InPoint Commercial Real Estate Income, Inc.

Previous wording

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of InPoint Commercial Real Estate Income, Inc. (which we refer to herein as the “Company,” “we,” “our” or “us”) based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 15, 2024 (the “Annual Report”) and subsequent Quarterly Reports on Form 10-Q, some of which are briefly summarized below:

Current wording

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of InPoint Commercial Real Estate Income, Inc. (which we refer to herein as the “Company,” “we,” “our” or “us”) based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 14, 2025 (the “Annual Report”), some of which are briefly summarized below:

Previous wording

There is no current public trading market for our common stock, and we do not expect that such a market will ever develop. Therefore, repurchase of shares by us will likely be the only way for stockholders to dispose of their shares, and our SRP is currently suspended;

Current wording

There is no current public trading market for our common stock, and we do not expect that such a market will develop. Therefore, repurchase of shares by us will likely be the only way for stockholders to dispose of their shares, and our SRP is currently suspended;

Previous wording

The following discussion and analysis relate to the three and nine months ended September 30, 2024 and 2023 and as of September 30, 2024 and December 31, 2023. You should read the following discussion and analysis along with our unaudited consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis relate to the three months ended March 31, 2025 and 2024 and as of March 31, 2025 and December 31, 2024. You should read the following discussion and analysis along with our unaudited consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q.

Previous wording

We are a Maryland corporation formed on September 13, 2016 to originate, acquire and manage an investment portfolio of CRE investments primarily comprised of (i) CRE debt, including (a) primarily floating-rate first mortgage loans, and (b) subordinate mortgage and mezzanine loans, and participations in such loans, and (ii) floating-rate CRE securities such as CMBS and senior unsecured debt of publicly traded REITs. Substantially all of our business is conducted through our Operating Partnership, of which we are the sole general partner. We are externally managed by our Advisor, an indirect subsidiary of IREIC. Our Advisor has engaged the Sub-Advisor, a subsidiary of Sound Point CRE Management, LP, to perform certain services on behalf of the Advisor for us.

Current wording

We are a Maryland corporation formed on September 13, 2016 to originate, acquire and manage an investment portfolio of CRE investments primarily comprised of CRE debt, including primarily floating-rate first mortgage loans and fixed rate mezzanine loans. We may also invest in participations in CRE debt, floating-rate CRE securities such as CMBS, senior unsecured debt of publicly traded REITs and select equity investments in single-tenant, net leased properties. Substantially all of our business is conducted through our Operating Partnership, of which we are the sole general partner. We are externally managed by our Advisor, an indirect subsidiary of IREIC. Our Advisor has engaged the Sub-Advisor, a subsidiary of Sound Point CRE Management, LP, to perform certain services on behalf of the Advisor for us.

Previous wording

We continue to evaluate all loans on a quarterly basis and assign our internal risk rating with the majority of our loans continuing to perform as expected. While there has been some increase in competition for new loans in the first nine months of 2024, refinancing risk continues to be a focus. As such, for our CECL reserve, we have placed additional focus on loans with maturity dates up to nine months from the quarter end to determine if the collateral value would be sufficient to cover the outstanding loan principal balance and have recorded an asset-specific CECL reserve when necessary.

Current wording

We continue to evaluate all loans on a quarterly basis and assign our internal risk rating with the majority of our loans continuing to perform as expected. Our primary focus continues to be on refinance risk and our CECL reserve will place emphasis on loans with maturity dates nine months forward from the reporting date.

Previous wording

Net loss attributable to common stockholders was $0.9 million, or $0.09 per share, during the three months ended September 30, 2024, which included $3.7 million in provision for credit losses.

Current wording

Net income attributable to common stockholders was $2.5 million, or $0.24 per share, during the three months ended March 31, 2025, which included $1.5 million in reversal of credit losses.

Previous wording

During the third quarter of 2024, we paid an annual gross distribution rate of $1.25 per common share, which represents an annualized rate of 7.6% on our aggregate NAV of $16.4992 as of September 30, 2024. Holders of Class D and Class T shares of common stock received less than the gross distribution amount after the deduction of stockholder servicing fees applicable to those classes.

Current wording

During the first quarter of 2025, we declared gross distributions at an annual rate of $1.25 per common share, which represents an annualized rate of 7.7% on our aggregate NAV of $16.1342 as of March 31, 2025. Holders of Class D and Class T shares of common stock received less than the gross distribution amount after the deduction of stockholder servicing fees applicable to those classes.

