Ladder Capital Corp

Previous wording

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes of Ladder Capital Corp included within this Quarterly Report and the Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” within this Quarterly Report and “Risk Factors” withinthe Annual Report for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements as a result of various factors, including but not limited to, those in “Risk Factors” set forth withinthe Annual Report.

Current wording

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes of Ladder Capital Corp included within this Quarterly Report and the Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” within this Quarterly Report and “Risk Factors” within the Annual Report for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements as a result of various factors, including but not limited to, those in “Risk Factors” set forth within the Annual Report.

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 $32.4 billion of commercial real estate loans from our inception in October 2008 through June 30, 2026. During this timeframe, we also acquired $16.6 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.2 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 $32.6 billion of commercial real estate loans from our inception in October 2008 through September 30, 2026. During this timeframe, we also acquired $17.1 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.2 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 June 30, 2026, we originated $17.0 billion of conduit loans, of which $17.0 billion were sold into 76 CMBS securitizations. 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 September 30, 2026, we originated $17.0 billion of conduit loans, of which $17.0 billion were sold into 77 CMBS securitizations. 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 June 30, 2026, we held a portfolio of 88 balance sheet first mortgage loans with an aggregate book value of $2.8 billion. Based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 68.1% at June 30, 2026.

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 September 30, 2026, we held a portfolio of 93 balance sheet first mortgage loans with an aggregate book value of $2.9 billion. Based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 68.5% at September 30, 2026.

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 one conduit loan with an aggregate carrying value of $27.2 million at June 30, 2026.

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 $26.8 million at September 30, 2026.

Previous wording

Net Leased Commercial Real Estate Properties. As of June 30, 2026, we owned 149 single tenant net leased properties with an undepreciated book value of $596.9 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, 2026, our net leased properties comprised a total of 3.4 million square feet, 100% leased with an average age since construction of 13 years and a weighted average remaining lease term of 3.6 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, 2026, we collected 99% of rent on these properties.

Current wording

Net Leased Commercial Real Estate Properties. As of September 30, 2026, we owned 148 single tenant net leased properties with an undepreciated book value of $438.0 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 September 30, 2026, our net leased properties comprised a total of 2.6 million square feet, 100% leased with an average age since construction of 8.1 years and a weighted average remaining lease term of 6.4 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 September 30, 2026, we collected 100% of rent on these properties.

Previous wording

Diversified Commercial Real Estate Properties. As of June 30, 2026, we owned 62 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $460.8 million. During the three months ended June 30, 2026, we collected 98% of rent on these properties.

Current wording

Diversified Commercial Real Estate Properties. As of September 30, 2026, we owned 62 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $463.8 million. During the three months ended September 30, 2026, we collected 99% of rent on these properties.

Previous wording

As of June 30, 2026, the estimated fair value of our portfolio of CMBS investments totaled $1.9 billion in 112 CUSIPs ($16.5 million average investment per CUSIP). Included in the $1.9 billion of CMBS securities are $8.8 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, 98.5% 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, 2026:

Current wording

As of September 30, 2026, the estimated fair value of our portfolio of CMBS investments totaled $2.3 billion in 130 CUSIPs ($17.4 million average investment per CUSIP). Included in the $2.3 billion of CMBS securities are $7.7 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, 98.9% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of September 30, 2026:

Previous wording

As of June 30, 2026, our CMBS investments had a weighted average duration of 3.0 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of June 30, 2026, by property count and market value, respectively, 60.9% and 66.4% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 6.5% and 12.5%, 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 0.6% to 6.1% by property count and 0.1% to 6.1% by market value.

Current wording

As of September 30, 2026, 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 September 30, 2026, by property count and market value, respectively, 60.7% and 64.7% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 6.1% and 12.2%, 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 0.6% to 5.7% by property count and 0.2% to 5.8% by market value.

Previous wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of June 30, 2026, the carrying value of our unconsolidated ventures was $41.5 million.

