ARBOR REALTY TRUST INC
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 27, 2026
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-K
Period ended 2024-12-31; filed 2025-02-21.
0001628280-25-007183
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-27.
0001253986-26-000019
Item 7. 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 125 previous paragraphs and 141 current paragraphs.
63 unchanged; 41 reworded; 35 added; 20 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 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 (35)
Current report
•Entered into a $1.22 billion repurchase facility to refinance loans previously held in our CLOs. The facility has a 24-month reinvestment period through March 2027. 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 June 2028;
Current report
•Terminated five credit and repurchase facilities with a total committed amount of $1.13 billion;
Current report
•Issued $500.0 million of 7.875% senior unsecured notes due 2030 and $400.0 million of 8.50% senior unsecured notes due 2028 through private offerings. A portion of the net proceeds were used to repay the outstanding 7.50% convertible senior notes and the 7.75% senior notes, and will be used to repay the 5.00% senior notes due April 2026 totaling $557.5 million;
Current report
•Closed two new CLO vehicles (BTR CLO 1 and CLO 20) totaling $1.85 billion, of which $1.62 billion consisted of investment grade notes. We retained $41.0 million of the investment grade notes, along with the below investment grade notes totaling $236.1 million;
Current report
•Raised net proceeds of $70.6 million from the issuance of 5,898,957 shares of common stock under our ATM program at an average price of $11.97 per share.
Current report
•Balance sheet portfolio of $12.11 billion, as loan originations of $3.52 billion outpaced loan runoff totaling $2.21 billion;
Current report
•Received cash distributions totaling $81.5 million and recognized income of $54.3 million from our equity investments in the Lexford Portfolio ("Lexford") and a residential mortgage banking business, see Note 8 for details; and
Current report
•Foreclosed on and took back the underlying collateral on 21 loans with a total net carrying value of $590.5 million and charged-off $52.8 million of specific CECL reserves. We sold the underlying collateral on 8 of these foreclosures with a total net carrying value of $193.1 million. In addition, we sold 2 existing REO assets with a net carrying value of $72.0 million.
Current report
Subsequent Event.
Current report
•In January and February 2026, we repurchased 2,444,860 shares of our common stock under our share repurchase program at a total cost of $18.0 million and an average cost of $7.38 per share; and
Current report
•In 2026, we foreclosed on two loans with a total UPB of $33.9 million.
Current report
During 2025, the Federal Reserve has lowered the federal funds rate three times totaling a 75-basis point reduction. General consensus is that the Federal Reserve may continue to lower rates during 2026. The high-interest rate environment, that has persisted longer than anticipated, could persist even longer if certain key economic indicators, such as inflation, fail to align with the Federal Reserve’s expectations. Although short-term interest rates have declined, long-term interest rates remain highly volatile since the announcement of the current administration's imposition of increased tariffs and macroeconomic uncertainty. Analysts currently hold mixed expectations regarding the future trajectory of long-term rates in 2026 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 described below.
Current report
As a result of the significant volatility in rates, the unpredictable impact of the tariff negotiations, including certain litigations in connection with the tariffs, and the OBBBA, it is very difficult to predict where short and long-term rates will settle during 2026.
Current report
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 limited our ability to resolve delinquent loans, leading to 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. When we foreclose on assets as REO, we typically seek to reposition them to maximize value and support an orderly disposition. Our repositioning efforts may include implementing enhanced property management, completing targeted capital improvements and deferred maintenance, re-leasing vacant space, renewing or restructuring leases, and pursuing other stabilization initiatives intended to improve occupancy, cash flow and marketability. Depending on market conditions and asset-specific considerations, we generally pursue a disposition strategy through sale to third parties, and in certain circumstances may explore alternative exit options such as recapitalizations, joint venture arrangements or other transactions intended to optimize recoveries and reduce our REO exposure.
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 in equity affiliates decreased $18.3 million, primarily due to $22.0 million in distributions received from the completed sale of the residential mortgage banking business.
Current report
Real estate owned increased $322.4 million, primarily due to the foreclosure of sixteen multifamily bridge loans totaling $441.0 million, through which we took back the underlying collateral, partially offset by the sale of five multifamily properties.
