ARBOR REALTY TRUST INC
For the period ended Jun 30, 2025. Filed Aug 1, 2025.
View on SEC.govAbout this filing
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, 2025 · Filed Aug 1, 2025
ABR$1.61-3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001628280-25-021683
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-01.
0001253986-25-000014
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 124 previous paragraphs and 157 current paragraphs.
66 unchanged; 47 reworded; 25 added; 10 removed; 1 previous and 19 current paragraphs rearranged.
Tables are not compared: 8 previous and 10 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 (25)
Current report
•Closed our first build-to-rent collateralized securitization vehicle totaling $801.9 million, of which $682.6 million consisted of investment grade notes. We retained $41.0 million of the investment grade notes, along with the below investment grade notes totaling $119.3 million.
Current report
•We foreclosed on 6 loans with a total UPB of $188.2 million, 3 of which we took back the underlying collateral as REO assets totaling $72.3 million and 3 were sold totaling $115.9 million. In addition, we sold an existing $7.1 million REO asset; and
Current report
•In April 2025, Wakefield entered into an agreement to sell its interest in a residential mortgage banking business (an equity investment we refer to as ARI), as described in Note 8.
Current report
Agency Business Activity. Servicing portfolio of $33.76 billion (up $277.7 million); Agency originations of $857.1 million, including $88.5 million of new Agency loans that were recaptured from our structured Business runoff.
Current report
Subsequent Event. In July 2025, we issued $500.0 million aggregate principal amount of 7.875% senior unsecured notes due in 2030 through a private offering. The proceeds are being used to repay the remaining outstanding 7.50% convertible notes due August 2025 and to add ~$200 million of liquidity.
Current report
During 2024, the Federal Reserve lowered the federal funds rate three times totaling a 100-basis point reduction, which marked the first rate cuts since 2020. Although short-term rates are predicted to continue to decline with additional rate cuts of up to 50 basis points in the second half of 2025, we currently remain in a high-interest rate environment, which could persist longer than anticipated if certain key economic indicators fail to align with the Federal Reserve’s expectations. Although short-term interest rates have declined, long-term interest rates have increased significantly and remain highly volatile since the announcement of the current administrator’s imposition of increased tariffs and macroeconomic uncertainty. Since September 2024, the 5-year and 10-year interest rates have increased substantially, with the 10-year rate moving from a low of approximately 3.60% in September 2024 to a high of approximately 4.80% in January 2025 and has recently fluctuated between 4.25% and 4.50%. Analysts currently hold mixed expectations regarding the future trajectory of long-term rates for the remainder of 2025 due to the uncertainty regarding long-term inflation, fiscal policy, increased federal spending and larger deficits as a result of the recent enactment of the One Big Beautiful Bill Act (“OBBBA”), as described below.
Current report
On July 4, 2025, the OBBBA was enacted into law. This comprehensive legislation introduces wide-ranging changes to federal tax policy, entitlement programs, immigration enforcement and infrastructure investment. The OBBBA includes potential changes to broader corporate tax provisions that may affect certain aspects of our business operations and tax exposure over the course of the next few years. Additionally, various indirect components of the legislation, such as modifications to entitlement funding, increased federal spending and shifts in fiscal and regulatory priorities, may influence the capital markets, interest rate environment and demand for commercial real estate finance. We are reviewing the potential implications of the new law, including interpretive guidance related to corporate taxation, and as a result of the complexity of the legislation and the evolving nature of its implementation, it is difficult to predict the effects of this legislation on our business, financial condition, results of operations or the real estate markets in general.
Current report
Investments is equity affiliates decreased $4.5 million, primarily due to distributions totaling $8.5 million received from our investments in a residential mortgage banking business, AWC and Fifth Wall and losses totaling $3.3 million from the residential mortgage business and AMAC III investments, partially offset by contributions totaling $6.5 million made for our investments in AWC, Fifth Wall and AMAC III.
Current report
(Loss) Gain on Real Estate
Current report
The loss on real estate in 2025 is substantially comprised of losses on below market debt totaling $1.5 million related to financing on the sale of several REO assets. The $3.8 million gain on real estate in 2024 represents the gain recognized on the sale of an REO asset.
Current report
Income from Equity Affiliates
Current report
nm — not meaningful
Current report
Net Interest Income
Current report
Agency Business Revenue
Current report
Other Income (Loss)
Current report
Other Expenses
Current report
The decrease in the provision for credit losses (net of recoveries) primarily reflects a decrease is specifically impaired loans.
Current report
(Loss) Gain on Real Estate
Current report
Income from Equity Affiliates
Current report
Income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture and income of $0.8 million from our Fifth Wall investment, partially offset by losses from our investments in a residential mortgage banking business and AMAC III totaling $3.3 million. Income from equity affiliates in 2024 primarily reflects a $4.2 million distribution received from Lexford and $0.8 million in income from our investment in a residential mortgage banking business, partially offset by a $1.2 million loss from our AMAC III investment.
