Ladder Capital Corp

Previous wording

Ladder Capital is an internally-managed real estate investment trust (“REIT”) that is a leader in commercial real estate finance. We originate and invest in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Our investment activities include: (i) our primary business of originating senior first mortgage fixed and floating rate loans collateralized by commercial real estate with flexible loan structures; (ii) owning and operating commercial real estate, including net leased commercial properties; and (iii) investing in investment grade securities secured by first mortgage loans on commercial real estate. We believe that our in-house origination platform, ability to flexibly allocate capital among complementary product lines, credit-centric underwriting approach, access to diversified financing sources, and experienced management team position us well to deliver attractive returns on equity to our shareholders through economic and credit cycles.

Current wording

Ladder Capital is an investment grade-rated, internally-managed real estate investment trust (“REIT”) that is a leader in commercial real estate finance. We originate and invest in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Our investment activities include: (i) our primary business of originating senior first mortgage fixed and floating rate loans collateralized by commercial real estate with flexible loan structures; (ii) owning and operating commercial real estate, including net leased commercial properties; and (iii) investing in investment grade securities secured by first mortgage loans on commercial real estate. We believe that our in-house origination platform, ability to flexibly allocate capital among complementary product lines, credit-centric underwriting approach, access to diversified financing sources, and experienced management team position us well to deliver attractive returns on equity to our shareholders through economic and credit cycles.

Previous wording

Our businesses, including balance sheet lending, conduit lending, securities investments, and real estate investments, provide for a stable base of net interest and rental income. We have originated $30.3 billion of commercial real estate loans from our inception in October 2008 through March 31, 2025. During this timeframe, we also acquired $14.6 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.1 billion of selected net leased and other real estate assets.

Current wording

Our businesses, including balance sheet lending, conduit lending, securities investments, and real estate investments, provide for a stable base of net interest and rental income. We have originated $30.4 billion of commercial real estate loans from our inception in October 2008 through June 30, 2025. During this timeframe, we also acquired $15.2 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.1 billion of selected net leased and other real estate assets.

Previous wording

As part of our commercial mortgage lending operations, we originate conduit loans, which are first mortgage loans on stabilized, income producing commercial real estate properties that we intend to make available for sale in commercial mortgage-backed securities (“CMBS”) securitizations. From our inception in October 2008 through March 31, 2025, we originated $17.0 billion of conduit loans, of which $16.9 billion were sold into 74 CMBS securitizations, making us, by volume, one of the largest non-bank contributors of loans to CMBS securitizations in the United States in such period. Our sales of loans into securitizations are generally accounted for as true sales, not financings, and we generally retain no ongoing interest in loans which we securitize unless we are required to do so as issuer pursuant to the risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, (the “Dodd-Frank Act”). The securitization of conduit loans enables us to reinvest our equity capital into new loan originations or allocate it to other investments.

Current wording

As part of our commercial mortgage lending operations, we originate conduit loans, which are first mortgage loans on stabilized, income producing commercial real estate properties that we intend to make available for sale in commercial mortgage-backed securities (“CMBS”) securitizations. From our inception in October 2008 through June 30, 2025, we originated $17.0 billion of conduit loans, of which $16.9 billion were sold into 75 CMBS securitizations, making us, by volume, one of the largest non-bank contributors of loans to CMBS securitizations in the United States in such period. Our sales of loans into securitizations are generally accounted for as true sales, not financings, and we generally retain no ongoing interest in loans which we securitize unless we are required to do so as issuer pursuant to the risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, (the “Dodd-Frank Act”). The securitization of conduit loans enables us to reinvest our equity capital into new loan originations or allocate it to other investments.

Previous wording

We generally seek to hold our balance sheet first mortgage loans for investment although we also maintain the flexibility to contribute such loans into a CLO or similar structure, sell participation interests or “b-notes” in our mortgage loans or sell such mortgage loans as whole loans. Our balance sheet first mortgage loans may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of March 31, 2025, we held a portfolio of 54 balance sheet first mortgage loans with an aggregate book value of $1.7 billion. Based on the loan balances and the “as-is” third-party Financial Institutions

Current wording

We generally seek to hold our balance sheet first mortgage loans for investment although we also maintain the flexibility to contribute such loans into a CLO or similar structure, sell participation interests or “b-notes” in our mortgage loans or sell such mortgage loans as whole loans. Our balance sheet first mortgage loans may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of June 30, 2025, we held a portfolio of 52 balance sheet first mortgage loans with an aggregate book value of $1.6 billion. Based on the loan balances and the “as-is” third-party Financial Institutions

Previous wording

Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 67.5% at March 31, 2025.

