ACRES Commercial Realty Corp.

Previous wording

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "continue," "expect," "intend," "anticipate," "estimate," "believe," "look forward" or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, including, without limitation, factors impacting whether we will be able to maintain our sources of liquidity and whether we will be able to identify sufficient suitable investments to increase our originations, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission (the "SEC"). Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Current wording

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "continue," "expect," "intend," "anticipate," "estimate," "believe," "look forward" or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include:

Previous 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. Our short-term strategy is to drive book value ("BV") growth by utilizing both our NOL carryforwards of $32.1 million, which may be used over the coming years, and a portion of our net capital loss carryforwards of $115.9 million, which expire on December 31, 2025 (each balance as of September 30, 2025). 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. ("ACC," and collectively with our Manager, "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 trade tensions, geopolitical tensions, the risk of increased tariffs, inflation and elevated interest rates. 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

Since September 2024, the U.S. Federal Reserve lowered the Federal Funds rate by 1.50% in five 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.

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 direction, timing, or pace of change for future interest rates.

Previous 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 reevaluate 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 nine months ended September 30, 2025, we originated two new CRE floating-rate whole loans, with total commitments of $162.0 million, one new $15.0 million CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and funded $25.2 million of previously unfunded loan commitments. Loan payoffs and sales during the nine months ended September 30, 2025 were $318.6 million, producing a net decrease to the portfolio of $107.1 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 three months ended March 31, 2026, we originated nine new CRE floating-rate whole loans, purchased one new CRE floating-rate whole loan and purchased a participation in an existing CRE floating-rate whole loan, with total commitments of $495.6 million and funded $13.6 million of loan commitments. These increases were offset by loan payoffs and sales during the three months ended March 31, 2026 in the amount of $110.6 million and unfunded commitments of $24.2 million, producing a net increase to the portfolio of $374.4 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.

Previous wording

Our CRE loan portfolio, which had carrying values of $1.4 billion and $1.5 billion at September 30, 2025 and December 31, 2024, respectively, comprised:

Current wording

Our CRE loan portfolio, which had carrying values of $2.2 billion and $1.8 billion at March 31, 2026 and December 31, 2025, respectively, comprised:

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 September 30, 2025, we had two mezzanine loans included in CRE loans held for investment with a carrying value of $14.6 million. At December 31, 2024, 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 both September 30, 2025 and 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 both March 31, 2026 and December 31, 2025, no individual mezzanine loans were included in CRE loans held for investment on our consolidated balance sheet.

Previous wording

Preferred equity investments that are subordinate to first mortgage loans and mezzanine debt. These investments may be subject to more credit risk than subordinated debt but provide the potential for higher returns upon a liquidation of the underlying property and are typically structured to provide some credit enhancement differentiating it from the common equity in such investments. At September 30, 2025, we had one preferred equity investment included in CRE loans held for investment with a carrying value of $8.9 million. At December 31, 2024, we had no preferred equity investments included in CRE loans held for investment.

Current wording

Preferred equity investments that are subordinate to first mortgage loans and mezzanine debt. These investments may be subject to more credit risk than subordinated debt but provide the potential for higher returns upon a liquidation of the underlying property and are typically structured to provide some credit enhancement differentiating it from the common equity in such investments. At March 31, 2026 and December 31, 2025, we had one preferred equity investment included in CRE loans held for investment with a carrying value of $9.5 million and $9.2 million, respectively. We also hold the first mortgage CRE whole loan on the underlying collateral for this investment.

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. 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 September 30, 2025, 63% 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 March 31, 2026, 74% 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 September 30, 2025, our par value $1.4 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 1.25%. At December 31, 2024, our par value $1.5 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 0.97%. 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 floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the rise in interest rates resulted in an increase in our net interest income, which was offset due to the decrease in our floating-rate CRE loan portfolio. See "Interest Rate Risk" in "Item 3: Quantitative and Qualitative Disclosures About Market Risk."

Current wording

At March 31, 2026, our par-value $2.2 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 2.13%. At December 31, 2025, our par value $1.8 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 1.78%. 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 3: 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 74.6% of our portfolio allocated to multifamily at September 30, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation at carrying value by property type at September 30, 2025 and December 31, 2024:

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 81.5% of our portfolio allocated to multifamily at March 31, 2026 and 81.9% at December 31, 2025. The following charts show our portfolio allocation at carrying value by property type at March 31, 2026 and December 31, 2025:

Previous wording

At September 30, 2025, the net carrying value of our net real estate-related assets and liabilities was $143.0 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 a requirement to distribute under the REIT tax regulations. To that end, we closed on two real estate sale transactions in the past twelve months, one this quarter and one in the fourth quarter of 2024, with total proceeds of $126.8 million and generating total net gains of $20.6 million. The capital generated by these gains will be protected by our net capital loss carryforwards and will be redeployed into our CRE loan portfolio.