Previous wording

27 out of our 30 loans were current on their contractual interest payments with no interest deferrals during the three months ended September 30, 2024.

Current wording

22 out of our 25 loans were current on their contractual interest payments during the three months ended March 31, 2025.

Previous wording

As of September 30, 2024, 2 out of our 30 loans were placed on nonaccrual status. After being placed on nonaccrual status, any cash collected, including any interest payments, on such loans is applied against their principal balance.

Current wording

As of March 31, 2025, 3 out of our 25 loans were on nonaccrual status. After being placed on nonaccrual status, any cash collected, including any interest payments, on such loans is applied against their principal balance.

Previous wording

The changes in our loan portfolio by property type and by region as of September 30, 2024 compared to December 31, 2023 were primarily due to sale of a loan, transfer of a loan to REO upon foreclosure, and loans that were repaid by borrowers in ordinary course.

Current wording

There were no changes in our loan portfolio by property type and by region as of March 31, 2025 compared to December 31, 2024.

Previous wording

The decrease in the size of our portfolio is primarily due to loan payoffs, foreclosure of a loan, and a sale of a loan with no new loans originated during the nine months ended September 30, 2024. The decrease in the all-in yield was primarily driven by the loans placed on nonaccrual status.

Current wording

The size of our portfolio did not change during the three months ended March 31, 2025. The decrease in the all-in yield was primarily driven by the loans placed on nonaccrual status.

Previous wording

As of September 30, 2024, an 80% undivided senior interest in each of loan numbers 1, 2, and 6, which includes the right to receive priority interest payments at a rate of one-month term USD Secured Overnight Financing Rate (“SOFR”)+2.00%, was sold by our Operating Partnership pursuant to a Loan Participation Agreement dated November 15, 2021. Our Operating Partnership has retained a 20% undivided subordinate interest in each of these loans.

Current wording

As of March 31, 2025, an 80% undivided senior interest in each of loan numbers 1 and 5, which includes the right to receive priority interest payments at a rate of one-month term USD Secured Overnight Financing Rate (“SOFR”)+2.00%, was sold by our Operating Partnership pursuant to a Loan Participation Agreement dated November 15, 2021. Our Operating Partnership has retained a 20% undivided subordinate interest in each of these loans.

Previous wording

Cash coupon is the stated rate on the loan. All-in yield is the present value of all future principal and interest payments on the loan and does not include any origination fees or deferred commitment fees. Loan numbers 10 and 30 are on nonaccrual basis as of September 30, 2024 and excluded from the total. Loan number 6 is paying interest at a 4.0% fixed current rate and accruing the remaining amount as payment-in-kind. The total is the weighted average of the stated yield, excluding any default interest, as of September 30, 2024. Our first mortgage loans are all floating rate and each contains a minimum SOFR floor. As of September 30, 2024, the weighted average SOFR floor was 0.65%.

Current wording

Cash coupon is the stated rate on the loan. All-in yield is the present value of all future principal and interest payments on the loan and does not include any origination fees or deferred commitment fees. Loan numbers 5, 13 and 25 are on nonaccrual basis as of March 31, 2025 and excluded from the total. The total is the weighted average of the stated yield, excluding any default interest, as of March 31, 2025. Our first mortgage loans are all floating rate and each contains a minimum SOFR floor. As of March 31, 2025, the weighted average SOFR floor was 0.68%.

Previous wording

The loan matured on April 9, 2023 and is currently accruing default interest. The Company is negotiating an extension to allow the borrower to obtain long-term financing. The Company expects to complete the loan extension in the fourth quarter of 2024. The property securing the loan is class A office and is 90% occupied as of September 30, 2024. The Company has reviewed the loan and based on the current estimated LTV does not believe the loan is impaired.

Current wording

The loan matured on April 9, 2023 and was accruing default interest. On March 18, 2025, the Company extended the loan maturity date to February 9, 2026 to allow the borrower to obtain long-term financing or bridge financing to pay-off the existing loan. The property securing the loan is class A office and was 94% occupied as of March 2025. The Company has reviewed the loan and based on the estimated LTV recorded a $0.8 million asset-specific CECL reserve as of March 31, 2025.

