STARWOOD PROPERTY TRUST, INC.

Previous wording

(5)Expand our investment activities in both (i) targeted real estate equity investments and (ii) residential mortgage finance; and

Current wording

(5)Expand our investment activities in both (i) targeted real estate equity investments (including net lease and triple net lease commercial properties) and (ii) residential mortgage finance; and

Previous wording

During 2023, inflation began to moderate as a result of the monetary policy tightening actions taken by the Federal Reserve, including repeatedly raising interest rates. While the Federal Reserve began to lower interest rates in September 2024, interest rates may remain near recent highs which creates uncertainty for the economy and for our borrowers. Elevated interest rates over time may adversely affect our existing borrowers and lead to nonperformance as higher costs may dampen consumer spending and slow income growth, which may negatively impact the collateral underlying certain of our loans. Additionally, elevated interest rates could adversely affect the value of commercial real estate we own and that collateralizes our loans. It remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation.

Current wording

Although the Federal Reserve began to lower interest rates in September 2025, after having held rates steady for a year, it is not clear what actions it may take going forward given the uncertain economic effects of tariffs which increase the possibility of an economic slowdown as well as inflationary pressures in the U.S. Elevated interest rates and tariffs over time may adversely affect our borrowers and our tenants. Higher costs may dampen consumer spending and slow income growth, which may negatively impact the collateral underlying certain of our loans and certain of our commercial assets subject to net lease whose customer base could be adversely impacted. Rates can also impact the value of real estate, including the real estate we own as well as the real estate collateralizing our loans. It remains difficult to predict the full impact of recent events and any future changes in tariffs, interest rates, inflation and overall economic activity.

Previous wording

In addition, following the onset of the COVID-19 pandemic, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce. These negative factors have been considered in the determination of our current expected credit loss (“CECL”) allowance as discussed in Note 5 to the Consolidated Financial Statements. We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve. Any such reserve increases are difficult to predict.

Current wording

In addition, following the onset of the COVID-19 pandemic, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce and the multifamily sector has been strained by sustained higher interest rates. These negative factors have been considered in the determination of our current expected credit loss (“CECL”) allowance as discussed in Note 5 to the Consolidated Financial Statements. We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our

Previous wording

•Originated or acquired $1.7 billion of commercial loans during the year, including the following:

Current wording

•Originated or acquired $1.7 billion of commercial loans during the quarter, including the following:

Previous wording

•Funded $171.9 million of previously originated commercial loan commitments and investment securities.

Current wording

•Funded $222.7 million of previously originated commercial loan commitments and investment securities.

Previous wording

•Received gross proceeds of $967.3 million ($484.7 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.

Current wording

•Received gross proceeds of $669.7 million ($183.0 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.

Previous wording

•Sold three units in a residential conversion project in New York for $12.1 million.

Current wording

•Sold another unit in a residential conversion project in New York for $5.4 million.

Previous wording

•Acquired $532.0 million of infrastructure loans and funded $25.8 million of pre-existing infrastructure loan commitments.

Current wording

•Committed $386.4 million for new infrastructure loans and bonds, of which the Company funded $338.5 million, and also funded $3.3 million of pre-existing infrastructure loan commitments.

Previous wording

•Received proceeds of $365.9 million from principal repayments on our infrastructure loans and bonds.

Current wording

•Received proceeds of $567.6 million from principal repayments on our infrastructure loans and bonds.

Previous wording

•Received proceeds of $666.4 million from sales of previously originated commercial conduit loans.

Current wording

•Received proceeds of $372.9 million from sales of previously originated commercial conduit loans.

Previous wording

•Acquired CMBS for a purchase price of $53.6 million, of which $5.0 million related to non-controlling interests.

Current wording

•Acquired CMBS for a purchase price of $107.2 million, of which $5.8 million related to non-controlling interests.

Previous wording

•Obtained 29 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $24.2 billion, while $13.2 billion matured and $0.1 billion transferred, bringing our total named special servicing portfolio to $109.6 billion.

Current wording

•Obtained four new special servicing assignments for CMBS trusts with a total unpaid principal balance of $2.7 billion, while $3.1 billion matured and $1.1 billion transferred, bringing our total named special servicing portfolio to $97.5 billion.

Previous wording

•Originated or acquired $477.1 million of commercial loans during the quarter, including the following:

Current wording

•Originated or acquired $6.4 billion of commercial loans during the year, including the following:

Previous wording

•Funded $506.8 million of previously originated commercial loan commitments and investment securities.

Current wording

•Funded $674.8 million of previously originated commercial loan commitments and investment securities.