Current report
Securitized debt decreased $1.15 billion, primarily due to the unwind of three CLOs totaling $1.56 billion and paydowns on our existing securitizations of $841.7 million, partially offset by the issuances of BTR CLO 1 and CLO 20 where we issued $1.46 billion of notes to third-party investors.
Current report
Senior unsecured notes increased $792.9 million, primarily due to our issuance of $900.0 million of senior unsecured notes, partially offset by the settlement of our $95.0 million 7.75% senior unsecured notes.
Current report
In August 2025, we fully redeemed our 7.50% convertible senior notes with a remaining outstanding balance of $287.5 million with a portion of the net proceeds received from our 7.875% senior unsecured notes that were issued in July 2025.
Current report
Notes payable - real estate owned increased $148.1 million, primarily due to the addition of notes payable totaling $197.2 million on new REO assets and financing received on an existing REO asset, partially offset by the payoff of $49.1 million of notes payable associated with the sale of REO assets.
Current report
The increases in property operating income and expenses were due to the addition of several new REO assets, which also resulted in an increase in depreciation and amortization.
Current report
The increase in other income, net was primarily due to increases in the fair values of our Private Label loans and loan fees from higher loan originations and modified loans.
Current report
In 2025, we recorded a $20.5 million impairment loss related to certain REO assets that we acquired through foreclosure, which represents the extent to which the carrying value exceeded its estimated fair value.
Current report
The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in the current year period.
Current report
(Loss) Gain on Real Estate
Current report
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. As stated earlier, this environment has also caused a decrease in the performance of certain of our assets, leading to increased delinquencies, defaults and foreclosures. If our 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 could have a material adverse effect on our liquidity, capital resources and cash flows.
Current report
Unencumbered Assets. At December 31, 2025, we had total unencumbered assets with a carrying value of $3.23 billion, consisting of cash and cash equivalents of $482.9 million, loans of $816.8 million, securitization investments of $1.18 billion, MSRs of $340.8 million and $402.2 million of other assets not encumbered by any portion of secured indebtedness. Our unencumbered assets to unsecured debt ratio was 1.57x at December 31, 2025, or 1.72x after the payoff of our 5.00% senior notes due April 2026, compared to the required minimum of 1.20x.
Current report
(3)Commitment totals include available overadvances.
Current report
Inflation. During 2025, the Federal Reserve has lowered the federal funds rate three times totaling a 75-basis point reduction. General consensus is that the Federal Reserve may continue to lower rates during 2026. This high-interest rate environment, that has persisted longer than anticipated, could persist even longer if certain key economic indicators, such as inflation, fail to align with the Federal Reserve’s expectations. Although short-term interest rates have declined, long-term interest rates remain highly volatile since the announcement of the current administrations imposition of increased tariffs and macroeconomic uncertainty. Analysts currently hold mixed expectations regarding the future trajectory of long-term rates in 2026 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, the unpredictable impact of the tariff negotiations, including certain litigations in connection with the tariffs, and the OBBBA, it is very difficult to predict where short and long-term rates will settle during 2026.
Current report
This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and
Current report
For pooled assets that share similar risk characteristics, we use a third-party CECL model that incorporates historical loss information and produces probability of default and loss given default metrics to develop loss factors (the “general reserve”). In applying this model, management uses judgment to determine appropriate portfolio pools and to select and evaluate the relevance of forecast inputs, which currently include commercial real estate price indices, unemployment rates and interest rates. We currently use a one-year reasonable and supportable forecast period, and for periods beyond the forecast horizon we generally revert expected losses to historical experience using a straight-line method. We may also apply adjustments to reflect differences in the risk characteristics of our current portfolio (including loan-to-value and debt service coverage ratios, among other factors) and may apply qualitative adjustments based on internal and external information, including loan- and property-specific developments and market conditions (such as refinance activity, planned sale, loan modifications and bankruptcy).
Current report
For assets that no longer share similar risk characteristics with pooled assets, and for certain loans evaluated on an individual basis, we may determine that a loan is collateral dependent and measure expected credit losses using the CECL practical expedient based on the difference between the fair value of the collateral and the amortized cost basis of the loan, adjusted for estimated costs to sell when repayment is dependent on a sale rather than operations. If foreclosure is probable, expected credit losses are measured using the fair value of the collateral as of the reporting date. Estimating collateral fair value involves significant judgment and may be based on third-party appraisals and other valuation information, including assumptions related to capitalization and market discount rates and the borrower’s operating income and cash flows, as well as whether the valuation is based on “as-is” or “stabilized value.”
