Claros Mortgage Trust, Inc.
For the period ended Jun 30, 2026. Filed Jul 29, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 29, 2026
CMTG$1.64-4.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001193125-26-208946
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-29.
0001193125-26-323733
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 221 previous paragraphs and 235 current paragraphs.
139 unchanged; 72 reworded; 23 added; 7 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 25 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
For the three months ended June 30, 2026 and three months ended March 31, 2026, amount excludes 7,542,227 and 5,111,954 of weighted average warrants, respectively, as the exercise price of $4.00 per share exceeded the average closing share price of our common stock.
Current report
Reflects previously recognized depreciation and amortization on (i) our mixed-use real estate owned asset and (ii) one of our multifamily real estate owned assets upon reclassification of the respective assets to held-for-sale during the three months ended June 30, 2026. Amounts recorded were not previously recognized in Distributable Earnings (Loss).
Current report
Net of specific CECL reserves of $516.8 million.
Current report
Net of specific CECL reserves of $516.8 million.
Current report
In July 2026, this loan was repaid in full.
Current report
In July 2026, this loan was repaid in accordance with the terms of the discounted payoff agreement with the borrower. See Note 3 - Loan Portfolio - Loan Modifications to our consolidated financial statements for further detail.
Current report
Subsequent to June 30, 2026, we resolved $409.5 million of unpaid principal balance prior to charge-offs, including $186.4 million of watchlist loans. Such resolutions included (i) $223.1 million of full loan repayments, (ii) a $111.5 million loan sale below par, and (iii) a $74.9 million discounted loan payoff.
Current report
In July 2026, this loan was repaid in accordance with the terms of the discounted payoff agreement with the borrower. See Note 3 - Loan Portfolio - Loan Modifications to our consolidated financial statements for further detail.
Current report
Gain on Sale of Real Estate Owned
Current report
During the three months ended March 31, 2026, we recognized a $5.9 million loss on extinguishment of debt in connection with the refinancing of our prior secured term loan. There were no such losses recognized during the three months ended June 30, 2026.
Current report
Valuation Adjustment for Real Estate Owned Held-for-Sale
Current report
As of June 30, 2026 we determined that our mixed-use real estate owned asset and one of our multifamily real estate owned assets met the held-for-sale criteria. As a result, we reclassified these assets to real estate owned held-for-sale and recognized a $29.6 million loss through our valuation adjustment for real estate owned held-for-sale based upon anticipated sales price, less estimated costs to sell, and the carrying values of the assets (including related net lease intangible assets and deferred leasing costs) prior to reclassification. No such valuation adjustments were made during the three months ended March 31, 2026.
Current report
During the three months ended June 30, 2026, we recorded a provision for current expected credit losses of $208.8 million, which consisted of $211.6 million of additional provision for our specific CECL reserves and $0.5 million of additional provision for our general CECL reserves, offset in part by a $3.2 million reversal of our CECL reserves on accrued interest receivable. The additional provision for our specific CECL reserves is primarily attributable to specific reserves determined on loans now classified as risk rated 5, changes to collateral values, protective advances made on certain loans, and additional provision for a loan that was reclassified as held-for-sale. The additional provision for our general CECL reserves is primarily attributable to changes in expected remaining duration within our loan portfolio, offset in part by a reduction in the size of our loan portfolio subject to determination of the general CECL reserve, seasoning of our loan portfolio, and changes in the historical loss rate of the analogous data set. The reversal of our CECL reserves on accrued interest receivable is attributable to the collection of previously reserved past-due interest on loans that remain on non-accrual status.
Current report
Recovery of Principal Charge-Offs
Current report
During the three months ended June 30, 2026, we recorded a recovery of principal charge-offs of $1.9 million related to a loan sale completed in 2023, where concurrent with the sale, our TRS entered into an agreement with the transferee which provides for a share of cash flows upon the transferee achieving certain financial metrics. In May 2026, the transferee achieved the necessary financial metrics, and under the terms of such agreement, our TRS received $1.9 million. There were no such recoveries recognized during the three months ended March 31, 2026.
Current report
Results of Operations – Six Months Ended June 30, 2026 and June 30, 2025
Current report
Comparison of the six months ended June 30, 2026 and June 30, 2025
Current report
Gain (Loss) on Sales of Real Estate Owned
Current report
During the six months ended June 30, 2026, we sold a multifamily property located in Dallas, TX to an unaffiliated purchaser, which resulted in a gain on sale of $0.3 million. During the six months ended June 30, 2025 we sold five floors of primarily office space in our mixed-use property to an unaffiliated purchaser which resulted in a loss on sale of $1.6 million.
Current report
Valuation Adjustment for Real Estate Owned Held-For-Sale
Current report
During the six months ended June 30, 2025, we recorded a provision for current expected credit losses of $230.6 million, which consisted of $11.5 million of additional provision for our general CECL reserves, $184.6 million of additional provision for our specific CECL reserves, and $34.5 million of additional provision for our CECL reserves on accrued interest receivable. The additional provision for our general CECL reserves was primarily attributable to changes in the historical loss rate of the analogous data set and changes in risk ratings, non-accrual status, and expected remaining duration within our loan portfolio, offset in part by the seasoning of our loan portfolio and a reduction in the size of our loan portfolio subject to determination of the general CECL reserve. The additional provision for our specific CECL reserves was primarily attributable to specific reserves determined on loans then newly classified as risk rated 5, changes to collateral values, and protective advances made. The additional provision for our CECL reserves on accrued interest receivable was attributable to reserving against interest income previously recognized on loans placed on non-accrual status during such period.
Current report
Recovery of Principal Charge-Offs
Current report
During the six months ended June 30, 2026, we recorded a recovery of principal charge-offs of $1.9 million related to a loan sale completed in 2023, where concurrent with the sale, our TRS entered into an agreement with the transferee which provides for a share of cash flows upon the transferee achieving certain financial metrics. In May 2026, the transferee achieved the necessary financial metrics, and under the terms of such agreement, our TRS received $1.9 million. There were no such recoveries recognized during the six months ended June 30, 2025.
Removed paragraphs (7)
Previous report
Net of specific CECL reserves of $348.8 million.
Previous report
Net of specific CECL reserves of $348.8 million.
Previous report
Represents two multifamily properties which previously represented the collateral property for one loan receivable. In May 2026, we entered into a binding agreement to sell one of the multifamily properties to an unaffiliated purchaser for a gross sales price of $48.0 million. As of March 31, 2026, the individual property’s carrying value was $46.8 million, inclusive of lease intangible assets.