Current wording

Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of September 30, 2026, the carrying value of our unconsolidated ventures was $40.6 million.

Previous wording

As of June 30, 2026, we had $2.2 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $589.1 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”), $500.0 million in aggregate principal amount of 5.50% senior notes due 2030 (the “2030 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” collectively with the 2027 Notes, the 2029 Notes, and the 2030 Notes, the “Notes”). The Company currently guarantees the obligations under the Notes and the indenture. During the six months ended June 30, 2026, the Company repurchased $10.4 million of the 2027 Notes, recognizing gain on bond repurchase of $0.1 million.

Current wording

As of September 30, 2026, we had $2.2 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $587.0 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”), $500.0 million in aggregate principal amount of 5.50% senior notes due 2030 (the “2030 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” collectively with the 2027 Notes, the 2029 Notes, and the 2030 Notes, the “Notes”). The Company currently guarantees the obligations under the Notes and the indenture. During the nine months ended September 30, 2026, the Company repurchased $12.5 million of the 2027 Notes, recognizing gain on bond repurchase of $0.1 million.

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 $4.2 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of June 30, 2026.

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 $4.5 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of September 30, 2026.

Previous wording

Our Unsecured Revolving Credit Facility is available on a revolving basis to finance our working capital needs and for general corporate purposes. On February 20, 2026, the Company increased the aggregate maximum borrowing amount of the Unsecured Revolving Credit Facility to $1.25 billion. Borrowings under the Unsecured Revolving Credit Facility bear interest at a rate equal to term SOFR plus a margin of 125 basis points as of June 30, 2026. 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, 2026, we had $202.0 million in outstanding borrowings on the Unsecured Revolving Credit Facility.

Current wording

Our Unsecured Revolving Credit Facility is available on a revolving basis to finance our working capital needs and for general corporate purposes. On February 20, 2026, the Company increased the aggregate maximum borrowing amount of the Unsecured Revolving Credit Facility to $1.25 billion. Borrowings under the Unsecured Revolving Credit Facility bear interest at a rate equal to term SOFR plus a margin of 125 basis points as of September 30, 2026. 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 September 30, 2026, we had $508.0 million in outstanding borrowings on the Unsecured Revolving Credit Facility.

Previous wording

We are a party to multiple committed loan repurchase agreement facilities, totaling $570.0 million of credit capacity. As of June 30, 2026, we had $107.2 million of borrowings outstanding. Assets pledged as collateral under these facilities are generally limited to first lien whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans.

Current wording

We are a party to multiple committed loan repurchase agreement facilities, totaling $570.0 million of credit capacity. As of September 30, 2026, we had $107.5 million of borrowings outstanding. Assets pledged as collateral under these facilities are generally limited to first lien whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans.

Previous wording

We are a party to master repurchase agreements with several counterparties to finance our investments in securities. As of June 30, 2026, the Company had $825.9 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.

Current wording

We are a party to master repurchase agreements with several counterparties to finance our investments in securities. As of September 30, 2026, the Company had $874.8 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 $387.5 million, including premiums and deferred financing costs of $1.5 million as of June 30, 2026, 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, 2026. During the six months ended June 30, 2026, we executed one new term debt agreement to finance properties in our real estate portfolio with a carrying amount of $8.1 million. During the six months ended June 30, 2025, the Company 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 $374.7 million, including premiums and deferred financing costs of $1.2 million as of September 30, 2026, 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 $0.5 million of premium amortization, which decreased interest expense for the nine months ended September 30, 2026. During the nine months ended September 30, 2026, we executed four new term debt agreements to finance properties in our real estate portfolio with a carrying amount of $78.4 million. During the nine months ended September 30, 2025, the Company executed no new term debt agreements.

Previous wording

June 30, 2026. The average balance was $2.1 billion for the three months ended June 30, 2026 and March 31, 2026. There was a $0.2 billion increase in average loan investments from $2.5 billion for the three months ended March 31, 2026 to $2.7 billion for the three months ended June 30, 2026.

