What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-18 compared with 2025-02-18 · 116 added, 133 removed, 314 unchanged (44% of the section changed)

7 unchanged sentences

Tremont is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended.

We believe that Tremont provides us with significant experience and expertise in investing in middle market and transitional CRE.

We believe that Tremont provides us with significant experience and expertise in investing in middle market transitional CRE.

We operate our business in a manner that is consistent with our qualification for taxation as a REIT under the IRC.

12 unchanged sentences

We evaluate the credit quality of each of our loans at least quarterly.

If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we will record an allowance for credit losses by comparing the collateral's fair value to the amortized cost basis of the loan.

If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may record an allowance for credit losses by comparing the collateral's fair value to the amortized cost basis of the loan.

For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value of the collateral compared to the loan's amortized cost.

6 unchanged sentences

Market Conditions.

Early in 2024, CRE investors seemed cautiously optimistic that inflation had peaked, the U.S.

economy was likely headed for a “soft-landing” and the FOMC was poised to reduce the federal funds rate by 125 to 150 basis points by year end.

With the anticipation of lower interest rates in the future, investors delayed sale or refinancing decisions, which resulted in tepid CRE investment and transaction volume during the first half of 2024.

In September 2024, citing progress toward its 2% inflation target, the FOMC lowered the targeted federal funds rate by 50 basis points, providing CRE owners initial relief from high borrowing costs and reduced uncertainty regarding the timing and magnitude of future rate cuts.

The FOMC then followed with two additional 25 basis point reductions by year end.

Although the 100-basis point reduction fell short of expectations, the reduction in overall borrowing costs helped spur CRE refinancing activity through the fourth quarter of 2024, and we believe there is a renewed appetite amongst most lenders to increase CRE loan origination volume in 2025.

The CMBS financing market was a key provider of debt liquidity to the CRE industry in 2024.

Increasing demand from bond investors has translated into tighter credit spreads, particularly for 5-year loans which have become more popular among borrowers anticipating further interest rate reductions at the longer end of the yield curve.

Life insurance companies continue to expand their product offerings, providing low leverage, fixed rate term debt for stabilized assets as well as floating rate capital for more transitional properties, which were once reserved for banks and alternative lenders, like us.

The banking sector, particularly smaller regional banks, continues to be impacted by increased regulations and capital charges related to legacy CRE and construction loan portfolios.

However, larger banks have continued to work through these challenges and have found ways to begin to increase CRE exposure, including on a direct basis and through warehouse lines of credit to debt funds and mortgage REITs, like us.

Agency lenders, such as Fannie-Mae and Freddie-Mac, continue to provide liquidity to the multifamily market.

Volatility in long-term interest rates, however, has resulted in increased competition for multifamily loans from CMBS/conduit providers, life-insurance companies and alternative lenders.

Despite an increase in delinquencies on loans financed by the CRE-CLO market in 2024, concerns about collateral and loan performance have waned.

CLO bond investors continue to demonstrate an appetite for these bonds which has resulted in increased competition for new, quality multifamily loans to package and sell, driving down spreads and borrowers’ interest expense.

In addition to lower interest rates and increased liquidity from CRE debt providers, property fundamentals continue to stabilize as supply/demand imbalances across most property sectors continue to normalize.

office market continues to navigate the impact of the post COVID-19 Pandemic remote workplace dynamics, and corporations are increasingly requiring return-to-office mandates.

Additionally, fewer construction starts should improve the supply/demand imbalance in the office market.

Retail assets, particularly needs based and grocery anchored retail, have benefited from a strong consumer market and a healthy job market.

New supply in the industrial sector resulted in downward pressure on rent growth during 2024, but fewer new construction starts, strong consumer demand and onshoring of manufacturing is expected to bring equilibrium to the sector by the end of 2025.

As for the multifamily market, the lack of affordable housing in the United States and the rent versus own dynamic continue to favor the sector.

While there has been oversupply in certain markets and a subsequent decline in rents, it is expected that for most markets, the supply/demand imbalance will be short lived, and once equilibrium is reached, rent-growth will return.

Interest rate cuts in the latter half of 2024 have resulted in CRE investors again being cautiously optimistic heading into 2025.

Over $2 trillion in CRE debt is expected to mature over the next two years.

These maturities, coupled with a lower and more stabilized interest rate environment, are likely to provide investors with greater investment opportunities, which we expect will translate into more lending activity.

Looking forward, it is unclear how geopolitical uncertainty, and the new presidential administration, may impact the commercial real estate sector, but we believe that the CRE lending market remains well positioned for 2025.

Earlier this year, U.S.

trade and fiscal policy, coupled with ongoing geopolitical tensions, caused volatility in financial markets and uncertainty for CRE investors.

As a result, transaction activity slowed as investors waited on the outcomes of negotiations with U.S.

trade partners, new tariff announcements and domestic fiscal policy initiatives as well as the path of interest rates before making buy and sell decisions.

CRE transaction activity showed signs of recovery in the second half of 2025 as investors and lenders responded to three interest rate cuts by the FOMC in 2025.

Additionally, a more stabilized monetary environment, improving property fundamentals and substantial liquidity in debt capital markets may give CRE investors and lenders renewed optimism and confidence in underwriting assumptions.

The relative value of CRE debt investments today compared to alternative corporate or private debt investments continues to drive demand from lenders, including banks, securitized lenders, life insurance companies, private debt funds and mortgage REITs.

This increased competition amongst lenders has led to a tightening of credit spreads and lower overall borrowing costs for CRE debt investors across all property sectors.

Barring potential risks associated with persistent inflation, increased geopolitical uncertainty that may negatively impact global economic conditions and a weakening labor market that could moderate economic growth, we believe the CRE sector is relatively well positioned, with expectations for increased transaction volume in 2026.

Changes in Interest Rates.

9 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.

Decreases in benchmark rates are mitigated by interest rate floor provisions in all but one of our loan agreements with borrowers, ranging from 0.10% to 5.20%;

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 4.34% with a weighted average floor of 2.81%;

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

As of December 31, 2024, SOFR was 4.33%, and as a result, one of our loan investments had an active interest rate floor.

As of December 31, 2025, SOFR was 3.69%, and as a result, seven of our loan investments had an active interest rate floor.

Size of Portfolio .

6 unchanged sentences

We are subject to risk that our loan investments will be repaid at an earlier date than anticipated, which may reduce the returns realized on those loans as less interest income may be received over time.

Additionally, we may not be able to reinvest the principal repaid at a similar or higher yield of the original loan investment.

Additionally, we may not be able to reinvest the principal repaid timely and/or at a similar or higher yield of the original loan investment.

We seek to limit this risk by structuring our loan agreements with fees required to be paid to us upon prepayment of a loan within a specified period of time before the loan’s maturity;

however, unanticipated prepayments could negatively impact our operating results.

Non-GAAP Financial Measures

We present Distributable Earnings, Distributable Earnings per common share and Adjusted Book Value per common share, which are considered “non-GAAP financial measures” within the meaning of the applicable SEC rules.

These non-GAAP financial measures do not represent net income, net income per common share or cash generated from operating activities and should not be considered as alternatives to net income or net income per common share determined in accordance with GAAP or as an indication of our cash flows from operations determined in accordance with U.S.

generally accepted accounting principles, or GAAP, a measure of our liquidity or operating performance or an indication of funds available for our cash needs.

In addition, our methodologies for calculating these non-GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures;

therefore, our reported Distributable Earnings and Distributable Earnings per common share may not be comparable to distributable earnings and distributable earnings per common share as reported by other companies.

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 TRMT 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.

Our methodology for calculating Adjusted Book Value per common share may differ from the methodologies employed by other companies to calculate the same or similar supplemental capital adequacy measures;

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

In order to maintain our qualification for taxation as a REIT, we are generally required to distribute substantially all of our taxable income, subject to certain adjustments, to our shareholders.

We believe that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate.

Over time, Distributable Earnings and Distributable Earnings per common share may be useful indicators of distributions to our shareholders and are measures that are considered by our Board of Trustees when determining the amount of distributions.

We believe that Distributable Earnings and Distributable Earnings per common share provide meaningful information to consider in addition to net income, net income per common share and cash flows from operating activities determined in accordance with GAAP.

These measures help us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations.

In addition, Distributable Earnings, excluding incentive fees, is used in determining the amount of base management and management incentive fees payable by us to Tremont under our management agreement.

Distributable Earnings

We calculate Distributable Earnings and Distributable Earnings per common share as net income and net income per common share, respectively, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding:

(a) depreciation and amortization of real estate owned and related intangible assets, if any;

(b) non-cash equity compensation expense;

(c) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any;

and (d) one-time events pursuant to changes in GAAP and certain non-cash items, if any.

Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.

This is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold, but may also be when, in our determination, it is nearly certain that all amounts due will not be collected.

The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received or expected to be received and the carrying value of the loan.

Adjusted Book Value per Common Share

The table below calculates our book value per common share:

As of December 31,

Shareholders' equity $ 269,278 $ 271,248

Total outstanding common shares 14,903 14,811

Book value per common share 18.07 18.31

Unaccreted purchase discount per common share (1)

Allowance for credit losses per common share (2)

Adjusted Book Value per common share

$ 18.67 $ 18.87

(1) Excludes the impact of the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment and that we acquired as a result of the Merger over the consideration we paid in the Merger.

The purchase discount of $36,443 was allocated to each acquired loan and was accreted into income over the remaining term of the respective loan.

As of December 31, 2024, the purchase discount was fully accreted.

As of December 31, 2023, the unaccreted purchase discount was $2,347.

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

As of December 31, 2024 and 2023, our allowance for credit losses for our loan portfolio and unfunded loan commitments was $8,908 and $5,828, respectively.

For further information on our adoption of our allowance for credit losses, see Note 2 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Our Loan Portfolio

23 unchanged sentences

Maximum Maturity (2)

1 Olmsted Falls, OH Multifamily 01/28/2021 $ 54,575 $ 52,050 S + 4.00% S + 4.30% 01/28/2026 63 % 3

1 Olmsted Falls, OH (4)

Multifamily 01/28/2021 $ 54,575 $ 54,575 S + 4.00% S + 4.29% 01/28/2026 63 % 1

2 Passaic, NJ Industrial 09/08/2022 47,000 45,260 S + 3.85% S + 4.42% 09/08/2027 69 % 3

1 unchanged sentence

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 + 4.27% 03/29/2027 62 % 3

5 Oxford, MS Multifamily 11/26/2024 42,000 42,000 S + 2.95% S + 3.35% 11/26/2029 75 % 1

7 Farmington Hills, MI Multifamily 05/24/2022 30,520 29,443 S + 3.15% S + 3.52% 05/24/2027 75 % 3

8 Downers Grove, IL Office 09/25/2020 30,000 29,500 S + 5.00% S + 5.91% 02/24/2025 67 % 4

6 College Park, MD Multifamily 11/12/2025 37,320 27,911 S + 2.95% S + 3.46% 11/12/2030 43 % 3

7 Revere, MA (5)

Hotel 07/01/2024 37,000 37,000 S + 3.95% S + 5.14% 07/01/2029 73 % 3

8 New York, NY Mixed Use 09/05/2025 34,500 34,500 S + 3.20% S + 4.03% 09/05/2030 70 % 3

9 San Marcos, TX Multifamily 01/14/2025 31,200 28,228 S + 3.25% S + 3.68% 01/14/2030 62 % 2

10 Anaheim, CA Hotel 11/29/2023 29,000 29,000 S + 4.00% S + 4.05% 11/29/2028 55 % 2

10 Fountain Inn, SC Industrial 07/13/2023 27,500 24,300 S + 4.25% S + 4.85% 07/13/2026 76 % 2

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

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

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

13 Downers Grove, IL Office 09/25/2020 27,000 26,500 S + 5.00% S + 5.15% 05/22/2026 67 % 3

14 Wayne, PA (5)

Industrial 07/18/2024 27,000 24,733 S + 4.25% S + 4.73% 07/18/2029 62 % 3

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

16 Carlsbad, CA Office 10/27/2021 24,750 24,417 S + 3.25% S + 3.26% 10/27/2026 78 % 4

15 Fontana, CA Industrial 11/18/2022 24,355 22,000 S + 3.75% S + 4.09% 11/18/2026 72 % 3

17 Los Angeles, CA Industrial 06/28/2024 23,800 22,954 S + 3.40% S + 3.82% 06/28/2029 58 % 3

18 Downers Grove, IL Office 12/09/2021 23,530 23,530 S + 4.25% S + 4.51% 12/09/2026 72 % 3

19 Fontana, CA Industrial 11/18/2022 22,080 20,470 S + 3.75% S + 4.03% 11/18/2026 72 % 3

20 Bellevue, WA Office 11/05/2021 21,000 20,245 S + 2.85% S + 2.85% 04/07/2029 68 % 4

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

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

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

20 Sandy Springs, GA Retail 09/23/2021 16,488 15,286 S + 3.75% S + 4.05% 09/23/2026 72 % 2

24 Lake Mary, FL Hotel 09/06/2024 16,000 16,000 S + 4.00% S + 4.41% 09/06/2029 68 % 1

3 unchanged sentences

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

(4) In January 2026, the maturity date of this loan was extended to March 31, 2026.

(5) These loans were acquired in November 2025.

As of December 31, 2025, we had $724,458 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 24 first mortgage loans.

As of December 31, 2024, we had five loans representing approximately 24% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”.

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 December 31, 2024, 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 December 31, 2024, this loan had an amortized cost of $26,635 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 December 31, 2025, we had 4 loans representing approximately 17% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”.

As of December 31, 2025, we had no loans with risk rating of “5” or “impaired/ loss likely”.

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 December 31, 2025, this loan had an amortized cost of $20,245 and a risk rating of 4.

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

As part of this amendment, the maturity date was extended by 90 days to February 5, 2025.

Subsequently, in January 2025, the maturity date was extended by 60 days to April 7, 2025.

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 December 31, 2025, this loan had an amortized cost of $26,640 and a risk rating of 3.

9 unchanged sentences

Our secured financing agreements at December 31, 2025 consisted of agreements that govern our Wells Fargo Master Repurchase Facility, our Citibank Master Repurchase Facility, our BMO Facility and our UBS Master Repurchase Facility.

In September 2024, we amended our Citibank Master Repurchase Agreement.

The amendment to the Citibank Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to September 27, 2026.

In October 2024, we amended our Wells Fargo Master Repurchase Agreement.

The amendment to the Wells Fargo Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to March 11, 2026.

In December 2024, we amended the fee letter to our UBS Master Repurchase Agreement to extend the stated maturity date to February 18, 2026 and increase the maximum facility size to $250,000.

In February 2026, we amended the Wells Fargo Master Repurchase Agreement and made certain changes to the agreement, including extending the stated maturity date to March 13, 2028 and increasing the maximum facility size by $125,000 to $250,000.

In February 2026, we amended our UBS Master Repurchase Agreement to extend the stated maturity date to February 18, 2028.

For further information regarding our Secured Financing Facilities, see Note 5 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

The table below is an overview of our Secured Financing Facilities as of December 31, 2024:

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 December 31, 2025, after giving effect to the above referenced amendments to the UBS and Wells Fargo Master Repurchase Agreements:

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

UBS Master Repurchase Facility 02/18/2028 $ 194,948 $ 194,887 $ 55,052 $ 250,000 $ 278,594

Wells Fargo Master Repurchase Facility 03/13/2028 92,980 92,902 157,020 250,000 120,469

Citibank Master Repurchase Facility 09/27/2026 135,715 135,426 79,285 215,000 199,838

BMO Facility Various 64,632 64,442 85,368 150,000 88,684

Wells Fargo Master Repurchase Facility 03/11/2026 40,464 84,536 125,000 52,973

Total $ 488,275 $ 487,657 $ 376,725 $ 865,000 $ 687,585

16 unchanged sentences

Interest and related income $ 56,340 $ 64,762 $ (8,422) (13.0 %)

Purchase discount accretion 2,347 4,128 (1,781) (43.1) %

interest and related expenses (29,485) (31,769) 2,284 7.2 %

7 unchanged sentences

Reimbursement of shared services expenses 2,040 2,647 (607) (22.9 %)

Provision for (reversal of) credit losses 3,080 (799) 3,879 485.5 %

Provision for credit losses 203 3,080 (2,877) (93.4 %)

Expenses from real estate owned 2,269 2,489 (220) (8.8 %)

1 unchanged sentence

Income before income taxes 15,448 17,853 (2,405) (13.5 %)

Income tax (expense) benefit (33) 38 (71) (186.8 %)

Income tax expense (14) (33) 19 57.6 %

Net income $ 15,434 $ 17,820 $ (2,386) (13.4 %)

2 unchanged sentences

Interest and related income .

The decrease in interest and related income was primarily the result of lower outstanding principal balances under our loan investment portfolio during the year ended December 31, 2024.

The weighted average principal balance was approximately $603,000 for the year ended December 31, 2024 compared to approximately $646,000 for the year ended December 31, 2023.

Purchase discount accretion.

The decrease in purchase discount accretion was due to the purchase discount recorded as part of the Merger becoming fully accreted during the year ended December 31, 2024.

The decrease in interest and related income was primarily the result of lower weighted average coupon rates, which was partially offset by interest rate floors for seven of our loans becoming active, lower interest income earned on cash invested due to decreased index rates and lower purchase discount accretion due to discounts becoming fully accreted during the year ended December 31, 2025.

The weighted average coupon rate was 7.60% for the year ended December 31, 2025, inclusive of the seven active floors, compared to 8.77% for the year ended December 31, 2024.

Interest and related expenses.

The decrease in interest and related expenses was primarily the result of lower outstanding principal balances under our Secured Financing Facilities during the year ended December 31, 2024.

The weighted average principal balance was approximately $411,000 for the year ended December 31, 2024 compared to approximately $447,000 for the year ended December 31, 2023.

The decrease in interest and related expenses was primarily the result of lower weighted average coupon rates offset by higher outstanding principal balances under our Secured Financing Facilities during the year ended December 31, 2025.

The weighted average coupon rate was 6.25% for the year ended December 31, 2025, compared to 7.24% for the year ended December 31, 2024.

The weighted average principal balance was approximately $425,000 for the year ended December 31, 2025, compared to $411,000 for the year ended December 31, 2024.

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 increase in revenue from real estate owned was primarily the result of higher operating expense reimbursements during the year ended December 31, 2025.

Base management and incentive fees.

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

The increase in base management and incentive fees was due to higher “core earnings”, as defined in our management agreement, during the year ended December 31, 2024.

The increase in base management fees was due to higher “equity” as defined in our management agreement.

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

General and administrative expenses .

The decrease in general and administrative expenses was primarily due to a decrease in professional fees during the year ended December 31, 2024.

The increase in general and administrative expenses was primarily due to an increase in share based and cash compensation awarded to our Trustees, each resulting from the increase in the size of our Board of Trustees, higher share based compensation for employees of RMR and Tremont and higher legal expenses during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

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 increase in reimbursement of shared services expenses was primarily the result of higher usage of shared services from RMR during the year ended December 31, 2024.

Provision for (reversal of) credit losses.

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

The increase in the allowance for credit losses during the year ended December 31, 2024 was primarily attributable to declining values for CRE and unfavorable CRE pricing forecasts used in our current expected credit loss, or CECL, model and increased provisions for certain of our office loans.

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

Provision for credit losses.

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

The increase in the allowance for credit losses during the year ended December 31, 2025 was primarily attributable to increased provisions for our office loans and a larger loan portfolio as of December 31, 2025, offset by increasing values for CRE and favorable CRE pricing forecasts used in our CECL model and loans nearing maturity.

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.

Income tax (expense) benefit.

The decrease in expenses from real estate owned was primarily the result of lower amortization expense related to acquired real estate leases during the year ended December 31, 2025.

Income tax expense.

Income tax expense for the year ended December 31, 2025 is a result of income taxes paid or payable by us in certain jurisdictions where we are subject to state income taxes.

Net income and net income per common share - basic and diluted.

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

Additionally, net income per common share - basic and diluted includes the effect of the issuance of 7,532,861 common shares through the Rights Offering.

Non-GAAP Financial Measures

We present Adjusted Book Value, Adjusted Book Value per common share, Distributable Earnings and Distributable Earnings per common share, which are considered “non-GAAP financial measures” within the meaning of the applicable SEC rules.

These non-GAAP financial measures do not represent book value, book value per common share, net income, net income per common share or cash generated from operating activities and should not be considered as alternatives to book value, book value per common share, net income or net income per common share determined in accordance with GAAP or as an indication of our cash flows from operations determined in accordance with U.S.

generally accepted accounting principles, or GAAP, a measure of our capital adequacy, liquidity or operating performance or an indication of funds available for our cash needs.

therefore, our reported Adjusted Book Value, Adjusted Book Value per common share, Distributable Earnings, and Distributable Earnings per common share may not be comparable to adjusted book value, adjusted book value per common share, distributable earnings and distributable earnings per common share as reported by other companies.

Adjusted Book Value

We believe that Adjusted Book Value and 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 our allowance for credit losses for our loan portfolio and unfunded loan commitments.

The table below calculates our book value, Adjusted Book Value and Adjusted Book Value per common share:

As of December 31,

Shareholders' equity $ 328,651 $ 269,278

Allowance for credit losses (1)

Adjusted Book Value $ 337,762 $ 278,186

Total outstanding common shares 22,584 14,903

Book value per common share $ 14.55 $ 18.07

Adjusted Book Value per common share

$ 14.96 $ 18.67

(1) Amounts include our allowance for credit losses for our loan portfolio and our unfunded commitments.

The allowance for credit losses for our unfunded commitments is included in accounts payable, accrued liabilities and other liabilities in our consolidated balance sheets.

Distributable Earnings

In order to maintain our qualification for taxation as a REIT, we are generally required to distribute substantially all of our taxable income, subject to certain adjustments, to our shareholders.

We believe that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate.

(a) depreciation and amortization of real estate owned and related intangible assets, if any;

(b) non-cash equity compensation expense;

and (d) one-time events pursuant to changes in GAAP and certain non-cash items, if any.

Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.

The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received or expected to be received and the carrying value of the loan.

Reconciliation of Net Income to Distributable Earnings

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

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

Year Ended December 31,

2 unchanged sentences

Non-cash accretion of purchase discount (37) (2,347)

Provision for (reversal of) credit losses 3,080 (799)

Provision for credit losses 203 3,080

Depreciation and amortization of real estate owned 1,063 1,248

34 unchanged sentences

$ 123,471 $ 70,750

The decrease in cash provided by operating activities for 2024 compared to 2023 was primarily the result of lower net interest income earned on loan investments due to lower amounts invested, partially offset by favorable changes in working capital, higher interest income earned on cash balances invested and increased cash earned from our real estate owned.

The decrease in cash provided by investing activities was primarily due to increased fundings for our existing loan portfolio as borrowers carry out their business plans and decreased loan repayments in 2024 compared to 2023.

The increase in cash used in financing activities was primarily due to lower proceeds from our Secured Financing Facilities in 2024 compared to 2023.

The decrease in cash provided by operating activities for 2025 compared to 2024 was primarily the result of lower net interest income earned on loan investments due to lower SOFR index rates.

The change from cash provided by to cash used in investing activities was primarily due to increased loan originations and acquisitions, as well as lower loan repayments in 2025 compared to 2024.

The change from cash used in to cash provided by financing activities was primarily due to proceeds received from the Rights Offering and increased borrowing under our Secured Financing Facilities in 2025 compared to net repayment activity under our Secured Financing Facilities in 2024.

Distributions

During the year ended December 31, 2024, we declared and paid distributions totaling $20,772, or $1.40 per common share, using cash on hand.

During the year ended December 31, 2025, we declared and paid regular quarterly distributions totaling $18,835, or $1.26 per common share, using cash on hand.

On January 15, 2026, we declared a regular quarterly distribution of $0.28 per common share, or $6,327, to shareholders of record on January 26, 2026.

1 unchanged sentence

For further information regarding distributions, see Note 7 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Rights Offering

In November 2025, we commenced the Rights Offering, pursuant to which we issued transferable rights to our shareholders of record as of November 10, 2025.

The record date shareholders received one transferable right for each outstanding common share they owned on the record date, which entitled them to purchase one new common share for every two rights held.

The Rights Offering was fully backstopped by Tremont.

In December 2025, we completed the Rights Offering, in which 7,532,861 common shares were issued at $8.65 per share, generating net proceeds of $61,530, after offering costs.

For further information regarding the Rights Offering, see Note 9 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Contractual Obligations and Commitments

14 unchanged sentences

(3) Projected interest payments are attributable only to our debt service obligations at existing rates as of December 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.

(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 the Yardley, PA property.

Debt Covenants

38 unchanged sentences

Allowance for Credit Losses.

On January 1, 2023, we adopted Accounting Standards Update, or ASU, No.

2016-13, Financial Instruments - Credit Losses (Topic 326) :

Measurement of Credit Losses on Financial Instruments , which replaces the “incurred loss” model for recognizing credit losses with a forward-looking “expected loss” model that generally will result in the earlier recognition of credit losses.

We measure our allowance for credit losses using the CECL model, which is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount.

We recognize the allowance for credit losses under the current expected credit loss, or CECL, model.

The CECL measurement is based upon historical experience, current conditions, and reasonable and supportable

forecasts incorporating forward-looking information that affect the collectability of the reported amount.

The CECL model is applicable to financial assets measured at amortized cost and off-balance sheet credit exposures, such as unfunded loan commitments.

The allowance for credit losses is a valuation account that is deducted from the related loans’ amortized cost basis in our consolidated balance sheets.

Our loans typically include commitments to fund incremental proceeds to borrowers over the life of the loan.

these future funding commitments are also subject to the CECL model.

The allowance for credit losses related to unfunded loan commitments is included in accounts payable, accrued liabilities and other liabilities in our consolidated balance sheets.

2 unchanged sentences

Significant inputs to the model include certain loan specific data, such as LTV, property type, geographic location, occupancy, vintage year, remaining loan term, net operating income, expected timing and amounts of future loan fundings, and macroeconomic forecast assumptions, including the performance of CRE assets, unemployment rates, interest rates and other factors.

We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of six months to average historical losses.

We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of 12 months to average historical losses.

Average historical losses are established using a population of third party historical loss data that approximates our portfolio as of the measurement date.

5 unchanged sentences

For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value, less costs to sell, if applicable, of the collateral compared to the loan's amortized cost.

Significant judgements are required in our estimation of our allowance for credit losses, including but not limited to the amount and timing of future fundings, repayments and macroeconomic forecast assumptions.

Significant judgments are required in our estimation of our allowance for credit losses, including but not limited to the amount and timing of future fundings, repayments and macroeconomic forecast assumptions.

Therefore, actual results over time could differ materially from our estimates.

14 unchanged sentences

“4” higher risk—Criteria reflects a sponsor having a history of unresolved missed or late payments, maturity extensions and difficulty timely fulfilling its credit obligations and our evaluation of management's experience;

collateral performance failing to meet the business plan or credit underwriting;

collateral performance

failing to meet the business plan or credit underwriting;

the existence of a risk of default possibly leading to a loss and/or potential weaknesses that deserve management’s attention;

26 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis