ARBOR REALTY TRUST INC
For the period ended Mar 31, 2026. Filed May 8, 2026.
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.
Mar 31, 2026 · Filed May 8, 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-Q
Period ended 2025-09-30; filed 2025-10-31.
0001253986-25-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001253986-26-000036
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 164 previous paragraphs and 125 current paragraphs.
61 unchanged; 48 reworded; 16 added; 40 removed; 15 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 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 (16)
Current report
•We repurchased 4,117,901 shares of our common stock under our share repurchase program at a total cost of $30.7 million and an average cost of $7.46 per share.
Current report
•We foreclosed on and took back the underlying collateral on three loans with an aggregate net carrying value of $58.8 million and recorded a loss of $1.8 million through provision for credit losses. We sold one of those foreclosed properties, along with an existing REO asset, for $33.0 million and recognized an aggregate loss of $2.1 million through loss on real estate. See Notes 3 and 9 for details.
Current report
Dividend. We declared a cash dividend of $0.17 per share, a reduction from our previous quarterly dividend of $0.30 per share.
Current report
This prolonged rate environment has resulted, and may continue to result, in higher payment delinquencies and defaults, more loan modifications and foreclosures and declines in real estate values in certain asset classes, which have adversely affected, and may continue to adversely affect, our results of operations, financial condition, business prospects, liquidity and ability to make distributions to stockholders. It has also made it more difficult to resolve delinquent loans, contributing to additional foreclosures and REO assets on our balance sheet. When we take title to assets through foreclosure, we generally seek to dispose of these assets through third-party sales. However, depending on market conditions and asset-specific factors, we may evaluate other alternatives, such as recapitalizations and joint venture structures, intended to optimize recoveries and reduce our REO exposure. These efforts may include enhanced property management, capital improvements and deferred maintenance, re-leasing vacant space, renewing or restructuring leases and other stabilization initiatives designed to improve occupancy, cash flow and marketability.
Current report
On July 4, 2025, the OBBBA was enacted into law. The legislation includes significant changes to U.S. tax law and other policy areas that may affect our business and the broader commercial real estate finance markets. Based on our evaluation to date, we expect certain changes under the OBBBA, including changes affecting the application of Section 162(m), to increase our current tax expense and effective tax rate. In addition, a separate expansion of Section 162(m), enacted under prior law and scheduled to take effect in 2027, could further increase our annual effective tax rate and current tax expense, potentially materially. More broadly, elements of the OBBBA, including changes in federal spending, fiscal priorities and other policy provisions, may also influence capital markets, the interest rate environment and demand for commercial real estate finance. Because implementation of these tax and other provisions remains subject to further interpretation and guidance, the ultimate impact on our business, financial condition, results of operations and the real estate markets in general could differ from our current expectations.
Current report
Other assets decreased $27.5 million, primarily due to the payoff of an unsecured line of credit loan.
Current report
Credit and repurchase facilities decreased $181.7 million, primarily due to the transfer of loans into a CLO and loan runoff in our Structured Business portfolio, partially offset by loan originations exceeding sales in our Agency Business.
Current report
Other liabilities decreased $35.1 million, primarily due to payments of accrued incentive compensation and commissions during the first quarter of 2026, related to 2025 performance.
Current report
In 2026, we recorded a $12.5 million impairment loss related to certain REO assets that we acquired through foreclosure in prior periods, which represents the extent to which the carrying value exceeded its estimated fair value at the current period end.
Current report
The decrease in the provision for credit losses, net primarily reflects lower specific loan impairment reserves taken in 2026, partially offset by higher general reserves as a result of an increase in our historical loss and a loss provision recorded upon sale, or expected sale, of an REO asset in 2026.
Current report
Income (loss) from Equity Affiliates
Current report
Unencumbered Assets. At March 31, 2026, we had total unencumbered assets with a carrying value of $3.23 billion, consisting of cash and cash equivalents of $407.1 million, loans of $792.4 million, securitization investments of $1.28 billion, MSRs of $331.9 million and $423.2 million of other assets not encumbered by any portion of secured indebtedness. Our unencumbered assets to unsecured debt ratio was 1.58x at March 31, 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 lowered the federal funds rate three times for an aggregate 75-basis point reduction. Current market expectations generally contemplate the potential for an additional rate cut in the fourth quarter of 2026, but those expectations may abate if impacts from recent geopolitical events have a longer lasting effect on the economic environment and inflationary measurements. However, the elevated rate environment has persisted longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. While short-term rates have declined, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict in Iran, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the OBBBA. Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.