Current wording

Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 67.1% at June 30, 2025.

Previous wording

Other Commercial Real Estate-Related Loans. We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of March 31, 2025, we held a portfolio of 4 mezzanine loans with an aggregate book value of $11.6 million. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 72.3% at March 31, 2025.

Current wording

Other Commercial Real Estate-Related Loans. We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of June 30, 2025, we held a portfolio of 2 mezzanine loans with an aggregate book value of $7.3 million. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 69.2% at June 30, 2025.

Previous wording

Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations. These first mortgage loans are typically structured with fixed interest rates and generally have five- to ten-year terms. Conduit first mortgage loans are originated, underwritten, approved and funded using the same comprehensive legal and underwriting approach, process and personnel used to originate our balance sheet first mortgage loans. Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee. We held two conduit loans with an aggregate carrying value of $90.4 million at March 31, 2025.

Current wording

Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations. These first mortgage loans are typically structured with fixed interest rates and generally have five- to ten-year terms. Conduit first mortgage loans are originated, underwritten, approved and funded using the same comprehensive legal and underwriting approach, process and personnel used to originate our balance sheet first mortgage loans. Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee. We held one conduit loan with an aggregate carrying value of $28.3 million at June 30, 2025.

Previous wording

Although our primary intent is to sell our conduit first mortgage loans to CMBS trusts, we generally seek to maintain the flexibility to keep them on our balance sheet, sell participation interests or “B-notes” in such loans or sell the loans as whole loans. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of March 31, 2025, we held two conduit first mortgage loans that were available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of these loans was 48.4% at March 31, 2025.

Current wording

Although our primary intent is to sell our conduit first mortgage loans to CMBS trusts, we generally seek to maintain the flexibility to keep them on our balance sheet, sell participation interests or “B-notes” in such loans or sell the loans as whole loans. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of June 30, 2025, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of the loan was 58.9% at June 30, 2025.

Previous wording

Net Leased Commercial Real Estate Properties. As of March 31, 2025, we owned 149 single tenant net leased properties with an undepreciated book value of $591.5 million. These properties are fully leased on a net basis where the tenant is generally responsible for payment of real estate taxes, property, building and general liability insurance and property and building maintenance expenses. As of March 31, 2025, our net leased properties comprised a total of 3.4 million square feet, 100% leased with an average age since construction of 20.1 years and a weighted average remaining lease term of 7.5 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee. The majority of the tenants in our net leased properties are necessity-based businesses. During the three months ended March 31, 2025, we collected 100% of rent on these properties.

Current wording

Net Leased Commercial Real Estate Properties. As of June 30, 2025, we owned 149 single tenant net leased properties with an undepreciated book value of $592.0 million. These properties are fully leased on a net basis where the tenant is generally responsible for payment of real estate taxes, property, building and general liability insurance and property and building maintenance expenses. As of June 30, 2025, our net leased properties comprised a total of 3.4 million square feet, 100% leased with an average age since construction of 21.1 years and a weighted average remaining lease term of 7.2 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee. The majority of the tenants in our net leased properties are necessity-based businesses. During the three months ended June 30, 2025, we collected 100% of rent on these properties.

Previous wording

Diversified Commercial Real Estate Properties. As of March 31, 2025, we owned 53 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $300.9 million. During the three months ended March 31, 2025, we collected 99% of rent on these properties.

Current wording

Diversified Commercial Real Estate Properties. As of June 30, 2025, we owned 55 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $344.0 million. During the three months ended June 30, 2025, we collected 98% of rent on these properties.