Previous report
partially offset by an increase in depreciation and amortization from real estate owned of $0.7 million due to depreciation and amortization expense recognized relating to the multifamily property we foreclosed on during the three months ended March 31, 2026.
Previous report
Loss on Partial Sales of Real Estate Owned, Net
Previous report
During the three months ended March 31, 2026 and December 31, 2025, we recognized losses on extinguishment of debt of $5.9 million and $0.8 million, respectively, relating to the accelerated recognition of unamortized deferred financing costs resulting from the repayment of financing balances prior to maturity. The loss on extinguishment of debt incurred during the three months ended March 31, 2026 was in connection with the refinancing of our prior secured term loan; the loss on extinguishment of debt incurred during the three months ended December 31, 2025 was in connection with a $150.0 million partial repayment of our prior secured term loan as part of a modification to its terms.
Previous report
Loss on Real Estate Owned, Held-for-Sale
Reworded paragraphs (72)
Previous wording
As a CRE finance company, we believe the key financial measures and indicators for our business are net income (loss) per share, Distributable Earnings (Loss) per share, Distributable Earnings (Loss) per share prior to realized gains and losses, which such gains and losses includes charge-offs of principal, accrued interest receivable, and/or exit fees, dividends declared per share, book value per share, adjusted book value per share, Net Debt-to-Equity Ratio and Total Leverage Ratio. During the three months ended March 31, 2026, we had net loss per share of $0.39, Diluted Distributable Loss per share of $0.52, Diluted Distributable Loss per share prior to realized losses of $0.05, and our Board did not declare any dividends. As of March 31, 2026, our book value per share was $10.33, our adjusted book value per share was $10.83, our Net Debt-to-Equity Ratio was 1.7x, and our Total Leverage Ratio was 2.2x. We use Net Debt-to-Equity Ratio and Total Leverage Ratio, financial measures which are not prepared in accordance with GAAP, to evaluate our financial leverage, which in the case of our Total Leverage Ratio, makes certain adjustments that we believe provide a more conservative measure of our financial condition.
Current wording
As a CRE finance company, we believe the key financial measures and indicators for our business are net income (loss) per share, Distributable Earnings (Loss) per share, Distributable Earnings (Loss) per share prior to realized gains and losses, which such gains and losses include charge-offs of principal, accrued interest receivable, and/or exit fees, dividends declared per share, book value per share, adjusted book value per share, Net Debt-to-Equity Ratio and Total Leverage Ratio. During the three months ended June 30, 2026, we had net loss per share of $1.81, Diluted Distributable Loss per share of $0.63, Diluted Distributable Loss per share prior to realized gains and losses of $0.07, and our Board did not declare any dividends. As of June 30, 2026, our book value per share was $8.58, our adjusted book value per share was $9.06, our Net Debt-to-Equity Ratio was 2.0x, and our Total Leverage Ratio was 2.7x. We use Net Debt-to-Equity Ratio and Total Leverage Ratio, financial measures which are not prepared in accordance with GAAP, to evaluate our financial leverage, which in the case of our Total Leverage Ratio, makes certain adjustments that we believe provide a more conservative measure of our financial condition.
Previous wording
On December 16, 2024, our Board paused our quarterly dividend on our common stock commencing with the fourth quarter dividend that would have otherwise been paid in January 2025. Such action was taken to preserve capital and create added financial flexibility for capital allocation decisions, including to effectuate the refinancing of our prior secured term loan and reduce leverage on other financings, with the objective of enhancing stockholder value over the long-term. The timing and amount of any future dividends declared by our Board depend on a variety of factors, including cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code, and such other factors as our Board deems relevant.
Current wording
During the six months ended June 30, 2026 and the year ended December 31, 2025, our Board did not declare any dividends. The timing and amount of any future dividends declared by our Board depend on a variety of factors, including cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code, and such other factors as our Board deems relevant. We may use net operating losses carried forward to offset future net taxable income, and therefore reduce our dividend requirements, subject to certain limitations as prescribed by the Internal Revenue Code which may change from time-to-time.
Previous wording
Distributable Earnings (Loss) is a non-GAAP measure used to evaluate our performance excluding the effects of certain transactions, non-cash items and GAAP adjustments, as determined by our Manager. Distributable Earnings (Loss) is a non-GAAP measure, which we define as net income (loss) in accordance with GAAP, excluding (i) non-cash stock-based compensation expense, (ii) real estate owned held-for-investment depreciation and amortization, (iii) any unrealized gains or losses from mark-to-market valuation changes (other than permanent impairments) that are included in net income (loss) for the applicable period, (iv) one-time events pursuant to changes in GAAP and (v) certain non-cash items, which in the judgment of our Manager, should not be included in Distributable Earnings (Loss). Furthermore, we present Distributable Earnings (Loss) prior to realized gains and losses, which such gains and losses include charge-offs of principal, accrued interest receivable, and/or exit fees, as we believe this more easily allows our Board, Manager, and investors to compare our operating performance to our peers, to assess our ability to declare and pay dividends, and to determine our compliance with certain financial covenants. Pursuant to the Management Agreement, we use Core Earnings, which is substantially the same as Distributable Earnings (Loss) excluding incentive fees, to determine the incentive fees we pay our Manager.
Current wording
Distributable Earnings (Loss) is a non-GAAP measure used to evaluate our performance excluding the effects of certain transactions, non-cash items and GAAP adjustments, as determined by our Manager. Distributable Earnings (Loss) is a non-GAAP measure, which we define as net income (loss) in accordance with GAAP, excluding (i) non-cash stock-based compensation expense, (ii) real estate owned held-for-investment depreciation and amortization, (iii) any unrealized gains or losses from mark-to-market valuation changes (other than permanent impairments) that are included in net income (loss) for the applicable period, (iv) one-time events pursuant to changes in GAAP and (v) certain non-cash items, which in the judgment of our Manager, should not be included in Distributable Earnings (Loss). For both the Company’s entire portfolio and its real estate owned assets, we present Distributable Earnings (Loss) prior to realized gains and losses, which such gains and losses include, as applicable, (i) charge-offs and recoveries of principal, accrued interest receivable, and/or exit fees and (ii) gains, losses, and components thereof recognized in connection with real estate owned assets, as we believe this more easily allows our Board, Manager, and investors to compare our operating performance to our peers, to assess our ability to declare and pay dividends, and to determine our compliance with certain financial covenants. Pursuant to the Management Agreement, we use Core Earnings, which is substantially the same as Distributable Earnings (Loss) excluding incentive fees, to determine the incentive fees we pay our Manager.