Previous wording

•Received gross proceeds of $3.6 billion ($1.5 billion, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.

Current wording

•Received gross proceeds of $2.8 billion ($1.0 billion, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.

Previous wording

•Acquired $1.4 billion of infrastructure loans and funded $110.6 million of pre-existing infrastructure loan commitments.

Current wording

•Committed $2.6 billion for new infrastructure loans and bonds, of which the Company funded $2.3 billion, and also funded $31.3 million of pre-existing infrastructure loan commitments.

Previous wording

•Received proceeds of $1.3 billion from principal repayments on our infrastructure loans and bonds and $47.1 million from the sale of an infrastructure loan.

Current wording

•Received proceeds of $2.0 billion from principal repayments on our infrastructure loans and bonds.

Previous wording

•In October 2024, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, Starwood 2024-SIF4. The CLO has a contractual maturity of October 2036 and a weighted average cost of financing of SOFR + 2.10%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $600.0 million of notes, of which $496.2 million of notes was purchased by third party investors and $103.8 million of subordinated notes were retained by us. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF1 CLO for $402.8 million and contributed certain loans previously held in that CLO to Starwood 2024-SIF4.

Current wording

•Refinanced a pool of our infrastructure loans held-for-investment in April 2025 through a CLO, Starwood 2025-SIF5. The CLO has a contractual maturity of April 2037 and a weighted average cost of financing of SOFR + 1.94%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $500.0 million of notes, of which $413.5 million of notes were purchased by third party investors and $86.5 million of subordinated notes were retained by us. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF2 CLO for $410.0 million and contributed certain loans previously held in that CLO to Starwood 2025-SIF5.

Previous wording

•In May 2024, we refinanced $600.0 million of outstanding debt on our Medical Office Portfolio due November 2024 with $450.5 million of senior securitized mortgage debt and a $39.5 million mezzanine loan. The new debt carries an initial term of two years, followed by three successive one-year extension options and a weighted average coupon of SOFR + 2.52%.

Current wording

•Refinanced $311.2 million of the Woodstar Fund investments’ mortgage debt in August and October 2025 with $613.6 million of new debt that carries an initial term of 10 years, and a weighted average coupon of SOFR + 1.76%.

Previous wording

•Received proceeds of $1.7 billion from sales of previously originated or acquired commercial conduit loans.

Current wording

•Received proceeds of $1.3 billion from sales of previously originated commercial conduit loans.

Previous wording

•Acquired CMBS for a purchase price of $187.5 million, of which $8.7 million related to non-controlling interests, and sold CMBS for total gross proceeds of $12.9 million, of which $2.8 million related to non-controlling interests.

Current wording

•Acquired CMBS for a purchase price of $176.3 million, of which $7.3 million related to non-controlling interests, and sold CMBS for total gross proceeds of $4.2 million.

Previous wording

•Obtained six new special servicing assignments for CMBS trusts with a total unpaid principal balance of $5.1 billion, while $2.8 billion matured, bringing our total named special servicing portfolio to $109.6 billion.

Current wording

•Obtained 12 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $8.2 billion, while $19.2 billion matured and $1.1 billion transferred, bringing our total named special servicing portfolio to $97.5 billion.

Previous wording

•In December 2024, we issued $500.0 million of 6.50% Senior Notes due 2030 and swapped the notes to a floating rate of SOFR + 2.55%.

Current wording

•Issued $500.0 million of 6.50% Senior Notes due 2030 in April 2025 and swapped the notes to a floating rate of SOFR + 2.61%.

Previous wording

•In September 2024, we issued 20.1 million shares of our common stock for proceeds of $392.5 million.

Current wording

•Issued 27.1 million shares of common stock for proceeds of $534.4 million.

Previous wording

For the year ended December 31, 2023, net interest income of our Commercial and Residential Lending Segment increased $62.4 million to $721.7 million, compared to $659.3 million for the year ended December 31, 2022. This increase reflects the increase in interest income, partially offset by the increase in interest expense on our secured financing facilities, both as discussed in the sections above.

Current wording

For the year ended December 31, 2025, net interest income of our Commercial and Residential Lending Segment decreased $68.5 million to $627.4 million, compared to $695.9 million for the year ended December 31, 2024. This decrease reflects the decrease in interest income, partially offset by the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.

Previous wording

The weighted average unlevered yield on our commercial loans increased primarily due to higher average index rates. The weighted average unlevered yield on our residential loans increased primarily due to a decline in fair value of the residential loans.