Previous wording

As of March 31, 2025, the estimated fair value of our portfolio of CMBS investments totaled $1.5 billion in 105 CUSIPs ($14.0 million average investment per CUSIP). Included in the $1.5 billion of CMBS securities are $9.1 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act, which are subject to transfer restrictions over the term of the securitization trust. The following chart summarizes our securities investments by market value, 99.3% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of March 31, 2025:

Current wording

As of June 30, 2025, the estimated fair value of our portfolio of CMBS investments totaled $2.0 billion in 114 CUSIPs ($17.2 million average investment per CUSIP). Included in the $2.0 billion of CMBS securities are $8.9 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act, which are subject to transfer restrictions over the term of the securitization trust. The following chart summarizes our securities investments by market value, 99.3% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of June 30, 2025:

Previous wording

As of March 31, 2025, our CMBS investments had a weighted average duration of 2.9 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of March 31, 2025, by property count and market value, respectively, 59.0% and 66.1% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 5.1% and 11.4%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.4% to 5.8% by property count and 0.3% to 8.4% by market value.

Current wording

As of June 30, 2025, our CMBS investments had a weighted average duration of 2.4 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of June 30, 2025, by property count and market value, respectively, 60.5% and 65.2% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 5.0% and 12.9%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.4% to 5.8% by property count and 0.2% to 7.0% by market value.

Previous wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of March 31, 2025, the carrying value of our unconsolidated ventures was $19.2 million.

Current wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of June 30, 2025, the carrying value of our unconsolidated ventures was $18.9 million.

Previous wording

United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet. As of March 31, 2025, we held $483.1 million of U.S. Treasury securities classified as cash and cash equivalents on our consolidated balance sheet.

Current wording

United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet. As of June 30, 2025, we held $18.9 million of U.S. Treasury securities classified as cash and cash equivalents on our consolidated balance sheet.

Previous wording

As of March 31, 2025, we had $2.0 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $287.7 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $599.5 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes”, collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”). The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture.

Current wording

As of June 30, 2025, we had $2.0 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $285.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $599.5 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes”, collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”). The Company currently guarantees the obligations under the Notes and the indenture. Subsequent to quarter end, we issued $500.0 million of 5.50% senior notes due 2030 and redeemed in full our 2025 Notes, which had an outstanding principal amount of $285.0 million as of June 30, 2025.

Previous wording

Due in large part to devoting such a large portion of our capital structure to equity and unsecured corporate bond debt, we maintain a $3.7 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of March 31, 2025.

Current wording

Due in large part to devoting such a large portion of our capital structure to equity and unsecured corporate bond debt, we maintain a $3.6 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of June 30, 2025.

Previous wording

Our Revolving Credit Facility is available on a revolving basis to finance our working capital needs and for general corporate purposes. On January 2, 2025, we increased the aggregate maximum borrowing amount of the Revolving Credit Facility to $850.0 million, following the upsize to $725 million on December 20, 2024. The Revolving Credit Facility also allows us to enter into additional incremental revolving commitments up to an aggregate facility size of $1.3 billion subject to certain customary conditions. Borrowings under the Revolving Credit Facility bear interest at a rate equal to adjusted term SOFR plus a margin. The margin for borrowings is adjustable based on our credit rating and is between 77.5 basis points and 170 basis points. As of March 31, 2025, we had no outstanding borrowings on the Revolving Credit Facility.

Current wording

Our Revolving Credit Facility is available on a revolving basis to finance our working capital needs and for general corporate purposes. On January 2, 2025, we increased the aggregate maximum borrowing amount of the Revolving Credit Facility to $850.0 million, following the upsize to $725 million on December 20, 2024. The Revolving Credit Facility also allows us to enter into additional incremental revolving commitments up to an aggregate facility size of $1.3 billion subject to certain customary conditions. Borrowings under the Revolving Credit Facility bear interest at a rate equal to adjusted term SOFR plus a margin of 125 basis points as of June 30, 2025. The margin for borrowings is subject to adjustment based on the Company's credit rating and may range between 77.5 and 170 basis points. As of June 30, 2025, we had no outstanding borrowings on the Revolving Credit Facility.

