ACRES Commercial Realty Corp.

Previous wording

We are a Maryland corporation and an externally managed REIT that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our “Manager”), a subsidiary of ACRES Capital Corp. (collectively, “ACRES”), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial properties in top United States (“U.S.”) markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our longer-term objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio. Our short-term strategy is to drive book value (“BV”) growth over the coming years by utilizing our NOL carryforwards and a portion of our net capital loss carryforwards. At our latest determination, which is as of our 2023 tax return filed in October 2024, we have NOL carryforwards of $32.1 million and net capital loss carryforwards of $121.9 million. By retaining future earnings, we can grow our investable base and selectively deploy the anticipated capital growth into new whole loan originations at attractive yields, which we expect will grow our earnings available for distribution.

Current wording

We are a Maryland corporation and an externally-managed real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial properties in top United States ("U.S.") markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our longer-term objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies, as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio.

Previous wording

Currently, markets are grappling with inflation and the prospect of having higher interest rates for longer than originally forecasted. These market pressures have caused continued disruption in many market segments, including the financial services, real estate and credit markets and these disruptions have affected the availability and the cost of capital. The increase in the cost of capital is expected to cause dislocations in various investment and financing markets in which we participate as we and other market participants adjust to the new financing environment.

Current wording

Currently, markets are grappling with trade tensions, geopolitical tensions, the risk of increased tariffs, inflation and labor volatility. These market pressures have caused continued disruption in many market segments, including the financial services, real estate and credit markets and these disruptions have affected the availability and the cost of capital. The increase in the cost of capital is expected to cause dislocations in various investment and financing markets in which we participate as we and other market participants adjust to the new financing environment.

Previous wording

The U.S. Federal Reserve raised the Federal Funds rate by 5.25% in 11 rate hikes between March 2022 and July 2023 to combat inflation. While the U.S Federal Reserve has lowered rates in September, November and December 2024, there is no certainty with respect to the timing and pace of potential future decreases or if such decreases will continue to occur. Interest rates may remain at or near recent highs, which creates further uncertainty for the economy and our borrowers. A rising interest rate environment generally correlates to increases in our net income. However, increases in interest rates may adversely affect our existing borrowers and could lead to nonperformance, i.e. the borrower’s inability to pay debt service. Lowering rates and decreasing costs may encourage consumer spending and accelerate corporate profit growth, which may positively impact the collateral underlying our loans and positively impact our borrowers' ability to sell or refinance in the current market.

Current wording

Since September 2024, the U.S. Federal Reserve lowered the Federal Funds rate by 1.75% in six rate cuts reaching its lowest levels since 2022. Lowering rates and decreasing costs may encourage consumer spending and accelerate corporate profit growth, which may positively impact the credit profile of the collateral underlying our loans and positively impact our borrowers' ability to sell or refinance in the current market; however, lower rates would also correlate to decreases in our net income. There is also no certainty with respect to the timing and pace of potential future decreases or if such decreases will continue to occur.

Previous wording

Additionally, the office property market continues to experience high vacancies, slower leasing activity and current tenants reevaluating their needs for physical office space due to remote-work trends across the country. These factors, coupled with inflation, historically higher interest rates and dislocations in market liquidity, have converged to create higher levels of uncertainty surrounding property values, which in turn, also negatively impact borrowers' ability and willingness to financially support and standby their investments in their office properties, their abilities to sell or refinance their positions in the current market and ultimately our financial results.

Current wording

The multifamily real estate market continues to be a competitive market, and as a result of investors' continued confidence in that asset class, the market for those assets continues to experience spread compression on newly originated deals. Furthermore, the office property market continues to experience high vacancies, slower leasing activity and current tenants reevaluating their needs for physical office space due to remote-work trends across the country. These factors, coupled with inflation, higher interest rates and dislocations in market liquidity, have converged to create higher levels of uncertainty surrounding property values, which in turn, also negatively impact borrowers' ability and willingness to financially support and standby their investments in their office properties, their abilities to sell or refinance their positions in the current market and ultimately our financial results.

Previous wording

We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the year ended December 31, 2024, we selectively originated one floating-rate CRE loan, with a total commitment of $47.9 million. Loan payoffs during the year ended December 31, 2024 were $377.6 million, along with loan foreclosures of $37.7 million, partially offset by net funded commitments of $5.9 million, producing a net decrease to the portfolio of $361.5 million.