Current wording

The weighted average unlevered yield on our commercial loans decreased primarily due to lower average index rates and spreads and lower prepayment related income. The unlevered yield on our residential loans was relatively unchanged.

Previous wording

During the years ended December 31, 2023 and 2022, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of interest rate hedging costs and the amortization of deferred financing fees, were 7.3% and 4.0%, respectively. The increase in borrowing rates primarily reflects higher average index rates. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 6.6% and 3.9% during the year ended December 31, 2023 and 2022, respectively.

Current wording

During the years ended December 31, 2025 and 2024, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.4% and 7.4%, respectively. The decrease in borrowing rates primarily reflects lower average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 5.9% and 6.5% during the year ended December 31, 2025 and 2024, respectively.

Previous wording

For the year ended December 31, 2023, other loss of our Commercial and Residential Lending Segment decreased $114.3 million to $1.5 million, compared to $115.8 million for the year ended December 31, 2022. This decrease primarily reflects (i) a $378.3 million favorable change in fair value of residential loans, (ii) a $157.3 million favorable change in foreign currency gain (loss), (iii) the nonrecurrence of an $88.4 million loss contingency provision related to residential loans sold and later repurchased in 2022 (refer to Note 5 to the Consolidated Financial Statements) and (iv) a $57.4 million favorable change in fair value of primarily RMBS investment securities, all partially offset by (v) a $364.2 million unfavorable change in net gain (loss) on derivatives, (vi) $124.9 million of impairment losses on two properties which had been acquired through loan foreclosures in 2022 (refer to Note 7 to the Consolidated Financial Statements) and (vii) the nonrecurrence of an $86.6 million gain on sale of a foreclosed property in 2022. The unfavorable change in net gain (loss) on derivatives during the year ended December 31, 2023 reflects (i) a $182.7 million decreased gain on interest rate swaps principally related to residential loans, which partially offsets the favorable change in fair value of those loans, and (ii) a $181.5 million unfavorable change in gain (loss) on foreign currency hedges. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The favorable change in foreign currency gain (loss) and the unfavorable change in gain (loss) on foreign currency hedges reflect the weakening of the U.S. dollar against the GBP and EUR, partially offset by a slight strengthening against the AUD, during the year ended December 31, 2023 compared to a strengthening of the U.S. dollar against each of those currencies during the year ended December 31, 2022.

Current wording

For the year ended December 31, 2025, other income of our Commercial and Residential Lending Segment decreased $16.6 million to $111.7 million, compared to $128.3 million for the year ended December 31, 2024. This decrease primarily reflects (i) a $351.4 million unfavorable change in gain (loss) on derivatives and (ii) $26.8 million of impairments recognized on four foreclosed properties in 2025, partially offset by (iii) a $186.6 million favorable change in foreign currency gain (loss), (iv) a $118.5 million greater increase in fair value of residential loans, (v) a $32.6 million increased gain on sale of investments and other assets and (vi) a $20.3 million increased gain on extinguishment of debt primarily related to the sale of a foreclosed property in 2025. The unfavorable change in gain (loss) on derivatives during the year ended December 31, 2025 reflects (i) a $205.6 million unfavorable change in gain (loss) on foreign currency hedges and (ii) a $145.8 million unfavorable change in gain (loss) on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The favorable change in foreign currency gain (loss) and the unfavorable change in gain (loss) on foreign currency hedges reflect the weakening of the U.S. dollar against the pound sterling (“GBP”), Euro (“EUR”) and Australian dollar (“AUD”) during the year ended December 31, 2025, compared to a strengthening of the U.S. dollar against each of those currencies in the year ended December 31, 2024.

Previous wording

For the year ended December 31, 2023, net interest income of our Infrastructure Lending Segment increased $22.9 million to $97.7 million, compared to $74.8 million for the year ended December 31, 2022. The increase reflects the net increase in interest income, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

Current wording

For the year ended December 31, 2025, net interest income of our Infrastructure Lending Segment increased $12.7 million to $117.7 million, compared to $105.0 million for the year ended December 31, 2024. The increase reflects the increase in interest income from loans, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.

Previous wording

During the years ended December 31, 2023 and 2022, the weighted average unlevered yields on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, were 10.2% and 6.6%, respectively, primarily reflecting higher average index rates in 2023.

Current wording

During the years ended December 31, 2025 and 2024, the weighted average unlevered yields on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, were 9.7% and 10.6%, respectively, reflecting lower average index rates and spreads, partially offset by higher prepayment related income, in 2025.