Current report
•Entered into a new $300.0 million credit facility;
Current report
•In April 2026, we redeemed our 5.00% senior notes totaling $175.0 million at maturity.
Removed paragraphs (40)
Previous report
•Issued $500.0 million aggregate principal amount of 7.875% senior unsecured notes due 2030 through a private offering. A portion of the net proceeds were used to repay the remaining outstanding 7.50% convertible senior notes due August 2025; and
Previous report
•Raised net proceeds of $39.7 million from the issuance of 3,390,207 shares of our common stock at an average price of $11.72 per share.
Previous report
•Received cash distributions totaling $67.4 million and recognized income of $48.0 million from our equity investments in Lexford and a residential mortgage banking business (see Note 8 for details); and
Previous report
•We foreclosed on two loans with a net carrying value of $107.8 million and charged-off $16.6 million of specific CECL reserves.
Previous report
Subsequent Events.
Previous report
•In October 2025, we unwound CLO 16, redeeming the remaining outstanding notes totaling $482.1 million; and
Previous report
•In October 2025, we foreclosed on five loans with a total UPB of $127.4 million that have specific reserves totaling $17.8 million..
Previous report
During 2025, the Federal Reserve has so far lowered the federal funds rate twice totaling a 50-basis point reduction. General consensus is that the Federal Reserve may continue to lower rates in the near term. This high-interest rate environment, that has persisted longer than anticipated, could persist even longer 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 remain highly volatile since the announcement of the current administrator’s imposition of increased tariffs and macroeconomic uncertainty. 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.
Previous report
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 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.
Previous report
Investments is equity affiliates decreased $19.0 million, primarily due to $22.0 million in distributions received from the completed sale of the residential mortgage banking business.
Previous report
Credit and repurchase facilities increased $564.1 million, 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 and CLO 20.
Previous report
Senior unsecured notes increased $492.1 million, primarily due to our issuance of $500.0 million of 7.875% senior unsecured notes due 2030.
Previous 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 due 2030 that were issued in July 2025.
Previous report
The increase in gain on sales, including fee-based services, net was primarily due to a 81% increase in loan sales volume ($907.8 million), partially offset by a 31% decrease in the sales margin from 1.67% to 1.15%. The decrease in the sales margin was mainly due to larger portfolio deals that closed in the current quarter that produced lower margins.
Previous report
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 report
The increase in other income, net was primarily due to increases in loan fees from higher loan originations.
Previous report
The increase in the provision for credit losses (net of recoveries) was primarily related to an increase in specific reserves recorded on multifamily loans and the weakening in the general macroeconomic outlook of the commercial real estate market in the current year period.
Previous report
In 2025, we sold an REO asset for $10.1 million and recognized a $0.6 million loss.
Previous report
Income from Equity Affiliates
Previous report
nm — not meaningful
Previous report
Net Interest Income
Previous report
Agency Business Revenue
Previous report
The decrease in income from MSRs was primarily due to a 20% decrease in the MSR rate from 1.23% to 0.99%, partially offset by a 13% increase in loan commitment volume ($411.3 million). 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 well as larger portfolio deals in 2025 that produced lower margins.
Previous report
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 report
Other Income (Loss)
Previous report
Other Expenses
Previous report
The increase in selling and administrative expenses was primarily due to increases in legal and professional fees.
Previous report
The decrease in the provision for credit losses (net of recoveries) primarily reflects a decrease is specifically impaired loans.
Previous report
(Loss) Gain on Real Estate
Previous report
Income from Equity Affiliates
Previous report
Provision for Income Taxes
Previous report
This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and
Previous report
defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have
Previous report
impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make
Previous report
•Entered into a new repurchase facility totaling $1.15 billion;
Previous report
•Unwound CLO 14 and CLO 19, repaying $1.08 billion of outstanding notes;
Previous report
•Modified existing debt facilities resulting in a decrease in the committed amount by $300.0 million;
Previous report
•Issued $500.0 million aggregate principal amount of 7.875% senior unsecured notes due 2030; and
Previous report
•Fully settled our 7.50% convertible senior notes totaling $287.5 million at maturity.