Current wording

We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the year ended December 31, 2025, we originated 14 new CRE floating-rate whole loans, with total commitments of $733.0 million, one new $15.0 million CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and net funded commitments of $3.1 million. Loan payoffs and sales during the year ended December 31, 2025 were $418.9 million, producing a net increase to the portfolio of $341.5 million. During the year ended December 31, 2024, we selectively originated one floating-rate CRE loan, with a total commitment of $47.9 million. Loan payoffs during the year ended December 31, 2024 were $377.6 million, along with loan foreclosures of $37.7 million, partially offset by net funded commitments of $5.9 million, producing a net decrease to the portfolio of $361.5 million.

Previous wording

Our CRE loan portfolio, which had a $1.5 billion and $1.8 billion carrying value at December 31, 2024 and 2023, respectively, comprised:

Current wording

Our CRE loan portfolio, which had carrying values of $1.8 billion and $1.5 billion at December 31, 2025 and 2024, respectively, comprised:

Previous wording

First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, student housing, hospitality, office, self-storage and retail. All but two of our CRE whole loans were current on contractual payments at December 31, 2024.

Current wording

First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, student housing, hospitality, office, self-storage, mixed-use and retail. All but three of our CRE whole loans were current on contractual payments at December 31, 2025.

Previous wording

Mezzanine debt that is senior to borrower’s equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower’s equity ownership in the entity that owns the property or by a second lien mortgage on the property. At both December 31, 2024 and 2023, we had one mezzanine loan included in CRE loans held for investment that had no carrying value. This mezzanine loan was not current on contractual payments at December 31, 2024.

Current wording

Mezzanine debt that is senior to borrower’s equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower’s equity ownership in the entity that owns the property or by a second lien mortgage on the property. At December 31, 2025, no individual mezzanine loans were included in CRE loans held for investment on our consolidated balance sheet. At December 31, 2024, we had one individual mezzanine loan included in CRE loans held for investment on our consolidated balance sheet that had no carrying value.

Previous wording

While the CRE whole loans included in the CRE loan portfolio are substantially composed of floating-rate loans benchmarked to the one-month Term Secured Overnight Financing Rate ("SOFR"), asset yields are protected through the use of benchmark floors and minimum interest periods that typically range from 12 to 18 months at the time of a loan’s origination. Our benchmark floors provide asset yield protection when the benchmark rate falls below an in-place benchmark floor. Our net investment returns are enhanced by a decline in the cost of our floating-rate liabilities that do not have benchmark floors. Our net investment returns will be negatively impacted by the rising cost of our floating-rate liabilities that do not have floors until the benchmark rate is above the benchmark floor, at which point our floating-rate loans and floating-rate liabilities will be match funded, effectively locking in our net interest margin until the benchmark floor rate is activated again or the floating-rate loan is paid off or refinanced.

Current wording

While the CRE whole loans included in the CRE loan portfolio are substantially composed of floating-rate loans benchmarked to the one-month Term Secured Overnight Financing Rate ("Term SOFR"), asset yields are protected through the use of benchmark floors and minimum interest periods that typically range from 12 to 18 months at the time of a loan’s origination. Our benchmark floors provide asset yield protection when the benchmark rate falls below an in-place benchmark floor. Our net investment returns are enhanced by a decline in the cost of our floating-rate liabilities that do not have benchmark floors. Our net investment returns will be negatively impacted by the rising cost of our floating-rate liabilities that do not have floors until the benchmark rate is above the benchmark floor, at which point our floating-rate loans and floating-rate liabilities will be match-funded, effectively locking in our net interest margin until the benchmark floor rate is activated again or the floating-rate loan is paid off or refinanced.

Previous wording

In a business environment where benchmark rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. The sponsors may need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At December 31, 2024, 74.7% of the par value of our CRE loan portfolio had interest rate caps or funded debt service reserves in place with a weighted-average maturity of six months.

Current wording

In a business environment where benchmark rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In certain cases, the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At December 31, 2025, 76.5% of the par value of our CRE loan portfolio had interest rate caps or funded debt service reserves in place. Our interest rate caps have a weighted-average maturity of 15 months.