Previous wording

The loan has no unfunded commitment and matured on October 6, 2024. The borrower is current on all debt service payments. The property is occupied by a single tenant that is possibly exiting the property at the end of its lease. The Company has negotiated with the borrower a possible repayment at an amount less than the outstanding balance. The Company has recorded a $4.0 million asset-specific CECL reserve on this loan as of September 30, 2024. The loan was placed on nonaccrual status effective July 1, 2024.

Current wording

The loan has no unfunded commitment and matured on October 6, 2024. The borrower is current on all debt service payments. The property is occupied by a single tenant that is possibly exiting the property at the end of its lease. The Company has negotiated with the borrower a possible repayment at an amount less than the outstanding balance. The Company has recorded a $4.0 million asset-specific CECL reserve on this loan as of March 31, 2025. The loan has been on nonaccrual status since July 1, 2024.

Previous wording

We entered into master repurchase agreements to fund our loan portfolio. As of September 30, 2024 and December 31, 2023, we had total borrowings of $418,765 (which is net of $0 unamortized debt issuance costs) and $457,438 (which is net of $0 of unamortized debt issuance costs), respectively. During the nine months ended September 30, 2024 and the year ended December 31, 2023, we had weighted average borrowings of $472,163 and $562,396 and weighted average borrowing costs of 7.8% and 7.4%, respectively.

Current wording

As of March 31, 2025 and December 31, 2024, we had total borrowings of $357,835 and $360,677, respectively. During the three months ended March 31, 2025 and the year ended December 31, 2024, we had weighted average borrowings of $387,315 and $459,902 and weighted average borrowing costs of 6.7% and 7.7%, respectively.

Previous wording

On July 2, 2024, we acquired legal title to two office properties located in Addison, TX through non-judicial foreclosure transactions. The properties were previously collateralized by a senior loan with an amortized cost basis of $24,411 that was risk rated 5 with a CECL reserve of $281 at the time of the acquisitions. The acquisitions were accounted for as asset acquisitions under ASC Topic 805, Business Combinations, and we intend to hold these properties as real estate held for use with the intent to eventually sell when the market improves. The properties were recorded on our consolidated balance sheet at $24,035 based on the estimated fair value at acquisition. The fair market value estimate was determined based on appraisals performed by an independent third-party appraiser. The acquisitions resulted in a CECL reserve charge-off of $855 during the three months ended September 30, 2024.

Current wording

On July 2, 2024, we acquired legal title to two office properties, one located in Addison, TX, and the other located in Irving, TX, through non-judicial foreclosure transactions. The properties previously collateralized a senior loan with an amortized cost basis of $24,411 that was risk rated 5 with a CECL reserve of $281 at the time of the acquisitions. The acquisitions were accounted for as asset acquisitions under applicable GAAP guidance, and we intend to hold these properties as real estate held for use with the intent to eventually sell when the market improves. The properties were recorded on our consolidated balance sheet at $24,035 based on the estimated fair value at acquisition. The fair market value estimate was determined based on appraisals performed by an independent third-party appraiser. The acquisitions resulted in a CECL reserve charge-off of $855 during the year ended December 31, 2024.

Previous wording

Interest income excludes $500 and $172 for the three months ended September 30, 2024 and 2023, respectively, related to bank deposits not included in the loan portfolio. Interest expense excludes $360 of participation payments related to the REO.

Current wording

Interest income excludes $608 and $638 for the three months ended March 31, 2025 and 2024, respectively, related to bank deposits not included in the investment portfolio. Interest expense excludes $309 and $0 of participation payments for the three months ended March 31, 2025 and 2024, respectively, related to the REO.

Previous wording

The change in our average interest-earning assets and interest-bearing liabilities was due to loan maturities and foreclosure. The change in the weighted average levered yield was primarily due to the loans that were placed on nonaccrual status.

Current wording

The change in our average interest-earning assets and interest-bearing liabilities was due to the paydown of the principal balance as loans matured or were foreclosed on and the subsequent repayment of the amount financed for these loans. The change in the weighted average levered yield was primarily due to the change in the composition of the loans in the portfolio.

Previous wording

Our revenue from real estate during the three months ended September 30, 2024 and 2023 was $1,274 and $4,472, respectively. The decrease in revenue was primarily due to the sale of the Renaissance O’Hare in September 2023, partially offset by an increase in revenue due to the acquisition of two properties in July 2024.

Current wording

Our revenue from real estate during the three months ended March 31, 2025 and 2024 was $1,528 and $0, respectively. The increase in revenue was primarily due to the acquisition of three properties during the second half of 2024.