Current report
Our allowance for credit loss also includes expected credit losses associated with unfunded loan commitments, which reflect our obligation to extend credit as borrowers meet certain requirements. Expected credit losses related to these unfunded commitments are assessed and adjusted quarterly and correspond to the associated outstanding loans. In addition, we may modify loans to borrowers experiencing financial difficulty, including through payment deferrals, term extensions, principal forgiveness and/or interest rate reductions. Such modifications are considered in our allowance for credit loss estimate under the same CECL methodology applied to other loans.
Current report
Because these estimates are subject to change as facts, conditions, forecasts and the composition and risk characteristics of our portfolio change, changes in these judgments and assumptions can significantly affect expected credit losses and the amount of the allowance for credit loss recorded in our consolidated financial statements.
Removed paragraphs (20)
Previous report
•Entered into three new debt facilities totaling $900.0 million of warehouse capacity, amended existing facilities resulting in a net $50.0 million increase in the committed amounts of these facilities and terminated three facilities totaling $400.0 million;
Previous report
•Raised $100.0 million from the issuance of our 9.00% senior notes and repaid our 4.75% and 5.75% senior notes totaling $200.0 million;
Previous report
•Entered into a new equity distribution agreement with JMP to sell up to 30,000,000 shares of our common stock and raised $10.0 million of capital under the plan from the issuance of 661,708 shares at an average price of $15.16 per share; and
Previous report
•Repurchased $11.4 million of our common stock at an average price of $12.19 per share.
Previous report
•Reduced our balance sheet portfolio by 10% to $11.30 billion on loan runoff of $2.69 billion, which outpaced loan originations totaling $1.43 billion;
Previous report
•Grew our fee-based servicing portfolio 8%, or $2.49 billion, to $33.47 billion.
Previous report
Capitalized mortgage servicing rights decreased $22.6 million, primarily due to amortization and prepayment write-downs totaling $76.9 million exceeding additions from new originations of $54.3 million.
Previous report
Real estate owned, net increased $89.6 million, primarily from the foreclosure of three structured bridge loans where we took back the underlying collateral as REO assets.
Previous report
Due from related party decreased $51.6 million, primarily due to funds from loan payoffs being remitted to us by our affiliated servicing operations related to real estate transactions.
Previous report
Other assets increased $78.2 million, primarily due to additional fundings of unsecured line of credit loans totaling $41.7 million and an increase in deferred interest on modified loans.
Previous report
Securitized debt decreased $2.31 billion, primarily due to the unwind of CLO 15 and paydowns on existing securitizations totaling $1.65 billion.
Previous report
Senior unsecured notes decreased $97.8 million, primarily due to the repayment of our 4.75% and 5.75% notes totaling $200.0 million, partially offset by the issuance of $100.0 million of our 9.00% notes.
Previous report
Mortgage notes payable - real estate owned increased $30.6 million primarily due to financing placed on two new REO assets.
Previous report
Due to borrowers decreased $74.1 million, primarily due to the funding of previously unfunded loan commitments in our Structured Business.
Previous report
Other liabilities decreased $18.5 million, primarily due to a decrease in accrued interest payable as a result of the unwind of CLO 15 and paydowns on remaining securitizations, along with a decrease in deferred tax liabilities.
Previous report
Gain on Real Estate
Previous report
In 2024, we recorded a $3.8 million gain on real estate from the sale of an REO asset for $14.2 million.
Previous report
The ongoing adverse economic and market conditions, including inflation, high interest rate environment, bank failures and geopolitical uncertainty, 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.
Previous report
Inflation. The Federal Reserve lowered the federal funds rate three times during 2024 for a total reduction of 100 basis points, which marks the first rate cuts since 2020, and it is possible that rates will continue to decline during 2025. Although rates have started to decline, we currently remain in a high interest rate environment which could remain higher 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.