Previous wording

At December 31, 2024, our par-value $1.5 billion CRE loan portfolio had a weighted average benchmark floor of 0.97%. At December 31, 2023, our par-value $1.9 billion floating rate CRE loan portfolio, which included one whole loan without a benchmark floor, had a weighted average benchmark floor of 0.70%. With the historical trend of rising benchmark rates, we have seen the coupons on all of our floating-rate assets and debt rise accordingly. Because we have equity invested in each CRE loan, and because in all instances the benchmark rates are above our loan floors, the rise in interest rates resulted in an increase in our net interest income. See "Interest Rate Risk" in "Item 7A: Quantitative and Qualitative Disclosures About Market Risk."

Current wording

At December 31, 2025, our par-value $1.8 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 1.78%. At December 31, 2024, our par-value $1.5 billion floating rate CRE loan portfolio, which included one whole loan without a benchmark floor, had a weighted average benchmark floor of 0.97%. With the current trend of decreasing benchmark rates, we have seen the coupons on all of our floating-rate assets and debt decrease accordingly. Because we have equity invested in each floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the decrease in interest rates resulted in a decrease in our net interest income. See "Interest Rate Risk" in "Item 7A: Quantitative and Qualitative Disclosures About Market Risk."

Previous wording

Our portfolio comprises loans with a diverse array of collateral types and locations. Multifamily continues to comprise the majority of our portfolio, with 77.4% of our portfolio allocated to multifamily at December 31, 2024 and 79.6% at December 31, 2023. The following charts show our portfolio allocation by property type at December 31, 2024 and 2023:

Current wording

Our portfolio comprises loans with a diverse array of collateral types and locations. Multifamily continues to comprise the majority of our portfolio, with 81.9% of our portfolio allocated to multifamily at December 31, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation at carrying value by property type at December 31, 2025 and 2024:

Previous wording

Our properties are located throughout the U.S., with one and two National Council of Real Estate Investment Fiduciaries (“NCREIF”) regions, the Southwest at December 31, 2024 and Southwest and Southeast at December 31, 2023, in excess of 20% of the total portfolio carrying value. The following charts shows our portfolio allocation by property type at December 31, 2024 and 2023:

Current wording

Our properties are located throughout the U.S., with two and one National Council of Real Estate Investment Fiduciaries (“NCREIF”) regions, the Southwest and Southeast at December 31, 2025 and Southwest at December 31, 2024, in excess of 20% of the total portfolio carrying value. The following charts shows our portfolio allocation by property type at December 31, 2025 and 2024:

Previous wording

From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. During the first quarter of 2024, we acquired an office property located in the East North Central region via deed-in-lieu of foreclosure that, at acquisition, had a cost basis of $14.0 million and a fair value of $20.3 million. We recognized a $5.8 million net unrealized gain upon converting the CRE loan to real estate owned and immediately contributed the property into a joint venture with an unrelated third-party, seeking to maximize the property's value through a multifamily conversion. In the third quarter of 2024, we acquired a multifamily property in the Southwest region via foreclosure that, at acquisition, had a cost basis of $30.9 million. No gain or loss was recognized upon conversion of the CRE loan to real estate investment owned, and the property was immediately contributed to a joint venture with an unrelated third-party. Both of these investments are reported as investments in an unconsolidated entity on our consolidated balance sheet at December 31, 2024.

Current wording

From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. During the year ended December 31, 2025, we acquired one property via foreclosure valued at $75.8 million that was contributed to a joint venture with an unrelated third-party. During the year ended December 31, 2024, we acquired one property via deed-in-lieu of foreclosure and one property via foreclosure, valued at $20.3 million and $30.9 million, respectively, each of which was immediately contributed to joint ventures with unrelated third-parties. Each of these investments is reported as investments in an unconsolidated entity on our consolidated balance sheet at December 31, 2025.

Previous wording

Additionally, we acquired two properties via foreclosure in the third quarter of 2024 that are held as investments in real estate. The first is an office complex located in the Southwest region that, at acquisition, had a fair value of $17.5 million. We recognized a $2.8 million net unrealized gain upon converting the CRE loan to real estate owned. The second acquisition is a multi-family property located in the Southeast region with a cost basis of $9.4 million. No gain or loss occurred upon conversion of the CRE loan to real estate owned. In December 2024, we sold an office property located in the Northeast region for $20.0 million and generated a net gain on the sale of $7.5 million.