Previous wording

For the year ended December 31, 2023, other income of our Property Segment decreased $496.4 million to $293.3 million, compared to $789.7 million for the year ended December 31, 2022. The decrease in other income was primarily due to (i) a $464.5 million decrease in income attributable to investments of the Woodstar Fund, mainly reflecting lower unrealized increases in fair value during the year ended December 31, 2023 and (ii) a $33.0 million lower gain on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio.

Current wording

For the year ended December 31, 2025, other income of our Property Segment decreased $152.8 million to $39.7 million, compared to $192.5 million for the year ended December 31, 2024. The decrease is primarily due to (i) the nonrecurrence of a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024, (ii) a $55.2 million decrease in income attributable to investments of the Woodstar Fund due to an unfavorable change in unrealized increase (decrease) in fair value and (iii) a $4.1 million loss on derivatives which hedge the timing of securitizations on Fundamental collateral while on a warehouse line.

Previous wording

For the year ended December 31, 2023, other income of our Investing and Servicing Segment decreased $40.8 million to $15.3 million, compared to $56.1 million for the year ended December 31, 2022. The decrease in other income was primarily due to (i) a $46.0 million unfavorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments, (ii) a $25.2 million decreased gain on sales of operating properties and (iii) an $8.7 million greater decrease in fair value of CMBS investments, all partially offset by (iv) a $30.6 million greater increase in fair value of conduit loans and (v) a $6.0 million increase in earnings from unconsolidated entities.

Current wording

For the year ended December 31, 2025, other income of our Investing and Servicing Segment increased $70.5 million to $73.2 million, compared to $2.7 million for the year ended December 31, 2024. The increase was primarily due to (i) a $66.9 million lesser decrease in fair value of CMBS investments, (ii) a $7.8 million increase in earnings from unconsolidated entities and (iii) a $6.5 million greater increase in fair value of servicing rights, partially offset by (iv) a $10.0 million lesser increase in fair value of conduit loans.

Previous wording

For the year ended December 31, 2023, corporate expenses increased $63.2 million to $394.0 million, compared to $330.8 million for the year ended December 31, 2022. This increase was primarily due to (i) a $78.7 million increase in interest expense reflecting higher average outstanding term loan and unsecured senior note balances, as well as higher interest rates, partially offset by (ii) a $13.9 million decrease in management fees, primarily reflecting lower incentive fees.

Current wording

For the year ended December 31, 2025, corporate expenses increased $62.3 million to $494.4 million, compared to $432.1 million for the year ended December 31, 2024. This increase was primarily due to (i) a $67.5 million increase in interest expense reflecting higher average balances of unsecured senior notes and secured term loans outstanding, partially offset by lower spreads and index rates on the secured term loans, and (ii) a $2.6 million increase in general and administrative expenses, partially offset by (iii) a $7.8 million decrease in management fees, primarily reflecting lower incentive fees.

Previous wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the year ended December 31, 2023, our income tax benefit decreased $60.8 million to $0.7 million, compared to $61.5 million for the year ended December 31, 2022 due to lower tax losses of our TRSs during the year ended December 31, 2023 compared to the year ended December 31, 2022. The tax losses were primarily attributable to net unrealized losses on our residential loans resulting from elevated market volatility. This market dislocation resulted in us choosing to hold more residential loans rather than securitize them, which resulted in higher net unrealized losses on those loans particularly during the year ended December 31, 2022.

Current wording

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the year ended December 31, 2025, our income tax provision increased $11.3 million to $36.7 million, compared to $25.4 million for the year ended December 31, 2024. This increase was due to higher taxable income of our TRSs during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Previous wording

For the year ended December 31, 2024, other income of our Commercial and Residential Lending Segment increased $129.8 million to income of $128.3 million, compared to a loss of $1.5 million for the year ended December 31, 2023. This increase primarily reflects (i) a $221.6 million favorable change in gain (loss) on derivatives, (ii) the non-recurrence of $124.9 million of impairment losses in 2023 on two foreclosed properties and (iii) a $7.2 million increase in earnings from unconsolidated entities primarily due to an observable price change in an equity investment, partially offset by (iv) a $134.5 million unfavorable change in foreign currency gain (loss), (v) a $69.2 million lesser increase in fair value of primarily RMBS investment securities and (vi) a $22.3 million lesser increase in fair value of residential loans. The favorable change in gain (loss) on derivatives during the year ended December 31, 2024 reflects (i) a $160.2 million favorable change in gain (loss) on foreign currency hedges and (ii) a $61.4 million increased gain on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the pound sterling (“GBP”), Euro (“EUR”) and Australian dollar (“AUD”) during the year ended December 31, 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a slight strengthening against the AUD, during the year ended December 31, 2023.

