 3.73% 10/06/2028 55 % 3

3 unchanged sentences

17 Downers Grove, IL Office 12/09/2021 23,530 23,530 S + 4.25% S + 4.54% 12/09/2026 72 % 3

19 Bellevue, WA (5)

Office 11/05/2021 21,000 20,000 S + 3.85% S + 3.89% 11/05/2026 68 % 4

18 Bellevue, WA Office 11/05/2021 21,000 20,000 S + 2.85% S + 2.85% 04/07/2029 68 % 4

19 Waco, TX Multifamily 03/06/2025 18,500 18,500 S + 3.35% S + 3.75% 03/06/2030 73 % 3

20 Boise, ID Multifamily 06/26/2025 18,000 18,000 S + 3.50% S + 4.29% 06/26/2030 79 % 3

21 Newport News, VA Multifamily 04/25/2024 17,757 15,126 S + 3.15% S + 3.85% 04/25/2029 71 % 3

5 unchanged sentences

(3) LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.

(4) In April 2025, the borrower exercised a 30 day extension option which extended the maturity date of the loan to May 23, 2025.

(5) In April 2025, the coupon rate was reduced from SOFR + 3.85% to SOFR + 2.85% and the maturity date was extended by three years to April 7, 2028.

As of March 31, 2025, we had $690,913 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 23 first mortgage loans.

As of March 31, 2025, we had five loans representing approximately 22% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”.

As of June 30, 2025, we had $665,421 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 23 first mortgage loans.

As of June 30, 2025, we had five loans representing approximately 22% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”.

We have no “5” or “loss likely” rated loans.

In August 2024, we amended the agreement governing our loan secured by an office property in Dallas, TX.

As part of this amendment, the loan commitment was reduced by $3,189, the borrower was required to contribute $2,900 to cash reserves and the maturity date was extended by two years to August 25, 2026.

As of March 31, 2025, this loan had an amortized cost of $43,511 and a risk rating of 4.

As of June 30, 2025, this loan had an amortized cost of $43,511 and a risk rating of 4.

In August 2024, we amended the agreement governing our loan secured by an office property in Plano, TX.

As part of this amendment, the coupon rate was reduced from SOFR + 4.75% to SOFR + 3.75% and the maturity date was extended by two years to July 1, 2026.

As of March 31, 2025, this loan had an amortized cost of $26,635 and a risk rating of 4.

As of June 30, 2025, this loan had an amortized cost of $26,636 and a risk rating of 4.

In November 2024, we amended the agreement governing our loan secured by an office property in Carlsbad, CA.

As part of this amendment, the borrower was required to contribute $1,100 to cash reserves and the maturity date was extended by two years to October 27, 2026.

As of March 31, 2025, this loan had an amortized cost of $24,413 and a risk rating of 4.

Tab le of Contents

In February 2025, we amended the agreement governing our loan secured by an office property in Downers Grove, IL, which extended the term of the loan by 60 days to April 25, 2025 with an option to extend the loan for an additional 30 days.

In April 2025, the borrower exercised its option to extend the loan by 30 days to May 23, 2025.

As of March 31, 2025, this loan had an amortized cost of $29,642 and a risk rating of 4.

As of June 30, 2025, this loan had an amortized cost of $24,414 and a risk rating of 4.

In April 2025, we amended the agreement governing our loan secured by an office property in Bellevue, WA.

As part of this amendment, the borrower was required to contribute $1,625 to cash reserves, the coupon rate was reduced from SOFR + 3.85% to SOFR + 2.85% and the maturity date was extended by three years to April 7, 2028.

As of March 31, 2025, this loan had an amortized cost of $19,999 and a risk rating of 4.

As of June 30, 2025, this loan had an amortized cost of $19,999 and a risk rating of 4.

In May 2025, we amended the agreement governing our loan secured by an office property in Downers Grove, IL.

As part of this amendment, the borrower repaid $3,000 of the outstanding principal balance and the maturity date was extended by one year to May 22, 2026.

As of June 30, 2025, this loan had an amortized cost of $26,620 and a risk rating of 4.