Previous wording
While Distributable Earnings (Loss) excludes the impact of our provision for or reversal of current expected credit loss reserve, charge-offs of principal, accrued interest receivable, and/or exit fees are recognized through Distributable Earnings (Loss) when deemed non-recoverable. Non-recoverability is determined (i) upon the resolution of a loan (i.e., when the loan is repaid, fully or partially, when we acquire title in the case of foreclosure, deed-in-lieu of foreclosure, or assignment-in-lieu of foreclosure, or when the loan is sold or anticipated to be sold for an amount less than its carrying value), or (ii) with respect to any amount due under any loan, when such amount is determined to be uncollectible.
Current wording
While Distributable Earnings (Loss) excludes the impact of our provision for or reversal of current expected credit loss reserve, charge-offs of principal, accrued interest receivable, exit fees, and gains, losses, and components thereof in connection with real estate owned assets are recognized through Distributable Earnings (Loss) when deemed non-recoverable and/or recognized. Non-recoverability is determined (i) upon the resolution of a loan (i.e., when the loan is repaid, fully or partially, when we acquire title in the case of foreclosure, deed-in-lieu of foreclosure, or assignment-in-lieu of foreclosure, or when the loan is sold or anticipated to be sold for an amount less than its carrying value), or (ii) with respect to any amount due under any loan, when such amount is determined to be uncollectible.
Previous wording
For the three months ended March 31, 2026, amount includes a $12.9 million charge-off of accrued interest receivable and a $0.3 million charge-off of an exit fee related to the sale of a hospitality loan in March 2026. For the three months ended December 31, 2025, amount includes a $16.9 million charge-off of accrued interest receivable related to the foreclosure on a land parcel in December 2025 and the mortgage foreclosure of a multifamily property in January 2026.
Current wording
For the three months ended June 30, 2026, amount includes a $0.4 million charge-off of accrued interest receivable related to the mortgage foreclosure on a multifamily property in May 2026. For the three months ended March 31, 2026, amount includes a $12.9 million charge-off of accrued interest receivable and a $0.3 million charge-off of an exit fee related to the sale of a hospitality loan in March 2026.
Previous wording
For the three months ended December 31, 2025, amounts reflect previously recognized depreciation and amortization on the portions of our mixed-use real estate owned asset that were sold. Amounts not previously recognized in Distributable Earnings (Loss).
Current wording
Reflects previously recognized depreciation and amortization on the multifamily real estate owned asset that was sold during the three months ended June 30, 2026. Amounts recorded were not previously recognized in Distributable Earnings (Loss).
Previous wording
We believe that presenting book value per share adjusted for our general current expected credit loss reserve and accumulated depreciation and amortization on our real estate owned held-for-investment is useful for investors as it enhances the comparability to our peers who may not hold real estate investments. Further, we believe that our investors and lenders consider book value excluding these items as an important metric related to our overall capitalization.
Current wording
We believe that presenting book value per share adjusted for accumulated depreciation and amortization on our real estate owned held-for-investment and our general CECL reserve is useful for investors as it enhances the comparability to our peers who may not hold real estate investments and excludes the impact of our general CECL reserve, which may fluctuate from quarter-to-quarter as the composition and size of our loan portfolio varies. Further, we believe that our investors and lenders consider book value excluding these items as an important metric related to our overall capitalization.
Previous wording
Origination LTV represents “loan-to-value” or “loan-to-cost,” which is calculated as our total loan commitment upon origination, as if fully funded, plus any financings that are pari passu with or senior to our loan, divided by our estimate of either (1) the value of the underlying real estate, determined in accordance with our underwriting process (typically consistent with, if not less than, the value set forth in a third-party appraisal) or (2) the borrower’s projected, fully funded cost basis in the asset, in each case as we deem appropriate for the relevant loan and other loans with similar characteristics. Underwritten values and projected costs should not be assumed to reflect our judgment of current market values or project costs, which may have changed materially since the date of origination. Weighted average origination LTV of 72.3% is based on loan commitment, including non-consolidated senior interests and pari passu interests, and excludes risk rated 5 loans.
Current wording
Origination LTV represents “loan-to-value” or “loan-to-cost,” which is calculated as our total loan commitment upon origination, as if fully funded, plus any financings that are pari passu with or senior to our loan, divided by our estimate of either (1) the value of the underlying real estate, determined in accordance with our underwriting process (typically consistent with, if not less than, the value set forth in a third-party appraisal) or (2) the borrower’s projected, fully funded cost basis in the asset, in each case as we deem appropriate for the relevant loan and other loans with similar characteristics. Underwritten values and projected costs should not be assumed to reflect our judgment of current market values or project costs, which may have changed materially since the date of origination. Weighted average origination LTV of 73.3% is based on loan commitment, including non-consolidated senior interests and pari passu interests, and excludes risk rated 5 loans.
Previous wording
During the three months ended March 31, 2026, we resolved $608.8 million of unpaid principal balance prior to charge-offs, including $434.9 million of watchlist loans, and received $4.0 million of partial loan repayments. Such resolutions included (i) $240.8 million of full loan repayments, (ii) $220.0 million of loan sales below par, (iii) $76.6 million of mortgage foreclosures prior to charge-offs, and (iv) $71.4 million related to the assignment of our right, title, and interest in a loan receivable and the collateral property to our financing counterparty in exchange for the full extinguishment of amounts due under the related financing. Subsequent to March 31, 2026, we resolved a watchlist loan with $25.4 million of unpaid principal balance prior to charge-offs through a mortgage foreclosure and received $8.0 million of partial loan repayments.
Current wording
During the three months ended June 30, 2026, we resolved $25.4 million of unpaid principal balance prior to charge-offs through a mortgage foreclosure and received $20.9 million of partial loan repayments. During the six months ended June 30, 2026, we resolved $634.2 million of unpaid principal balance prior to charge-offs, including $460.3 million of watchlist loans, and received $24.8 million of partial loan repayments. Such resolutions included (i) $240.8 million of full loan repayments, (ii) a $220.0 million loan sale below par, (iii) $102.0 million of mortgage foreclosures prior to charge-offs, and (iv) $71.4 million related to the assignment of our right, title, and interest in a loan receivable and the collateral property to our financing counterparty in exchange for full extinguishment of amounts due under the related financing.
