What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-28 compared with 2025-10-27 · 104 added, 153 removed, 245 unchanged (51% of the section changed)

30 unchanged sentences

Market Conditions.

trade and fiscal policy, coupled with ongoing geopolitical tensions, has caused increased volatility in financial markets this year, resulting in further uncertainty for commercial real estate investors.

For much of the year, CRE investors were waiting on the outcomes of negotiations with U.S.

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

In September, the Federal Open Market Committee, or FOMC, cut interest rates by 25 basis points, lowering the targeted Federal Funds Rate range to 4.00% to 4.25%, its first reduction since December of 2024 and the lowest target since 2022.

Despite key inflation rates running higher than the FOMC target of 2%, there were enough signs of softening in the labor market to support the cut.

Notwithstanding the potential risks of a weakening job market on the commercial and multifamily property sectors, the relative risk versus reward in CRE debt investments today continues to drive demand from lenders, including banks, securitized lenders, life insurance companies, private debt funds and mortgage REITs.

Furthermore, we believe CRE investors’ anticipation of potential future short term interest rate reductions should lead to even greater liquidity and increased transaction volume into 2026.

During the first quarter of 2026, CRE market conditions reflected a continuation of the stabilization trends that emerged in the second half of 2025.

CRE transaction activity continued to show signs of recovery early this quarter, supported by improving property‑level fundamentals, substantial liquidity in debt capital markets and increased 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.

More recent geopolitical developments in the Middle East have the potential to affect U.S.

economic conditions and has complicated the outlook for U.S.

monetary policy.

The potential for future Federal Open Markets Committee, or FOMC, interest rate cuts in the near term is lower today than at the beginning of the year.

However, the FOMC has indicated it intends to remain patient as it evaluates the potential impact of these events on oil prices and, in turn, U.S.

economic growth and labor market conditions.

To date, demand for CRE debt in the U.S.

has not been materially impacted by geopolitical events and there continues to be a significant amount of maturing CRE debt to be refinanced in the coming year.

While the duration and ultimate economic impact of the Middle East conflict remain uncertain, continued volatility in energy prices and financial markets could influence inflation trends, interest‑rate expectations, and economic growth, all of which may affect commercial real estate investment conditions in 2026.

Changes in Interest Rates.

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

As of September 30, 2025, SOFR was 4.13%, and as a result, none of our loan investments had an active interest rate floor.

As of March 31, 2026, SOFR was 3.66%, and as a result, seven of our loan investments had an active interest rate floor.

Size of Portfolio .

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Our Loan Portfolio

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

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

The table below details overall statistics for our loan portfolio as of March 31, 2026 and December 31, 2025:

As of March 31, 2026 As of December 31, 2025

Number of loans 26 24

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Loan Portfolio Details

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

The table below details our loan portfolio as of March 31, 2026:

# Location Property Type Origination Date Committed Principal Amount Principal

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First mortgage loans

1 Olmsted Falls, OH Multifamily 01/28/2021 $ 54,575 $ 54,575 S + 4.00% S + 4.29% 01/28/2026 63 % 2

1 Olmsted Falls, OH (4)

Multifamily 01/28/2021 $ 54,575 $ 54,575 S + 4.00% S + 4.15% 04/15/2026 63 % 1

2 Passaic, NJ Industrial 09/08/2022 47,000 45,260 S + 3.85% S + 4.42% 09/08/2027 69 % 4

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

5 Oxford, MS Multifamily 11/26/2024 42,000 42,000 S + 2.95% S + 3.30% 11/26/2029 75 % 2

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

6 College Park, MD Student Housing 11/12/2025 37,320 28,327 S + 2.95% S + 3.45% 11/12/2030 43 % 3

7 Revere, MA 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 + 4.02% 09/05/2030 70 % 2

7 San Marcos, TX Multifamily 01/14/2025 31,200 28,228 S + 3.25% S + 3.68% 01/14/2030 62 % 3

9 San Marcos, TX Student Housing 01/14/2025 31,200 28,811 S + 3.25% S + 3.67% 01/14/2030 62 % 2

10 Atlanta, GA Medical Office 02/05/2026 30,500 25,500 S + 3.95% S + 4.42% 02/05/2031 66 % 3

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

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

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

15 Wayne, PA Industrial 07/18/2024 27,000 25,252 S + 4.25% S + 4.72% 07/18/2029 62 % 3

16 Fayetteville, GA Self Storage 10/06/2023 25,250 25,250 S + 3.35% S + 3.73% 10/06/2028 55 % 3

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

14 Fontana, CA Industrial 11/18/2022 24,355 22,745 S + 3.75% S + 4.08% 11/18/2026 72 % 3

15 Los Angeles, CA Industrial 06/28/2024 23,800 22,750 S + 3.40% S + 3.82% 06/28/2029 58 % 3

18 Los Angeles, CA Self Storage 06/28/2024 23,800 23,092 S + 3.40% S + 3.82% 06/28/2029 58 % 3

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

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

21 Bellevue, WA Office 11/05/2021 21,000 20,817 S + 2.85% S + 2.85% 04/07/2029 68 % 4

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

22 Palm Desert, CA Retail 02/25/2026 19,500 15,190 S + 3.60% S + 4.12% 02/25/2031 72 % 3

23 Waco, TX Student Housing 03/06/2025 18,500 18,500 S + 3.35% S + 3.75% 03/06/2030 73 % 3

24 Boise, ID Multifamily 06/26/2025 18,000 18,000 S + 3.50% S + 4.28% 06/26/2030 79 % 3

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

21 Sandy Springs, GA Retail 09/23/2021 16,488 15,286 S + 3.75% S + 4.04% 09/23/2026 72 % 1

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

26 Scottsdale, AZ Hotel 03/06/2026 17,500 17,500 S + 3.85% S + 4.44% 03/06/2031 63 % 3

Total/weighted average $ 775,958 $ 732,003 S + 3.63% S + 4.03% 66 % 2.8

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

As of September 30, 2025, we had $641,901 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 22 first mortgage loans.

As of September 30, 2025, we had five loans representing approximately 23% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”.

(4) This loan was repaid in April 2026.

As of March 31, 2026, we had $775,958 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 26 first mortgage loans.

As of March 31, 2026, 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 September 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 September 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 September 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 September 30, 2025, this loan had an amortized cost of $19,999 and a risk rating of 4.

As of March 31, 2026, this loan had an amortized cost of $20,817 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 September 30, 2025, this loan had an amortized cost of $26,630 and a risk rating of 4.

As of March 31, 2026, this loan had an amortized cost of $26,650 and a risk rating of 3.

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 September 30, 2025 and October 23, 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 September 30, 2025.

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

As of March 31, 2026 and April 24, 2026, 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, 2026.

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.

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Financing Activities

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

The table below is an overview of our Secured Financing Facilities as of March 31, 2026:

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

UBS Master Repurchase Facility 02/18/2028 $ 142,417 $ 141,837 $ 107,583 $ 250,000 $ 208,538

Wells Fargo Master Repurchase Facility 03/13/2028 104,305 103,708 145,695 250,000 136,658

Citibank Master Repurchase Facility 09/27/2026 135,715 135,513 79,285 215,000 200,409

BMO Facility Various 85,032 84,759 64,968 150,000 114,323

Wells Fargo Master Repurchase Facility 03/11/2026 70,652 70,432 54,348 125,000 92,558

Total $ 467,469 $ 465,817 $ 397,531 $ 865,000 $ 659,928

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

Carrying Value

Balance at June 30, 2025 $ 415,999

Borrowings 53,624

Repayments (40,416)

Deferred fees (136)

Amortization of deferred fees 378

Balance at September 30, 2025 $ 429,449

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

In February 2026, we amended our master repurchase agreement with UBS to extend the stated maturity date to February 18, 2028.

In February 2026, we amended our master repurchase agreement with Wells Fargo 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.

The table below details our Secured Financing Facilities activities during the three months ended March 31, 2026:

Carrying Value

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Amortization of deferred fees 388

Balance at September 30, 2025 $ 429,449

As of September 30, 2025, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 6.30% per annum, excluding associated fees and expenses.

As of September 30, 2025 and October 23, 2025, we had a $430,423 aggregate outstanding principal balance under our Secured Financing Facilities.

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

Balance at March 31, 2026 $ 465,817

As of March 31, 2026, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 5.84% per annum, excluding associated fees and expenses.

As of March 31, 2026 and April 24, 2026, we had a $467,469 and $463,157, respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of March 31, 2026, 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.

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

Three Months Ended September 30, 2025 Compared to Three Months Ended June 30, 2025:

Three Months Ended March 31, 2026 Compared to Three Months Ended December 31, 2025:

Three Months Ended

September 30, 2025 June 30, 2025 Change % Change

INCOME FROM INVESTMENTS:

Interest and related income $ 13,442 $ 14,359 $ (917) (6.4 %)

interest and related expenses (6,998) (7,524) 526 7.0 %

Income from loan investments, net 6,444 6,835 (391) (5.7 %)

Revenue from real estate owned 648 558 90 16.1 %

Total revenue 7,092 7,393 (301) (4.1 %)

OTHER EXPENSES:

Base management fees 1,076 1,076 — — %

Incentive fees 337 229 108 47.2 %

General and administrative expenses 1,295 1,381 (86) (6.2 %)

Reimbursement of shared services expenses 357 551 (194) (35.2 %)

Provision for credit losses 37 912 (875) (95.9 %)

Expenses from real estate owned 562 569 (7) (1.2 %)

Total other expenses 3,664 4,718 (1,054) (22.3 %)

Income before income taxes 3,428 2,675 753 28.1 %

Income tax benefit 2 3 (1) (33.3 %)

Net income $ 3,430 $ 2,678 $ 752 28.1 %

Weighted average common shares outstanding - basic and diluted 14,826 14,785 41 0.3 %

Net income per common share - basic and diluted $ 0.23 $ 0.18 $ 0.05 27.8 %

Interest and related income .

The decrease in interest and related income was primarily due to higher net loan repayment activity and lower weighted average coupon rates during the three months ended September 30, 2025.

The weighted average principal balance of our loan investments was approximately $595,000 for the three months ended September 30, 2025 compared to approximately $641,000 for the three months ended June 30, 2025.

The weighted average coupon rate was 7.85% as of September 30, 2025 compared to 8.03% as of June 30, 2025.

Interest and related expenses.

The decrease in interest and related expenses was primarily the result of a lower average principal balance outstanding under our Secured Financing Facilities and lower weighted average coupon rates during the three months ended September 30, 2025.

The weighted average principal balance was approximately $399,000 for the three months ended September 30, 2025 compared to approximately $433,000 for the three months ended June 30, 2025.

The weighted average coupon rate was 6.30% as of September 30, 2025 compared to 6.51% as of June 30, 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 increase in revenue from real estate owned was primarily due to higher operating expense reimbursements during the three months ended September 30, 2025 as compared to the three months ended June 30, 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 September 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 June 30, 2025.

General and administrative expenses .

The decrease in general and administrative expenses was primarily due to a decrease in share based compensation resulting from shares awarded to our Trustees during the three 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 an adjustment to our estimate of the costs for the usage of shared services from RMR.

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 increase in the allowance for credit losses during the three months ended September 30, 2025 was primarily attributable to decreased net operating income for the collateral securing certain of our loans, partially offset by loans nearing maturity and 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.

Income tax benefit (expense).

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

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024:

Nine Months Ended September 30,

2025 2024 Change % Change

March 31, 2026 December 31, 2025 Change % Change

INCOME FROM INVESTMENTS:

Interest and related income $ 14,839 $ 14,217 $ 622 4.4 %

Purchase discount accretion — 2,347 (2,347) (100.0 %)

interest and related expenses (7,182) (7,526) 344 4.6 %

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Reimbursement of shared services expenses 574 582 (8) (1.4 %)

Provision for credit losses 796 3,530 (2,734) (77.5 %)

Provision for (reversal of) credit losses 603 (593) 1,196 201.7 %

Expenses from real estate owned 580 544 36 6.6 %

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Interest and related income .

The decrease in interest and related income was primarily due to lower weighted average coupon rates, partially offset by higher principal balances outstanding during the nine months ended September 30, 2025.

The weighted average coupon rate was 7.85% as of September 30, 2025 compared to 8.89% as of September 30, 2024.

The weighted average principal balance of our loan investments was approximately $626,000 for the nine months ended September 30, 2025 compared to approximately $598,000 for the nine months ended September 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.

The increase in interest and related income was primarily due to a higher weighted average principal balance due to loan origination activity during the three months ended March 31, 2026 as compared to the three months ended December 31, 2025, offset by declines in the SOFR index rate.

The weighted average principal balance of our loan investments was approximately $712,000 for the three months ended March 31, 2026 compared to approximately $656,000 for the three months ended December 31, 2025.

The weighted average coupon rate was approximately 7.33% during the three months ended March 31, 2026 compared to approximately 7.60% during the three months ended December 31, 2025.

Interest and related expenses.

The decrease in interest and related expenses was primarily the result of a lower weighted average coupon rates during the nine months ended September 30, 2025.

The weighted average coupon rate was 6.30% as of September 30, 2025 compared to 7.25% as of September 30, 2024.

The decrease in interest and related expenses was primarily the result of a lower weighted average SOFR index rate during the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 and the repayment of $40,931 under our Secured Financing Facilities related to our investment loan secured by a multifamily property in Olmsted Falls, OH in January 2026, partially offset by increased borrowings under our Secured Financing Facilities related to loan origination activity.

The weighted average coupon rate was approximately 5.86% during the three months ended March 31, 2026 compared to approximately 6.08% during the three months ended December 31, 2025.

Revenue from real estate owned.

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

The increase in revenue from real estate owned was primarily due to higher operating expense reimbursements during the three months ended March 31, 2026 as compared to the three months ended December 31, 2025.

Base management fees.

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

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

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 nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The decrease in management incentive fees was due to higher “equity” and lower “core earnings”, each as defined in our management agreement, for the 12 month period ended March 31, 2026.

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 and legal and professional fees during the nine months ended September 30, 2025.

The increase in general and administrative expenses was primarily due to higher legal costs during the three months ended March 31, 2026 as compared to the three months ended December 31, 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 nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Provision for credit losses.

Provision for (reversal of) credit losses.

The provision for 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 nine months ended September 30, 2025 was primarily attributable to increased provisions for our office loans, partially offset by loans nearing maturity and loan repayments.

The increase in the allowance for credit losses during the three months ended March 31, 2026 reflects an increased loan investment balance as of March 31, 2026 and increased allowances for certain of our office loans, partially offset by loans nearing maturity.

Expenses from real estate owned.

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

The increase in expenses from real estate owned was primarily due to higher utility expenses during the three months ended March 31, 2026 as compared to the three months ended December 31, 2025.

Income tax expense.

Income tax expense represents 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 in December 2025.

Non-GAAP Financial Measures

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

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 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 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.

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:

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

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Shareholders' equity $ 326,982 $ 328,651

Allowance for credit losses (1)

Adjusted Book Value $ 336,696 $ 337,762

Total outstanding common shares 22,596 22,584

Book value per common share $ 14.47 $ 14.55

Allowance for credit losses per common share (1)

Adjusted Book Value per common share $ 14.90 $ 14.96

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

As of September 30, 2025 and December 31, 2024, our allowance for credit losses for our loan portfolio and unfunded loan commitments was $9,704 and $8,908, respectively.

(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

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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 Nine Months Ended

September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024

Three Months Ended

March 31, 2026 December 31, 2025

Net income $ 4,385 $ 4,794

1 unchanged sentence

Non-cash accretion of purchase discount (145) (37)

Provision for credit losses 37 912 796 3,530

Provision for (reversal of) credit losses 603 (593)

Depreciation and amortization of real estate owned 253 247

Exit fees collected on loans acquired in Merger (1)

Distributable Earnings $ 5,303 $ 4,627

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Distributable Earnings per common share - basic and diluted $ 0.24 $ 0.28

(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)

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to fund our lending commitments, repay or meet margin calls resulting from our borrowings, if any, fund and maintain our assets and operations, make distributions to our shareholders and fund other business operating requirements.

Liquidity is a measure of our ability to meet cash requirements, including ongoing commitments to fund our lending commitments, repay or meet margin calls resulting from our borrowings, if any, fund and maintain our assets and operations, make distributions to our shareholders and fund other business operating requirements.

Our sources of cash flows include cash on hand, payments of principal, interest and fees we receive on our investments, other cash we may generate from our business and operations, any unused borrowing capacity, including under our Secured Financing Facilities or other repurchase agreements or financing arrangements we may obtain, which may also include bank loans or public or private issuances of debt or equity securities, and proceeds from any sale of real estate owned.

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For further information regarding the risks associated with our loan portfolio, see Note 3 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 and elsewhere in this Management Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" of our 2025 Annual Report.

Pursuant to the terms of our Citibank Master Repurchase Facility, our UBS Master Repurchase Facility and our Wells Fargo Master Repurchase Facility, we may sell to, and later repurchase from, Citibank, UBS and Wells Fargo, the purchased assets related to the applicable facility.

Pursuant to the terms of the agreements governing our Master Repurchase Facilities, or our Master Repurchase Agreements, with Citibank, UBS and Wells Fargo, we may sell to, and later repurchase from, Citibank, UBS and Wells Fargo, the purchased assets related to the applicable facility.

The initial purchase price paid by Citibank of each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank's approval.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Cash and cash equivalents at beginning of period $ 123,471 $ 70,750

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Cash and cash equivalents at end of period $ 56,606 $ 41,637

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, loan portfolio size and unfavorable changes in working capital.

The change from cash provided by investing activities 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.

The increase in cash provided by operating activities for the 2026 period compared to the 2025 period was primarily due to higher net interest income resulting from an increased loan portfolio size and favorable changes in working capital.

The decrease in cash used in investing activities was primarily due to higher loan repayment activity, partially offset by higher loan origination activity during the 2026 period.

The change in cash provided by financing activities to cash used in financing activities was primarily due to higher repayments on our Secured Financing Facilities in the 2026 period.

Distributions

During the nine months ended September 30, 2025, we declared and paid regular quarterly distributions to our common shareholders totaling $14,617, or $0.98 per common share, using cash on hand.

On October 9, 2025, we declared a regular quarterly distribution of $0.28 per common share, or $4,218, to shareholders of record on October 27, 2025.

We expect to pay this distribution to our common shareholders on or about November 13, 2025 using cash on hand.

During the three months ended March 31, 2026, we declared and paid regular quarterly distributions to our common shareholders totaling $6,327, or $0.28 per common share, using cash on hand.

On April 9, 2026, we declared a regular quarterly distribution of $0.28 per common share, or $6,327, to shareholders of record on April 21, 2026.

We expect to pay this distribution to our common shareholders on or about May 14, 2026 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.

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 $61,494, after offering costs.

For further information regarding distributions, see Note 9 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 September 30, 2025 were as follows:

Our contractual obligations and commitments as of March 31, 2026 were as follows:

Payment Due by Period

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(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 September 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.

(3) Projected interest payments are attributable only to our debt service obligations at existing rates as of March 31, 2026 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 September 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.

Our principal debt obligations as of March 31, 2026 were the outstanding balances under our Secured Financing Facilities.

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.

Our Master Repurchase Agreements also provide that upon the repurchase of any then purchased asset, we are required to pay UBS, Citibank or Wells Fargo the outstanding purchase price of such purchased asset and accrued interest and any and all accrued and unpaid expenses of UBS, Citibank or Wells Fargo, as applicable, relating to such purchased asset.

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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 September 30, 2025, we had a $353,165 aggregate outstanding principal balance under our Master Repurchase Facilities.

As of March 31, 2026, we had a $382,437 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 September 30, 2025, we had a $77,258 aggregate outstanding principal balance under the BMO Facility.

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

As of March 31, 2026, we had a $85,032 aggregate outstanding principal balance under the BMO Facility.

As of March 31, 2026, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

Related Person Transactions

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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