All of the loans in our portfolio are structured with risk mitigation mechanisms, such as cash flow sweeps or interest reserves, to help protect us against investment losses.

In addition, we actively engage with our borrowers regarding their execution of the business plans for the underlying collateral, among other things.

As of March 31, 2025 and April 24, 2025, all of our borrowers had paid their debt service obligations owed and due to us.

We did not have any outstanding past due loans or nonaccrual loans as of March 31, 2025.

As of June 30, 2025 and July 24, 2025, all of our borrowers had paid their debt service obligations owed and due to us.

We did not have any outstanding past due loans or nonaccrual loans as of June 30, 2025.

However, our borrowers' businesses, operations and liquidity may be materially adversely impacted by current inflationary pressures, interest rate fluctuations, supply chain issues or a prolonged economic slowdown or recession could amplify those negative impacts.

2 unchanged sentences

Financing Activities

The table below is an overview of our Secured Financing Facilities as of March 31, 2025:

Facility Maturity Date Principal Balance Unused Capacity Maximum Facility Size Collateral Principal Balance

The table below is an overview of our Secured Financing Facilities as of June 30, 2025:

Facility Maturity Date Principal Balance Carrying Value Unused Capacity Maximum Facility Size Collateral Principal Balance

UBS Master Repurchase Facility 02/18/2026 $ 156,929 $ 156,663 $ 93,071 $ 250,000 $ 241,161

3 unchanged sentences

Total $ 417,215 $ 415,999 $ 322,785 $ 740,000 $ 614,826

The table below details our Secured Financing Facilities activities during the three months ended March 31, 2025:

The table below details our Secured Financing Facilities activities during the three months ended June 30, 2025:

Carrying Value

Balance at March 31, 2025 $ 440,474

Borrowings 31,900

Repayments (56,711)

Deferred fees (47)

Amortization of deferred fees 383

Balance at June 30, 2025 $ 415,999

The table below details our Secured Financing Facilities activities during the six months ended June 30, 2025:

Carrying Value

Balance at December 31, 2024 $ 417,796

Borrowings 54,304

Repayments (56,711)

Deferred fees (139)

Amortization of deferred fees 749

Balance at March 31, 2025 $ 440,474

As of March 31, 2025, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 6.52% per annum, excluding associated fees and expenses.

As of March 31, 2025 and April 24, 2025, we had a $442,026 aggregate outstanding principal balance under our Secured Financing Facilities.

As of March 31, 2025, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

Balance at June 30, 2025 $ 415,999

As of June 30, 2025, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 6.51% per annum, excluding associated fees and expenses.

As of June 30, 2025 and July 24, 2025, we had a $417,215 and $381,853, respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of June 30, 2025, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

For further information regarding our Secured Financing Facilities, see Note 5 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Tab le of Contents

RESULTS OF OPERATIONS (amounts in thousands, except per share data)

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024:

Three Months Ended June 30, 2025 Compared to Three Months Ended March 31, 2025:

Three Months Ended

March 31, 2025 December 31, 2024 Change % Change

June 30, 2025 March 31, 2025 Change % Change

INCOME FROM INVESTMENTS:

6 unchanged sentences

Base management fees 1,076 1,079 (3) (0.3 %)

Incentive fees 229 18 211 n/m

General and administrative expenses 1,381 963 418 43.4 %

Reimbursement of shared services expenses 551 550 1 0.2 %

Provision for (reversal of) credit losses 912 (153) 1,065 696.1 %

Expenses from real estate owned 569 594 (25) (4.2 %)

Total other expenses 4,718 3,051 1,667 54.6 %

Income before income taxes 2,675 4,543 (1,868) (41.1 %)

Income tax benefit (expense) 3 (11) 14 127.3 %

Net income $ 2,678 $ 4,532 $ (1,854) (40.9 %)

Weighted average common shares outstanding - basic and diluted 14,785 14,757 28 0.2 %

Net income per common share - basic and diluted $ 0.18 $ 0.30 $ (0.12) (40.0 %)

Interest and related income .

The increase in interest and related income was primarily due to higher deferred fee amortization, partially offset by a decrease in the weighted average coupon rates during the three months ended June 30, 2025.

The weighted average coupon rate was 8.03% as of June 30, 2025 compared to 8.07% as of March 31, 2025.

Interest and related expenses.

The increase in interest and related expenses was primarily the result of a higher average principal balance outstanding under our Secured Financing Facilities and higher deferred fee amortization, partially offset by a decrease in the weighted average coupon rates during the three months ended June 30, 2025.

The weighted average principal balance was approximately $433,000 for the three months ended June 30, 2025 compared to approximately $432,000 for the three months ended March 31, 2025.

The weighted average coupon rate was 6.51% as of June 30, 2025 compared to 6.52% as of March 31, 2025.

Revenue from real estate owned.

Revenue from real estate owned represents revenue from the operations of an office property located in Yardley, PA that was transferred to real estate owned through a deed in lieu of foreclosure in June 2023.

The decrease in revenue from real estate owned was primarily due to lower operating expense reimbursements during the three months ended June 30, 2025 as compared to the three months ended March 31, 2025.

Incentive fees.

We recognize management incentive fees payable to Tremont in accordance with our management agreement.

The increase in management incentive fees was due to the incentive fee for the 12 month period ended June 30, 2025 exceeding the fee paid for the previous three calendar quarters by a higher margin, as compared to the fee for the 12 month period ended March 31, 2025.

General and administrative expenses .

The increase in general and administrative expenses was primarily due to an increase in share based compensation resulting from shares awarded to our trustees during the three months ended June 30, 2025.

Reimbursement of shared services expenses.

Reversal of credit losses (153) (450) 297 (66.0 %)

Reimbursement of shared services expenses represents reimbursement of the costs for the services that Tremont arranges on our behalf from RMR.

Provision for (reversal of) credit losses.

The provision for (reversal of) credit losses represents the change in the allowance for credit losses on our loan portfolio and unfunded commitments.

The increase in the allowance for credit losses during the three months ended June 30, 2025 was primarily attributable to unfavorable CRE pricing forecasts used in our CECL model and extensions for certain of our loans, partially offset by loan repayments.

Expenses from real estate owned.

Expenses from real estate owned represent expenses from the operations of an office property located in Yardley, PA that was transferred to real estate owned through a deed in lieu of foreclosure in June 2023.

The decrease in expenses from real estate owned was primarily due to lower utility expenses during the three months ended June 30, 2025 as compared to the three months ended March 31, 2025.

Income tax benefit (expense).

Income tax expense represents income taxes paid or payable by us in certain jurisdictions where we are subject to state income taxes.

The decrease in net income was due to the changes noted above.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024:

Six Months Ended June 30,

2025 2024 Change % Change

INCOME FROM INVESTMENTS:

Interest and related income $ 28,681 $ 32,726 $ (4,045) (12.4 %)

Purchase discount accretion — 1,927 (1,927) (100.0 %)

interest and related expenses (14,961) (17,058) 2,097 (12.3 %)

Income from loan investments, net 13,720 17,595 (3,875) (22.0 %)

Revenue from real estate owned 1,267 1,147 120 10.5 %

Total revenue 14,987 18,742 (3,755) (20.0 %)

OTHER EXPENSES:

Base management fees 2,155 2,162 (7) (0.3 %)

Incentive fees 247 420 (173) (41.2 %)

General and administrative expenses 2,344 2,044 300 14.7 %

Reimbursement of shared services expenses 1,101 1,382 (281) (20.3 %)

Provision for credit losses 759 2,012 (1,253) (62.3 %)

Expenses from real estate owned 1,163 1,244 (81) (6.5 %)

Total other expenses 7,769 9,264 (1,495) (16.1 %)

5 unchanged sentences

Interest and related income .

The increase in interest and related income was primarily the result of greater outstanding principal balances, partially offset by a decrease in the weighted average coupon rates under our loan investment portfolio during the three months ended March 31, 2025.

The weighted average principal balance was approximately $641,000 for the three months ended March 31, 2025 compared to approximately $603,000 for the three months ended December 31, 2024.