Previous wording

Following the date on which the Company has received an investment grade rating from at least two rating agencies, the Revolving Credit Facility will be automatically amended, the pledge of the shares of (or other ownership or equity interest in) certain subsidiaries will be terminated, and each guarantor (other than Ladder Capital Corp and any subsidiary that is a trigger guarantor) will be released and discharged from all obligations as a guarantor and/or pledgor. There is no guarantee that the Company will achieve or maintain an investment grade rating.

Current wording

Effective May 27, 2025, the date on which we received investment grade ratings from Moody’s and Fitch, the Revolving Credit Facility was automatically amended, the pledge of the shares of (or other ownership or equity interest in) certain subsidiaries was terminated, and each guarantor (other than Ladder Capital Corp and any subsidiary that is a trigger guarantor) was released and discharged from all obligations as a guarantor and/or pledgor.

Previous wording

On July 13, 2021, we financed a pool of $607.5 million of loans at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis in a managed CLO transaction (“LCCM 2021-FL2”), which generated $498.2 million of gross proceeds. We retained an 18% subordinate and controlling interest in LCCM 2021-FL2. The Company retained control over major decisions made with respect to the administration of the loans in LCCM 2021-FL2, including broad discretion in managing these loans, and has the ability to appoint the special servicer. On February 18, 2025, the Company redeemed all outstanding obligations of LCCM 2021-FL2.

Current wording

In July 2021, we financed a pool of $607.5 million of loans in a managed CLO transaction (“LCCM 2021-FL2”), which generated $498.2 million of gross proceeds to Ladder. On February 18, 2025, the Company redeemed all outstanding obligations of LCCM 2021-FL2. In December 2021, the Company financed a pool of $729.4 million of loans in a managed

Previous wording

On December 2, 2021, we financed a pool of $729.4 million of loans at a 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis in a managed CLO transaction (“LCCM 2021-FL3”), which generated $566.2 million of gross proceeds. We retained a 15.6% subordinate and controlling interest in the LCCM 2021-FL3 and held two additional tranches totaling 6.8% as investments. The Company retained control over major decisions made with respect to the administration of the loans in LCCM 2021-FL3, including broad discretion in managing these loans, and has the ability to appoint the special servicer. LCCM 2021-FL3 is a VIE and we are the primary beneficiary and, therefore, consolidate the VIE. Refer to Note 9, Consolidated Variable Interest Entities for further detail.

Current wording

CLO transaction (“LCCM 2021-FL3”), which generated $566.2 million of gross proceeds to Ladder. On June 16, 2025, the Company redeemed all outstanding obligations of LCCM 2021-FL3. Refer to Note 6, Debt Obligations, Net for further detail.

Previous wording

We are a party to master repurchase agreements with several counterparties to finance our investments in securities. The securities that serve as collateral for these borrowings are typically highly liquid AAA-rated CMBS with relatively short duration and significant subordination. The lenders have sole discretion to determine the market value of the collateral on a daily basis, and, if the estimated market value of the collateral declines, the lenders have the right to require additional collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess collateral.

Current wording

We are a party to master repurchase agreements with several counterparties to finance our investments in securities. As of June 30, 2025, the Company had $294.4 million of securities repurchase debt outstanding. The securities that serve as collateral for these borrowings are typically highly liquid AAA-rated CMBS with relatively short duration and significant subordination. The lenders have sole discretion to determine the market value of the collateral on a daily basis, and, if the estimated market value of the collateral declines, the lenders have the right to require additional collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess collateral.

Previous wording

We typically finance our real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $425.7 million, net of unamortized premiums of $3.5 million as of March 31, 2025, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.2 million of premium amortization, which decreased interest expense for the three months ended March 31, 2025. During the three months ended March 31, 2025, we executed no new term debt agreements.

Current wording

We typically finance our real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $421.9 million, net of unamortized premiums of $3.4 million as of June 30, 2025, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.3 million of premium amortization, which decreased interest expense for the six months ended June 30, 2025. During the six months ended June 30, 2025, we executed no new term debt agreements.