Current report
Provision for Income Taxes
Current report
Inflation. During 2024, the Federal Reserve lowered the federal funds rate three times totaling a 100-basis point reduction, which marked the first rate cuts since 2020. Although short-term rates are predicted to continue to decline with additional rate cuts of up to 50 basis points in the second half of 2025, we currently remain in a high-interest rate environment, which could persist longer than anticipated if certain key economic indicators fail to align with the Federal Reserve’s expectations. Although short-term interest rates have declined, long-term interest rates have increased significantly and remain highly volatile since the announcement of the current administrator’s imposition of increased tariffs and macroeconomic uncertainty. Since September 2024, the 5-year and 10-year interest rates have increased substantially, with the 10-year rate moving from a low of approximately 3.60% in September 2024 to a high of approximately 4.80% in January 2025 and has recently fluctuated between 4.25% and 4.50%. Analysts currently hold mixed expectations regarding the future trajectory of long-term rates for the remainder of 2025 due to the uncertainty regarding long-term inflation, fiscal policy, increased federal spending and larger deficits as a result of the recent enactment of the OBBBA. As a result of the significant volatility in rates and the unpredictable impact of the tariff negotiations and the OBBBA, it is very difficult to predict where short and long-term rates will settle for the remainder of the year.
Current report
•Closed a collateralized securitization vehicle (BTR CLO 1) totaling $801.9 million of notes issued, of which notes totaling $160.3 million were retained by us;
Current report
In July 2025, we issued $500.0 million aggregate principal amount of 7.875% senior unsecured notes due July 2030 in a private offering. We are using a portion of the net proceeds from this offering to repay our remaining outstanding 7.50% convertible notes due August 2025.
Current report
In July 2025, we amended a repurchase facility to temporarily increase the facility size by $500.0 million, effective through August 2025. We also amended a joint repurchase facility reducing the facility size by $500.0 million and extended the maturity date to July 2027, with a one-year extension option.
Removed paragraphs (10)
Previous report
•We entered into a new $1.15 billion repurchase facility to finance loans primarily held in our CLOs. The facility can be upsized to $1.25 billion within the first 90 days and has a 24-month reinvestment period. The facility has an interest rate of SOFR plus 1.85% and matures at the latest maturity date of all purchased assets, which is currently February 2028. Additionally, this facility is approximately 88% non-recourse to us and has an 80% advance rate;
Previous report
•Unwound CLOs 14 and 19, redeeming the remaining $1.08 billion of outstanding notes using the proceeds from the new $1.15 billion repurchase facility;
Previous report
•Raised $29.3 million from issuances of approximately 2.4 million shares of common stock under our “At-The-Market” equity offering sales agreement.
Previous report
•Increased our REO asset portfolio through the foreclosure of seven multifamily loans with a net carrying value of $192.7 million, partially offset by the sale of two REO assets for $77.0 million.
Previous report
Agency Business Activity. Loan originations totaled $605.9 million and our fee-based servicing portfolio was up slightly to $33.48 billion.
Previous report
Dividend. We declared a cash dividend of $0.30 per share, a reduction from our previous quarterly dividend of $0.43 per share.
Previous report
Loss on Real Estate
Previous report
(Loss) Income from Equity Affiliates
Previous report
Inflation. The Federal Reserve lowered the federal funds rate three times during 2024 for a total reduction of 100 basis points, which marked the first rate cuts since 2020, and it is possible that rates will continue to decline during 2025. Although short term rates have declined 100 basis points, we currently remain in a high interest rate environment which could remain for longer than expected if inflation and other economic indicators do not continue to meet the Federal Reserve’s expectations. These adverse economic conditions have resulted in, and may continue to result in, a dislocation in capital markets, declining real estate values of certain asset classes, increased payment delinquencies and defaults and increased loan modifications and foreclosures, all of which has impacted, and may continue to impact, our future results of operations, financial condition, business prospects and our ability to make distributions to our stockholders. If these rate reductions continue, this would likely lead to immediate decreases in net interest income on our floating rate loan book and reduce earnings on our cash and escrow balances. However, if a prolonged rate cut occurs, this could lead to increases in our loan origination business and improved credit, resulting in decreases in delinquencies and potential future losses. For additional details, please see “Current Market Conditions, Risks and Recent Trends” above and “Quantitative and Qualitative Disclosures about Market Risk” below.