The weighted average coupon rate was 8.07% as of March 31, 2025 compared to 8.24% as of December 31, 2024.

The decrease in interest and related income was primarily the result of lower weighted average coupon rates under our loan investment portfolio, partially offset by higher outstanding principal balances during the six months ended June 30, 2025.

The weighted average coupon rate was 8.03% as of June 30, 2025 compared to 9.11% as of June 30, 2024.

The weighted average principal balance was approximately $642,000 for the six months ended June 30, 2025 compared to approximately $607,000 for the six months ended June 30, 2024.

Purchase discount accretion.

The decrease in purchase discount accretion was due to the purchase discount recorded as part of our merger with Tremont Mortgage Trust, or the Merger, becoming fully accreted during 2024.

Interest and related expenses.

The increase in interest and related expenses was primarily the result of greater outstanding principal balances, partially offset by a decrease in the weighted average coupon rates under our Secured Financing Facilities during the three months ended March 31, 2025.

The weighted average principal balance was approximately $432,000 for the three months ended March 31, 2025 compared to approximately $411,000 for the three months ended December 31, 2024.

The weighted average coupon rate was 6.52% as of March 31, 2025 compared to 6.62% as of December 31, 2024.

The decrease in interest and related expenses was primarily the result of lower weighted average coupon rates under our Secured Financing Facilities, partially offset by higher outstanding principal balances during the six months ended June 30, 2025.

The weighted average coupon rate was 6.51% as of June 30, 2025 compared to 7.48% as of June 30, 2024.

The weighted average principal balance was approximately $432,000 for the six months ended June 30, 2025 compared to approximately $431,000 for the six months ended June 30, 2024.

Revenue from real estate owned.

The increase in revenue from real estate owned was primarily due to higher operating expense reimbursement during the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

Tab le of Contents

Base management and incentive fees.

We recognize base management and incentive fees payable to Tremont in accordance with our management agreement.

The decrease in base management and incentive fees was due to lower “core earnings”, as defined in our management agreement, during the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

The increase in revenue from real estate owned was primarily due to higher operating expense reimbursements during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Incentive fees.

We recognize management incentive fees payable to Tremont in accordance with our management agreement.

The decrease in management incentive fees was due to lower “core earnings”, as defined in our management agreement, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

General and administrative expenses .

The increase in general and administrative expenses was primarily due to trustee stock grants during the three months ended March 31, 2025.

The increase in general and administrative expenses was primarily due to an increase in share based compensation resulting from shares awarded to our trustees during the six months ended June 30, 2025.

Reimbursement of shared services expenses.

Reimbursement of shared services expenses represents reimbursement of the costs for the services that Tremont arranges on our behalf from RMR.

The decrease in reimbursement of shared services expenses was primarily the result of lower usage of shared services from RMR during the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

Reversal of credit losses.

The reversal of credit losses represents the decrease in the allowance for credit losses on our loan portfolio and unfunded commitments.

The decrease in the allowance for credit losses during the three months ended March 31, 2025 was primarily attributable to certain of our loans nearing maturity and improved performance at certain of the collateral properties underlying our loans, partially offset by higher total loan commitments as of March 31, 2025 as compared to December 31, 2024, including future funding of our unfunded loan commitments.

The decrease in reimbursement of shared services expenses was primarily the result of lower usage of shared services from RMR during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Provision for credit losses.

The provision for credit losses represents the change in the allowance for credit losses on our loan portfolio and unfunded commitments.

The decrease in the provision for credit losses during the six months ended June 30, 2025 was primarily attributable to improved performance at certain of the collateral properties underlying our loans, partially offset by higher total loan commitments during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Expenses from real estate owned.

The decrease in expenses from real estate owned was primarily due to decreases in maintenance expenses during the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

The decrease in expenses from real estate owned was primarily due to decreases in maintenance expenses, partially offset by higher utility expenses during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Income tax expense.

7 unchanged sentences

Adjusted Book Value per Common Share

We believe that Adjusted Book Value per common share is a meaningful measure of our capital adequacy because it excludes the impact of certain non-cash estimates or adjustments, including the unaccreted purchase discount resulting from the excess of the fair value of the loans Tremont Mortgage Trust then held for investment and that we acquired as a result of the Merger, over the consideration we paid in the Merger and our allowance for credit losses for our loan portfolio and unfunded loan commitments.

Adjusted Book Value per common share does not represent book value per common share or alternative measures determined in accordance with GAAP.

1 unchanged sentence

therefore, our Adjusted Book Value per common share may not be comparable to the adjusted book value per common share reported by other companies.

Tab le of Contents

The table below calculates our book value per common share and Adjusted Book Value per common share, which is a non-GAAP financial measure:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Shareholders' equity $ 267,020 $ 269,278

4 unchanged sentences

(1) Excludes the impact of our allowance for credit losses.

As of March 31, 2025 and December 31, 2024, our allowance for credit losses for our loan portfolio and unfunded loan commitments was $8,755 and $8,908, respectively.

As of June 30, 2025 and December 31, 2024, our allowance for credit losses for our loan portfolio and unfunded loan commitments was $9,667 and $8,908, respectively.

Distributable Earnings

14 unchanged sentences

The table below demonstrates how we calculate Distributable Earnings and Distributable Earnings per common share, which are non-GAAP financial measures, and provides a reconciliation of these non-GAAP financial measures to net income:

Three Months Ended

March 31, 2025 December 31, 2024

Three Months Ended Six Months Ended

June 30, 2025 March 31, 2025 June 30, 2025 June 30, 2024

Net income $ 2,678 $ 4,532 $ 7,210 $ 9,462

Non-cash equity compensation expense 677 356 1,033 833

Reversal of credit losses (153) (450)

Non-cash accretion of purchase discount — — — (1,927)

Provision for (reversal of) credit losses 912 (153) 759 2,012

Depreciation and amortization of real estate owned 269 269 538 662

Exit fees collected on loans acquired in Merger (1)

Distributable Earnings $ 4,536 $ 5,004 $ 9,540 $ 11,132

2 unchanged sentences

Distributable Earnings per common share - basic and diluted $ 0.31 $ 0.34 $ 0.65 $ 0.76

Tab le of Contents

(1) Exit fees collected on loans acquired in the Merger represent fees collected upon repayment of loans for which no income has previously been recognized in Distributable Earnings.

In accordance with GAAP, exit fees payable with respect to loans acquired in the Merger were accreted as a component of the purchase discount and were excluded from Distributable Earnings as a non-cash item.

Accordingly, these exit fees have been recognized in Distributable Earnings upon collection.

LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share data)

16 unchanged sentences

The table below is a summary of our sources and uses of cash flows for the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents at beginning of period $ 70,750 $ 87,855

4 unchanged sentences

Cash and cash equivalents at end of period $ 45,951 $ 69,603

Tab le of Contents

The decrease in cash provided by operating activities for the 2025 period compared to the 2024 period was primarily due to lower net interest income resulting from lower weighted average interest rates under our loan investment portfolio.

The decrease in cash provided by investing activities was primarily due to increased loan originations and decreased loan repayments in the 2025 period.

The increase in cash provided by financing activities was primarily due to decreased repayments on our Secured Financing Facilities and increased proceeds from our Secured Financing Facilities in the 2025 period.

The change from cash provided by to cash used in investing activities was primarily due to increased loan originations in the 2025 period.

The decrease in cash used in financing activities was primarily due to increased proceeds from our Secured Financing Facilities in the 2025 period.

Distributions

During the three months ended March 31, 2025, we declared and paid regular quarterly distributions to our common shareholders totaling $5,216, or $0.35 per common share, using cash on hand.

On April 10, 2025, we declared a regular quarterly distribution of $0.35 per common share, or $5,217, to shareholders of record on April 22, 2025.

We expect to pay this distribution to our common shareholders on or about May 15, 2025 using cash on hand.

During the six months ended June 30, 2025, we declared and paid regular quarterly distributions to our common shareholders totaling $10,433, or $0.70 per common share, using cash on hand.