Previous wording

Net operating expenses for the three months ended September 30, 2024 and 2023 consisted of the following:

Current wording

Operating expenses for the three months ended March 31, 2025 and 2024 consisted of the following:

Previous wording

Net operating expenses for the three months ended September 30, 2024 and 2023 were $3,209 and $5,567, respectively. The primary driver of the decrease in net operating expenses was the sale of Renaissance O’Hare in September 2023.

Current wording

Total operating expenses for the three months ended March 31, 2025 and 2024 were $3,335 and $1,900, respectively. The primary driver of the increase in total operating expenses was the acquisition of three properties during the second half of 2024.

Previous wording

For the three months ended September 30, 2024 and 2023, our net income was $615 and $4,992, respectively. The decrease in net income was primarily due to a decrease in net interest income caused by the loans on nonaccrual status and a larger provision for credit losses in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Current wording

For the three months ended March 31, 2025 and 2024, our net income was $3,948 and $3,399, respectively. The increase in net income was primarily due to a decrease in the CECL reserve, partially offset by a reduction in net interest income as the loan portfolio decreased.

Previous wording

We use Funds from Operations (“FFO”), a widely accepted metric, to evaluate our performance. FFO provides a supplemental measure to compare our performance and operations to other REITs. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts (“NAREIT”) has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT. As defined by NAREIT, FFO means net income (loss) attributable to common stockholders computed in accordance with GAAP, excluding gains (or losses) from sales of operating property, plus depreciation and amortization and after adjustments for unconsolidated entities. In addition, NAREIT has further clarified the FFO definition to add-back impairment write-downs of depreciable real estate or of investments in unconsolidated entities that are driven by measurable decreases in the fair value of depreciable real estate and to exclude the earnings impacts of cumulative effects of accounting changes. We have adopted the NAREIT definition for computing FFO.

Current wording

National Association of Real Estate Investment Trusts (“NAREIT”) has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT. As defined by NAREIT, FFO means net income (loss) attributable to common stockholders computed in accordance with GAAP, excluding gains (or losses) from sales of operating property, plus depreciation and amortization and after adjustments for unconsolidated entities. In addition, NAREIT has further clarified the FFO definition to add-back impairment write-downs of depreciable real estate or of investments in unconsolidated entities that are driven by measurable decreases in the fair value of depreciable real estate and to exclude the earnings impacts of cumulative effects of accounting changes. We have adopted the NAREIT definition for computing FFO.

Previous wording

We define MFFO in accordance with the concepts established by the IPA and adjust FFO for certain items, such as amortization of premium and discounts on real estate securities. We purchase real estate securities at a premium or discount to par value, and in accordance with GAAP, record the amortization of premium/accretion of the discount to interest income. We believe that excluding the amortization of premiums and discounts provides better insight to the expected contractual cash flows. We also adjust FFO for gains or losses on preferred stock repurchases because we do not consider these gains or losses to be a measure of our operating performance. In addition, we adjust FFO for unrealized gains or losses on real estate securities. Any mark-to-market or fair value adjustments are based on general market or overall industry conditions and may be temporary in nature.

Current wording

We define MFFO in accordance with the concepts established by the IPA and adjust FFO for certain items, such as amortization of premium and discounts on real estate securities. We purchase real estate securities at a premium or discount to par value, and in accordance with GAAP, record the amortization of premium/accretion of the discount to interest income. We believe that excluding the amortization of premiums and discounts provides better insight to the expected contractual cash flows. We also adjust FFO for gains or losses on preferred stock repurchases, when/if they occur, because we do not consider these gains or losses to be a measure of our operating performance. In addition, we adjust FFO for unrealized gains or losses on real estate securities. Any mark-to-market or fair value adjustments are based on general market or overall industry conditions and may be temporary in nature.

Previous wording

Wholly Owned Properties. For real properties we own, our Advisor has developed a valuation plan with the objective of having each of our wholly owned properties valued at least annually by an appraisal, except for newly acquired properties as described below, with appraisals scheduled over the course of a year. We rely on property-level information provided by our Advisor, including but not limited to (1) historical and projected operating revenues and expenses of the property, (2) lease agreements with respect to the property and (3) information regarding recent or planned capital expenditures. Appraisals will be performed in accordance with the Internal Revenue Code of Ethics and the Uniform Standards of Professional Appraisal Practices, the real estate appraisal industry standards created by The Appraisal Foundation. Each appraisal must be reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). Newly acquired wholly owned properties will initially be valued at cost and thereafter will join the annual appraisal cycle during the year following the first full calendar year in which we own the property. Development assets, if any, will be valued at cost plus capital expenditures and will join the annual appraisal cycle upon stabilization. Acquisition costs and expenses incurred in connection with the acquisition of multiple wholly owned properties that are not directly related to any single wholly owned property generally will be allocated among the applicable wholly owned properties pro rata based on relative values. Properties purchased as a portfolio or held in a joint venture that acquires properties over time may be valued as a single asset. Each individual appraisal report for our assets will be addressed solely to our company to assist in providing our monthly portfolio valuation.

Current wording

Wholly Owned Properties. For real properties we own, our Advisor has developed a valuation plan with the objective of having each of our wholly owned properties valued at least annually by an appraisal, except for newly acquired properties as described below, with appraisals scheduled over the course of a year. We rely on property-level information provided by our Advisor, including but not limited to (1) historical and projected operating revenues and expenses of the property, (2) lease agreements with respect to the property and (3) information regarding recent or planned capital expenditures. Appraisals will be performed in accordance with the Internal Revenue Code of Ethics and the Uniform Standards of Professional Appraisal Practices, the real estate appraisal industry standards created by The Appraisal Foundation. Each appraisal must be reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). Newly acquired wholly owned properties will initially be valued at cost and thereafter will join the annual appraisal cycle during the year following the first full calendar year in which we own the property. Development assets, if any, will be valued at cost plus capital expenditures and will join the annual appraisal cycle upon stabilization.

Previous wording

Our valuation reports will not be addressed to the public and may not be relied upon by any other person to establish an estimated value of our common stock and will not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing our NAV calculation, our Advisor will not solicit third-party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of our company. Real estate appraisals are reported on a free and clear basis (for example no mortgage), irrespective of any property-level financing that may be in place. The primary methodology used to value properties is the income approach, whereby value is derived by determining the present value of an asset’s stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates subjective judgments regarding comparable rental and operating expense data, the capitalization or discount rate, and projections of future rent and expenses based on appropriate evidence.

Current wording

Our valuation reports will not be addressed to the public and may not be relied upon by any other person to establish an estimated value of our common stock and will not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing our NAV calculation, our Advisor will not solicit third-party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of our company. Real estate appraisals are reported on a free and clear basis (for example no mortgage), irrespective of any property-level financing that may be in place. The primary methodology used to value properties is the income approach, whereby value is derived by determining the present value of an asset’s stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates subjective judgments regarding comparable rental and operating expense data, the capitalization or discount rate, and projections of future rent and expenses based on appropriate evidence. Other methodologies that may also be used to value properties include sales comparisons and replacement cost approaches. Because the appraisals involve subjective judgments, the fair value of our assets, which is included in our NAV, may not reflect the liquidation value or net realizable value of our properties.

Previous wording

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay distributions to our stockholders, fund investments, originate loans, repay borrowings, and other general business needs including the payment of our operating and administrative expenses. Our primary sources of funds for liquidity consist of any future follow-on public offerings of common stock, net cash provided by operating activities, proceeds from repurchase agreements and other financing arrangements and future issuances of equity and/or debt securities.

Current wording

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay distributions to our stockholders, fund investments, originate loans, repay borrowings, and other general business needs including the payment of our operating and administrative expenses.

Previous wording

Our primary sources of liquidity include $58.8 million in cash, $247 million in available capacity on our borrowing facilities, and $20 million in available borrowing capacity from our revolving credit letter agreements with IREIC and Sound Point. We may seek additional sources of liquidity from syndicated financing in the form of collateralized loan obligations, sale of loan participations, other borrowings, including additional repurchase agreement facilities and borrowings not related to a specific investment and future offerings of equity and debt securities.

Current wording

Our primary sources of funds for liquidity consist of net cash provided by operating activities, repayments of our outstanding loans by borrowers, proceeds from repurchase agreements and other financing arrangements, future issuances of equity and/or debt securities and any follow-on public offerings of common stock. As of March 31, 2025, we had $59.1 million in cash, $168 million in available capacity on our borrowing facilities and $20 million in available borrowing capacity from our revolving credit letter agreements with IREIC and Sound Point.

Previous wording

We experienced a net increase in cash and cash equivalents of $4,678 for the nine months ended September 30, 2024 compared to a net increase of $24,259 for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we funded

Current wording

We experienced a net decrease in cash and cash equivalents of $5,426 for the three months ended March 31, 2025 compared to a net increase of $6,253 for the three months ended March 31, 2024. During the three months ended March 31, 2025, we funded $1,038 on existing mortgage loans, received $19 in principal payments from our loans, paid down $2,842 on our borrowing facilities, and paid distributions of $4,647.

Previous wording

On February 15, 2018, we, through our wholly owned subsidiary, entered into a master repurchase agreement (the “Atlas Repo Facility”) with Column Financial, Inc. as administrative agent for certain of its affiliates. As our business has grown, we have increased the borrowing limit and extended the maturity. The most recent extension was in November 2023 for a twelve-month term and the maximum advance amount was reduced to $100,000. On February 8, 2023, Column Financial, Inc. and affiliated parties sold and assigned their interest in the Atlas Repo Facility to Atlas Securitized Products Investments 2, L.P. with no changes to the terms of the Atlas Repo Facility. Advances under the Atlas Repo Facility for current loans accrue interest at a per annum rate equal to SOFR plus 2.50% to 3.00% with a 0.15% to 0.25% floor. We paid off the outstanding balance on the Atlas Repo Facility in May 2023 and had no outstanding balance as of September 30, 2024. As there was no outstanding balance on the Atlas Repo Facility, we were not subject to any financial covenants.

Current wording

On February 15, 2018, we, through our wholly owned subsidiary, entered into a master repurchase agreement (the “Atlas Repo Facility”) with Column Financial, Inc. as administrative agent for certain of its affiliates. As our business grew, we extended the maturity date of the Atlas Repo Facility. The most recent extension was in November 2023 for a twelve-month term and the maximum advance amount was reduced to $100,000. On February 8, 2023, Column Financial, Inc. and affiliated parties sold and assigned their interest in the Atlas Repo Facility to Atlas Securitized Products Investments 2, L.P. with no changes to the terms of the Atlas Repo Facility. Advances under the Atlas Repo Facility accrued interest at a per annum rate equal to SOFR plus 2.50% to 3.00% with a 0.15% to 0.25% floor. We paid off the outstanding balance on the Atlas Repo Facility in May 2023. The Atlas Repo Facility matured on November 8, 2024 and we chose not to extend the line as we did not believe it was needed.

Previous wording

On March 10, 2021, we, through our wholly owned subsidiary, entered into a credit facility with Western Alliance Bank (the “WA Credit Facility,” together with the Atlas Repo Facility and the JPM Repo Facility, the “Facilities”). The WA Credit Facility provides for loan advances up to the lesser of $75,000 or the borrowing base. The borrowing base consists of eligible assets pledged to and accepted by Western Alliance in its discretion up to the lower of (i) 60% to 70% of loan-to-unpaid balance or (ii) 45% to 50% of the loan-to-appraised value (depending on the property type underlying the asset, for both (i) and (ii)). Assets that would otherwise be eligible become ineligible after being pledged as part of the borrowing base for 36 months. Advances under the WA Credit Facility accrue interest at an annual rate equal to one-month LIBOR plus 3.25% with a floor of 0.75%. The initial maturity date of the WA Credit Facility was March 10, 2023. On March 9, 2023, we extended the maturity date of the WA Credit Facility to March 10, 2025, modified that loan advances are up to the lesser of $40,000 or the borrowing base, and changed the index rate from LIBOR to SOFR. In addition, the spread increased to 3.50% and the floor to 2.50%. We have an option to convert the loan made pursuant to the WA Credit Facility upon its initial maturity to a term loan with the same interest rate and floor and a maturity of two years in exchange for, among other things, a conversion fee of 0.25% of the outstanding amount at the time of conversion. The WA Credit Facility requires maintenance of an average unrestricted aggregate deposit account balance with Western Alliance of not less than $3,750 until the calendar quarter ending on June 30, 2023 and not less than $5,000 commencing with the calendar quarter ending on September 30, 2023. Failure to meet the minimum deposit balance will result in, among other things, the interest rate of the WA Credit Facility increasing by 0.50% per annum for each quarter in which the compensating balances are not maintained. We paid off the outstanding balance on the WA Credit Facility in May 2024 and had no outstanding balance as of September 30, 2024. As there were no borrowings outstanding, we were not subject to any financial covenants.