Reworded paragraphs (48)
Previous wording
We conduct our operations to qualify as a REIT. A REIT is generally not subject to federal income tax on its taxable income that is distributed to its stockholders; provided that at least 90% of its REIT-taxable income is distributed and provided that certain other requirements are met.
Current wording
We conduct our operations to qualify as a REIT. A REIT is generally not subject to federal income tax on its REIT-taxable income that is distributed to its stockholders; provided that at least 90% of its taxable income is distributed and provided that certain other requirements are met.
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. 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
Significant Developments During the Third Quarter of 2025
Current wording
Significant Developments During the First Quarter of 2026
Previous wording
•Closed a collateralized securitization vehicle (CLO 20) totaling $1.05 billion, of which $933.2 million consisted of investment grade notes and $116.8 million of below investment grade notes were retained by us;
Current wording
•Closed a collateralized securitization vehicle (CLO 21) totaling $762.6 million, of which $674.0 million consisted of investment grade notes and $88.6 million of below investment grade notes were retained by us; and
Previous wording
•Balance sheet portfolio of $11.71 billion, as loan originations of $956.7 million outpaced loan runoff totaling $734.2 million;
Current wording
•Balance sheet portfolio of $12.00 billion, as loan runoff totaling $861.0 million outpaced loan originations of $767.6 million;
Previous wording
•We modified 19 loans with a total UPB of $808.6 million which were modified to provide temporary rate relief through a pay and accrual feature (see Note 3 for details);
Current wording
•We modified 13 loans with a total UPB of $478.8 million (see Note 3 for details); and
Previous wording
Agency Business Activity. Servicing portfolio of $35.17 billion (up $1.41 billion); Agency originations of $1.98 billion, including $391.2 million of new Agency loans that were recaptured from our Structured Business runoff.
Current wording
Agency Business Activity. Servicing portfolio of $36.31 billion (up $107.3 million) with loan originations totaling $707.6 million, which includes $218.5 million of new Agency loans that were recaptured from our Structured Business runoff.
Previous wording
Inflation. During 2025, the Federal Reserve has so far lowered the federal funds rate twice totaling a 50-basis point reduction. General consensus is that the Federal Reserve may continue to lower rates in the near term. This high-interest rate environment, that has persisted longer than anticipated, could persist even longer 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 remain highly volatile since the announcement of the current administrator’s imposition of increased tariffs and macroeconomic uncertainty. 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 wording
During 2025, the Federal Reserve lowered the federal funds rate three times for an aggregate 75-basis point reduction. Current market expectations generally contemplate the potential for an additional rate cut in the fourth quarter of 2026, but those expectations may abate if impacts from recent geopolitical events have a longer lasting effect on the economic environment and inflationary measurements. However, the elevated rate environment has persisted longer than anticipated and could persist even longer if inflation and other key economic indicators do not align with the Federal Reserve’s expectations. While short-term rates have declined, long-term rates remain volatile following the current administration’s adoption of increased tariffs, related litigation, geopolitical developments, including the conflict involving Iran, and broader macroeconomic uncertainty. Expectations for long-term rates in 2026 remain mixed, reflecting uncertainty around long-term inflation, fiscal policy, increased federal spending and larger deficits, including the effects of the July 2025 enactment of the OBBBA, as described below. Accordingly, it remains difficult to predict where short- and long-term rates will settle during 2026.
Previous 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.
Current wording
We continue to apply disciplined underwriting and risk management practices and work closely with borrowers to protect portfolio quality and mitigate potential losses, including, where appropriate, modifying loan terms. However, given the current interest rate environment, we cannot assure that our loan portfolio will continue to perform in accordance with current contractual terms.
Previous 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.
Current wording
An elevated rate environment generally benefits our net interest income because our structured loan portfolio exceeds our corresponding debt balances, the substantial majority of our loan portfolio is floating rate based on SOFR and a meaningful portion of our debt, including senior unsecured notes, is fixed rate. As a result, increases in interest income generally tends to outpace increases in interest expense, and earnings on our cash and escrow balances also benefit from higher rates. These benefits, however, have been increasingly offset by the adverse effects of a prolonged elevated rate environment, including higher delinquencies, more loan modifications and foreclosures, lower loan originations, reduced cash and escrow balances and pressure on certain commercial real estate values, which can result in higher reserves when collateral values are considered insufficient to fully repay loans.
Previous 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.
Current wording
The recent reductions in short-term interest rates have reduced, and are expected to continue to reduce, net interest income on our floating rate loan portfolio and earnings on our cash and escrow balances. For additional information, see “Quantitative and Qualitative Disclosures about Market Risk” below.
Previous 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.
Current wording
Elevated and volatile interest rates, together with geopolitical uncertainty, including the conflict involving Iran, have also disrupted portions of the financial services, real estate and credit markets. These conditions have contributed to weaker performance in certain of our legacy assets, leading to increased defaults and delinquencies. If these conditions continue to affect our borrowers and their tenants, or if other risks described in our SEC filings materialize, our liquidity and capital resources could be further adversely affected. Notwithstanding these conditions, we have continued to access capital through a variety of financing vehicles to support our operations and strengthen our business. In addition, while a majority of our cash is held at major financial institutions and balances frequently exceed insured limits, we mitigate this exposure by diversifying deposits across counterparties. Because these deposits are generally demand deposits maintained with institutions with reputable credit, 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. 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 continue to be the most significant providers of capital to the multifamily market. FHFA set the 2026 Caps for Fannie Mae and Freddie Mac at $88 billion for each enterprise, or $176 billion in the aggregate, up from $73 billion for each enterprise in 2025. FHFA has stated that it will continue to monitor the market and may increase the 2026 Caps if warranted but will not reduce them if the market is smaller than initially projected. Loans supporting workforce housing, which preserve affordable rents in multifamily properties typically without public subsidies, will continue to be excluded from the 2026 Caps. In addition, at least 50% of multifamily volume must continue to support mission-driven affordable housing, with affordability levels ranging from 80% to 120% of area median income, depending on the market. Our GSE originations remain highly attractive executions because they generate significant gains on sale, non-cash gains related to MSRs and servicing revenues. At the same time, we cannot predict whether FHFA may impose stricter limitations on GSE multifamily production in the future.
Previous wording
Our Structured loan and investment portfolio balance was $11.71 billion and $11.30 billion at September 30, 2025 and December 31, 2024, respectively. This increase was primarily due to loan originations exceeding loan runoff by $744.5 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 $12.00 billion and $12.11 billion at March 31, 2026 and December 31, 2025, respectively. This decrease was primarily due to loan runoff exceeding loan originations by $93.4 million (see below for details) and 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 6.64% and 6.90% at September 30, 2025 and December 31, 2024, respectively. Including certain fees earned and costs, the weighted average current interest rate was 7.27% and 7.80% at September 30, 2025 and December 31, 2024, respectively. Our debt that finances our Structured loan and investment portfolio totaled $9.93 billion and $9.46 billion at September 30, 2025 and December 31, 2024, respectively, with a weighted average funding cost of 6.39% and 6.55%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.72% and 6.88%, at September 30, 2025 and December 31, 2024. respectively.
Current wording
The portfolio had a weighted average current interest pay rate of 6.49% at both March 31, 2026 and December 31, 2025. Including certain fees earned and costs, the weighted average current interest rate was 7.03% and 7.08% at March 31, 2026 and December 31, 2025, respectively. Our debt that finances our Structured loan and investment portfolio totaled $10.71 billion and $10.46 billion at March 31, 2026 and December 31, 2025, respectively, with a weighted average funding cost of 6.13% and 6.16%, respectively, which excludes financing costs. Including financing costs, the weighted average funding rate was 6.40% and 6.45%, at March 31, 2026 and December 31, 2025. respectively.
Previous wording
Loans held-for-sale from the Agency Business decreased $116.6 million, primarily from loan sales exceeding originations by $118.6 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 increased $34.1 million, primarily from loan originations exceeding sales by $36.6 million as noted in the following table ($ in thousands):
Previous wording
Real estate owned increased $294.8 million, primarily due to the foreclosure of twelve multifamily bridge loans totaling $368.1 million, through which we took back the underlying collateral, partially offset by the sale of four multifamily properties.
Current wording
Real estate owned increased $21.8 million, primarily due to the foreclosure of two multifamily bridge loans totaling $34.0 million, through which we took back the underlying collateral, partially offset by the sale of one multifamily property.
Previous wording
Due from related party increased $17.1 million, primarily due to funds from payoffs to be remitted by our affiliated servicing operations related to real estate transactions at the end of the reporting period. These amounts were remitted to us in October 2025.
Current wording
Due from related party increased $28.7 million, primarily due to funds from payoffs to be remitted by our affiliated servicing operations related to real estate transactions at the end of the reporting period. These amounts were remitted to us in April 2026.
Previous wording
Securitized debt decreased $454.3 million, primarily due to the unwind of CLO 14 and CLO 19 totaling $1.08 billion and paydowns on our existing securitizations of $852.1 million, partially offset by the issuances of BTR CLO 1 and CLO 20 where we issued $1.49 billion of notes to third-party investors.
Current wording
Securitized debt increased $463.2 million, primarily due to the closing of CLO 21 where we issued $674.0 million of notes to third-party investors, partially offset by paydowns on our existing securitizations of $248.4 million.
Previous wording
Mortgage notes payable — real estate owned increased $115.8 million, primarily due to the addition of mortgage notes payable totaling $164.9 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.
Current wording
Notes payable — real estate owned increased $30.2 million, due to the addition of notes payable on a new REO asset and financing received on two existing REO assets.
Previous wording
(2)Delinquent loans reflect loans that are contractually 60 days or more past due. At September 30, 2025 and December 31, 2024, delinquent loans totaled $832.8 million and $524.5 million, respectively. At September 30, 2025, there was one loan totaling $24.4 million in bankruptcy and 19 loans totaling $104.7 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 March 31, 2026 and December 31, 2025, delinquent loans totaled $975.4 million and $959.0 million, respectively. At March 31, 2026, there were five loans totaling $56.0 million in bankruptcy and twenty-five loans totaling $313.5 million were foreclosed. At December 31, 2025, there were five loans totaling $56.0 million in bankruptcy and nineteen loans totaling $176.5 million were foreclosed.
Previous wording
The decrease in interest income was mainly due to a $65.8 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.
Current wording
The decrease in interest income was mainly due to a $5.7 million decrease from our Structured Business. The decline was primarily due to a decrease in the average yield on core interest-earning assets, partially offset by an increase in the average balance of our core interest-earning assets (loan originations exceeded runoff in 2025) and, to a lesser extent, higher average bank balances. The decrease in the average yield was mainly from a decrease in SOFR, a reduction in back interest earned on delinquent and modified loans and an increase in new delinquencies and modified loans at lower rates.
Previous wording
The decrease in interest expense was mainly due to a $16.8 million decrease from our Structured Business, primarily due to a reduction in the average cost of interest-bearing liabilities (mainly from a decrease in SOFR) and a decline in the average balance of our interest-bearing liabilities from a decrease in the average loan portfolio, note paydowns in our securitizations and the payoff of our 7.50% convertible senior notes.
Current wording
The increase in interest expense was mainly due to a $9.2 million increase from our Structured Business, primarily due an increase in the average balance of our interest-bearing liabilities from an increase in the average loan portfolio and the issuance of senior unsecured notes. This was partially offset by note paydowns in our securitizations, the payoff of our 7.50% convertible senior notes and a reduction 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 12% decrease in the sales margin from 1.58% to 1.40%, partially offset by a 7% increase in loan sales volume ($225.1 million). The decrease in the sales margin was mainly due to the portfolio mix and larger portfolio deals in 2025 that produced lower margins.
Current wording
The decrease in gain on sales, including fee-based services, net was primarily due to a 8% decrease in loan sales volume ($59.9 million), partially offset by a 6% increase in the sales margin from 1.75% to 1.86%. The increase in the sales margin was mainly due to the portfolio mix in 2026 that produced higher margins.
Previous wording
The increase in income from MSRs was primarily due to a 90% increase in loan commitment volume ($947.0 million), largely offset by a 38% decrease in the MSR rate from 1.25% to 0.78%. The decrease in the MSR rate was mainly due to higher percentage of Freddie Mac loan commitments which contain lower servicing fees, as well as larger portfolio deals that closed in the quarter that produced lower margins.
Current wording
The increase in income from MSRs was primarily due to a 14% increase in loan commitment volume ($88.5 million).
Previous 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.
Current wording
The gains and losses on derivative instruments in 2026 and 2025 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 other income, net was primarily due to increases in the fair values of our Private Label loans and loan fees from higher loan originations.
Current wording
The decrease in other income, net was primarily due to increases in the fair value of our Private Label loans from our Agency Business recognized in 2025.
Previous wording
The increase in the provision for loss sharing (net of recoveries) primarily reflects larger specific loan impairment reserves taken in the current year period.
Current wording
The increase in the provision for loss sharing, net primarily reflects larger specific loan impairment reserves taken in 2026, partially offset by an improved positive outlook for commercial real estate in 2026, compared to 2025.
Previous wording
The loss on extinguishment of debt in both 2025 and 2024 reflects deferred financing fees recognized in connection with the unwind of CLOs.
Current wording
The loss on extinguishment of debt in 2025 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 $4.7 million loss on below market debt related to financing the sale of several REO assets and a $1.7 million loss on the foreclosure of loans we took back as REO assets, partially offset by a $1.6 million gain on REO sales. In 2024, we 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 2026 represents a loss incurred on the sale of an existing REO asset; while 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.
Previous wording
Income from equity affiliates in 2025 primarily reflects $51.4 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 $4.4 million; while income in 2024 primarily reflects $9.0 million in cash distributions received from Lexford, partially offset by a $1.7 million loss from our AMAC III investment.
Current wording
Income from equity affiliates in 2026 primarily reflects $5.8 million of income recognized related to a cash distribution received from our Lexford joint venture, partially offset by losses from other investments; while 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.
Previous wording
In the three months ended September 30, 2025, we recorded a tax provision of $7.6 million, which consisted of a current tax provision of $9.4 million and a deferred tax benefit of $1.8 million. In the three months ended September 30, 2024, we recorded a tax provision of $5.2 million, which consisted of a current tax provision of $7.2 million and a deferred tax benefit of $2.0 million.
Current wording
In the three months ended March 31, 2026, we recorded a tax provision of $2.1 million, which consisted of a current tax provision of $4.7 million and a deferred tax benefit of $2.6 million. 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.
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 September 30, 2025 and 2024, respectively, which represented 7.6% and 8.0% of our outstanding stock at September 30, 2025 and 2024, respectively.
Current wording
The noncontrolling interest relates to the outstanding OP Units (see Note 16). There were 16,170,218 and 16,173,761 OP Units outstanding at March 31, 2026 and 2025, respectively, which represented 7.8% of our outstanding stock at both March 31, 2026 and 2025.
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
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.
Current wording
The elevated and volatile interest rates, together with geopolitical uncertainty, including the conflict involving Iran, has caused some disruptions in financial services, real estate and credit markets. As stated earlier, these conditions have contributed to weaker performance of certain of our legacy assets, leading to increased defaults, delinquencies and foreclosures. If these conditions continue to affect our borrowers and their tenants, or if other risks described in our SEC filings materialize, our liquidity and capital resources could be further adversely affected.
Previous wording
We had $9.93 billion in total structured debt outstanding at September 30, 2025. Of this total, $6.09 billion, or 61%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $3.84 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At September 30, 2025, we had $1.51 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Current wording
We had $10.96 billion in total structured debt outstanding at March 31, 2026. Of this total, $6.16 billion, or 56%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes. The remaining $4.81 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At March 31, 2026, we had $2.66 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads.
Previous wording
At October 29, 2025, we had approximately $420 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 $35.17 billion agency servicing portfolio at September 30, 2025, which is mostly prepayment protected and generates approximately $127 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 $36.31 billion agency servicing portfolio at March 31, 2026, which is mostly prepayment protected, and escrow/cash balances that generates approximately $129 million per year in recurring gross cash flow.