Current wording

For the year ended December 31, 2024, other income of our Commercial and Residential Lending Segment increased $129.8 million to income of $128.3 million, compared to a loss of $1.5 million for the year ended December 31, 2023. This increase primarily reflects (i) a $221.6 million favorable change in gain (loss) on derivatives, (ii) the non-recurrence of $124.9 million of impairment losses in 2023 on two foreclosed properties and (iii) a $7.2 million increase in earnings from unconsolidated entities primarily due to an observable price change in an equity investment, partially offset by (iv) a $134.5 million unfavorable change in foreign currency gain (loss), (v) a $69.2 million lesser increase in fair value of primarily RMBS investment securities and (vi) a $22.3 million lesser increase in fair value of residential loans. The favorable change in gain (loss) on derivatives during the year ended December 31, 2024 reflects (i) a $160.2 million favorable change in gain (loss) on foreign currency hedges and (ii) a $61.4 million increased gain on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the GBP, EUR and AUD during the year ended December 31, 2024, compared to a weakening of the U.S. dollar against the GBP and EUR, partially offset by a slight strengthening against the AUD, during the year ended December 31, 2023.

Previous wording

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends. We also use Distributable Earnings (previously defined as “Core Earnings”) to compute the incentive fee due under our management agreement.

Current wording

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends. We also use Distributable Earnings (previously defined as “Core Earnings”) to compute the incentive fee due under our management agreement.

Previous wording

As noted above, the definition of Distributable Earnings allows management to make adjustments, subject to the approval of a majority of our independent directors. This is done in situations where such adjustments are considered appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Distributable Earnings became effective during the years ended December 31, 2024, 2023 and 2022.

Current wording

As noted above, the definition of Distributable Earnings provides flexibility for management to make additional adjustments, subject to the approval of a majority of our independent directors, when appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. As a result of the Fundamental acquisition, we expect that straight-line rent will become a more significant component of our GAAP net income. Given that straight-line rent does not reflect the timing of cash received pursuant to the applicable leases and is not consistent with the determination of taxable income, we are adding an adjustment for straight line rents in the computation of Distributable Earnings. This adjustment was unanimously approved by our independent directors. No adjustments to the definition of Distributable Earnings became effective during the years ended December 31, 2024 and 2023.

Previous wording

Distributable Earnings per weighted average diluted share for the year ended December 31, 2024 does not equal the sum of the individual quarters due to rounding and other computational factors.

Current wording

Distributable Earnings per weighted average diluted share for the years ended December 31, 2025 and 2024 do not equal the sum of the individual quarters due to rounding and other computational factors.

Previous wording

(1)The reconciling items in this section are exactly equivalent to the amounts recognized within GAAP net income (before the consolidation of VIEs), each of which can be agreed back to the respective lines within Note 24 to our Consolidated Financial Statements. They reflect both unrealized and realized (gains) and losses. For added transparency and consistency of presentation, the entire amount recognized in GAAP income is reversed in this section, and the realized components of these amounts are reflected in the next section entitled “Recognition of Distributable realized gains / (losses).”

Current wording

(1)The reconciling items in this section are exactly equivalent to the amounts recognized within GAAP net income (before the consolidation of VIEs), each of which can be agreed back to the respective lines within Note 24 to our Consolidated Financial Statements. They reflect both unrealized and realized (gains) and losses and, in the case of property sales, include the related gain or loss on extinguishment of debt associated with such sale, if any. For added transparency and consistency of presentation, the entire amount recognized in GAAP income is reversed in this section, and the realized components of these amounts are reflected in the next section entitled “Recognition of Distributable realized gains / (losses).”

Previous wording

(9)Represents the realized gain (loss) on sales of properties held at depreciated cost. Because depreciation is a non-cash expense that is excluded from Distributable Earnings, GAAP gains upon sale of a property are higher, and GAAP losses are lower, than the respective realized amounts reflected in Distributable Earnings. The amount is calculated as net sales proceeds less undepreciated cost, adjusted for any noncontrolling interest.

Current wording

(9)Represents the realized gain (loss) on sales of properties held at depreciated cost. Because depreciation is a non-cash expense that is excluded from Distributable Earnings, GAAP gains upon sale of a property are higher, and GAAP losses are lower, than the respective realized amounts reflected in Distributable Earnings. The amount is calculated as net sales proceeds less undepreciated cost, adjusted for any noncontrolling interest and any realized gain or loss on extinguishment of debt.