Current wording

Additionally, we acquired two properties via foreclosure during the year ended December 31, 2024 that are held as investments in real estate. These properties had values of $17.5 million and $9.4 million, at the time of foreclosure. In December 2024, we sold an office property located in the Northeast region for $20.0 million and generated a net gain on the sale of $7.5 million. During the year ended December 31, 2025, we sold two properties consisting of one student housing project in the Southeast region for $106.8 million that generated a net gain of $13.1 million and an office complex located in the Southwest region for $16.5 million that generated a net loss of $1.5 million.

Previous wording

At December 31, 2024, the total carrying value of our net real estate-related assets and liabilities was $176.6 million on seven properties owned, three of which are included in investments in real estate and four of which are included in properties held for sale on our consolidated balance sheets. The existence of net capital loss carryforwards available until December 31, 2025, allows for potential future capital gains on certain of these investments to be shielded from income taxes or there is a requirement to distribute under the REIT tax regulations.

Current wording

At December 31, 2025, the net carrying value of our net real estate-related assets and liabilities was $123.8 million on six properties owned, three of which are included in investments in real estate and three of which are included in properties held for sale on our consolidated balance sheets.

Previous wording

Each of our CRE debt securitizations initially provided for a two-year reinvestment period that allowed us to reinvest CRE loan payoffs and principal paydown proceeds into the securitizations, pending certain eligibility criteria are met and rating agency approval is obtained. The reinvestment periods on both our securitizations ended in May 2023 and December 2023, respectively.

Current wording

Our CRE - term reinvestment financing facility provides for a two-year reinvestment period that allows us to reinvest CRE loan payoffs and principal paydown proceeds into the reinvestment facility and pending certain eligibility criteria are met.

Previous wording

We reevaluate our current expected credit losses ("CECL") allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves. At December 31, 2024, the CECL allowance on our CRE loan portfolio was $32.8 million or 2.2% of our $1.5 billion loan portfolio. During the year ended December 31, 2024, we recorded a net provision for credit losses primarily driven by a general worsening macroeconomic factors over the year as well as an increase in modeled credit risk in our portfolio offset by loan payoffs. We also recorded a charge-off of $700,000 for one CRE whole loan held for sale.

Current wording

At December 31, 2024, the CECL allowance on our CRE loan portfolio was $32.8 million, or 2.2% of our $1.5 billion loan portfolio. During the year ended December 31, 2024, we recorded a net provision for credit losses primarily driven by a general worsening of macroeconomic factors over the year as well as an increase in modeled credit risk in our portfolio offset by loan payoffs. We also recorded a charge-off of $700,000 for one CRE whole loan held for sale.

Previous wording

Additionally, the decline in our CECL reserves from our highest reserve balance at June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at December 31, 2024 of $32.8 million, or 2.2% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, as well as the increased percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had the lowest credit losses of any asset class, and our percentage allocation of our CRE loan portfolio to multifamily has grown from 58.4% at June 30, 2020 to 77.4% at December 31, 2024.

Current wording

Additionally, the decline in our CECL reserves from our highest reserve balance at June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at December 31, 2025 of $20.4 million, or 1.1% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with only 4.1% of the portfolio, at December 31, 2025, being originated prior to the fourth quarter of 2020) as well as the increased percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had the lowest credit losses of any asset class, and our percentage allocation of our CRE loan portfolio to multifamily at carrying value has grown from 58.4% at June 30, 2020 to 81.9% at December 31, 2025.

Previous wording

Common stock book value was $28.87 per share at December 31, 2024, a $2.22 per share, or 8%, increase from December 31, 2023.

Current wording

Common stock book value was $30.01 per share at December 31, 2025, an increase of $1.14 per share or 4% from December 31, 2024.

Previous wording

Our net income allocable to common shares for the year ended December 31, 2024 was $9.1 million, or $1.19 per share-basic ($1.15 per share-diluted), as compared to net income allocable to common shares of $3.0 million, or $0.35 per share-basic ($0.35 per share-diluted), for the year ended December 31, 2023.

Current wording

Our net income allocable to common shares for the year ended December 31, 2025 was $239,000, or $0.03 per share-basic ($0.03 per share-diluted), as compared to net income allocable to common shares of $9.1 million, or $1.19 per share-basic ($1.15 per share-diluted), for the year ended December 31, 2024.

Previous wording

Includes a decrease in fee income of $1.4 million recognized on our CRE whole loans that was due to changes in volume.