Current wording

The $2.2 million increase in interest income was primarily attributable to net originations within our loan portfolio. There was a $5.7 million decrease in average securities investments from the three months ended June 30, 2026 to three months ended September 30, 2026. The average balance was $2.1 billion for the three months ended September 30, 2026 and June 30, 2026. There was a $0.2 billion increase in average loan investments from $2.7 billion for the three months ended June 30, 2026 to $2.9 billion for the three months ended September 30, 2026.

Previous wording

The $4.4 million increase in interest expense was primarily attributable to an increase in usage of our Unsecured Corporate Revolver, our Term Loan Facility and our securities and loan repurchase facilities.

Current wording

The $1.6 million increase in interest expense was primarily attributable to an increase in usage of our Unsecured Corporate Revolver, our Term Loan Facility and our securities and loan repurchase facilities.

Previous wording

As of June 30, 2026 and March 31, 2026, the weighted average yield on our mortgage loan receivables was 7.2% and 8.0%, respectively. As of June 30, 2026, the weighted average interest rate on borrowings against our mortgage loan receivables was 5.1%. As of June 30, 2026, we had outstanding borrowings secured by our mortgage loan receivables equal to 3.8% of the carrying value of our mortgage loan receivables. As of March 31, 2026, we did not have any borrowings against our mortgage loan receivables.

Current wording

As of September 30, 2026 and June 30, 2026, the weighted average yield on our mortgage loan receivables was 7.4% and 7.2%, respectively. As of September 30, 2026, the weighted average interest rate on borrowings against our mortgage loan receivables was 5.3%, compared to 5.1% as of June 30, 2026. As of September 30, 2026, we had outstanding borrowings secured by our mortgage loan receivables equal to 3.6% of the carrying value of our mortgage loan receivables, compared to 3.8% as of June 30, 2026.

Previous wording

As of June 30, 2026 and March 31, 2026, the weighted average yield on our securities was 5.2% and 5.3%, respectively. As of June 30, 2026 and March 31, 2026, the weighted average interest rate on borrowings against our securities was 4.1% and 4.2%, respectively. As of June 30, 2026, we had outstanding borrowings secured by our securities equal to 44.4% of the carrying value of our securities, compared to 45.1% as of March 31, 2026.

Current wording

As of September 30, 2026 and June 30, 2026, the weighted average yield on our securities was 5.5% and 5.2%, respectively. As of September 30, 2026 and June 30, 2026, the weighted average interest rate on borrowings against our securities was 4.4% and 4.1%, respectively. As of September 30, 2026, we had outstanding borrowings secured by our securities equal to 38.6% of the carrying value of our securities, compared to 44.4% as of June 30, 2026.

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 June 30, 2026, we recorded $0.6 million of realized gains on the securitization of one conduit loan and $0.4 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended March 31, 2026, we recorded $0.4 million 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 September 30, 2026, we recorded $0.4 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended June 30, 2026, we recorded $0.6 million of realized gains on the securitization of one conduit loan and $0.4 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.

Previous wording

The decrease of $3.8 million of gain on real estate, net during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was the result of no property sales during the six months ended June 30, 2026 compared to one property sale for a gain of $3.8 million during the six months ended June 30, 2025. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.

Current wording

The increase of $65.6 million of gain on real estate, net during the three months ended September 30, 2026 compared to the three months ended June 30, 2026 was the result of one property sale for a gain of $65.6 million during the three months ended September 30, 2026 compared to no property sales during the three months ended June 30, 2026. 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 also include unrealized and realized gains and losses on securities within fee and other income. The $2.2 million increase in fee and other income was primarily due to lower unrealized losses on securities for the three months ended June 30, 2026 as compared to the three months ended March 31, 2026.

Current wording

We generate fee income on the loans we originate and in which we invest and also include unrealized and realized gains and losses on securities within fee and other income. The $9.1 million decrease in fee and other income was primarily due to a realized loss of $4.5 million associated with a fixed-rate CMBS and higher unrealized losses on securities for the three months ended September 30, 2026 as compared to the three months ended June 30, 2026.

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 $0.2 million was comprised of a realized gain of $0.5 million and an unrealized loss of $0.3 million for the three months ended June 30, 2026. Net result from derivative transactions of $0.3 million was comprised of a realized gain of $0.2 million and an unrealized gain of $0.1 million for the three months ended March 31, 2026. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were 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, 2026 was primarily related to movement in interest rates during the three months ended June 30, 2026.

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 $0.5 million was comprised of a realized gain of $0.3 million and an unrealized gain of $0.2 million for the three months ended September 30, 2026. Net result from derivative transactions of $0.2 million was comprised of a realized gain of $0.5 million and an unrealized loss of $0.3 million for the three months ended June 30, 2026. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were 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 September 30, 2026 was primarily related to movement in interest rates during the three months ended September 30, 2026.

Previous wording

Income (loss) from our investment in unconsolidated ventures totaled $0.3 million and $(0.3) million for the three months ended June 30, 2026 and March 31, 2026, respectively. The increase in income from investment in unconsolidated ventures is primarily attributable to an increase in property operations.

Current wording

Income (loss) from our investment in unconsolidated ventures totaled $(0.8) million and $0.3 million for the three months ended September 30, 2026 and June 30, 2026, respectively. The decrease in income from investment in unconsolidated ventures is primarily attributable to a decrease in property operations.

Previous wording

Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The decrease of $10.1 million in compensation expense was primarily attributable to the immediate vesting of shares that were granted during the three months ended March 31, 2026, partially offset by an increase in bonus accrual for the three months ended June 30, 2026 as compared to the three months ended March 31, 2026.

Current wording

Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The increase of $3.9 million in compensation expense was primarily attributable to an increase in bonus accrual as a result of an increase in earnings for the three months ended September 30, 2026, as compared to the three months ended June 30, 2026.

Previous wording

The increase of $3.6 million in real estate operating income during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 was primarily attributable to an increase in operations at our properties and the acquisition of real estate that occurred since January 1, 2026, for which there was not a full quarter of operating income during the three months ended March 31, 2026. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Current wording

The increase of $1.8 million in real estate operating expenses during the three months ended September 30, 2026 compared to the three months ended June 30, 2026 was primarily attributable to the foreclosure of real estate that occurred in June 2026, for which there was not a full quarter of operating income during the three months ended June 30, 2026 and an increase in operations at our properties. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

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 June 30, 2026 and March 31, 2026, the weighted average interest rate on mortgage borrowings against our real estate was 5.9%. As of June 30, 2026, we had outstanding borrowings secured by our real estate equal to 49.9% of the carrying value of our real estate, compared to 49.5% as of March 31, 2026.

Current wording

Our real estate portfolio is comprised of non-interest bearing assets; however, interest expense associated with debt financing related to the Company’s owned real estate is included in Interest expense on real estate. As of September 30, 2026 and June 30, 2026, the weighted average interest rate on mortgage borrowings against our real estate was 6.3% and 5.9%, respectively. As of September 30, 2026, we had outstanding borrowings secured by our real estate equal to 56.9% of the carrying value of our real estate, compared to 49.9% as of June 30, 2026.

Previous wording

Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan-related expenses. The increase during the three months ended June 30, 2026 as compared to March 31, 2026 of $0.6 million was primarily attributable to an increase in loan-related expenses.

Current wording

Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan-related expenses. The increase during the three months ended September 30, 2026 as compared to June 30, 2026 of $0.2 million was primarily attributable to an increase in loan-related expenses.

Previous wording

The $0.4 million increase during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 in depreciation and amortization is primarily attributable to the acquisition of real estate. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Current wording

The $1.3 million decrease during the three months ended September 30, 2026 compared to the three months ended June 30, 2026 in depreciation and amortization is primarily attributable to the sale of real estate, partially offset by the acquisition of real estate that occurred in June 2026, for which there was not a full quarter of depreciation and amortization during the three months ended June 30, 2026. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Previous wording

Most of our consolidated income tax provision relates to business units held in our TRSs. The increase in expense during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 is primarily a result of changes in our income in our TRSs.

Current wording

Most of our consolidated income tax provision relates to business units held in our TRSs. The decrease in expense during the three months ended September 30, 2026 compared to the three months ended June 30, 2026 is primarily a result of changes in our income in our TRSs.

Previous wording

A discussion regarding our results of operations for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 is presented below.

Current wording

A discussion regarding our results of operations for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 is presented below.

Previous wording

Activity for the six months ended June 30, 2026 included fundings of $1.1 billion, paydowns of $381.6 million, and the sale of $26.0 million of two conduit loans, which contributed to a $572.0 million increase in commercial mortgage loans. Activity for the six months ended June 30, 2026 included securities purchases of $608.3 million, amortization and paydowns of $193.5 million and sales of $630.5 million, which contributed to a net decrease in our securities portfolio of $215.8 million. Activity for the six months ended June 30, 2026 included $88.0 million of real estate acquired via foreclosure.

Current wording

Activity for the nine months ended September 30, 2026 primarily included fundings of $1.3 billion, paydowns of $419.5 million, and proceeds from the sale of $26.2 million of two conduit loans, which contributed to a $736.6 million increase in commercial mortgage loans. Activity for the nine months ended September 30, 2026 included securities purchases of $1.1 billion, amortization and paydowns of $230.9 million and sales of $664.1 million, which contributed to a net increase in our securities portfolio of $188.0 million. Activity for the nine months ended September 30, 2026 included $166.3 million of real estate sales and $88.0 million of real estate acquired via foreclosure.

Previous wording

Activity for the six months ended June 30, 2025 included fundings of $476.0 million and paydowns of $373.3 million, which contributed to a $3.8 million increase in commercial mortgage loans. Activity for the six months ended June 30, 2025 included securities purchases of $1.1 billion, amortization and paydowns of $201.3 million and sales of $59.4 million, which contributed to a net increase in our securities portfolio of $885.6 million. In addition, we purchased $1.6 billion of short-term U.S. Treasury securities during the six months ended June 30, 2025. Nearly the entire short-term U.S. Treasury securities portfolio, or $2.7 billion, matured or was sold during the six months ended June 30, 2025.

Current wording

Activity for the nine months ended September 30, 2025 included fundings of $952.1 million and paydowns of $502.2 million, which contributed to a $330.3 million increase in commercial mortgage loans. Activity for the nine months ended September 30, 2025 included securities purchases of $1.5 billion, amortization and paydowns of $365.6 million and sales of $316.7 million, which contributed to a net increase in our securities portfolio of $859.7 million. In addition, we purchased $1.6 billion of short-term U.S. Treasury securities during the nine months ended September 30, 2025. The entire short-term U.S. Treasury securities portfolio, or $2.7 billion, matured or was sold during the nine months ended September 30, 2025.

Previous wording

The $25.4 million increase in interest income was primarily attributable to net originations within our loan portfolio and an increase in interest earned from CMBS securities due to net purchases, partially offset by lower interest income on short‑term U.S. Treasury securities, resulting from the sale and maturity of the full portfolio. There was a $0.9 billion increase in average loan investments from $1.7 billion for the six months ended June 30, 2025 to $2.6 billion for the six months ended June 30, 2026. There was a $0.6 billion increase in average securities investments from $1.5 billion for the six months ended June 30, 2025 to $2.1 billion for the six months ended June 30, 2026.

Current wording

The $34.0 million increase in interest income was primarily attributable to net originations within our loan portfolio and an increase in interest earned from CMBS securities due to net purchases, partially offset by lower interest income on short‑term U.S. Treasury securities, resulting from the sale and maturity of the full portfolio. There was a $1.0 billion increase in average loan investments from $1.7 billion for the nine months ended September 30, 2025 to $2.7 billion for the nine months ended September 30, 2026. There was a $0.4 billion increase in average securities investments from $1.7 billion for the nine months ended September 30, 2025 to $2.1 billion for the nine months ended September 30, 2026.

Previous wording

The $21.6 million increase in interest expense is primarily related to an increase in borrowings on our securities repurchase facilities and our Unsecured Corporate Revolver, and the issuance of our 2030 Notes and utilization of our Term Loan Facility, partially offset by the redemption of all outstanding obligations of LCCM 2021-FL2 and LCCM 2021-FL3, lower outstanding balances on our loan repurchase facilities and the payoff of mortgage loan debt.

Current wording

The $37.8 million increase in interest expense is primarily related to an increase in borrowings on our securities repurchase facilities and our Unsecured Corporate Revolver, and the issuance of our 2030 Notes and utilization of our Term Loan Facility, partially offset by the redemption of all outstanding obligations of LCCM 2021-FL2 and LCCM 2021-FL3, lower outstanding balances on our loan repurchase facilities and the payoff of mortgage loan debt.

Previous wording

As of June 30, 2026, the weighted average yield on our mortgage loan receivables was 7.2%, compared to 8.9% as of June 30, 2025. As of June 30, 2026, the weighted average interest rate on borrowings against our mortgage loan receivables was 5.1%. As of June 30, 2025, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.5%. As of June 30, 2026 we had outstanding borrowings secured by our mortgage loan receivables equal to 3.8%, compared to 4.0% of the carrying value of our mortgage loan receivables as of June 30, 2025.

Current wording

As of September 30, 2026, the weighted average yield on our mortgage loan receivables was 7.4%, compared to 8.1% as of September 30, 2025. As of September 30, 2026, the weighted average interest rate on borrowings against our mortgage loan receivables was 5.3%. As of September 30, 2025, we did not have any borrowings against our mortgage loan receivables. As of September 30, 2026 we had outstanding borrowings secured by our mortgage loan receivables equal to 3.6%.

Previous wording

As of June 30, 2026, the weighted average yield on our securities was 5.2%, compared to 5.9% as of June 30, 2025. As of June 30, 2026, the weighted average interest rate on borrowings against our securities was 4.1%, compared to 4.9% as of June 30, 2025. As of June 30, 2026, we had outstanding borrowings secured by our securities equal to 44.4% of the carrying value of our real estate securities, compared to 15.0% as of June 30, 2025.

Current wording

As of September 30, 2026, the weighted average yield on our securities was 5.5%, compared to 5.7% as of September 30, 2025. As of September 30, 2026, the weighted average interest rate on borrowings against our securities was 4.4%, compared to 4.7% as of September 30, 2025. As of September 30, 2026, we had outstanding borrowings secured by our securities equal to 38.6% of the carrying value of our real estate securities, compared to 18.6% as of September 30, 2025.

Previous wording

The increase of $10.6 million in real estate operating income was primarily attributable to real estate acquisitions that occurred subsequent to June 30, 2025 through June 30, 2026, partially offset by sales that occurred during the same period. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.

Current wording

The increase of $14.6 million in real estate operating income was primarily attributable to real estate acquisitions that occurred subsequent to September 30, 2025 through September 30, 2026, partially offset by sales that occurred during the same period. 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 six months ended June 30, 2026, we recorded $1.0 million of realized gains on the securitization of two conduit loans and $0.8 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the six months ended June 30, 2025, we sold one conduit loan for a gain of $3.6 million and we recorded $1.4 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.

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 nine months ended September 30, 2026, we recorded $1.0 million of realized gains on the sale of one conduit loan and securitization of one conduit loan and $1.1 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the nine months ended September 30, 2025, we sold one conduit loan for a gain of $3.6 million and we recorded $1.1 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.