Previous wording
To maximize recovery from certain defaulted loans, we have assumed legal title and/or physical possession of the collateral property underlying such loan receivables. As of March 31, 2026, our portfolio includes nine real estate owned assets with a total carrying value of $780.2 million (including related net lease intangible assets and deferred leasing costs), of which one was acquired through a mortgage foreclosure during the quarter ended March 31, 2026. Such real estate owned assets are not included in the summary of our loan portfolio table above. The following table details the carrying value of each of our real estate owned held-for-investment assets reflected on our consolidated balance sheet as of March 31, 2026 ($ in thousands):
Current wording
To maximize recovery from certain defaulted loans, we have assumed legal title and/or physical possession of the collateral property underlying such loan receivables. As of June 30, 2026, our portfolio includes nine real estate owned assets with a total carrying value of $723.7 million (including related net lease intangible assets and deferred leasing costs), of which one was acquired through a mortgage foreclosure during the quarter ended June 30, 2026. Such real estate owned assets are not included in the summary of our loan portfolio table above. The following table details the carrying value of each of our real estate owned assets reflected on our consolidated balance sheet as of June 30, 2026 ($ in thousands):
Previous wording
Amounts included in other assets or other liabilities on our consolidated balance sheet.
Current wording
Amounts included in other assets or other liabilities on our consolidated balance sheets.
Previous wording
The following table presents detail related to changes in our real estate owned held-for-investment, net, during the three months ended March 31, 2026 ($ in thousands):
Current wording
The following table presents detail related to changes in our real estate owned held-for-investment, net, during the six months ended June 30, 2026 ($ in thousands):
Previous wording
Fair values of collateral assets used to determine the initial estimated fair value of real estate owned are calculated using a discounted cash flow model, a sales comparison approach, or a market capitalization approach. Estimates of fair values used to determine real estate owned upon acquisition may include, among others, assumptions of property specific cash flows over estimated holding periods, assumptions of property redevelopment costs, assumptions of leasing activities, discount rates, market and terminal capitalization rates, and, with respect to land, value per buildable square foot. These assumptions are based upon the nature of the properties, recent and projected property cash flows, recent sales and lease comparables, and anticipated real estate and capital market conditions, among other factors which we may deem relevant. Estimates of fair values used to determine real estate owned upon acquisition during the three months ended March 31, 2026 include assumptions of a market capitalization rate of 5.75% and a discount rate of 8.00%.
Current wording
Fair values of collateral assets used to determine the initial estimated fair value of real estate owned are calculated using a discounted cash flow model, a sales comparison approach, or a market capitalization approach. Estimates of fair values used to determine real estate owned upon acquisition may include, among others, assumptions of property specific cash flows over estimated holding periods, assumptions of property redevelopment costs, assumptions of leasing activities, discount rates, market and terminal capitalization rates, and, with respect to land, value per buildable square foot. These assumptions are based upon the nature of the properties, recent and projected property cash flows, recent sales and lease comparables, and anticipated real estate and capital market conditions, among other factors which we may deem relevant. Estimates of fair values used to determine real estate owned upon acquisition during the six months ended June 30, 2026 include assumptions of a market capitalization rate ranging from 5.00% to 5.75% and a discount rate of 8.00%.
Previous wording
Our Manager evaluates the credit quality of each of our loans receivable on an individual basis and assigns a risk rating at least quarterly. We have developed a loan grading system for all of our outstanding loans receivable that are collateralized directly or indirectly by real estate. Grading criteria include, but are not limited to, as-is or as-stabilized debt yield, term of loan, property type, property or collateral location, loan type, structure, collateral cash flow volatility and other more subjective variables that include, but are not limited to, as-is or as-stabilized collateral value, market conditions, industry conditions, borrower/sponsor financial stability, and borrower/sponsor exit plan. While evaluating the credit quality of each loan within our portfolio, we assess these quantitative and qualitative factors as a whole and with no pre-prescribed weight on their impact to our determination of a loan’s risk rating. However, based upon the facts and circumstances for each loan and the overall market conditions, we may consider certain previously mentioned factors more or less relevant than others. We utilize the grading system to determine each loan’s risk of loss and to provide a determination as to whether an individual loan is impaired and whether a specific CECL reserve is necessary. Based on a 5-point scale, the loans are graded “1” through “5,” from less risk to greater risk, respectively. The weighted average risk rating of our loans receivable held-for-investment portfolio was 3.7 as of March 31, 2026, weighted by carrying value net of specific CECL reserves.
Current wording
Our Manager evaluates the credit quality of each of our loans receivable on an individual basis and assigns a risk rating at least quarterly. We have developed a loan grading system for all of our outstanding loans receivable that are collateralized directly or indirectly by real estate. Grading criteria include, but are not limited to, as-is or as-stabilized debt yield, term of loan, property type, property or collateral location, loan type, structure, collateral cash flow volatility and other more subjective variables that include, but are not limited to, as-is or as-stabilized collateral value, market conditions, industry conditions, borrower/sponsor financial stability, and borrower/sponsor exit plan. While evaluating the credit quality of each loan within our portfolio, we assess these quantitative and qualitative factors as a whole and with no pre-prescribed weight on their impact to our determination of a loan’s risk rating. However, based upon the facts and circumstances for each loan and the overall market conditions, we may consider certain previously mentioned factors more or less relevant than others. We utilize the grading system to determine each loan’s risk of loss and to provide a determination as to whether an individual loan is impaired and whether a specific CECL reserve is necessary. Based on a 5-point scale, the loans are graded “1” through “5,” from less risk to greater risk, respectively. The weighted average risk rating of our loans receivable held-for-investment portfolio was 3.8 as of June 30, 2026, weighted by carrying value net of specific CECL reserves.
Previous wording
The current expected credit loss reserve required under GAAP reflects our current estimate of potential credit losses related to our loan portfolio, which may fluctuate depending on market conditions and changes in our loan portfolio. See Note 2 to our consolidated financial statements for further detail of our current expected credit loss reserve methodology. The following table illustrates the changes in the current expected credit loss reserve for our loans receivable held-for-investment for the three months ended March 31, 2026 and 2025 ($ in thousands):
Current wording
The current expected credit loss reserve required under GAAP reflects our current estimate of potential credit losses related to our loan portfolio, which may fluctuate depending on market conditions and changes in our loan portfolio. See Note 2 to our consolidated financial statements for further detail of our current expected credit loss reserve methodology. The following table illustrates the changes in the current expected credit loss reserve for our loans receivable held-for-investment for the six months ended June 30, 2026 and 2025 ($ in thousands):
Previous wording
CECL reserves for accrued interest receivable, if any, are included in other assets on our consolidated balance sheets.
Current wording
CECL reserves for accrued interest receivable are included in other assets on our consolidated balance sheets.
Previous wording
In certain circumstances, we may determine that a borrower is experiencing financial difficulty, and, if the repayment of the loan’s principal is collateral dependent, the loan is no longer suited for the WARM model. In these instances, there have been diminutions in the fair value and performance of the collateral property primarily as a result of reduced tenant and/or capital markets demand for such property types in the markets in which these assets and borrowers operate. For such loans, we seek resolutions through a variety of means including, but not limited to, foreclosures on the collateral asset, sales of our loan receivable, and discounted repayments. If we anticipate assuming legal title and/or physical possession of the collateral property and the fair value of the collateral property is determined to be below the carrying value of our loan, we may recognize a specific CECL reserve. Furthermore, in certain circumstances, we may recognize a specific CECL reserve based upon anticipated proceeds from the disposition of our loan. The following table presents a summary of our risk rated 5 loans receivable held-for-investment as of March 31, 2026 ($ in thousands):
Current wording
In certain circumstances, we may determine that a borrower is experiencing financial difficulty, and, if the repayment of the loan’s principal is collateral dependent, the loan is no longer suited for the WARM method. In these instances, there have been diminutions in the fair value and performance of the collateral property primarily as a result of reduced tenant and/or capital markets demand for such property types in the markets in which these assets and borrowers operate. For such loans, we seek resolutions through a variety of means including, but not limited to, foreclosures on the collateral asset, sales of our loan receivable, and discounted loan payoffs. If we anticipate assuming legal title and/or physical possession of the collateral property and the fair value of the collateral asset is determined to be below the carrying value of our loan, we may recognize a specific CECL reserve. Furthermore, in certain circumstances, we may recognize a specific CECL reserve based upon anticipated proceeds from the disposition of our loan. The following table presents a summary of our risk rated 5 loans receivable held-for-investment as of June 30, 2026 ($ in thousands):
Previous wording
Fair values of collateral assets used to determine specific CECL reserves are calculated using a discounted cash flow model, a sales comparison approach, or a market capitalization approach. Estimates of fair values used to determine specific CECL reserves may include, among others, assumptions of property specific cash flows over estimated holding periods, assumptions of property redevelopment costs, assumptions of leasing activities, discount rates, market and terminal capitalization rates, and, with respect to land, value per buildable square foot. These assumptions are based upon the nature of the properties, recent and projected property cash flows, recent sales and lease comparables, and anticipated real estate and capital market conditions, among other factors which we may deem relevant. Estimates of fair values used to determine specific CECL reserves as of March 31, 2026 include discount rates ranging from 6.0% to 9.5%, market and terminal capitalization rates ranging from 4.72% to 8.25%, and, with respect to the land loan, value per buildable square foot of $140 based on current entitlements.
Current wording
Fair values of collateral assets used to determine specific CECL reserves are calculated using a discounted cash flow model, a sales comparison approach, or a market capitalization approach. Estimates of fair values used to determine specific CECL reserves may include, among others, assumptions of property specific cash flows over estimated holding periods, assumptions of property redevelopment costs, assumptions of leasing activities, discount rates, market and terminal capitalization rates, and, with respect to land, value per buildable square foot. These assumptions are based upon the nature of the properties, recent and projected property cash flows, recent sales and lease comparables, and anticipated real estate and capital market conditions, among other factors which we may deem relevant. Estimates of fair values used to determine specific CECL reserves as of June 30, 2026 include discount rates ranging from 6.0% to 20.0%, market and terminal capitalization rates ranging from 4.72% to 8.75%, and, with respect to the land loan, value per buildable square foot of $140 based on current entitlements.
Previous wording
Our financing arrangements include repurchase arrangements, a term participation facility, asset-specific financings, debt related to real estate owned hotel portfolio, and secured term loan borrowings.
Current wording
Our financing arrangements include repurchase agreements, a term participation facility, asset-specific financings, debt related to real estate owned hotel portfolio, and secured term loan borrowings.
Previous wording
Weighted average spread over the applicable benchmark rate is based on unpaid principal balance. SOFR as of March 31, 2026 was 3.66%.
Current wording
Weighted average spread over the applicable benchmark rate is based on unpaid principal balance. SOFR as of June 30, 2026 was 3.65%.
Previous wording
We finance certain of our loans and multifamily real estate owned properties using repurchase agreements and a term participation facility. As of March 31, 2026, aggregate borrowings outstanding under our repurchase agreements and term participation facility totaled $1.9 billion, with a weighted average spread of SOFR plus 2.91% per annum based on unpaid principal balance. As of March 31, 2026, the loans receivable securing the outstanding borrowings under these facilities had a weighted average term to initial maturity and fully extended maturity of 0.4 years and 0.9 years, respectively, assuming all conditions to extend are met. Further, we have a repurchase agreement that specifically provides for the ability to finance (i) loans receivable, including those which may be delinquent or in default, and (ii) real estate owned assets subsequent to assuming legal title and/or physical possession of the collateral property. As of March 31, 2026, $232.5 million of borrowings outstanding relate to our multifamily real estate owned assets.
Current wording
We finance certain of our loans and multifamily real estate owned properties using repurchase agreements and a term participation facility. As of June 30, 2026, aggregate borrowings outstanding under our repurchase agreements and term participation facility totaled $1.9 billion, with a weighted average spread of SOFR plus 2.87% per annum based on unpaid principal balance. As of June 30, 2026, the loans receivable securing the outstanding borrowings under these facilities had a weighted average term to initial maturity and fully extended maturity of 0.4 years and 0.8 years, respectively, assuming all conditions to extend are met. Further, we have a repurchase agreement that specifically provides for the ability to finance (i) loans receivable, including those which may be delinquent or in default, and (ii) real estate owned assets subsequent to assuming legal title and/or physical possession of the collateral property. As of June 30, 2026, $199.2 million of borrowings outstanding relate to our multifamily real estate owned assets.
Previous wording
In January 2026, we refinanced our prior secured term loan with a new secured term loan which provides for an aggregate principal amount of $500.0 million and a maturity date of January 30, 2030. Our secured term loan is presented net of any discounts and transaction costs which are deferred and recognized as interest expense over the life of the loan using the effective interest method. As of March 31, 2026, our secured term loan has an unpaid principal balance of $500.0 million and a carrying value of $465.6 million. As consideration for and in connection with entering into our new secured term loan in January 2026, we issued detachable warrants to purchase up to 7,542,227 shares of our common stock at an exercise price of $4.00 per share, with an expiration date of January 2037.
Current wording
In January 2026, we refinanced our prior secured term loan with a new secured term loan which provides for an aggregate principal amount of $500.0 million and a maturity date of January 30, 2030. Our secured term loan is presented net of any discounts and transaction costs which are deferred and recognized as interest expense over the life of the loan using the effective interest method. As of June 30, 2026, our secured term loan has an unpaid principal balance of $500.0 million and a carrying value of $467.7 million. As consideration for and in connection with entering into our new secured term loan in January 2026, we issued detachable warrants to purchase up to 7,542,227 shares of our common stock at an exercise price of $4.00 per share, with an expiration date of January 2037. Value allocated to the detachable warrants is classified as equity and created a corresponding discount on our secured term loan in the same amount.
Previous wording
On February 8, 2021, we assumed a $300.0 million securitized senior mortgage in connection with a foreclosure on a hotel portfolio which, subsequent thereto, was modified to provide for, among other things, total principal payments of $25.0 million, an extension of the contractual maturity date to February 9, 2025, and the designation of a portion of the loan becoming partial recourse to us. Upon maturity in February 2025, we entered into forbearance agreements with our lender through September 9, 2025 and concurrently repaid $5.0 million of the principal balance. On June 9, 2025, we refinanced our debt related to real estate owned hotel portfolio with a non-recourse senior mortgage in the amount of $235.0 million. Such financing matures on June 9, 2027, and we may extend the maturity to June 9, 2030 pursuant to three one-year extension options, subject to meeting prescribed conditions. As of March 31, 2026, our debt related to real estate owned hotel portfolio has an unpaid principal balance of $235.0 million, a carrying value of $231.7 million and a stated rate of SOFR plus 3.18%. See Derivatives below for further detail of our interest rate cap.
Current wording
On February 8, 2021, we assumed a $300.0 million securitized senior mortgage in connection with a foreclosure on a hotel portfolio which, subsequent thereto, was modified to provide for, among other things, total principal payments of $25.0 million, an extension of the contractual maturity date to February 9, 2025, and the designation of a portion of the loan becoming partial recourse to us. Upon maturity in February 2025, we entered into forbearance agreements with our lender through September 9, 2025 and concurrently repaid $5.0 million of the principal balance. On June 9, 2025, we refinanced our debt related to real estate owned hotel portfolio with a non-recourse senior mortgage in the amount of $235.0 million. Such financing matures on June 9, 2027, and we may extend the maturity to June 9, 2030 pursuant to three one-year extension options, subject to meeting prescribed conditions. As of June 30, 2026, our debt related to real estate owned hotel portfolio has an unpaid principal balance of $235.0 million, a carrying value of $232.4 million and a stated rate of SOFR plus 3.18%. See Derivatives below for further detail of our interest rate cap.
Previous wording
Prior to the June 2025 refinance of our debt related to real estate owned hotel portfolio, we acquired interest rate caps with maturity dates and notional amounts equal to that of the then maturity dates and outstanding principal balance of our debt related to real estate owned hotel portfolio, respectively, and strike rates ranging from 3.0% to 5.0% which effectively limited the maximum interest rate to 7.94%. Concurrent with refinancing our debt related to real estate owned hotel portfolio in June 2025, we acquired an interest rate cap for a price of $71,000 with a notional amount of $235.0 million, a strike rate of 6.79%, and a maturity date of June 2027, which effectively limits the maximum interest rate of our debt related to real estate owned hotel portfolio to 9.97%.
Current wording
Prior to the June 2025 refinance of our debt related to real estate owned hotel portfolio, we acquired interest rate caps with maturity dates and notional amounts equal to that of the then maturity dates and outstanding principal balance of our debt related to real estate owned hotel portfolio, respectively, and strike rates ranging from 3.0% to 5.0% which effectively limited the maximum interest rate to 7.94% through the then contractual maturity. Concurrent with refinancing our debt related to real estate owned hotel portfolio in June 2025, we acquired an interest rate cap for a price of $71,000 with a notional amount of $235.0 million, a strike rate of 6.79%, and a maturity date of June 2027, which effectively limits the maximum interest rate of our debt related to real estate owned hotel portfolio to 9.97%.
Previous wording
Changes in the fair value of our interest rate cap are recorded as an unrealized gain or loss on interest rate cap on our consolidated statements of operations and the fair value is recorded in other assets on our consolidated balance sheets. Proceeds received from our counterparty related to the interest rate cap are recorded as proceeds from interest rate cap on our consolidated statements of operations. As of March 31, 2026 and December 31, 2025, the fair value of our interest rate cap was de minimis. During the three months ended March 31, 2026 and 2025, we did not recognize any proceeds from our interest rate caps.
Current wording
Changes in the fair value of our interest rate cap are recorded as an unrealized gain or loss on interest rate cap on our consolidated statements of operations and the fair value is recorded in other assets on our consolidated balance sheets. Proceeds received from our counterparty related to the interest rate cap are recorded as proceeds from interest rate cap on our consolidated statements of operations. As of June 30, 2026 and December 31, 2025, the fair value of our interest rate cap was de minimis. During the three and six months ended June 30, 2026 and 2025, we did not recognize any proceeds from our interest rate caps.
Previous wording
In certain instances, we use structural leverage through the non-recourse syndication of a match-term senior loan interest to a third party which qualifies for sale accounting under GAAP, or through the acquisition of a subordinate loan for which a non-recourse senior interest is retained by a third party. In such instances, the senior loan is not included on our consolidated balance sheet.
Current wording
In certain instances, we use structural leverage through the non-recourse syndication of a match-term senior loan interest to a third party which qualifies for sale accounting under GAAP, or through the acquisition of a subordinate loan for which a non-recourse senior interest is retained by a third party. In such instances, the senior loan is not included on our consolidated balance sheets.
Previous wording
Our business model seeks to minimize our exposure to changing interest rates by originating floating rate loans and financing them with floating rate liabilities. Further, we seek to match the benchmark rate index in the floating rate loans we originate with the benchmark index used in the related floating rate financings. Generally, we use SOFR as the benchmark rate index in both our floating rate loans and floating rate financings. As of March 31, 2026, 96.4% of our loans receivable held-for-investment based on unpaid principal balance were floating rate and indexed to SOFR. All of our financing is floating rate and indexed to SOFR, which resulted in approximately $712.2 million of net floating rate exposure.
Current wording
Our business model seeks to minimize our exposure to changing interest rates by originating floating rate loans and financing them with floating rate liabilities. Further, we seek to match the benchmark rate index in the floating rate loans we originate with the benchmark index used in the related floating rate financings. Generally, we use SOFR as the benchmark rate index in both our floating rate loans and floating rate financings. As of June 30, 2026, 96.2% of our loans receivable held-for-investment based on unpaid principal balance were floating rate and indexed to SOFR. All of our financing is floating rate and indexed to SOFR, which resulted in approximately $629.1 million of net floating rate exposure.
Previous wording
As of March 31, 2026, amount includes $960.2 million of net floating rate exposure related to loans on non-accrual status.
Current wording
As of June 30, 2026, amount includes $931.1 million of net floating rate exposure related to loans on non-accrual status and a $39.1 million floating rate liability related to a loan receivable classified as held-for-sale.
Previous wording
Total net revenue decreased $17.2 million during the three months ended March 31, 2026, compared to the three months ended December 31, 2025. The decrease is primarily due to a decrease in revenue from real estate owned of $12.8 million attributable to a decrease in revenue at the hotel portfolio compared to the three months ended December 31, 2025, due to expected seasonally lower overall occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) levels, as well as a decrease in net interest income of $4.4 million, which was driven by a decrease in interest income of $15.4 million as a result of decreased average loans receivable balances and additional loans on non-accrual status, partially offset by a decrease in interest expense of $11.0 million as a result of lower average borrowing levels during the three months ended March 31, 2026 compared to the three months ended December 31, 2025 as a result of loan realizations during the quarter in addition to incremental deleveraging.
Current wording
Total net revenue increased $0.2 million during the three months ended June 30, 2026, compared to the three months ended March 31, 2026. The increase is primarily due to an increase in revenue from real estate owned of $8.7 million attributable to an increase in revenue at the hotel portfolio compared to the three months ended March 31, 2026 due to expected seasonally higher overall occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) levels. Such increase was partially offset by a decrease in net interest income of $8.5 million, which was driven by a decrease in interest income of $12.7 million primarily as a result of decreased average loans receivable balances as well as an additional loan on non-accrual status, partially offset by a decrease in interest expense of $4.3 million due to loan realizations in 2026, the proceeds from which were primarily used to reduce financing balances.
Previous wording
Expenses are primarily comprised of base management fees payable to our Manager, general and administrative expenses, stock-based compensation expense, operating expenses from real estate owned, interest expense from real estate owned, and depreciation and amortization on real estate owned and related in-place and other lease intangible values. Operating expenses from real estate owned primarily include real estate taxes, utilities, repairs and maintenance, personnel costs of third-party property managers, property management fees incurred to third-parties, insurance, marketing, and general and administrative expenses specific to our real estate owned properties. Expenses increased by $8.9 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to:
Current wording
Expenses are primarily comprised of base management fees payable to our Manager, general and administrative expenses, stock-based compensation expense, operating expenses from real estate owned, interest expense from real estate owned, and depreciation and amortization on real estate owned and related in-place and other lease intangible values. Operating expenses from real estate owned primarily include real estate taxes, utilities, repairs and maintenance, personnel costs of third-party property managers, property management fees incurred to third-parties, insurance, marketing, and general and administrative expenses specific to our real estate owned properties. Expenses increased by $2.4 million during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, primarily due to:
Previous wording
a decrease in operating expenses from real estate owned of $3.3 million during the comparative period, due to lower variable operating expenses in connection with lower occupancy levels at the hotel portfolio due to seasonality;
Current wording
an increase in operating expenses from real estate owned of $2.5 million during the comparative period, due to higher variable operating expenses in connection with higher occupancy levels at the hotel portfolio due to seasonality and operating expenses incurred at the multifamily properties foreclosed on in 2026;
Previous wording
a decrease in general and administrative expenses of $2.7 million primarily as a result of a decrease in certain non-recurring charges incurred over the comparative period generally related to legal and professional fees incurred in connection with the modification of our prior secured term loan in November 2025;
Current wording
an increase in general and administrative expenses of $1.5 million primarily as a result of an increase in certain non-recurring charges incurred over the comparative period generally related to legal fees incurred for loan and REO investment related matters;
Previous wording
further offset by a decrease in management fees of $1.1 million as a result of lower stockholders’ equity compared to the comparative period;
Current wording
further offset by a decrease in management fees of $0.3 million as a result of lower stockholders’ equity compared to the comparative period.
Previous wording
During the three months ended December 31, 2025, we sold the remaining office floors and the signage component of our mixed-use real estate owned asset to unaffiliated purchasers, which resulted in a loss on partial sale of $1.3 million. During the three months ended March 31, 2026, there were no partial sales of our real estate owned assets.
Current wording
During the three months ended June 30, 2026, we sold a multifamily property located in Dallas, TX to an unaffiliated purchaser, which resulted in a gain on sale of $0.3 million. During the three months ended March 31, 2026, there were no sales of our real estate owned assets.
Previous wording
During the three months ended March 31, 2026 and 2025, we recognized de minimis losses from our equity method investment as a result of the net losses recognized by our investee during each respective period.
Current wording
During the three months ended June 30, 2026 and the three months ended March 31, 2026, we recognized de minimis losses from our equity method investment as a result of the net losses recognized by our investee during each respective period.
Previous wording
During the three months ended March 31, 2026, we recorded a provision for current expected credit losses of $31.4 million, which consisted of a $32.4 million increase in our specific CECL reserves prior to principal and exit fee charge-offs and a $26.6 million increase in CECL reserves on accrued interest receivable prior to charge-offs, offset in part by a $27.6 million decrease in our general CECL reserves. The increase in our specific CECL reserves was primarily attributable to protective advances made on certain loans and a specific reserve determined on a loan sold which was not previously classified as held-for-sale, offset in part by principal charge-offs recognized. The increase in our CECL reserves on accrued interest receivable is attributable to reserving against outstanding interest due to us upon a loan being placed on non-accrual status during the three months ended March 31, 2026, offset in part by a reduction in reserves upon the receipt of past due interest and charge-offs recognized in connection with the sale of a delinquent loan. The decrease in our general CECL reserves was primarily attributable to seasoning of our loan portfolio, a reduction in the size of our loan portfolio subject to determination of the general CECL reserve, and changes in the historical loss rate of the analogous data set, offset in part by changes in risk ratings and expected remaining duration within our loan portfolio. During the three months ended March 31, 2025, we recorded a provision for current expected credit losses of $41.1 million, which consisted of a $41.5 million increase in our specific CECL reserve prior to charge-offs of principal and exit fees and a $3.5 million increase in CECL reserves on accrued interest receivable prior to charge-offs, offset in part by a $3.9 million decrease in our general CECL reserve. The increase in our specific CECL reserves was primarily attributable to specific reserves determined on a discounted loan repayment, offset in part by changes to collateral values and protective advances made. The reversal of our general CECL reserves was primarily attributable to changes in the historical loss rate of the analogous data set, seasoning of our loan portfolio, and a reduction in the size of our loan portfolio subject to determination of the general CECL reserve.
Current wording
During the three months ended March 31, 2026, we recorded a provision for current expected credit losses of $31.4 million, which consisted of $32.4 million of additional provision for our specific CECL reserves and $26.6 million of additional provision for our CECL reserves on accrued interest receivable, offset in part by a $27.6 million reversal of our general CECL reserves. The additional provision for our specific CECL reserves was primarily attributable to protective advances made on certain loans and a specific CECL reserve determined on a loan that was sold and had not previously been classified as held-for-sale. The additional provision for our CECL reserves on accrued interest receivable was attributable to reserving against outstanding interest due to us upon a loan being placed on non-accrual status during such period, offset in part by a reduction in reserves upon the receipt of past due interest. The reversal of our general CECL reserves was primarily attributable to a reduction in the size of our loan portfolio subject to determination of the general CECL reserve, seasoning of our loan portfolio, and changes in the historical loss rate of the analogous data set, offset in part by changes in risk ratings and expected remaining duration within our loan portfolio.
Previous wording
The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2026 and 2025 ($ in thousands, except per share data):
Current wording
The following table sets forth information regarding our consolidated results of operations for the six months ended June 30, 2026 and 2025 ($ in thousands, except per share data):
Previous wording
Total net revenue decreased $13.9 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease is primarily due to a decrease in net interest income of $20.7 million, which was driven by a decrease in interest income of $59.0 million as a result of a reduction in the size of our loan portfolio and an increase in the portion of loans on non-accrual status during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, partially offset by a decrease in interest expense of $38.3 million primarily as a result of lower average borrowing levels. The decrease in total net revenue was partially offset by an increase in revenue from real estate owned of $6.9 million attributable to revenue recognized from the multifamily properties we foreclosed on in 2025 and January 2026 and attributable to higher overall average occupancy, RevPAR, and ADR levels at our hotel portfolio compared to the three months ended March 31, 2025, offset in part by a reduction in revenue from our mixed-use real estate owned asset as a result of partial asset sales during 2025.
Current wording
Total net revenue decreased $35.8 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease is primarily due to a decrease in net interest income of $47.2 million, which was driven by a decrease in interest income of $120.9 million as a result of a reduction in the size of our loan portfolio and an increase in the portion of loans on non-accrual status during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This decrease was partially offset by a decrease in interest expense of $73.7 million primarily as a result of lower average borrowing levels, and an increase in revenue from real estate owned of $11.4 million attributable to revenue recognized from the multifamily properties we foreclosed on in 2025 and 2026, offset in part by a reduction in revenue from our mixed-use real estate owned asset as a result of partial asset sales during 2025.
Previous wording
Expenses are primarily comprised of base management fees payable to our Manager, general and administrative expenses, stock-based compensation expense, operating expenses from real estate owned, interest expense from real estate owned, and depreciation and amortization on real estate owned and related in-place and other lease intangible values. Operating expenses from real estate owned primarily include real estate taxes, utilities, repairs and maintenance, personnel costs of third-party property managers, property management fees incurred to third-parties, insurance, marketing, and general and administrative expenses specific to our real estate owned properties. Expenses decreased by $5.5 million during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, primarily due to:
Current wording
Expenses are primarily comprised of base management fees payable to our Manager, general and administrative expenses, stock-based compensation expense, operating expenses from real estate owned, interest expense from real estate owned, and depreciation and amortization on real estate owned and related in-place and other lease intangible values. Operating expenses from real estate owned primarily include real estate taxes, utilities, repairs and maintenance, personnel costs of third-party property managers, property management fees incurred to third-parties, insurance, marketing, and general and administrative expenses specific to our real estate owned properties. Expenses increased by $15.1 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to:
Previous wording
an increase in depreciation and amortization from real estate owned of $6.0 million primarily due to depreciation and amortization expense recognized on the multifamily properties we foreclosed on in 2025 and January 2026 and depreciation expense not being recognized on the hotel portfolio during the three months ended March 31, 2025 while the hotel portfolio was classified as held-for sale;
Current wording
an increase in depreciation and amortization from real estate owned of $11.3 million primarily due to depreciation and amortization expense recognized on the multifamily properties we foreclosed on in 2025 and 2026 and depreciation expense not being recognized on the hotel portfolio during the six months ended June 30, 2025 while the hotel portfolio was classified as held-for-sale;
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
partially offset by a decrease in stock-based compensation expense of $0.9 million during the comparative period due to the vesting period of previously issued restricted stock units ending on April 1, 2026 and the remaining unvested restricted stock unit grants having a grant date fair value less than that of the grant which vested;
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Results of Operations – Three Months Ended March 31, 2026 and March 31, 2025
Previous report — wording carried elsewhere
Comparison of the three months ended March 31, 2026 and March 31, 2025
Previous report — wording carried elsewhere
ATM Agreement. As of March 31, 2026, the ATM Agreement has not been utilized, and $150.0 million of our common stock remained available for issuance pursuant to the ATM Agreement.