Previous wording

We and our subsidiaries may incur substantial additional debt in the future. However, we are subject to certain restrictions on our ability to incur additional debt in the indentures governing the Notes (the “Indentures”) and our other debt agreements. Under the Indentures, we may not incur certain types of indebtedness unless our consolidated non-funding debt to equity ratio (as defined in the Indentures) is less than or equal to 1.75:1.00 or if the unencumbered assets of the Company and its subsidiaries is less than 120% of their unsecured indebtedness, although our subsidiaries are permitted to incur indebtedness where recourse is limited to the assets and/or the general credit of such subsidiary.

Current wording

We and our subsidiaries may incur substantial additional debt in the future. However, we are subject to certain restrictions on our ability to incur additional debt in the indentures governing the Notes and our other debt agreements. Subsequent to June 30,

Previous wording

Further, certain of our financing arrangements and loans on our real property are secured by our assets, including pledges of the equity of certain subsidiaries or the assets of certain subsidiaries. From time to time, certain of these financing arrangements and loans may prohibit certain of our subsidiaries from paying dividends to us, from making distributions on such subsidiary’s capital stock, from repaying to us any loans or advances to such subsidiary from us or from transferring any of such subsidiary’s property or other assets to us or other of our subsidiaries. In addition, one of our subsidiaries was previously a captive insurance company subject to state regulations, which required regulatory approval for dividend distributions, limiting the Company’s ability to utilize cash held by our subsidiary. Effective January 31, 2025, the subsidiary is no longer licensed as a captive insurer and is no longer subject to state regulation.

Current wording

Further, certain of our financing arrangements and loans on our real property are secured by our assets, including the assets of certain subsidiaries. From time to time, certain of these financing arrangements and loans may prohibit certain of our subsidiaries from paying dividends to us, from making distributions on such subsidiary’s capital stock, from repaying to us any loans or advances to such subsidiary from us or from transferring any of such subsidiary’s property or other assets to us or other of our subsidiaries. In addition, one of our subsidiaries was previously a captive insurance company subject to state regulations, which required regulatory approval for dividend distributions, limiting the Company’s ability to utilize cash held by our subsidiary. Effective January 31, 2025, the subsidiary is no longer licensed as a captive insurer and is no longer subject to state regulation.

Previous wording

Activity for the three months ended March 31, 2025 included fundings of $316.4 million and paydowns of $181.9 million, which contributed to a $137.6 million increase of commercial mortgage loans. Activity for the three months ended March 31, 2025 included securities purchases of $521.8 million, $85.2 million of amortization and paydowns and $39.9 million of sales which contributed to a net increase in our securities portfolio of $395.5 million. In addition, we purchased $1.4 billion of short-term U.S. Treasury securities during the three months ended March 31, 2025, and $1.8 billion matured during the three months ended March 31, 2025.

Current wording

Activity for the three months ended March 31, 2025 included fundings of $316.4 million and paydowns of $181.9 million, which contributed to a $137.6 million increase of commercial mortgage loans. Activity for the three months ended March 31, 2025 included securities purchases of $521.8 million, $85.2 million of amortization and paydowns and sales of $39.9 million, which contributed to a net increase in our securities portfolio of $395.5 million. In addition, we purchased $1.4 billion of short-term U.S. Treasury securities during the three months ended March 31, 2025, and $1.8 billion matured or was sold during the three months ended March 31, 2025.

Previous wording

The $13.8 million decrease in interest income was primarily attributable to net payoffs within our loan portfolio, partially offset by an increase in interest earned from CMBS securities due to purchases. There was a $0.3 billion increase in average securities investments from $1.0 billion for the three months ended December 31, 2024 to $1.3 billion for the three months ended March 31, 2025. There was a $0.3 billion decrease in average loan investments from $1.9 billion for the three months ended December 31, 2024 to $1.6 billion for the three months ended March 31, 2025.

Current wording

The $1.6 million decrease in net interest income was primarily attributable to net payoffs within our loan portfolio, partially offset by an increase in interest earned from CMBS securities due to purchases. There was a $0.5 billion increase in average securities investments from $1.3 billion for the three months ended March 31, 2025 to $1.8 billion for the three months ended June 30, 2025. There was a $0.1 billion increase in average loan investments from $1.6 billion for the three months ended March 31, 2025 to $1.7 billion for the three months ended June 30, 2025.

Previous wording

The $6.9 million decrease in interest expense was primarily attributable to the redemption of all outstanding obligations of LCCM 2021-FL2.

Current wording

The $2.8 million decrease in interest expense was primarily attributable to the redemption of all outstanding obligations of LCCM 2021-FL2 and LCCM 2021-FL3.

Previous wording

The decrease in net interest income before provision for loan losses of $6.9 million is primarily driven by loan payoffs and paydowns, partially offset by the redemption of all outstanding obligations of LCCM 2021-FL2.

Current wording

The increase in net interest income before provision for loan losses of $1.2 million is primarily driven by increased income securities and lower interest expense as a result of the payoffs of LCCM 2021-FL2 and LCCM 2021-FL3.

Previous wording

As of March 31, 2025 and December 31, 2024, the weighted average yield on our mortgage loan receivables was 8.6% and 9.3%, respectively. As of March 31, 2025 and December 31, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.3% and 6.4%, respectively. The decrease in the rate on borrowings against our mortgage loan receivables from March 31, 2025 to December 31, 2024 was primarily due to decreases in prevailing interest rates. As of March 31, 2025, we had outstanding borrowings secured by our mortgage loan receivables equal to 19.9% of the carrying value of our mortgage loan receivables, compared to 42.4% as of December 31, 2024.

Current wording

As of June 30, 2025 and March 31, 2025, the weighted average yield on our mortgage loan receivables was 8.9% and 8.6%, respectively. As of June 30, 2025 and March 31, 2025, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.5% and 6.3%, respectively. The increase in the rate on borrowings against our mortgage loan receivables from June 30, 2025 to March 31, 2025 was primarily due to changes in composition of our borrowings against our mortgage loans. As of June 30, 2025, we had outstanding borrowings secured by our mortgage loan receivables equal to 4.0% of the carrying value of our mortgage loan receivables, compared to 19.9% as of March 31, 2025.

Previous wording

As of March 31, 2025 the weighted average yield on our securities was 5.7%, compared to 6.8% as of March 31, 2024. As of March 31, 2025, we did not have any borrowings against our securities. As of March 31, 2024, the weighted average interest rate on borrowings against our securities was 5.8%. As of March 31, 2024, we had outstanding borrowings secured by our securities equal to 19.6% of the carrying value of our real estate securities.

Current wording

As of June 30, 2025 and March 31, 2025, the weighted average yield on our securities was 5.9% and 5.7%, respectively. As of June 30, 2025, the weighted average interest rate on borrowings against our securities was 4.9%. As of June 30, 2025, we had outstanding borrowings secured by our securities equal to 15.0% of the carrying value of our securities. As of March 31, 2025, we did not have any borrowings against our securities.

Previous wording

Our real estate portfolio is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of March 31, 2025 and December 31, 2024, the weighted average interest rate on mortgage borrowings against our real estate was 6.1% and 6.0%, respectively. As of March 31, 2025, we had outstanding borrowings secured by our real estate equal to 65.0% of the carrying value of our real estate, compared to 66.6% as of December 31, 2024.

Current wording

Our real estate portfolio is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of June 30, 2025 and March 31, 2025, the weighted average interest rate on mortgage borrowings against our real estate was 6.1%. As of June 30, 2025, we had outstanding borrowings secured by our real estate equal to 61.1% of the carrying value of our real estate, compared to 65.0% as of March 31, 2025.

Previous wording

The decrease of $1.6 million in real estate operating income was primarily attributable to sales that occurred during the three months ended December 31, 2024, for which there was no operating income during the three months ended March 31, 2025.

Current wording

The increase of $4.0 million in real estate operating income during the three months ended June 30, 2025 compared to the three months ended March 31, 2025 was primarily attributable to an increase in operations at our properties and the acquisition of real estate that occurred during the three months ended June 30, 2025, for which there was no operating income during the three months ended March 31, 2025. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Previous wording

Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the three months ended March 31, 2025, we recorded $0.2 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended March 31, 2024, we recorded $0.1 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. Income from sales of loans, net is subject to market conditions impacting timing, size and pricing and as such may vary significantly quarter to quarter.

Current wording

Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the three months ended June 30, 2025, we sold one conduit loan for a gain of $3.6 million and we recorded $1.3 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended March 31, 2025, we recorded $0.2 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. Income from sales of loans, net is subject to market conditions impacting timing, size and pricing and as such may vary significantly quarter to quarter.

Previous wording

The increase of $3.8 million of gain on real estate, net during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was the result of property sales during the three months ended March 31, 2025 compared to no property sales during the three months ended March 31, 2024. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.

Current wording

The decrease of $3.8 million of gain on real estate, net during the three months ended June 30, 2025 compared to the three months ended March 31, 2025 was the result of no property sales during the three months ended June 30, 2025 compared to property sales during the three months ended March 31, 2025. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.

Previous wording

We generate fee income on the loans we originate and in which we invest and include unrealized and realized gains and losses on securities within fee and other income. The $1.6 million increase in fee and other income was primarily due to an increase in unrealized and realized gains on securities, and the timing of loan payoffs and late fees received for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

We generate fee income on the loans we originate and in which we invest and include unrealized and realized gains and losses on securities within fee and other income. The $2.5 million decrease in fee and other income was primarily due to a decrease in unrealized and realized gains on securities, and the timing of loan payoffs and late fees received for the three months ended June 30, 2025 as compared to the three months ended March 31, 2025.

Previous wording

The total net result from derivative transactions is comprised of hedging interest expense, realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges. Net result from derivative transactions of $323 thousand was comprised of a realized gain of $288 thousand and an unrealized gain of $35 thousand for the three months ended March 31, 2025. Net result from derivative transactions of $1.5 million was comprised of a realized gain of $1.8 million and an unrealized loss of $0.3 million for the three months ended December 31, 2024. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The gain during the three months ended March 31, 2025 was primarily related to movement in interest rates during the three months ended March 31, 2025.

Current wording

The total net result from derivative transactions is comprised of hedging interest expense, realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges. Net result from derivative transactions of $1.5 million was comprised of a realized gain of $1.7 million and an unrealized loss of $(0.2) million for the three months ended June 30, 2025. Net result from derivative transactions of $0.3 million was comprised of a realized gain of $0.3 million and an unrealized gain of $35 thousand for the three months ended March 31, 2025. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The gain during the three months ended June 30, 2025 was primarily related to movement in interest rates during the three months ended June 30, 2025.

Previous wording

Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The increase of $7.0 million in compensation expense was primarily attributable to the immediate vesting of shares that were granted during the three months ended March 31, 2025, partially offset by a decrease in bonus accrual for the three months ended March 31, 2025 as compared to the three months ended December 31, 2024.

Current wording

Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The decrease of $7.2 million in compensation expense was primarily attributable to the immediate vesting of shares that were granted during the three months ended March 31, 2025, partially offset by an increase in bonus accrual for the three months ended June 30, 2025 as compared to the three months ended March 31, 2025.

Previous wording

Operating expenses are primarily comprised of professional fees, and lease, technology and administrative expenses. The decrease of $0.3 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 was primarily related to a decrease in professional fees, information technology and administrative expenses.

Current wording

Operating expenses are primarily comprised of professional fees, and lease, technology and administrative expenses. The increase of $0.3 million during the three months ended June 30, 2025 compared to the three months ended March 31, 2025 was primarily related to an increase in professional fees, information technology and administrative expenses.

Previous wording

The decrease of $0.9 million in real estate operating expenses during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 was primarily attributable to property sales that occurred during the three months ended December 31, 2024, for which there was no operating expenses during the three months ended March 31, 2025.

Current wording

The increase of $1.5 million in real estate operating expenses during the three months ended June 30, 2025 compared to the three months ended March 31, 2025 was primarily attributable to an increase in operations at our properties and the acquisition of real estate that occurred during the three months ended June 30, 2025, for which there was no operating expenses during the three months ended March 31, 2025. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Previous wording

Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans, and other deal related expenses. The decrease of $0.6 million during the three months ended March 31, 2025 compared to the three months ended December 31, 2024 was primarily attributable to a decrease in deal related expenses.

Current wording

Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans, and other deal related expenses. The decrease of $0.3 million during the three months ended June 30, 2025 compared to the three months ended March 31, 2025 was primarily attributable to a decrease in deal related expenses.