Previous report
There has been a high level of interest rate volatility and uncertainty since the announcement of the current adminstration's imposition of increased tariffs. Over the last six months the five and ten-year interest rates have increased substantially with the ten-year rate moving from a low of 3.60% in September 2024 to a high of 4.80% in January 2025 and the forward yield curve is predicting the ten-year rate will remain elevated for the balance of 2025. Additionally, the short term rate curve is currently expected to continue to decrease by approximately another 90 basis points in 2025. As a result of the significant volatility in rates and the uncertainty of the outcome of the tariff negotiations, it is very difficult to predict where short and long term rates will settle for the remainder of the year. This current unpredictable interest rate environment is creating increased headwinds for commercial real estate and is likely to result in decreased origination volumes, especially in our GSE/Agency business in 2025, which is a highly profitable segment of our overall business. This rate environment will also have a negative impact on the ability for borrowers to refinance our balance sheet loans with fixed rate agency product, which could increase our delinquencies and defaults and reduce available liquidity. This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a material adverse effect on our future results of operations, financial condition, liquidity and our ability to make distributions to our stockholders.
Reworded paragraphs (47)
Previous wording
Income earned from our structured transactions. Our structured transactions are primarily comprised of investments in equity affiliates, which represent unconsolidated joint venture investments formed to acquire, develop and/or sell real estate-related assets. Operating results from these investments can be difficult to predict and can vary significantly period-to-period. When interest rates rise, the income from these investments can be significantly and negatively impacted, particularly from our investment in a residential mortgage banking business, since rising interest rates generally decrease the demand for residential real estate loans. In addition, we periodically receive distributions from our equity investments. It is difficult to forecast the timing of such payments, which can be substantial in any given quarter. We account for structured transactions within our Structured Business.
Current wording
Income earned from our structured transactions. Our structured transactions are primarily comprised of investments in equity affiliates, which represent unconsolidated joint venture investments formed to acquire, develop and/or sell real estate-related assets. Operating results from these investments can be difficult to predict and can vary significantly period-to-period. When interest rates rise, the income from these investments can be significantly and negatively impacted. In addition, we periodically receive distributions from our equity investments. It is difficult to forecast the timing of such payments, which can be substantial in any given quarter. We account for structured transactions within our Structured Business.
Previous wording
Significant Developments During the First Quarter of 2025
Current wording
Significant Developments During the Second Quarter of 2025
Previous wording
•We increased our balance sheet portfolio by 2% to $11.49 billion, as loan originations of $747.1 million outpaced loan runoff totaling $421.9 million;
Current wording
•Balance sheet portfolio of $11.61 billion (up 1%), as loan originations of $716.5 million outpaced loan runoff totaling $519.7 million;
Previous wording
•We modified 21 loans with a total UPB of $949.8 million. Borrowers of 19 of these loans with a total UPB of $849.4 million invested additional capital to recapitalize their deals in exchange for temporary rate relief, which we provided through a pay and accrual feature (see Note 3 for details); and
Current wording
•We modified 8 loans with a total UPB of $251.9 million. Six of these loans with a total UPB of $144.9 million were modified to provide temporary rate relief through a pay and accrual feature (see Note 3 for details);
Previous wording
There has been a high level of interest rate volatility and uncertainty since the announcement of the current administration's imposition of increased tariffs. Over the last six months the five and ten-year interest rates have increased substantially with the ten-year rate moving from a low of 3.60% in September 2024 to a high of 4.80% in January 2025 and the forward yield curve is predicting the ten-year rate will likely remain elevated for the balance of 2025. Additionally, the short term rate curve is currently expected to continue to decrease by approximately another 90 basis points in 2025. As a result of the significant volatility in rates and the uncertainty of the outcome of the tariff negotiations, it is very difficult to predict where short and long term rates will settle for the remainder of the year. This current unpredictable interest rate environment is creating increased headwinds for commercial real estate and is likely to result in decreased origination volumes, especially in our GSE/Agency business in 2025, which is a highly profitable segment of our overall business. This rate environment will also have a negative impact on the ability for borrowers to refinance our balance sheet loans with fixed rate agency product, which could increase our delinquencies and defaults and reduce available liquidity. This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a material adverse effect on our future results of operations, financial condition, liquidity and our ability to make distributions to our stockholders.
Current wording
As a result of the significant volatility in rates and the unpredictable impact of the tariff negotiations and the OBBBA, it is very difficult to predict where short and long-term rates will settle for the remainder of the year.
Previous wording
The Federal Reserve lowered the federal funds rate three times during 2024 for a total reduction of 100 basis points, which marked the first rate cut since 2020, and it is possible that they will continue to reduce short term rates in 2025. Although short term rates have declined 100 basis points, we currently remain in a high interest rate environment which could remain for longer than expected if inflation and other economic indicators do not continue to meet the Federal Reserve’s expectations. These adverse economic conditions have resulted in, and may continue to result in, a dislocation in capital markets, declining real estate values of certain asset classes, increased payment delinquencies and defaults and increased loan modifications and foreclosures, all of which has impacted, and may continue to impact, our future results of operations, financial condition, business prospects and our ability to make distributions to our stockholders. We employ rigorous risk management and underwriting practices to proactively maintain the quality of our loan portfolio and work very closely with borrowers to mitigate potential losses, while safeguarding the integrity of our portfolio, which may include modifying original loan terms. Given the current elevated interest rate environment, we cannot guarantee that our loan portfolio will perform under the current loan terms.
Current wording
We employ rigorous risk management and underwriting practices to proactively maintain the quality of our loan portfolio and work very closely with borrowers to mitigate potential losses, while safeguarding the integrity of our portfolio, which may include modifying original loan terms. Given the current elevated interest rate environment, we cannot guarantee that our loan portfolio will continue to perform under the current loan terms.
Previous wording
In the past, the high interest rate environment has sometimes positively impacted our net interest income since our structured loan portfolio exceeds our corresponding debt balances and the vast majority of our loan portfolio is floating rate based on SOFR. Additionally, since a greater portion of our debt consists of fixed-rate instruments (such as convertible and senior unsecured notes), as compared to our structured loan portfolio, the increase in interest income from high interest rates tends to outpace the rise in interest expense on our debt. Furthermore, our earnings on escrows and cash balances also benefit from an elevated rate environment. However, the prolonged period of elevated interest rates has led to an increase in loan delinquencies, a decrease in loan originations and lower cash and escrow balances, which is having, and may continue to have, a negative impact on our net interest income. Additionally, the prolonged high interest rate environment has contributed to a decline in certain commercial real estate values, leading to increased reserves, when the collateral value is considered insufficient to fully repay the loans.
Current wording
In general, a rising or high-interest rate environment positively impacts our net interest income since our structured loan portfolio exceeds our corresponding debt balances, and the vast majority of our loan portfolio is floating rate based on SOFR. Additionally, since a sizeable portion of our debt consists of fixed-rate instruments (such as senior unsecured notes), as compared to our structured loan portfolio, the increase in interest income from high interest rates tends to outpace the rise in interest expense on our debt. Furthermore, our earnings on escrows and cash balances also benefit from an elevated rate environment. However, the prolonged period of elevated interest rates has also led to an increase in loan delinquencies, a decrease in loan originations and lower cash and escrow balances, which is having, and may continue to have, a negative impact on our net interest income. Additionally, the prolonged high-interest rate environment has contributed to a decline in certain commercial real estate values, leading to increased reserves, when the collateral value is considered insufficient to fully repay the loans.
Previous wording
As discussed earlier, the Federal Reserve began lowering short term interest rates in 2024 and may continue to cut interest rates during 2025. These rate reductions have resulted in and will continue to result in a decrease in the net interest income on our floating rate loan book and reductions in the earnings on our cash and escrow balances. For additional details, please see “Quantitative and Qualitative Disclosures about Market Risk” below.
Current wording
The above mentioned short-term interest rate reductions have resulted, and will continue to result, in a decrease in the net interest income on our floating rate loan book and reductions in the earnings on our cash and escrow balances. For additional details, see “Quantitative and Qualitative Disclosures about Market Risk” below.
Previous wording
Inflation, high interest rates, bank failures, and geopolitical uncertainty has caused significant disruptions in many market segments, including the financial services, real estate and credit markets, which has, and may continue, to result in a further dislocation in capital markets and a continual reduction of available liquidity. Despite these periodic disruptions, we have been successful in raising capital through various vehicles, when needed, to continue to operate and strengthen our business.
Current wording
The elevated and volatile interest rates, along with geopolitical uncertainty, has caused some disruptions in certain segments of the financial services, real estate, and credit markets, leading to tighter liquidity conditions. Despite these periodic disruptions, we have been successful in raising capital through various vehicles, when needed, to continue to operate and strengthen our business.
Previous wording
Instability in the banking sector, such as the multiple regional bank failures and consolidations, further contributed to the tightening liquidity conditions in the equity and capital markets and has affected the availability, and increased the cost of, capital. The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all. Additionally, although the majority of our cash is currently on deposit with major financial institutions, our balances often exceed insured limits. We limit the exposure relating to these balances by diversifying them among various counterparties. Generally, deposits may be redeemed upon demand and are maintained at financial institutions with reputable credit and therefore we believe bear minimal credit risk.
Current wording
The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all. Additionally, although the majority of our cash is currently on deposit with major financial institutions, our balances often exceed insured limits. We limit the exposure relating to these balances by diversifying them among various counterparties. Generally, deposits may be redeemed upon demand and are maintained at financial institutions with reputable credit and, therefore, we believe we bear minimal credit risk.
Previous wording
Our Structured loan and investment portfolio balance was $11.49 billion and $11.30 billion at March 31, 2025 and December 31, 2024, respectively. This increase was primarily due to loan originations exceeding loan runoff by $325.2 million (see below for details), partially offset by loans we foreclosed on and received ownership of the underlying collateral as REO assets.
Current wording
Our Structured loan and investment portfolio balance was $11.61 billion and $11.30 billion at June 30, 2025 and December 31, 2024, respectively. This increase was primarily due to loan originations exceeding loan runoff by $522.0 million (see below for details), partially offset by loans we foreclosed on and received ownership of the underlying collateral as REO assets.
Previous wording
The portfolio had a weighted average current interest pay rate of 6.94% and 6.90% at March 31, 2025 and December 31, 2024, respectively. Including certain fees earned and costs, the weighted average current interest rate was 7.85% and 7.80% at March 31, 2025 and December 31, 2024, respectively. Our debt that finances our Structured loan and investment portfolio totaled $9.49 billion and $9.46 billion at March 31, 2025 and December 31, 2024, respectively, with a weighted average funding cost of 6.47% and 6.55%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.82% and 6.88% at March 31, 2025 and December 31, 2024, respectively.
Current wording
The portfolio had a weighted average current interest pay rate of 7.03% and 6.90% at June 30, 2025 and December 31, 2024, respectively. Including certain fees earned and costs, the weighted average current interest rate was 7.86% and 7.80% at June 30, 2025 and December 31, 2024, respectively. Our debt that finances our Structured loan and investment portfolio totaled $9.61 billion and $9.46 billion at June 30, 2025 and December 31, 2024, respectively, with a weighted average funding cost of 6.52% and 6.55%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.88% at both June 30, 2025 and December 31, 2024.
Previous wording
Loans held-for-sale from the Agency Business decreased $121.1 million, primarily from loan sales exceeding loan originations by $124.9 million as noted in the following table. Activity from our Agency Business portfolio is comprised of the following (in thousands):
Current wording
Loans held-for-sale from the Agency Business decreased $74.3 million, primarily from loan sales exceeding originations by $74.9 million as noted in the following table. Activity from our Agency Business portfolio is comprised of the following (in thousands):
Previous wording
Real estate owned increased $125.6 million, primarily due to the foreclosure of seven multifamily bridge loans, through which we took back the underlying collateral, partially offset by the sale of two multifamily properties.
Current wording
Real estate owned increased $188.6 million, primarily due to the foreclosure of ten multifamily bridge loans, through which we took back the underlying collateral, partially offset by the sale of three multifamily properties.
Previous wording
Credit and repurchase facilities increased $1.22 billion, primarily due to refinancing loans from the unwind of two CLOs with our new $1.15 billion repurchase facility.
Current wording
Credit and repurchase facilities increased $1.16 billion, primarily due to refinancing loans from the unwind of two CLOs with our new $1.15 billion repurchase facility and loan originations exceeding runoff in our Structured Business, partially offset by transferring loans into BTR CLO 1.
Previous wording
Securitized debt decreased $1.34 billion, primarily due to the unwind of CLO 14 and CLO 19 totaling $1.08 billion and paydowns on our remaining securitizations of $260.1 million.
Current wording
Securitized debt decreased $1.11 billion, primarily due to the unwind of CLO 14 and CLO 19 totaling $1.08 billion and paydowns on our existing securitizations of $519.7 million, partially offset by the issuance of BTR CLO 1 where we issued $491.4 million of notes to third-party investors.
Previous wording
Mortgage notes payable — real estate owned increased $49.0 million, primarily due to the addition of mortgage notes payable totaling $98.1 million on recently foreclosed loans, through which we took back the underlying property, partially offset by the payoff of $49.1 million of mortgage notes payable associated with the sale of two REO assets.
Current wording
Mortgage notes payable — real estate owned increased $109.7 million, primarily due to the addition of mortgage notes payable totaling $158.9 million on new REO assets and financing received on an existing REO asset, partially offset by the payoff of $49.1 million of mortgage notes payable associated with the sale of REO assets.
Previous wording
Other liabilities decreased $40.9 million, primarily due to payments of accrued incentive compensation and commissions during the first quarter of 2025, related to 2024 performance, and a decrease in accrued interest payable as a result of the unwind of CLOs, paydowns on remaining securitizations, and interest payments made on our convertible notes.
Current wording
Other liabilities decreased $28.6 million, primarily due to payments of accrued incentive compensation and commissions during the first half of 2025, related to 2024 performance, a decrease in accrued interest payable as a result of the unwind of CLOs and paydowns on remaining securitizations and lower current tax liabilities.
Previous wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At March 31, 2025 and December 31, 2024, delinquent loans totaled $582.5 million and $524.5 million, respectively. At March 31, 2025, there were two loans totaling $27.6 million in bankruptcy and eight loans totaling $32.1 million have been foreclosed. At December 31, 2024, there were two loans totaling $4.8 million in bankruptcy and six loans totaling $28.2 million were foreclosed.
Current wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At June 30, 2025 and December 31, 2024, delinquent loans totaled $735.0 million and $524.5 million, respectively. At June 30, 2025, there was one loan totaling $24.4 million in bankruptcy and eighteen loans totaling $95.3 million have been foreclosed. At December 31, 2024, there were two loans totaling $4.8 million in bankruptcy and six loans totaling $28.2 million were foreclosed.
Previous wording
The decrease in interest income was mainly due to a $77.8 million decrease from our Structured Business. The decline was primarily due to a decrease in the average balance of our core interest-earning assets, as loan runoff exceeds loan originations in 2024, and a decrease in the average yield on core interest-earning assets. The decrease in the average yield was mainly from a reduction in back interest received on loan modifications and a decrease in SOFR. To a lesser extent, the decline also reflects a decrease in interest earned on our cash balances as a result of lower average bank balances in 2025.
Current wording
The decrease in interest income was mainly due to a $52.1 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets and a decrease in the average balance of our core interest-earning assets, as loan runoff exceeded loan originations in 2024. The decrease in the average yield was mainly from a decrease in SOFR and a reduction in back interest earned on delinquent and modified loans, as well as an increase in new delinquencies. To a lesser extent, the decline also reflects a decrease in interest earned on our cash balances, as a result of lower average balances and a decrease in SOFR.
Previous wording
The decrease in interest expense was mainly due to a $51.0 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities, from loan runoff and note paydowns in our securitizations, and a decrease in the average cost of interest-bearing liabilities, mainly from a decrease in SOFR.
Current wording
The decrease in interest expense was mainly due to a $37.2 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities, from loan runoff and note paydowns in our securitizations and senior unsecured notes, and a decrease in the average cost of interest-bearing liabilities, mainly from a decrease in SOFR.
Previous wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 33% decrease in loan sales volume ($354.5 million), partially offset by a 14% increase in the sales margin from 1.54% to 1.75%. The increase in the sales margin was mainly due to the portfolio mix in the first quarter of 2025 that produced higher margins.
Current wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 29% decrease in loan sales volume ($328.3 million), partially offset by a 10% increase in the sales margin from 1.54% to 1.69%. The increase in the sales margin was mainly due to the portfolio mix in 2025 that produced higher margins.
Previous wording
The decrease in income from MSRs was primarily due to a 31% decrease in loan commitment volume ($288.8 million), partially offset by a 16% increase in the MSR rate from 1.09% to 1.26%. The increase in the MSR rate was due to $160.2 million of loan commitments in the first quarter of 2024 not serviced for a fee. Excluding the loan commitments for which we do not receive a servicing fee, the MSR rate was 1.32% for the three months ended March 31, 2024.
Current wording
The decrease in income from MSRs was primarily due to a 22% decrease in loan commitment volume ($246.9 million).
Previous wording
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances.
Current wording
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate.
Previous wording
The increases in property operating income and expenses were due to the increase in our REO assets.
Current wording
The increases in property operating income and expenses were due to the addition of several new REO assets. This is also the reason for the increase in depreciation and amortization.
Previous wording
The increase in other income, net was primarily due to increases in the fair values of our Private Label loans from our Agency Business.
Current wording
The increase in other income, net was primarily due to increases in the fair values of our Private Label loans and loan fees from our Agency Business.
Previous wording
The decrease in employee compensation and benefits expense was primarily due to a decrease in incentive compensation, including commissions, from lower bonus allocation targets and lower GSE/Agency loan sales volume.
Current wording
The decrease in employee compensation and benefits expense was primarily due to decreases in commissions and incentive compensation from lower GSE/Agency loan sales volume and bonus allocation targets.
Previous wording
The increase in selling and administrative expenses was primarily due to increases in professional and legal costs.
Current wording
The increase in selling and administrative expenses was primarily due to increases in legal and professional fees.
Previous wording
The decrease in the provision for credit losses (net of recoveries) was primarily related to general improvements in the forecasted outlook for commercial real estate in 2025.
Current wording
The decrease in the provision for credit losses (net of recoveries) was primarily related to general improvements in the forecasted outlook for commercial real estate in 2025 and a decrease in specifically impaired loans, net of recoveries.
Previous wording
Loss from equity affiliates in 2025 primarily reflects losses from our investments in a residential mortgage banking business and our AMAC III investment totaling $2.3 million, partially offset by income from several of our other investments; while income in 2024 primarily reflects $1.6 million of income from our investment in a residential mortgage banking business.
Current wording
Income from equity affiliates in 2025 primarily reflects a $3.4 million distribution received from our Lexford joint venture, partially offset by a $1.0 million loss from our AMAC III investment; while income in 2024 primarily reflects a $4.2 million distribution received from Lexford, partially offset by losses from our investments in a residential mortgage banking business and AMAC III totaling $1.5 million.
Previous wording
In the three months ended March 31, 2025, we recorded a tax provision of $3.6 million, which consisted of a current tax provision of $3.7 million and a deferred tax benefit of $0.1 million. In the three months ended March 31, 2024, we recorded a tax provision of $3.6 million, which consisted of a current tax provision of $7.6 million and a deferred tax benefit of $4.0 million.
Current wording
In the three months ended June 30, 2025, we recorded a tax provision of $3.4 million, which consisted of a current tax provision of $5.0 million and a deferred tax benefit of $1.6 million. In the three months ended June 30, 2024, we recorded a tax provision of $3.9 million, which consisted of a current tax provision of $6.8 million and a deferred tax benefit of $2.9 million.
Previous wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). There were 16,173,761 and 16,293,589 OP Units outstanding at March 31, 2025 and 2024, respectively, which represented 7.8% and 7.9% of our outstanding stock at March 31, 2025 and 2024, respectively.
Current wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). There were 16,173,761 and 16,293,589 OP Units outstanding at June 30, 2025 and 2024, respectively, which represented 7.8% and 8.0% of our outstanding stock at June 30, 2025 and 2024, respectively.
Previous wording
The gains and losses on derivative instruments relate to changes in the fair values of forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates as well as from the timing of GSE Agency loan sales.
Current wording
The gains and losses on derivative instruments in 2025 and 2024 were related to changes in the fair values of our forward sale commitments and swaps held by our Agency Business as a result of changes in market interest rates as well as from the timing of GSE Agency loan sales.
Previous wording
The increase in the provision for loss sharing (net of recoveries) primarily reflects an increase in reserves related to specifically identified assets.
Current wording
The increase in the provision for loss sharing (net of recoveries) reflects an increase in general reserves as a result of portfolio growth.
Previous wording
The loss on extinguishment of debt in 2025 represents deferred financing fees recognized in connection with the unwind of CLOs.
Current wording
The loss on extinguishment of debt in both 2025 and 2024 reflects deferred financing fees recognized in connection with the unwind of CLOs.
Previous wording
The loss on real estate in 2025 is comprised of a $1.8 million loss on the foreclosure of loans we took back as REO, and a $2.8 million loss on below market debt on the sale of two existing REOs, partially offset by a $1.9 million gain on the REO sales.
Current wording
The loss on real estate in 2025 is comprised of $4.3 million in loss on below market debt related to financing on the sale of several existing REO assets and a $1.8 million loss on the foreclosure of loans we took back as REO assets, partially offset by a $1.9 million gain on the REO sales. The $3.8 million gain on real estate in 2024 represents the gain recognized on the sale of an REO asset.
Previous wording
The ongoing adverse economic and market conditions, including inflation, a high interest rate environment, bank failures and geopolitical uncertainty, including tariffs, has caused significant disruptions and liquidity constraints in many market segments, including the financial services, real estate and credit markets. These conditions have created, and may continue to create, further dislocations in capital markets and a continual reduction of available liquidity. Instability in the banking sector, such as the regional bank failures and consolidations, further contributed to the tightening liquidity conditions in the equity and capital markets and has affected the availability and increased the cost of capital. The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all. If our financing sources, borrowers and their tenants continue to be impacted by these adverse economic and market conditions, or by the other risks disclosed in our filings with the SEC, it would have a material adverse effect on our liquidity and capital resources.
Current wording
The elevated and volatile interest rates, along with geopolitical uncertainty, has caused some disruptions in certain segments of the financial services, real estate, and credit markets, leading to tighter liquidity conditions. The increased cost of credit, or degradation in debt financing terms, has impacted, and may continue to impact, our ability to identify and execute investments on attractive terms, or at all. If our financing sources, borrowers and their tenants continue to be impacted by these adverse economic and market conditions, or by the other risks disclosed in our filings with the SEC, it would have a material adverse effect on our liquidity and capital resources.
Previous wording
We had $9.49 billion in total structured debt outstanding at March 31, 2025. Of this total, $4.98 billion, or 52%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $4.51 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At March 31, 2025, we had $1.81 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Current wording
We had $9.61 billion in total structured debt outstanding at June 30, 2025. Of this total, $5.21 billion, or 54%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $4.40 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At June 30, 2025, we had $1.93 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Previous wording
At April 29, 2025, we had approximately $315 million in cash and liquidity. In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $33.48 billion agency servicing portfolio at March 31, 2025, which is mostly prepayment protected and generates approximately $126 million per year in recurring gross cash flow.
Current wording
At July 29, 2025, we had approximately $600 million in cash and liquidity. In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $33.76 billion agency servicing portfolio at June 30, 2025, which is mostly prepayment protected and generates approximately $126 million per year in recurring gross cash flow.
Previous wording
Cash Flows. Cash flows provided by operating activities totaled $150.5 million during the three months ended March 31, 2025 and consisted primarily of net cash inflows of $122.0 million from loan sales exceeding loan originations in our Agency Business and net income (adjusted for the increase in CECL reserves of $10.9 million) of $54.2 million.
Current wording
Cash Flows. Cash flows provided by operating activities totaled $210.6 million during the six months ended June 30, 2025 and consisted primarily of net income (adjusted for the increase in CECL reserves of $34.1 million) of $113.8 million and net cash inflows of $70.6 million from loan sales exceeding loan originations in our Agency Business.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (19)
Current report — wording carried from elsewhere
This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make distributions to our stockholders. Additionally, this high-interest rate environment has created, and may continue to create, increased headwinds for commercial real estate which has led to decreased origination volumes, especially in our GSE/Agency business in 2025, negatively impacting the ability for borrowers to refinance our balance sheet loans with fixed rate agency products. This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our future results of operations, financial condition, liquidity and ability to make distributions to our stockholders.
Current report — wording carried from elsewhere
Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
The following table provides our consolidated operating results ($ in thousands):
Current report — wording carried from elsewhere
The following table presents the average balance of our Structured Business interest-earning assets and interest-bearing liabilities, associated interest income (expense) and the corresponding weighted average yields ($ in thousands):
Current report — wording carried from elsewhere
(1)Based on UPB for loans, amortized cost for securities and principal amount of debt.
Current report — wording carried from elsewhere
(2)Weighted average yield calculated based on annualized interest income or expense divided by average carrying value.
Current report — wording carried from elsewhere
The decrease in interest income was mainly due to a $129.9 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets and a decrease in the average balance of our core interest-earning assets, as loan runoff exceeded loan originations in 2024. The decrease in the average yield was mainly from a decrease in SOFR and a reduction in back interest earned on delinquent and modified loans, as well as an increase in new delinquencies. To a lesser extent, the decline also reflects a decrease in interest earned on our cash balances, as a result of lower average balances and a decrease in SOFR.
Current report — wording carried from elsewhere
The decrease in interest expense was mainly due to a $88.2 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities, from loan runoff and note paydowns in our securitizations and senior unsecured notes, and a decrease in the average cost of interest-bearing liabilities, mainly from a decrease in SOFR.
Current report — wording carried from elsewhere
The decrease in gain on sales, including fee-based services, net was primarily due to a 31% decrease in loan sales volume ($682.8 million), partially offset by a 12% increase in the sales margin from 1.54% to 1.72%. The increase in the sales margin was mainly due to the portfolio mix in 2025 that produced higher margins.
Current report — wording carried from elsewhere
The decrease in income from MSRs was primarily due to a 26% decrease in loan commitment volume ($535.8 million), partially offset by a 4% increase in the MSR rate from 1.22% to 1.27%.
Current report — wording carried from elsewhere
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and a decrease in the applicable interest rate.
Current report — wording carried from elsewhere
The increases in property operating income and expenses were due to the addition of several new REO assets. This is also the reason for the increase in depreciation and amortization.
Current report — wording carried from elsewhere
The increase in other income, net was primarily due to increases in the fair values of our Private Label loans and loan fees from our Agency Business.
Current report — wording carried from elsewhere
The decrease in employee compensation and benefits expense was primarily due to decreases in commissions and incentive compensation from lower GSE/Agency loan sales volume and bonus allocation targets.
Current report — wording carried from elsewhere
The increase in selling and administrative expenses was primarily due to increases in legal and professional fees.
Current report — wording carried from elsewhere
In the six months ended June 30, 2025, we recorded a tax provision of $7.0 million, which consisted of a current tax provision of $8.7 million and a deferred tax benefit of $1.7 million. In the six months ended June 30, 2024, we recorded a tax provision of $7.5 million, which consisted of a current tax provision of $14.4 million and a deferred tax benefit of $6.9 million.
Current report — wording carried from elsewhere
Net Income Attributable to Noncontrolling Interest
Current report — wording carried from elsewhere
The noncontrolling interest relates to the outstanding OP Units (see Note 16). There were 16,173,761 and 16,293,589 OP Units outstanding at June 30, 2025 and 2024, respectively, which represented 7.8% and 8.0% of our outstanding stock at June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make distributions to our stockholders. Additionally, this high-interest rate environment has created, and may continue to create, increased headwinds for commercial real estate which has led to decreased origination volumes, especially in our GSE/Agency business in 2025, negatively impacting the ability for borrowers to refinance our balance sheet loans with fixed rate agency products. This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our future results of operations, financial condition, liquidity and ability to make distributions to our stockholders.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•Paid down outstanding notes on existing securitizations totaling $260.1 million; and