Current wording

On March 10, 2021, we, through our wholly owned subsidiary, entered into a credit facility with Western Alliance Bank (the “WA Credit Facility”). The WA Credit Facility provided for loan advances up to the lesser of $75,000 or the borrowing base. The borrowing base consisted of eligible assets pledged to and accepted by Western Alliance in its discretion up to the lower of (i) 60% to 70% of loan-to-unpaid balance or (ii) 45% to 50% of the loan-to-appraised value (depending on the property type underlying the asset, for both (i) and (ii)). Assets that would otherwise be eligible became ineligible after being pledged as part of the borrowing base for 36 months. Advances under the WA Credit Facility accrued interest at an annual rate equal to one-month LIBOR plus 3.25% with a floor of 0.75%. The initial maturity date of the WA Credit Facility was March 10, 2023. On March 9, 2023, we extended the maturity date of the WA Credit Facility to March 10, 2025, modified that loan advances are up to the lesser of $40,000 or the borrowing base, and changed the index rate from LIBOR to SOFR. In addition, the spread increased to 3.50% and the floor to 2.50%. We had an option to convert the loan made pursuant to the WA Credit Facility upon its initial maturity to a term loan with the same interest rate and floor and a maturity of two years in exchange for, among other things, a conversion fee of 0.25% of the outstanding amount at the time of conversion. The WA Credit Facility required maintenance of an average unrestricted aggregate deposit account balance with Western Alliance of not less than $3,750 until the calendar quarter ended on June 30, 2023 and not less than $5,000 commencing with the calendar quarter ended on September 30, 2023. Failure to meet the minimum deposit balance resulted in, among other things, the interest rate of the WA Credit Facility increasing by 0.50% per annum for each quarter in which the compensating balances were not maintained. We paid off the outstanding balance on the WA Credit Facility in May 2024. We decided the WA Credit Facility was no longer necessary and chose not to renew it when it matured on March 10, 2025.

Previous wording

The Facilities are used to finance eligible loans and act in the manner of a revolving credit facility that can be repaid as our assets are paid off and re-drawn as advances against new assets.

Current wording

The JPM Repo Facility, Atlas Repo Facility (prior to its maturity) and WA Credit Facility (prior to its maturity) (collectively, the “Facilities”) are used to finance eligible loans and act in the manner of a revolving credit facility that can be repaid as our assets are paid off and re-drawn as advances against new assets.

Previous wording

On July 2, 2024, we acquired legal title to two office properties through non-judicial foreclosure transactions. The underlying loan was subject to the loan participation agreement. Upon foreclosure, we are still subject to the participation payments to the third party. Such payments are based on the underlying properties’ net income before depreciation adjusted for any non-cash revenue. If the calculated monthly payment exceeds the interest due under the participation agreement, the excess is paid to the third party and recorded as a reduction of past interest due first and then as a reduction of the principal. If the calculated monthly payment is less than the interest due under the participation agreement, the shortfall is accrued as interest payable.

Current wording

On July 2, 2024, we acquired legal title to two office properties through non-judicial foreclosure transactions. The underlying loan was subject to the loan participation agreement. Upon foreclosure, we are still subject to the participation payments to the third party. Such payments are based on the underlying properties’ net income before depreciation adjusted for any non-cash revenue. If the monthly payment exceeds the interest due under the participation agreement, the excess is paid to the third party and recorded as a reduction of accrued and unpaid interest first and then as a reduction of the principal. If the monthly payment is less than the interest due under the participation agreement, the shortfall is accrued as interest payable.

Previous wording

The following table details our loan participations sold as of September 30, 2024 and December 31, 2023:

Current wording

The following tables detail our loan participations sold as of March 31, 2025 and December 31, 2024:

Previous wording

During the nine months ended September 30, 2024 and 2023, we recorded $2,673 and $4,096 of interest expense related to loan participations sold, respectively.

Current wording

During the three months ended March 31, 2025 and 2024, we recorded $764 and $626 of interest expense related to loan participations sold, respectively.

Previous wording

During the nine months ended September 30, 2024 and 2023, 100% of our distributions were paid from cash flows from operating activities generated during the period.

Current wording

During the three months ended March 31, 2025, 90% of our distributions were paid from cash flows from operating activities generated during the period, and the remainder was paid using cash generated during prior periods. During the three months ended March 31, 2024, 100% of our distributions were paid from cash flows from operating activities generated during the period.