Previous wording
Cash Flows. Cash flows provided by operating activities totaled $389.3 million during the nine months ended September 30, 2025 and consisted primarily of net income (adjusted for the increase in CECL reserves of $62.0 million) of $193.7 million and net cash inflows of $113.0 million from loan sales exceeding loan originations in our Agency Business.
Current wording
Cash Flows. Cash flows used in operating activities totaled $8.3 million during the three months ended March 31, 2026 and consisted primarily of net cash outflows of $36.6 million from loan originations exceeding loan sales in our Agency Business, partially offset by net income (adjusted for the impairment on REO of $12.5 million and an increase in CECL reserves of $10.4 million) of $33.9 million.
Previous wording
Cash flows used in investing activities totaled $727.6 million during the nine months ended September 30, 2025. Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities. Loan originations from our Structured Business totaling $2.43 billion, net of payoffs and paydowns of $1.70 billion, resulted in net cash outflows of $727.1 million.
Current wording
Cash flows provided by investing activities totaled $58.3 million during the three months ended March 31, 2026. Loan and investment activity (originations and payoffs/paydowns) comprise the majority of our investing activities. Loan paydowns/payoffs from our Structured Business totaling $894.0 million and originations of $826.1 million, net of payoffs, resulted in net cash inflows of $67.9 million.
Previous wording
Cash flows provided by financing activities totaled $224.5 million during the nine months ended September 30, 2025 and consisted primarily of net cash inflows of $582.8 million from debt facility activities (financed loan originations were greater than facility paydowns), $500.0 million cash inflow from issuance of senior unsecured notes and net cash inflows of $98.6 million from mortgage notes payable activities (proceeds exceeded payoffs and paydowns), partially offset by $446.0 million of net securitized debt activity (payoffs and paydowns exceeded proceeds), $287.5 million payoff of our convertible notes and $245.9 million of distributions to our stockholders and OP Unit holders.
Current wording
Cash flows provided by financing activities totaled $200.4 million during the three months ended March 31, 2026 and consisted primarily of $467.4 million of net securitized debt activity (proceeds exceeded payoffs and paydowns), partially offset by net cash outflows of $171.0 million from debt facility activities (facility paydowns were greater than financed loan originations), $73.3 million of distributions to our stockholders and OP Unit holders and $30.7 million of repurchase of common stock.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (15)
Previous report — wording carried elsewhere
The increase in the provision for loss sharing (net of recoveries) primarily reflects larger specific loan impairment reserves taken in the current year period as a result of an increase in delinquencies.
Previous report — wording carried elsewhere
Income from equity affiliates in 2025 primarily reflects $48.0 million of income recognized related to the cash distribution received from our Lexford joint venture; while income in 2024 primarily reflects a $4.9 million cash distribution received from Lexford, partially offset by losses from our investments in a residential mortgage banking business and AMAC III totaling $1.5 million.
Previous report — wording carried elsewhere
Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024
Previous report — wording carried elsewhere
The following table provides our consolidated operating results ($ in thousands):
Previous report — wording carried 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):
Previous report — wording carried elsewhere
(1)Based on UPB for loans, amortized cost for securities and principal amount of debt.
Previous report — wording carried elsewhere
(2)Weighted average yield calculated based on annualized interest income or expense divided by average carrying value.
Previous report — wording carried elsewhere
The decrease in interest income was mainly due to a $195.7 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 report — wording carried elsewhere
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 report — wording carried 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.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
In the nine months ended September 30, 2025, we recorded a tax provision of $14.6 million, which consisted of a current tax provision of $18.1 million and a deferred tax benefit of $3.5 million. In the nine months ended September 30, 2024, we recorded a tax provision of $12.7 million, which consisted of a current tax provision of $21.6 million and a deferred tax benefit of $8.9 million
Previous report — wording carried elsewhere
Net Income Attributable to Noncontrolling Interest
Previous report — wording carried 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 September 30, 2025 and 2024, respectively, which represented 7.6% and 8.0% of our outstanding stock at September 30, 2025 and 2024, respectively.
Previous report — wording carried elsewhere
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.