Current wording

At March 31, 2026, the net carrying value of our net real estate-related assets and liabilities was $106.3 million on five properties owned, two 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 debt securitization provides a 30 month reinvestment period that allows us to reinvest CRE loan payoffs and principal paydown proceeds into the securitization, pending certain eligibility criteria are met and rating agency approval is obtained. The reinvestment period expires in August 2028.

Previous 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.

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, 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 September 30, 2025, the CECL allowance on our CRE loan portfolio was $26.4 million, or 1.9% of our $1.4 billion loan portfolio. During the nine months ended September 30, 2025, we recorded a reversal of credit losses primarily attributable to improvements in the modeled credit risk of our loan portfolio and expected macroeconomic factors during the quarter.

Current 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 March 31, 2026, the CECL allowance on our CRE loan portfolio was $19.4 million, or 0.9% of our $2.2 billion loan portfolio. During the three months ended March 31, 2026, we recorded a reversal of credit losses primarily attributable to improvements in projected macroeconomic factors during the quarter, offset by an increase in the modeled credit risk of our loan portfolio.

Previous 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.

Current wording

At December 31, 2025, the CECL allowance on our CRE loan portfolio was $20.4 million, or 1.1% of our $1.8 billion loan portfolio. During the year ended December 31, 2025, we recorded a reversal of credit losses primarily driven by net improvements in the modeled credit risk of our loan portfolio as well as loan payoffs. These reversals were offset by a general decline in projected macroeconomic factors. We also recorded a charge-off of $4.7 million for one mezzanine loan that was fully reserved for in 2022.

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 September 30, 2025 of $26.4 million, or 1.9% 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 5.7% of the portfolio, at September 30, 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 74.6% at September 30, 2025.

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 March 31, 2026 of $19.4 million, or 0.9% 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, except for the charge-off noted above, the overall newer vintage of our CRE loan portfolio (with only 6.3% of the portfolio, at March 31, 2026, 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 81.5% at March 31, 2026.

Previous wording

Common stock book value was $29.63 per share at September 30, 2025, a $0.76 per share increase from December 31, 2024.

Current wording

Common stock book value was $29.98 per share at March 31, 2026, a $0.03 per share decrease from December 31, 2025.

Previous wording

The following tables analyze the change in interest income and interest expense for the comparative three and nine months ended September 30, 2025 and 2024 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):

Current wording

The following table analyzes the change in interest income and interest expense for the comparative three months ended March 31, 2026 and 2025 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):

Previous wording

Includes a decrease in fee income of $990,000 recognized on our CRE whole loans that was due to changes in volume.

Current wording

Includes a decrease in fee income of $390,000 recognized on our CRE whole loans that was due to changes in volume.

Previous wording

Net Change in Interest Income for the Comparative three and nine months ended September 30, 2025 and 2024:

Current wording

Net Change in Interest Income for the Comparative three months ended March 31, 2026 and 2025:

Previous wording

CRE whole loans. The decrease of $11.3 million and $37.3 million for the comparative three and nine months ended September 30, 2025 and 2024 was primarily attributable to a decrease in (i) total par value of our CRE portfolio resulting from loan payoffs and foreclosures and (ii) the benchmark rate over the comparative period.

Current wording

CRE whole loans. The increase of $4.3 million for the comparative three months ended March 31, 2026 and 2025 was primarily attributable to an increase in the daily average par value of our CRE portfolio resulting from loan production, offset by a decrease in the benchmark rate over the comparative period.

Previous wording

CRE mezzanine loan. The increase of $687,000 and $1.4 million for the comparative three and nine months ended September 30, 2025 and 2024 was attributable to the origination of a mezzanine loan in March 2025.

Current wording

CRE preferred equity loan. The increase of $247,000 for the comparative three months ended March 31, 2026 and 2025 was primarily attributable to the origination of a preferred equity loan in September 2025.

Previous wording

Other. The decrease of $356,000 and $1.2 million for the comparative three and nine months ended September 30, 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.

Current wording

Other. The increase of $1.2 million for the comparative three months ended March 31, 2026 and 2025, was primarily attributable to an increase in restricted cash from the close of our new CRE securitization, ACRES Commercial Realty 2026-FL4 Issuer, LLC ("ACR 2026-FL4"), and increase in yields on our interest earning money market accounts.

Previous wording

Securitized borrowings. The net decrease of $19.5 million and $49.1 million for the comparative three and nine months ended September 30, 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.

Current wording

Securitized borrowings. The net decrease of $6.8 million for the comparative three months ended March 31, 2026 and 2025, was primarily attributable to the issuance of our ACR 2026-FL4 securitization, offset by 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

Senior secured financing facility. The decrease of $158,000 and $532,000 for the comparative three and nine months ended September 30, 2025 and 2024, was primarily attributable to a decrease in the benchmark rate over the comparative periods.

Current wording

Senior secured financing facility. The decrease of $167,000 for the comparative three months ended March 31, 2026 and 2025, was primarily attributable to a decrease in borrowings and benchmark rate over the comparative periods.