Previous report
Additionally, over the last several 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 above 4.50% for the balance of 2025. The short term rate curve is expected to continue to decrease in 2025, but only by a nominal additional 25 basis points. This current 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 affect the ability for borrowers to refinance their 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 (41)
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 other structured investments. Our other structured investments 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. We also 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
•Unwound CLO 15, redeeming the remaining outstanding notes, and paid down outstanding notes totaling $1.65 billion on our other securitizations;
Current wording
•Unwound CLOs 14, 16 and 19, redeeming the remaining $1.56 billion of outstanding notes and paid down outstanding notes on existing securitizations totaling $841.7 million; and
Previous wording
•Modified 106 loans with a total UPB of $4.12 billion. Borrowers of 63 of these loans with a total UPB of $2.39 billion 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
•Modified 43 loans with a total UPB of $1.71 billion, of which 36 loans were modified to provide temporary rate relief through a pay and accrual feature, see Note 3 for details;
Previous wording
•Loan originations totaled $4.47 billion and includes $1.58 billion of new agency loans that were recaptured from our Structured Business runoff; and
Current wording
•Servicing portfolio of $36.20 billion (up $2.73 billion) with loan originations totaling $5.07 billion, which includes $669.4 million of new Agency loans that were recaptured from our Structured Business runoff.
Previous wording
The Federal Reserve lowered the federal funds rate three times during 2024 for a total reduction of 100 basis points, which marks the first rate cuts 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 higher 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 result in the continuation of modifying 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
Historically, the high interest rate environment has 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, as the collateral value is 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 sizable 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 a significant increase in loan delinquencies, modifications, foreclosures and decreases in loan originations and 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
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 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. As stated earlier, this environment has also caused a decrease in the performance of certain of our assets, leading to increased defaults and delinquencies. If our 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 could have a material adverse effect on our liquidity and capital resources. Despite these periodic disruptions, we have been successful in raising capital through various vehicles, when needed, to continue to operate and strengthen our business. 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
We are a national originator with Fannie Mae and Freddie Mac, and the GSEs remain the most significant providers of capital to the multifamily market. FHFA set its 2025 Caps for Fannie Mae and Freddie Mac at $73 billion for each enterprise for a total opportunity of $146 billion, which is an increase from its 2024 Caps of $70 billion for each enterprise. FHFA stated they will continue to monitor the market and reserves the right to increase the 2025 Caps if warranted, however, they will not reduce the 2025 Caps if the market is smaller than initially projected. To promote affordable housing preservation, loans classified as supporting workforce housing properties will be exempt from the 2025 Caps. Workforce housing loans preserve rents at affordable levels in multifamily properties, typically without the use of public subsidies. The 2025 Caps will continue to mandate that at least 50% be directed towards mission driven, affordable housing, with affordability levels corresponding to 80%-120% of area median income, depending on the market. Our originations with the GSEs are highly profitable executions as they provide significant gains from the sale of our loans, non-cash gains related to MSRs, and servicing revenues. As discussed above, the current high interest rate environment could lead to a decline in our GSE originations, which could negatively impact our financial results. We are also unsure whether FHFA will impose stricter limitations on GSE multifamily production volume in the future.
Current wording
We are a national originator with Fannie Mae and Freddie Mac, and the GSEs remain the most significant providers of capital to the multifamily market. FHFA set its 2026 Caps for Fannie Mae and Freddie Mac at $88 billion for each enterprise for a total opportunity of $176 billion, which is an increase from its 2025 Caps of $73 billion for each enterprise. FHFA stated they will continue to monitor the market and reserves the right to increase the 2026 Caps if warranted, however, they will not reduce the 2026 Caps if the market is smaller than initially projected. To promote affordable housing preservation, loans classified as supporting workforce housing properties will be exempt from the 2026 Caps. Workforce housing loans preserve rents at affordable levels in multifamily properties, typically without the use of public subsidies. The 2026 Caps will continue to mandate that at least 50% be directed towards mission driven, affordable housing, with affordability levels corresponding to 80%-120% of area median income, depending on the market. Our originations with the GSEs are highly profitable executions as they provide significant gains from the sale of our loans, non-cash gains related to MSRs, and servicing revenues. We are also unsure whether FHFA will impose stricter limitations on GSE multifamily production volume in the future.