Current wording

Includes a decrease in fee income of $2.4 million recognized on our CRE whole loans that was due to changes in volume.

Previous wording

Aggregate interest income decreased by $30.2 million for the comparative years ended December 31, 2024 and 2023. We attribute the change to the following:

Current wording

Aggregate interest income decreased by $38.1 million for the comparative years ended December 31, 2025 and 2024. We attribute the change to the following:

Previous wording

CRE whole loans. The decrease of $29.5 million for the comparative years ended December 31, 2024 and 2023 was primarily attributable to a decrease in total par value of our CRE portfolio resulting from loan payoffs and foreclosures.

Current wording

CRE whole loans. The decrease of $38.7 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in (i) the daily average par value of our CRE portfolio resulting from loan payoffs and foreclosures and (ii) the benchmark rate over the comparative periods.

Previous wording

Other. The decrease of $732,000 for the comparative years ended December 31, 2024 and 2023 was primarily attributable to a decrease in restricted cash in our CRE securitizations, offset, in part, by an increase in yields on our interest earning money market accounts.

Current wording

Other. The decrease of $1.4 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in (i) restricted cash in our CRE securitizations and (ii) yields on our interest earning money market accounts.

Previous wording

Aggregate interest expense decreased by $14.7 million for the comparative years ended December 31, 2024 and 2023. We attribute the change to the following:

Current wording

Aggregate interest expense decreased by $30.2 million for the comparative years ended December 31, 2025 and 2024. We attribute the change to the following:

Previous wording

Securitized borrowings. The net decrease of $7.8 million for the comparative years ended December 31, 2024 and 2023 was primarily attributable to paydowns on our borrowings, offset, in part, by an increase in the weighted average spread and benchmark rate over the comparative periods.

Current wording

Securitized borrowings. The net decrease of $66.1 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to the redemptions of our ACR 2021-FL1 and ACR 2021-FL2 securitizations and a decrease in the benchmark rate over the comparative periods.

Previous wording

CRE - term warehouse financing facilities. The decrease of $7.6 million for the comparative years ended December 31, 2024 and 2023 was primarily attributable to paydowns on our borrowings offset, in part, by an increase in the benchmark rate over the comparative periods.

Current wording

CRE - term warehouse financing facilities. The decrease of $3.9 million for the comparative years ended December 31, 2025 and 2024 was primarily attributable to a decrease in the benchmark rate over the comparative periods and paydowns on our borrowings.

Previous wording

Unsecured junior subordinated debentures. The increase of $99,000 for the comparative years ended December 31, 2024 and 2023 was attributable to an increase in benchmark rates over the comparative periods.

Current wording

Unsecured junior subordinated debentures. The decrease of $499,000 for the comparative years ended December 31, 2025 and 2024 was attributable to a decrease in benchmark rates over the comparative periods.

Previous wording

Includes fee income of $6.6 million and $8.0 million recognized on our CRE whole loans for the years ended December 31, 2024 and 2023, respectively.

Current wording

Includes fee income of $4.2 million and $6.6 million recognized on our floating-rate CRE whole loans for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Includes amortization expense of $5.3 million for each of the years ended December 31, 2024 and 2023 on our interest-bearing liabilities collateralized by CRE whole loans.

Current wording

Includes amortization expense of $4.8 million and $5.3 million for the years ended December 31, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

Previous wording

Includes net amortization expense of $1.6 million for each of the years ended December 31, 2024 and 2023 on 20 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be amortized as an expense over the remaining life of the debt.

Current wording

Includes net amortization expense of $1.6 million for each of the years ended December 31, 2025 and 2024 on 20 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.

Previous wording

Aggregate real estate income and other revenue increased by $7.9 million for the comparative years ended December 31, 2024 and 2023. The increase year over year is attributed to: (i) incremental increase in revenues from the acquisition of an office building through deed-in-lieu of foreclosure in June 2023, and asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through foreclosures, (ii) increased revenues from a hotel property that had increased occupancy and rental rates for the comparative periods and (iii) an increase in revenue related to a student housing property that completed construction and became operational in August 2024.

Current wording

Aggregate real estate income and other revenue increased by $4.4 million for the comparative years ended December 31, 2025 and 2024. The increase year over year is attributed to: (i) incremental increase in revenues from the asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through foreclosures, (ii) increased revenues from a hotel property that had increased average daily rates for the comparative periods and (iii) an increase in revenue related to a student housing property that completed construction and became operational in August 2024. This was partially offset by a decrease in revenues from a hotel property that had decreased average daily rates for the comparative periods.

Previous wording

Aggregate operating expenses increased by $1.4 million for the comparative years ended December 31, 2024 and 2023. We attribute the changes to the following:

Current wording

Aggregate operating expenses decreased by $8.4 million for the comparative years ended December 31, 2025 and 2024. We attribute the changes to the following:

Previous wording

General and administrative. General and administrative expenses increased by $179,000 for the comparative years ended December 31, 2024 and 2023. The following table summarizes the information relating to our general and administrative expenses for the years presented (dollars in thousands):

Current wording

General and administrative. General and administrative expenses increased by $613,000 for the comparative years ended December 31, 2025 and 2024. The following table summarizes the information relating to our general and administrative expenses for the years presented (dollars in thousands):

Previous wording

Real estate expenses. The increase of $8.0 million for the comparative years ended December 31, 2024 and 2023 was primarily related to (i) an increase in expenses related to a student housing property that completed construction and became operational in August 2024, (ii) an incremental increase in expenses from the acquisition of an office building through deed-in-lieu of foreclosure in June 2023, and asset acquisitions in the third quarter of 2024 of a multifamily property and an office property each through deed-in-lieu of foreclosure and (iii) an increase in expenses at a hotel property that had increased taxes, lease amortization and an incremental increase in operating expenses.

Current wording

Real estate expenses. The increase of $4.4 million for the comparative years ended December 31, 2025 and 2024 was primarily related to (i) an increase in expenses related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property each through deed-in-lieu of foreclosure and (iii) an increase in expenses at a hotel property that had an incremental increase in operating expenses. This was partially offset by (i) a sale of an office property in December 2024 that had no operations in 2025 and (ii) an incremental decrease in operating expenses related to a hotel property with lower occupancy.

Previous wording

Provision for credit losses, net. The provision for credit losses was $4.8 million for the year ended December 31, 2024 compared to the provision for credit losses of $10.9 million for the year ended December 31, 2023. The decrease of the provision year over year is primarily driven by payoffs offset by an increase in reserves from macroeconomic factors and modeled credit risk related to property performance. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.

Current wording

(Reversal of) provision for credit losses, net. The decrease of $12.5 million for the comparative years ended December 31, 2025 and 2024 was primarily driven by net improvements in the modeled credit risk of our CRE loan portfolio as well as payoffs, offset by a general decline in projected macroeconomic factors during the periods. We also recorded a $4.7 million charge-off as of December 31, 2025. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.

Previous wording

The following table sets forth information relating to our other income (expense) for the years presented (dollars in thousands):

Current wording

The following table sets forth information relating to our other income (expense) incurred for the years presented (dollars in thousands):

Previous wording

Gain on conversion of real estate. The increase of $8.6 million during the twelve months ended December 31, 2024, was primarily attributed to the completion of two foreclosures that generated non-recurring unrealized gains of $5.8 million, in the first quarter of 2024, and $2.8 million, in the third quarter of 2024, as the fair value of both properties exceeded the amortized cost basis of the loans at the time of foreclosure.

Current wording

Gain on conversion of real estate. The decrease of $8.6 million for the comparative years ended December 31, 2025 and 2024 was primarily attributed to the completion of two foreclosures that generated non-recurring unrealized gains of $5.8 million, in the first quarter of 2024, and $2.8 million, in the third quarter of 2024, as the fair value of both properties exceeded the amortized cost basis of the loans at the time of foreclosure. There were no gains on conversion of real estate during the year ended December 31, 2025.

Previous wording

Gain on sale of real estate. The increase of $6.8 million during the year ended December 31, 2024 was primarily attributed to the sale of an office property in the Northeast region during the year ended December 31, 2024 that generated a non-recurring gain of $7.5 million compared to the sale of a hotel property in the Northeast region in February 2023 that generated a non-recurring gain of $745,000.

Current wording

Gain on sale of real estate. The increase of $4.2 million for the comparative years ended December 31, 2025 and 2024 was primarily attributed to the sale of a property generating a one time gain of $13.1 million which was offset by a one time loss of $1.5 million on a sale of a property in December 2025, compared to the sale of an office property in the Northeast region during the year ended December 31, 2024 that generated a non-recurring gain of $7.5 million.