Previous wording

CRE - term reinvestment financing facility. The increase of $13.3 million and $29.2 million for the comparative three and nine months ended September 30, 2025 and 2024 was attributable to the close of our new CRE term reinvestment financing facility.

Current wording

CRE - term reinvestment financing facility. The increase of $7.6 million was attributable to the close of our new CRE term reinvestment financing facility in March 2025.

Previous wording

Unsecured junior subordinated debentures. The decrease of $133,000 and $406,000 for the comparative three and nine months ended September 30, 2025 and 2024, was primarily attributable to a decrease in the benchmark rate over the comparative periods.

Current wording

Unsecured junior subordinated debentures. The decrease of $84,000 for the comparative three months ended March 31, 2026 and 2025, was primarily attributable to a decrease in the benchmark rate over the comparative periods.

Previous wording

The following tables present the average net yield and average cost of funds for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands, except amounts in footnotes):

Current wording

The following table presents the average net yield and average cost of funds for the three months ended March 31, 2026 and 2025 (dollars in thousands, except amounts in footnotes):

Previous wording

Includes fee income of $908,000 and $1.9 million recognized on our floating-rate CRE whole loans for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Includes fee income of $1.2 million and $777,000 recognized on our floating-rate CRE whole loans for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Includes amortization expense of $677,000 and $1.3 million for the three months ended September 30, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

Current wording

Includes amortization expense of $837,000 and $2.8 million for the three months ended March 31, 2026 and 2025, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

Previous wording

Includes net amortization expense of $402,000 for both the three months ended September 30, 2025 and 2024, respectively, 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.

Current wording

Includes net amortization expense of $326,000 and $393,000 for the three months ended March 31, 2026 and 2025, respectively, on 17 and 20 terminated interest rate swap agreements, respectively, 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 $772,000 and $7.9 million for the comparative three and nine months ended September 30, 2025 and 2024. The increase in the comparative three and nine months was attributed to: (i) an increase in revenues related to a student housing property that completed construction and became operational in August 2024, (ii) an increase in revenues in the comparative nine month period at two properties that we obtained in the third quarter of 2024 and (iii) an incremental increase in revenues at a hotel property due to an increase in occupancy and revenue rates for the comparative nine month period.

Current wording

Aggregate real estate income and other revenue decreased by $2.8 million for the comparative three months ended March 31, 2026 and 2025. The decrease in the comparative three months was attributed to: (i) a decrease in revenue related to a student housing property that was sold in September 2025, and (ii) a decrease in revenue at an office property that was sold in December 2025, partially offset by an increase in revenues at a hotel property in the northeast region that had increased occupancy and rates in the comparative period.

Previous wording

The following tables set forth information relating to our operating expenses for the periods presented (dollars in thousands):

Current wording

The following table sets forth information relating to our operating expenses for the periods presented (dollars in thousands):

Previous wording

Aggregate operating expenses decreased by $1.2 million for the comparative three months ended September 30, 2025 and 2024 and decreased by $2.1 million for the comparative nine months ended September 30, 2025 and 2024. We attribute the changes to the following:

Current wording

Aggregate operating expenses decreased by $3.3 million for the comparative three months ended March 31, 2026 and 2025. We attribute the changes to the following:

Previous wording

General and administrative. General and administrative expenses increased by $60,000 and $344,000 for the comparative three and nine months ended September 30, 2025 and 2024. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):

Current wording

General and administrative. General and administrative expenses decreased by $123,000 for the comparative three months ended March 31, 2026 and 2025. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):

Previous wording

Provision for credit losses. The decrease in the provision for credit losses of $3.7 million and $12.4 million for the comparative three and nine months ended September 30, 2025 and 2024 was primarily driven by net improvements in the modeled credit risk of our CRE loan portfolio compounded by a general improvement in macroeconomic factors during the quarters. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.

Current wording

Reversal of credit losses. The decrease in the reversal for credit losses of $750,000 for the comparative three months ended March 31, 2026 was primarily driven by improvements in projected macroeconomic factors during the quarter, offset by an increase in the modeled credit risk of our loan portfolio.

Previous wording

Gain on sale of real estate. The increase of $13.1 million during the comparative three and nine months ended September 30, 2025 on the sale of real estate was attributed to the sale of a property generating a one time gain of $13.1 million. There were no sales of real estate in the three and nine months ended September 30, 2024.

Current wording

Gain on sale of investment in real estate. The increase of $3.3 million for the comparative three months ended March 31, 2026 and 2025 was primarily attributed to the sale of a property generating a gain of $3.3 million in the first quarter of 2026 compared to no sales on real estate in the first quarter of 2025.

Previous wording

Our total assets were $1.7 billion and $1.9 billion at September 30, 2025 and December 31, 2024, respectively.

Current wording

Our total assets were $2.5 billion and $2.2 billion at March 31, 2026 and December 31, 2025, respectively.