Previous wording
Our Structured loan and investment portfolio balance was $11.30 billion and $12.62 billion at December 31, 2024 and 2023, respectively. This decrease was primarily due to loan runoff exceeding loan originations by $1.27 billion. See below for details.
Current wording
Our Structured loan and investment portfolio balance was $12.11 billion and $11.30 billion at December 31, 2025 and 2024, respectively. This increase was primarily due to loan originations exceeding loan runoff by $1.31 billion (see below for details), partially offset by loans we foreclosed on and received ownership of the underlying collateral as REO assets.
Previous wording
Our portfolio had a weighted average current interest pay rate of 6.90% and 8.42% at December 31, 2024 and 2023, respectively. Including certain fees earned and costs, the weighted average current interest rate was 7.80% and 8.98% at December 31, 2024 and 2023, respectively. Our debt that finances our Structured loan and investment portfolio totaled $9.46 billion and $11.57 billion at December 31, 2024 and 2023, respectively, with a weighted average funding cost of 6.55% and 7.14%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.88% and 7.45% at December 31, 2024 and 2023, respectively.
Current wording
The portfolio had a weighted average current interest pay rate of 6.49% and 6.90% at December 31, 2025 and 2024, respectively. Including certain fees earned and costs, the weighted average current interest rate was 7.08% and 7.80% at December 31, 2025 and 2024, respectively. Our debt that finances our Structured loan and investment portfolio totaled $10.46 billion and $9.46 billion at December 31, 2025 and 2024, respectively, with a weighted average funding cost of 6.16% and 6.55%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.45% and 6.88% at December 31, 2025 and 2024, respectively.
Previous wording
Loans held-for-sale from the Agency Business decreased $115.9 million, primarily from loan sales exceeding originations 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 $26.7 million, primarily from loan sales exceeding originations by $30.2 million as noted in the following table. Activity from our Agency Business portfolio is comprised of the following ($ in thousands):
Previous wording
Credit and repurchase facilities increased $321.7 million, primarily due to refinancing loans from the unwind of CLOs in our Structured Business, substantially offset by loan sales exceeding originations in our Agency Business.
Current wording
Credit and repurchase facilities increased $1.59 billion, primarily due to refinancing loans from the unwind of three CLOs and loan originations exceeding runoff in our Structured Business, partially offset by the issuance of BTR CLO 1 and CLO 20.
Previous wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At December 31, 2024 and 2023, delinquent loans totaled $524.5 million and $411.1 million, respectively. At December 31, 2024, there were two loans totaling $4.8 million in bankruptcy and six loans totaling $28.2 million have been foreclosed. At December 31, 2023, there were two loans totaling $4.8 million in bankruptcy and no loans in foreclosure.
Current wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At December 31, 2025 and 2024, delinquent loans totaled $959.0 million and $524.5 million, respectively. At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were 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 $166.7 million decrease from our Structured Business. The decline was primarily from a decrease in the average balance of our core interest-earning assets as loan runoff exceeded loan originations, as well as a decrease in the average yield on core interest-earning assets from a rise in non-performing and other non-accrued loans.
Current wording
The decrease in interest income was mainly due to a $221.8 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets and, to a lesser extent, a decrease in the average balance of our core interest-earning assets (loan runoff exceeded loan originations in 2024) and lower average bank balances. The decrease in the average yield was mainly from a decrease in SOFR, the reversal of interest that was previously accrued on modified loans and a reduction in back interest earned on delinquent and modified loans, as well as an increase in new delinquencies and modified loans at lower rates.
Previous wording
The decrease in interest expense was mainly due to a $98.9 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, partially offset by an increase in the average cost of interest-bearing liabilities, mainly from lower rate debt tranches being paid down from CLO runoff.
Current wording
The decrease in interest expense was mainly due to a $105.0 million decrease from our Structured Business, primarily due to a decline in the average balance of our interest-bearing liabilities (from a decrease in the average loan portfolio and note paydowns in our securitizations) and a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR).
Previous wording
The increase in gain on sales, including fee-based services, net was primarily due to a 10% increase in the sales margin from 1.48% to 1.63%, partially offset by a 6% decrease in loan sales volume ($279.5 million).
Current wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 15% decrease in the sales margin from 1.63% to 1.38%, partially offset by an 11% increase in loan sales volume ($494.8 million). The decrease in the sales margin was mainly due to the sales volume product mix and larger portfolio deals in 2025 that produced lower margins.
Previous wording
The decrease in income from MSRs was primarily due to a 15% decrease in loan commitment volume ($763.2 million) and a 14% decrease in the MSR rate from 1.34% to 1.15%. The decrease in the MSR rate was primarily due to a higher percentage of Freddie Mac loan commitments, which contain lower servicing fees.
Current wording
The increase in income from MSRs was primarily due to a 15% increase in loan commitment volume ($659.9 million), partially offset by a 7% decrease in the MSR rate from 1.15% to 1.07%. The decrease in the MSR rate was mainly due to a decrease in the Fannie Mae MSR rates from lower servicing rates on newer loans, as a result of larger portfolio deals in 2025 that produced lower MSR rates.
Previous wording
The decrease in servicing revenue, net was primarily due to a decrease in earnings on escrow balances from lower average balances and lower prepayment fees, partially offset by an increase in servicing fees due to growth in our servicing portfolio.
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, partially offset by an increase in servicing fees due to growth in our servicing portfolio.
Previous wording
The (loss) gain on derivative instruments in both 2024 and 2023 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.
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.
Previous wording
The increase in employee compensation and benefits expense was primarily due to increases in incentive compensation and commissions from higher bonus allocation targets and annual merit increases.
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 professional fees and other general corporate expenses, such as business development and travel related costs.
Previous wording
The decreases in our CECL provisions were primarily due to a decrease in general reserves as a result of a decline in the structured portfolio as well as general improvements in the forecasted outlook for commercial real estate, as compared to 2023.
Current wording
The decrease in the provision for credit losses, net primarily reflects a decrease in specifically impaired loans and a decrease in general reserves as a result of improvements in the forecasted outlook for commercial real estate, as compared to the prior year forecasted outlook, partially offset by additional provisions recorded upon foreclosure of REO assets.
Previous wording
The loss on extinguishment of debt in both 2024 and 2023 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
•Sold a real estate owned asset for $14.2 million and recognized a $3.8 million gain.
Current wording
The loss on real estate in 2025 is comprised of a $4.9 million loss on below market debt related to financing the sale of several REO assets and a $4.3 million net loss on the foreclosure and sale of REO assets. In 2024, we sold a real estate owned asset for $14.2 million and recognized a $3.8 million gain.
Previous wording
Income from equity affiliates in 2024 primarily reflects $9.0 million in distributions received from our Lexford joint venture, partially offset by losses totaling $3.5 million from our investments in AMAC III and a residential mortgage banking business. Income in 2023 primarily reflects $14.5 million received from equity participation interests on properties that were sold and $12.2 million in distributions received from our Lexford joint venture.
Current wording
Income from equity affiliates in 2025 primarily reflects $56.0 million of income recognized related to the cash distributions received from our Lexford joint venture, partially offset by losses from our investments in AMAC III and a residential mortgage banking business totaling $5.3 million; while income in 2024 primarily reflects $9.0 million in distributions received from our Lexford joint venture, partially offset by losses totaling $3.5 million from our investments in AMAC III and a residential mortgage banking business.
Previous wording
In 2024, we recorded a tax provision of $13.5 million, which consisted of a current tax provision of $25.1 million and a deferred tax benefit of $11.6 million. In 2023, we recorded a tax provision of $27.3 million, which consisted of a current tax provision of $34.7 million and a deferred tax benefit of $7.3 million.
Current wording
In 2025, we recorded a tax provision of $18.8 million, which consisted of a current tax provision of $15.0 million and a deferred tax provision of $3.8 million. In 2024, we recorded a tax provision of $13.5 million, which consisted of a current tax provision of $25.1 million and a deferred tax benefit of $11.6 million.
Previous wording
The noncontrolling interest relates to the outstanding operating partnership units (“OP Units”) issued as part of the 2016 acquisition of ACM’s agency platform (the “Acquisition”). There were 16,293,589 OP Units outstanding at both December 31, 2024 and 2023, which represented 7.9% and 8.0% of our outstanding stock at December 31, 2024 and 2023, respectively.
Current wording
The noncontrolling interest relates to the outstanding operating partnership units (“OP Units”) issued as part of the 2016 acquisition of ACM’s agency platform. There were 16,169,858 and 16,293,589 OP Units outstanding at December 31, 2025 and 2024, respectively, which represented 7.6% and 7.9% of our outstanding stock at December 31, 2025 and 2024, respectively.
Previous wording
Sources of Liquidity. Liquidity is a measure of our ability to meet our potential cash requirements, including ongoing commitments to repay borrowings, satisfaction of collateral requirements under the Fannie Mae DUS risk-sharing agreement and, as an approved designated seller/servicer of Freddie Mac’s SBL program, operational liquidity requirements of the GSE agencies, fund new loans and investments, fund operating costs and distributions to our stockholders, as well as other general business needs. Our primary sources of funds for liquidity consist of proceeds from equity and debt offerings, proceeds from CLOs and securitizations, debt facilities and cash flows from operations. We closely monitor our liquidity position and believe our existing sources of funds and access to additional liquidity will be adequate to meet our liquidity needs.
Current wording
Sources of Liquidity. Liquidity is a measure of our ability to meet our potential cash requirements, including ongoing commitments to repay borrowings, satisfaction of collateral requirements under the Fannie Mae DUS risk-sharing agreement and, as an approved designated seller/servicer of Freddie Mac’s SBL program, operational liquidity requirements of the GSE agencies, fund new loans and investments, fund operating costs and distributions to our stockholders, fund capital expenditures and other property level costs associated with REO assets (including tenant improvements and rehabilitation/ renovation costs) and to fund draws due under unfunded loan commitments, as well as other general business needs. Our primary sources of funds for liquidity consist of proceeds from equity and debt offerings, proceeds from CLOs and securitizations, debt facilities and cash flows from operations. We closely monitor our liquidity position and believe our existing sources of funds and access to additional liquidity will be adequate to meet our liquidity needs.
Previous wording
We had $9.54 billion in total structured debt outstanding at December 31, 2024. Of this total, $6.32 billion, or 67%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $3.22 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At December 31, 2024, we had $1.42 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Current wording
We had $10.68 billion in total structured debt outstanding at December 31, 2025. Of this total, $5.69 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 $4.99 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At December 31, 2025, we had $1.91 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Previous wording
As of February 19, 2025, we had approximately $435 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 $33.47 billion agency servicing portfolio at December 31, 2024, which is mostly prepayment protected and generates approximately $126.5 million per year in recurring gross cash flow.
Current wording
In addition to our ability to extend our credit and repurchase facilities and raise funds from equity and debt offerings, we also have a $36.20 billion agency servicing portfolio at December 31, 2025, which is mostly prepayment protected, and escrow/cash balances that generates approximately $200 million per year in recurring gross cash flow.
Previous wording
To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our taxable income. These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations. However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital and liquidity requirements.
Current wording
To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT-taxable income. These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations. However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital and liquidity requirements.
Previous wording
Cash Flows. Cash flows provided by operating activities totaled $461.5 million during 2024 and consisted primarily of net income of $283.9 million, as well as certain other non-cash net income adjustments, partially offset by net cash outflows of $108.6 million as a result of loan originations exceeding loan sales in our Agency Business.
Current wording
Cash Flows. Cash flows provided by operating activities totaled $372.4 million during 2025 and consisted primarily of net income (adjusted for the increase in CECL reserves of $67.0 million) of $224.8 million, cash distributions of $59.0 million received from our Lexford investment and net cash inflows of $23.1 million from loan sales exceeding loan originations in our Agency Business.
Previous wording
Cash flows provided by investing activities totaled $1.15 billion during 2024. Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities. Loan payoffs and paydowns from our Structured Business totaling $2.78 billion, net of originations of $1.60 billion, resulted in net cash inflows of $1.18 billion.
Current wording
Cash flows used in investing activities totaled $1.28 billion during 2025. Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities. Loan originations from our Structured Business totaling $3.69 billion, net of payoffs and paydowns of $2.42 billion, resulted in net cash outflows of $1.27 billion.
Previous wording
Cash flows used in financing activities totaled $2.49 billion during 2024 and consisted primarily of $2.32 billion of payoffs and paydowns of securitized debt, $394.8 million of distributions to our stockholders and OP Unit holders and $100.0 million from senior unsecured notes activity, partially offset by net cash inflows of $325.4 million from debt facility activities (financed loan originations were greater than facility paydowns).
Current wording
Cash flows provided by financing activities totaled $798.8 million during 2025 consisted primarily of net cash inflows of $1.64 billion from debt facility activities (financed loan originations were greater than facility paydowns), $805.0 million cash inflow from senior unsecured notes (proceeds exceeded payoffs) and net cash inflows of $101.7 million from notes payable - REO activities (proceeds exceeded payoffs and paydowns), partially offset by $1.15 billion of net securitized debt activity (payoffs and paydowns exceeded proceeds), $319.9 million of distributions to our stockholders and OP Unit holders and $287.5 million payoff of our convertible notes.
Previous wording
(3)Maturity dates represent the weighted average remaining maturity based on the underlying collateral at December 31, 2024.
Current wording
(4)Maturity dates represent the weighted average remaining maturity based on the underlying collateral at December 31, 2025.
Previous wording
(4)The $750 million As Soon as Pooled ® Plus (“ASAP”) agreement we have with Fannie Mae has no expiration date.
Current wording
(5)The $750 million As Soon as Pooled ® Plus (“ASAP”) agreement we have with Fannie Mae has no expiration date.
Previous wording
Additionally, over the last several 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 above 4.50% for the balance of 2025. As discussed earlier, the short term rate curve is expected to continue to decrease in 2025, but only by a nominal additional 25 basis points. This current 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 affect the ability for borrowers to refinance their 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
distributions to our stockholders. Additionally, this high-interest rate environment has limited our ability to resolve delinquent loans, leading to 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.
Previous wording
A summary of our significant accounting policies is presented in Note 2. Many of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our consolidated financial statements. The accounting estimates requiring complex judgment that we consider to be most critical to an investor’s understanding of our financial results and condition are included in our allowance for credit losses accounting policy. Each quarter, we assess these estimates and assumptions based on several factors, including historical experience, which we believe to be reasonable under the circumstances. These estimates are subject to change in the future if any of the underlying assumptions or factors change.
Current wording
A summary of our significant accounting policies is presented in Note 2. Many of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our consolidated financial statements. The accounting estimates requiring complex judgment that we consider to be most critical to an investor’s understanding of our financial results and condition are included in our allowance for credit losses accounting policy. Each quarter, we assess these estimates and assumptions based on several factors, including historical experience, which we believe to be reasonable under the circumstances. These estimates are subject to change in the future if any of the underlying assumptions or factors change. Our allowance for credit loss estimate is critical because it requires significant judgment in applying the CECL model, including judgments regarding portfolio pooling, selection of key model inputs and macroeconomic variables, the reasonable and supportable forecast period and the manner in which expected losses revert to historical experience. The allowance for credit loss is recorded for our structured loans and investments (including unfunded loan commitments), loss-sharing obligations related to the Fannie Mae DUS program and held-to-maturity debt securities and reflects expected credit losses over the contractual life of the applicable asset or exposure, based on information about past events, current conditions and reasonable and supportable forecasts.
Previous wording
Distributable Earnings. We are presenting distributable earnings because we believe it is an important supplemental measure of our operating performance and is useful to investors, analysts and other parties in the evaluation of REITs and their ability to provide dividends to stockholders. Dividends are one of the principal reasons investors invest in REITs. To maintain REIT status, REITs are required to distribute at least 90% of their taxable income. We consider distributable earnings in determining our quarterly dividend and believe that, over time, distributable earnings is a useful indicator of our dividends per share.
Current wording
Distributable Earnings. We are presenting distributable earnings because we believe it is an important supplemental measure of our operating performance and is useful to investors, analysts and other parties in the evaluation of REITs and their ability to provide dividends to stockholders. Dividends are one of the principal reasons investors invest in REITs. To maintain REIT status, REITs are required to distribute at least 90% of their REIT-taxable income. We consider distributable earnings in determining our quarterly dividend and believe that, over time, distributable earnings is a useful indicator of our dividends per share.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have
Current report — wording carried from elsewhere
impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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 continued 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.