On July 10, 2025, we declared a reduced regular quarterly distribution of $0.28 per common share, or $4,184, to shareholders of record on July 21, 2025.

The reduced quarterly distribution reflects a sustainable rate with expectations that loan repayment proceeds will be redeployed at lower net interest margins and a declining SOFR index rate curve.

We expect to pay this distribution to our common shareholders on or about August 14, 2025 using cash on hand.

For further information regarding distributions, see Note 7 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

Our contractual obligations and commitments as of March 31, 2025 were as follows:

Our contractual obligations and commitments as of June 30, 2025 were as follows:

Payment Due by Period

11 unchanged sentences

(2) The allocation of outstanding advancements under our Secured Financing Facilities is based on the earlier of the current maturity date of each loan investment with respect to which the individual borrowing relates or the maturity date of the respective Secured Financing Facilities.

(3) Projected interest payments are attributable only to our debt service obligations at existing rates as of March 31, 2025 and are not intended to estimate future interest costs which may result from debt prepayments, additional borrowings, new debt issuances or changes in interest rates.

(3) Projected interest payments are attributable only to our debt service obligations at existing rates as of June 30, 2025 and are not intended to estimate future interest costs which may result from debt prepayments, additional borrowings, new debt issuances or changes in interest rates.

(4) Lease related costs include capital expenditures used to improve tenants' spaces pursuant to lease agreements or leasing related costs, such as brokerage commissions, related to real estate owned.

Debt Covenants

Our principal debt obligations as of March 31, 2025 were the outstanding balances under our Secured Financing Facilities.

Our principal debt obligations as of June 30, 2025 were the outstanding balances under our Secured Financing Facilities.

The agreements governing our Master Repurchase Facilities, or our Master Repurchase Agreements, provide for acceleration of the date of repurchase of any then purchased assets and the liquidation of the purchased assets by UBS, Citibank or Wells Fargo, as applicable, upon the occurrence and continuation of certain events of default, including a change of control of us, which includes Tremont ceasing to act as our sole manager or to be a wholly owned subsidiary of RMR.

2 unchanged sentences

The Master Repurchase Guarantees contain financial covenants, which require us to maintain a minimum tangible net worth, a minimum liquidity and a minimum interest coverage ratio and to satisfy a total indebtedness to stockholders' equity ratio.

Tab le of Contents

In connection with our facility loan program agreement and the security agreement with BMO, or the BMO Loan Program Agreement, we have agreed to guarantee certain of the obligations under the BMO Loan Program Agreement and the BMO Facility Loan Agreements pursuant to a limited guaranty from us to and for the benefit of the administrative agent for itself and such other lenders, or the BMO Guaranty.

2 unchanged sentences

Our BMO Loan Program Agreement provides for acceleration of all payment obligations due under the BMO Facility Loan Agreements upon the occurrence and continuation of certain events of default, including a change of control of us, which includes Tremont ceasing to act as our sole manager or to be a wholly owned subsidiary of RMR.

As of March 31, 2025, we had a $338,171 aggregate outstanding principal balance under our Master Repurchase Facilities.

As of June 30, 2025, we had a $345,010 aggregate outstanding principal balance under our Master Repurchase Facilities.

Our Master Repurchase Agreements are structured with risk mitigation mechanisms, including a cash flow sweep, which would allow UBS, Citibank and Wells Fargo, as applicable, to control interest payments from our borrowers under our loans that are financed under our respective Master Repurchase Facilities, and the ability to accelerate dates of repurchase and institute margin calls, which may require us to pay down balances associated with one or more of our loans that are financed under our Master Repurchase Facilities.

As of March 31, 2025, we had a $103,855 aggregate outstanding principal balance under the BMO Facility.

As of March 31, 2025, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

As of June 30, 2025, we had a $72,205 aggregate outstanding principal balance under the BMO Facility.

As of June 30, 2025, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

Related Person Transactions

10 unchanged sentences

There have been no significant changes in our critical accounting estimates since the year ended December 31, 2024.

Tab le of Contents

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis