What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 145 added, 87 removed, 262 unchanged (47% of the section changed)

30 unchanged sentences

Market Conditions.

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.

The first quarter of 2026 reflected a continuation of the stabilization trends that emerged in the second half of 2025, supported by improving underlying property fundamentals along with relative interest rate stability allowing for greater confidence in underwriting assumptions going forward.

During the second quarter of 2026, CRE capital markets continued to improve, however ongoing geopolitical uncertainty and renewed inflationary pressures are causing considerable volatility in U.S.

Treasury yields.

These conditions are again weighing on market participants’ buy, sell or refinance decision making process.

To that end, CRE financing activity remains robust, but market activity is more heavily weighted toward refinancings with lower than usual acquisition financing volume.

However, an abundance of upcoming loan maturities coupled with many lenders’ decreased tolerance for loan extensions may lead to higher transaction volume in the second half of 2026.

The relative value of CRE debt investments compared to alternative fixed income, corporate credit and private credit investments continues to attract capital from banks, securitized lenders, life insurance companies, private debt funds and mortgage REITs.

Increased competition among lenders has contributed to tighter credit spreads, more flexible loan terms and lower all-in borrowing costs for high-quality, well-structured CRE debt investments, although lender appetite remains differentiated by property type, market, sponsorship and leverage profile.

Overall, borrowers are the beneficiaries of this competition among lenders.

The outlook for U.S.

monetary policy remains uncertain.

The Federal Open Market Committee held rates steady during the quarter, however, updated projections indicate increased concern regarding persistent inflation and the potential need for policy tightening.

As a result, the timing and direction of future interest rate decisions will depend on incoming inflation data, labor market conditions, energy prices and the broader economic impact of geopolitical developments.

While CRE capital markets remain relatively well positioned, transaction volume, valuation trends and borrowing costs may remain subject to volatility if inflation proves persistent, geopolitical risks intensify or interest rates remain elevated for longer than currently expected.

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

As of June 30, 2026, SOFR was 3.65%, and as a result, six 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 March 31, 2026 and December 31, 2025:

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

The table below details overall statistics for our loan portfolio as of June 30, 2026 and December 31, 2025:

As of June 30, 2026 As of December 31, 2025

Number of loans 27 24

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Loan Portfolio Details

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

The table below details our loan portfolio as of June 30, 2026:

# Location Property Type Origination Date Committed Principal Amount Principal

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First mortgage loans

1 Olmsted Falls, OH (4)

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

1 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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5 College Park, MD Student Housing 11/12/2025 37,320 30,675 S + 2.95% S + 3.42% 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

6 Roswell, GA Multifamily 05/29/2026 36,310 34,440 S + 3.35% S + 4.16% 05/29/2031 79 % 3

7 New York, NY Mixed Use 09/05/2025 34,500 34,500 S + 3.20% S + 4.02% 09/05/2030 70 % 2

8 Revere, MA Hotel 07/01/2024 33,000 33,000 S + 3.95% S + 4.27% 07/01/2029 73 % 3

9 San Marcos, TX Student Housing 01/14/2025 31,200 29,270 S + 3.25% S + 3.66% 01/14/2030 62 % 2

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

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

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

13 Plano, TX (4)

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

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

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

19 Sugar Land, TX Medical Office 06/05/2026 22,650 21,500 S + 3.60% S + 4.21% 06/05/2031 60 % 3

20 Fontana, CA Industrial 11/18/2022 22,080 20,470 S + 3.75% S + 4.03% 11/18/2027 72 % 3

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

27 Philadelphia, PA Self Storage 05/07/2026 16,000 16,000 S + 4.00% S + 4.41% 05/07/2031 70 % 3

Total/weighted average $ 765,343 $ 722,325 S + 3.54% S + 3.94% 67 % 2.9

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

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

(4) In July 2026, the maturity date of this loan was extended by two years to July 1, 2028.

As of June 30, 2026, we had $765,343 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 27 first mortgage loans.

As of June 30, 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”.

In July 2026, we amended the agreement governing our loan secured by an office property in Plano, TX.

As part of this amendment, the maturity date was extended by two years to July 1, 2028.

As of June 30, 2026, this loan had an amortized cost of $26,637 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 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.

As of June 30, 2026 and July 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 June 30, 2026.

As a result, they may become unable to pay their debt service obligations owed and due to us, which may result in an increased allowance for credit losses and/or recognition of income on a nonaccrual basis.

For further information regarding our loan portfolio and risk rating policy, see Note 3 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, "—Factors Affecting our Operating Results" and "Warning Concerning Forward-Looking Statements" elsewhere in this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item 1A, “Risk Factors”, of our 2025 Annual Report.

For further information regarding our loan portfolio and risk rating policy, see Note 3 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, "—Factors Affecting Operating Results" and "Warning Concerning Forward-Looking Statements" elsewhere in this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item 1A, “Risk Factors”, of our 2025 Annual Report.

Financing Activities

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

The table below is an overview of our Secured Financing Facilities as of June 30, 2026:

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

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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:

The table below details our Secured Financing Facilities activities during the three months ended June 30, 2026:

Carrying Value

Balance at March 31, 2026 $ 465,817

Borrowings 24,687

Repayments (20,412)

Deferred fees (70)

Amortization of deferred fees 312

Balance at June 30, 2026 $ 470,334

The table below details our Secured Financing Facilities activities during the six months ended June 30, 2026:

Carrying Value

Balance at December 31, 2025 $ 487,657

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Amortization of deferred fees 700

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.

Balance at June 30, 2026 $ 470,334

As of June 30, 2026, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 5.78% per annum, excluding associated fees and expenses.

As of June 30, 2026 and July 24, 2026, we had a $471,744 and $488,944, respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of June 30, 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 March 31, 2026 Compared to Three Months Ended December 31, 2025:

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026:

Three Months Ended

March 31, 2026 December 31, 2025 Change % Change

June 30, 2026 March 31, 2026 Change % Change

INCOME FROM INVESTMENTS:

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Base management fees 1,299 1,305 (6) (0.5 %)

Incentive fees 91 — 91 n/m

General and administrative expenses 1,562 886 676 76.3 %

Reimbursement of shared services expenses 574 574 — — %

Provision for credit losses 4,923 603 4,320 716.4 %

Expenses from real estate owned 554 580 (26) (4.5 %)

Total other expenses 9,003 3,948 5,055 128.0 %

Income before income taxes (878) 4,391 (5,269) (120.0 %)

Income tax benefit (expense) 11 (6) 17 283.3 %

Net (loss) income $ (867) $ 4,385 $ (5,252) (119.8 %)

Weighted average common shares outstanding - basic and diluted 22,419 22,398 21 0.1 %

Net (loss) income per common share - basic and diluted $ (0.04) $ 0.19 $ (0.23) (121.1 %)

Interest and related income .

The decrease in interest and related income was primarily due to a lower weighted average principal balance due to loan repayment activity during the three months ended June 30, 2026.

The weighted average principal balance of our loan investments was approximately $699,000 for the three months ended June 30, 2026 compared to approximately $712,000 for the three months ended March 31, 2026.

The weighted average coupon rate was approximately 7.25% during the three months ended June 30, 2026 compared to approximately 7.33% during the three months ended March 31, 2026.

Interest and related expenses.

The decrease in interest and related expenses was primarily the result of lower weighted average coupon rates, partially offset by a higher weighted average principal balance during the three months ended June 30, 2026.

The weighted average coupon rate was approximately 5.81% during the three months ended June 30, 2026 compared to approximately 5.86% during the three months ended March 31, 2026.

The weighted average principal balance of our repurchase loans was approximately $468,000 for the three months ended June 30, 2026 compared to approximately $462,000 for the three months ended March 31, 2026.

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, 2026 as compared to the three months ended March 31, 2026.

Base management fees.

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

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

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, 2026 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, 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 during the three months ended June 30, 2026.

Reimbursement of shared services expenses.

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

Reimbursement of shared services expenses represents reimbursement of the costs for the services that Tremont arranges on our behalf 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 June 30, 2026 is primarily due to increased allowances for certain of our “4” rated office loans with near-term maturities, and primarily reflects lower estimated collateral values for these loans within the office sector.

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, 2026 as compared to the three months ended March 31, 2026.

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.

Net (loss) income and net (loss) income per common share - basic and diluted.

The decrease in net (loss) income during the three months ended June 30, 2026 as compared to the three months ended March 31, 2026 was due to the changes noted above.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025:

Six Months Ended

June 30, 2026 June 30, 2025 Change % Change

INCOME FROM INVESTMENTS:

Interest and related income $ 29,517 $ 28,681 $ 836 2.9 %

interest and related expenses (14,353) (14,961) 608 4.1 %

Income from loan investments, net 15,164 13,720 1,444 10.5 %

Revenue from real estate owned 1,300 1,267 33 2.6 %

Total revenue 16,464 14,987 1,477 9.9 %

OTHER EXPENSES:

Base management fees 2,604 2,155 449 20.8 %

Incentive fees 91 247 (156) (63.2 %)

General and administrative expenses 2,448 2,344 104 4.4 %

Reimbursement of shared services expenses 1,148 1,101 47 4.3 %

Provision for credit losses 5,526 759 4,767 628.1 %

Expenses from real estate owned 1,134 1,163 (29) (2.5 %)

Total other expenses 12,951 7,769 5,182 66.7 %

Income before income taxes 3,513 7,218 (3,705) (51.3 %)

Income tax expense (6) (8) 2 25.0 %

Income tax benefit (expense) 5 (8) 13 162.5 %

Net income $ 3,518 $ 7,210 $ (3,692) (51.2 %)

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Interest and related income .

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.

The increase in interest and related income was primarily due to a higher weighted average principal balance resulting from loan origination activity during the six months ended June 30, 2026, partially offset by declines in the SOFR index rate.

The weighted average principal balance of our loan investments was approximately $705,000 for the six months ended June 30, 2026 compared to approximately $642,000 for the six months ended June 30, 2025.

The weighted average coupon rate was approximately 7.31% during the six months ended June 30, 2026 compared to approximately 8.03% during the six months ended June 30, 2025.

Interest and related expenses.

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.

The decrease in interest and related expenses was primarily the result of declines in the SOFR index rate, offset by a higher weighted average principal balance during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

The weighted average coupon rate was approximately 5.80% during the six months ended June 30, 2026 compared to approximately 6.51% during the six months ended June 30, 2025.

The weighted average principal balance of our repurchase loans was approximately $465,000 for the six months ended June 30, 2026 compared to approximately $432,000 for the six months ended June 30, 2025.

Revenue from real estate owned.

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.

The increase in revenue from real estate owned was primarily due to higher operating expense reimbursements and higher rental rates from lease renewal activity during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Base management fees.

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

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.

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 June 30, 2026.

General and administrative expenses .

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.

The increase in general and administrative expenses was primarily due to an increase in share based compensation to our trustees during the six months ended June 30, 2026 as compared to 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.

Provision for (reversal of) credit losses.

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 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.

The increase in the allowance for credit losses during the six months ended June 30, 2026 is primarily due to increased allowances for certain of our “4” rated office loans with near-term maturities, and primarily reflects lower estimated collateral values for these loans within the office sector.

Expenses from real estate owned.

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.

The decrease in expenses from real estate owned was primarily due to lease related assets becoming fully amortized resulting in lower amortization expense during the six months ended June 30, 2026 as compared to the six months ended June 30, 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.

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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.

These non-GAAP financial measures do not represent book value, book value per common share, net (loss) income, net (loss) 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 (loss) income or net (loss) 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 capital adequacy, 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 capital adequacy or performance measures;

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Adjusted Book Value per Common Share

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:

We believe that Adjusted Book Value and Adjusted Book Value per common share are meaningful measures of our capital adequacy because they exclude 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 per common share and Adjusted Book Value per common share, which is a non-GAAP financial measure:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Shareholders' equity $ 320,673 $ 328,651

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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.

We believe that Distributable Earnings and Distributable Earnings per common share provide meaningful information to consider in addition to net (loss) income, net (loss) 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.

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:

We calculate Distributable Earnings and Distributable Earnings per common share as net (loss) income and net (loss) income per common share, respectively, computed in accordance with GAAP, including realized losses not otherwise included in net (loss) 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;

(c) unrealized gains, losses and other similar non-cash items that are included in net (loss) income for the period of the calculation (regardless of whether such items are included in or deducted from net (loss) 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.

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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.

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, 2026 December 31, 2025

Net income $ 4,385 $ 4,794

Three Months Ended Six Months Ended

June 30, 2026 March 31, 2026 June 30, 2026 June 30, 2025

Net (loss) income $ (867) $ 4,385 $ 3,518 $ 7,210

Non-cash equity compensation expense 891 207 1,098 1,033

Non-cash accretion of purchase discount (188) (145) (333) —

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

Provision for credit losses 4,923 603 5,526 759

Depreciation and amortization of real estate owned 253 253 506 538

Exit fees collected on acquired loans 40 — 40 —

Distributable Earnings $ 5,052 $ 5,303 $ 10,355 $ 9,540

Weighted average common shares outstanding - basic and diluted 22,419 22,398 22,408 14,771

Net income per common share - basic and diluted $ 0.19 $ 0.29

Net (loss) income per common share - basic and diluted $ (0.04) $ 0.19 $ 0.15 $ 0.48

Distributable Earnings per common share - basic and diluted $ 0.23 $ 0.24 $ 0.46 $ 0.65

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Loans issued under the BMO Facility are coterminous with the corresponding pledged mortgage loan investments, are not subject to margin calls and allow for up to an 80% advance rate, subject to certain loan to cost and LTV limits.

Interest on advancements under the BMO Facility are calculated at SOFR plus a premium.

Interest on advancements under the BMO Facility is calculated at SOFR plus a premium.

Loans issued under the BMO Facility are secured by a security interest and collateral assignment of the underlying loans to our borrowers which are secured by real property underlying such loans.

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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 $ 123,471 $ 70,750

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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.

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

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

Distributions

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.

During the six months ended June 30, 2026, we declared and paid regular quarterly distributions to our common shareholders totaling $12,654, or $0.56 per common share, using cash on hand.

On July 9, 2026, we declared a regular quarterly distribution of $0.28 per common share, or $6,346, to shareholders of record on July 20, 2026.

We expect to pay this distribution to our common shareholders on or about August 13, 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.

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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

For further information regarding the Rights Offering, see Notes 7 and 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 March 31, 2026 were as follows:

Our contractual obligations and commitments as of June 30, 2026 were as follows:

Payment Due by Period

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$ 537,973 $ 291,282 $ 246,691 $ — $ —

$ 539,243 $ 322,439 $ 216,804 $ — $ —

(1) The allocation of our unfunded loan commitments is based on the current loan maturity date to which the individual commitments relate.

(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, 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.

(3) Projected interest payments are attributable only to our debt service obligations at existing rates as of June 30, 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 March 31, 2026 were the outstanding balances under our Secured Financing Facilities.

Our principal debt obligations as of June 30, 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.

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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 March 31, 2026, we had a $382,437 aggregate outstanding principal balance under our Master Repurchase Facilities.

As of June 30, 2026, we had a $386,712 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, 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.

As of June 30, 2026, we had a $85,032 aggregate outstanding principal balance under the BMO Facility.

As of June 30, 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