Rithm Property Trust Inc.
For the period ended Sep 30, 2026. Filed Oct 29, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 29, 2026
RPT$11.00-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001614806-26-000020
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-29.
0001614806-26-000026
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 125 previous paragraphs and 121 current paragraphs.
81 unchanged; 33 reworded; 4 added; 10 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Headline inflation increased further during the quarter, primarily reflecting higher energy prices, as West Texas Intermediate crude oil prices rose approximately 30% during the quarter, from $69.50 per barrel at the end of June 2026 to $90.42 per barrel at the end of September 2026. Core consumer price index (“CPI”) was roughly stable.
Current report
Property-level performance improved across most sectors. In multifamily, national vacancy fell 30 basis points to 8.6%, the third consecutive quarterly decline and the lowest level in three years. Year-to-date absorption is the strongest since 2021, and asking rent growth has accelerated to 2.3% year-over-year from 1.1% in the first quarter. Supply continues to fade, with fewer than 480,000 units under construction, the lowest nominal level since 2015. Industrial has turned a corner: net absorption reached 76.6 million square feet, the strongest quarter since early 2023, pushing national vacancy down to 6.8%, its lowest since year-end 2024. Trade policy remains a source of intermittent volatility for logistics and manufacturing tenants.
Current report
The office recovery continued to broaden within its top markets. In Manhattan, availability fell to 13.7%, down 290 basis points from a year ago, with 2.67 million square feet of positive net absorption in the quarter and average asking rents up 4% year-over-year to $80.40 per square foot. Office availability tightened for the tenth consecutive quarter, the longest stretch since 2007, while Midtown has returned to its pre-pandemic availability level. In San Francisco, leasing totaled 3.9 million square feet in Q3, up roughly 77% year-over-year, bringing year-to-date volume to 12.1 million square feet versus 8.1 million a year earlier, with artificial intelligence (“AI”) and technology firms the key drivers. In both markets, the gains remain concentrated in newer, well-located, well-amenitized buildings, so the recovery reflects quality and location more than a broad-based rebound. Capital markets remain open. Private-label CMBS issuance reached $103.5 billion through September, up 11.9% year-over-year, while issuance of CRE collateralized loan obligations was up 45% year-over-year. However, higher borrowing costs could test that momentum.
Current report
Residential Transition Loan Portfolio
Removed paragraphs (10)
Previous report
Recent Developments
Previous report
In July 2026, the Company evaluated a potential common equity offering to finance the acquisition of commercial mortgage assets, including RTLs. In light of prevailing market conditions and available pricing, the Company determined not to pursue the equity raise or the related acquisition at that time.
Previous report
Headline inflation increased further during the quarter, primarily reflecting higher energy prices, even as West Texas Intermediate crude oil prices, which had been up as much as 101% following the outbreak of the conflict with Iran, eased to a gain of approximately 70% by the end of the second quarter as ceasefire efforts progressed, though that truce showed signs of strain by quarter-end. Core inflation measures were roughly stable. The unemployment rate declined modestly from 4.3% in March 2026 to 4.2% in June 2026, though the improvement was driven in part by a decline in labor force participation.
Previous report
Multifamily fundamentals continued to improve during the second quarter of 2026. National vacancy fell to 8.9%, the first meaningful quarterly decline in over a year, as trailing four-quarter absorption of approximately 362,000 units exceeded new deliveries for the first time since early 2022. Rent growth remained modest, with national effective rents essentially flat to down slightly year-over-year, even as asking rents accelerated to 1.5% growth, reflecting a market still working through elevated concession activity as the supply pipeline continues to moderate from its 2024 peak.
Previous report
The CRE market moved through the second quarter of 2026 with improving fundamentals in several sectors, even as the interest rate backdrop grew more uncertain. Following a change in Federal Reserve leadership, the Federal Open Market Committee shifted from signaling further cuts to a notably more hawkish posture, and recent commentary from officials, combined with inflation running above target, has introduced the possibility of a rate increase later this year — a reversal from the cutting-cycle expectations that prevailed as recently as the first quarter; however, in its July meeting, the Federal Reserve continued to maintain the current target range. Longer-term rates moved higher as geopolitical developments affecting energy prices added further inflation risk. Despite this, capital continues to flow into the sector, with underwriting simply reflecting a more disciplined, higher-for-longer rate environment rather than a retreat from CRE broadly.
Previous report
Property-level performance continues to improve unevenly but constructively. Multifamily fundamentals continued to improve, with national vacancy falling to 8.9% — the first meaningful quarterly decline in over a year — as absorption outpaced new deliveries for the first time since early 2022. Rent growth remained modest and still concession-driven, though the moderating supply pipeline continues to support a gradual recovery. Industrial fundamentals are rebalancing after a period of oversupply, aided by continued e-commerce and supply-chain-driven demand, though trade policy remains a source of intermittent volatility for logistics and manufacturing tenants. The office sector's recovery, long concentrated in a handful of markets, gained further traction in the second quarter. New York recorded some of its strongest leasing volume in over a decade, with overall availability falling to its lowest level in several years and Class A asking rents rising as landlords regained pricing power in higher-quality buildings. San Francisco posted one of its largest year-over-year vacancy improvements of any major U.S. market, driven substantially by AI-related tenants absorbing large blocks of previously vacant Class A space, with early signs of that demand beginning to spill into adjacent submarkets. In both markets, the improvement remains concentrated in newer, well-located, and well-amenitized properties, underscoring that the office recovery is a story of quality and location more than a broad-based rebound.
Previous report
Capital remains available for CRE but continues to be selective, with private-label CMBS issuance posting its busiest first half since before the financial crisis, reflecting continued demand for well-sponsored collateral.
Previous report
Net interest income decreased by $0.2 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily driven by a decrease in interest income, partially offset by a decrease in interest expense.
Previous report
Net interest income decreased by $0.3 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily driven by a decrease in interest income, partially offset by a decrease in interest expense.
Previous report
Residential Transition Loans Portfolio
Reworded paragraphs (33)
Previous wording
In May 2026, as part of its investment strategy, the Company acquired multifamily RTLs originated by Genesis and held by Rithm Loan Aggregation Trust (“Seller”), both subsidiaries of Rithm, with an unpaid principal balance (“UPB”) of approximately $102.1 million for an aggregate purchase price of approximately $103.0 million, pursuant to a Flow Mortgage Loan Purchase and Sale Agreement, dated April 29, 2026, between Seller and RPT Seller LLC, as purchaser (the “Flow MLPA”). RTLs are short-term business purpose loans used by real estate investors and developers to financial transitional projects, and include construction loans (provided for ground-up construction, including mid-construction refinancing of ground-up construction and the acquisition of properties), bridge loans (for initial purchase, refinance of completed projects or rental properties) and renovation loans (for acquisition or refinancing of loans for properties requiring renovation, excluding ground-up construction). RTLs are generally secured by a mortgage or first deed of trust lien on residential or multifamily real estate, and each loan is typically backed by a corporate or personal guarantee to provide further credit support for the loan. The Flow MLPA establishes an ongoing flow arrangement pursuant to which the Company may, from time to time, acquire additional RTLs originated by Genesis that meet certain eligibility criteria. The RTLs are serviced by Genesis pursuant to a related servicing agreement.
Current wording
In May 2026, as part of its investment strategy, the Company began acquiring multifamily RTLs originated by Genesis from Rithm Loan Aggregation Trust (“Seller”) pursuant to a Flow Mortgage Loan Purchase and Sale Agreement, dated April 29, 2026, between Seller and RPT Seller LLC, as purchaser (the “Flow MLPA”). Each of Genesis and Seller are subsidiaries of Rithm. RTLs are short-term business purpose loans used by real estate investors and developers to finance transitional projects and include construction loans (provided for ground-up construction, including mid-construction refinancing of ground-up construction and the acquisition of properties), bridge loans (for initial purchase, refinance of completed projects or rental properties) and renovation loans (for acquisition or refinancing of loans for properties requiring renovation, excluding ground-up construction). RTLs are generally secured by a mortgage or first deed of trust lien on residential or multifamily real estate, and each loan is typically backed by a corporate or personal guarantee to provide further credit support for the loan. The Flow MLPA establishes an ongoing flow arrangement pursuant to which the Company may, from time to time, acquire additional RTLs originated by Genesis that meet certain eligibility criteria. The RTLs are serviced by Genesis pursuant to a related servicing agreement.
Previous wording
During the second quarter of 2026, macroeconomic conditions reflected persistent inflation, an easing in labor force participation and continued volatility in energy prices and interest rates amid the ongoing conflict with Iran. The Federal Reserve maintained the federal funds target range at 3.50%–3.75% during its April and June 2026 meetings, with the June meeting marking the first under new Federal Reserve Chair Kevin Warsh, whose accompanying Summary of Economic Projections signaled a more hawkish policy stance and the potential for a rate increase later in 2026, a reversal from the cutting- cycle expectations that had prevailed as recently as the first quarter; however, in its July meeting, the Federal Reserve continued to maintain the current target range.
Current wording
During the third quarter of 2026, macroeconomic conditions reflected persistent inflation, a slowdown in job growth and continued volatility in energy prices and interest rates amid the ongoing conflict with Iran. The Federal Reserve maintained the federal funds target range at 3.50%–3.75% at its July 2026 meeting and then raised the range by 25 basis points to 3.75%–4.00% at its September 2026 meeting, its first increase since 2023 and the first rate change under Federal Reserve Chair Kevin Warsh. The accompanying Summary of Economic Projections indicated the potential for an additional rate increase later in 2026, a reversal from the cutting-cycle expectations that had prevailed as recently as the first quarter.
Previous wording
Market interest rates increased further during the quarter, with the 10-year Treasury yield rising 14 basis points to 4.44%, while market expectations shifted to reflect the possibility of a rate increase later in 2026. Equity markets rallied during the quarter, with the S&P 500 gaining 14.9% and recovering from the prior quarter's decline, driven substantially by strength in technology and artificial intelligence (“AI”) sectors.
Current wording
Market interest rates increased sharply during the quarter, with the 10-year Treasury yield rising 85 basis points to 5.29%, while market expectations continued to reflect the possibility of a further rate increase later in 2026. Equity markets advanced modestly during the quarter, with the S&P 500 gaining 2.0%, following a 14.9% gain in the second quarter of 2026.
Previous wording
Inflation increased further during the second quarter of 2026, primarily reflecting higher energy prices amid the ongoing conflict with Iran. Consumer Price Index (“CPI”) inflation rose from 3.3% in March 2026 to 3.5% in June 2026, driven in part by an increase in energy prices from 12.5% in March 2026 to 15.7% in June 2026 on a year-over-year basis.
Current wording
Inflation increased further during the third quarter of 2026, primarily reflecting higher energy prices amid the ongoing conflict with Iran. CPI inflation rose from 3.5% in June 2026 to 3.7% in September 2026, driven in part by an increase in energy prices from 15.7% in June 2026 to 20.4% in September 2026 on a year-over-year basis.
Previous wording
Core CPI, which excludes food and energy, remained essentially flat at 2.6% in June 2026. Core Personal Consumption Expenditures, the Federal Reserve’s preferred measure of underlying inflation, increased 3.3% in June 2026 compared to the prior-year period. Other inflation indicators showed further increases, with producer price inflation rising to 5.5% in June 2026 from 4.3% in March 2026, and import prices increasing 7.1% over the 12 months ending June 30, 2026, compared to 2.3% over the 12 months ending March 31, 2026.
Current wording
Core CPI, which excludes food and energy, remained essentially flat at 2.6% in September 2026. Core Personal Consumption Expenditures, the Federal Reserve’s preferred measure of underlying inflation, increased 3.0% year-over-year in August 2026, the most recent period for which data was available as of the date of this quarterly report on Form 10-Q, compared to 3.0% year-over-year in June 2026. Other inflation indicators were mixed, with producer price inflation rising to 6.3% in September 2026 from 5.6% in June 2026, and import prices increasing 8.1% over the 12 months ending September 30, 2026, compared to 6.7% over the 12 months ending June 30, 2026.
Previous wording
Treasury yields increased further during the second quarter of 2026. The ten-year Treasury yield rose 14 basis points to 4.44% from 4.30% at the end of March 2026. Shorter-term yields increased more significantly, with the two-year Treasury yield rising 35 basis points to 4.14%. As a result, the yield curve flattened further, with the spread between two-year and ten-year Treasury yields narrowing from 51 basis points to 30 basis points over the quarter. This shift reflects the more hawkish policy outlook communicated by the Federal Reserve following the change in its leadership.
Current wording
Treasury yields increased sharply during the third quarter of 2026. The 10-year Treasury yield rose 85 basis points to 5.29% from 4.44% at the end of June 2026. Shorter-term yields also increased, though by less, with the 2-year Treasury yield rising 74 basis points to 4.88%. As a result, the yield curve steepened modestly, with the spread between 2-year and 10-year Treasury yields widening from 30 basis points to 41 basis points over the quarter. This shift reflects the Federal Reserve’s September rate increase and the more hawkish policy outlook communicated alongside it, together with persistent inflation and elevated energy prices.
Previous wording
Labor market conditions continued to stabilize during the second quarter of 2026, though signals were mixed. The unemployment rate declined by 0.1 percentage points from 4.3% in March 2026 to 4.2% in June 2026, aided in part by a decline in labor force participation. Job growth accelerated during the quarter, with non-farm payrolls increasing by an average of 111,000 per month, compared to an average of 73,000 per month during the first quarter of 2026. However, initial unemployment insurance claims increased, averaging 222,000 per week during the second quarter of 2026, compared to 209,000 per week in the prior quarter.
Current wording
Labor market conditions reflected the low hire low fire environment during the third quarter of 2026, with slower job growth and a stable unemployment rate. The unemployment rate was unchanged at 4.2% in September 2026 compared to June 2026. Job growth slowed during the quarter, with non-farm payrolls increasing by an average of 51,000 per month, compared to an average of 81,000 per month during the second quarter of 2026. However, initial unemployment insurance claims declined, averaging 200,000 per week during the third quarter of 2026, compared to 222,000 per week in the prior quarter.
Previous wording
Housing market activity was mixed during the second quarter of 2026. Existing home sales rose modestly to an annualized rate of 4.09 million, compared to 4.01 million in the first quarter of 2026, though sales remained rangebound amid still-elevated mortgage rates. New home sales declined to an annualized rate of approximately 628,000 in the second quarter of 2026, compared to approximately 659,000 in the first quarter of 2026. Home price growth increased modestly, with the median resale price rising 1.8% year-over-year in June 2026, compared to 1.5% in March 2026. Mortgage rates increased further during the quarter, with the 30-year fixed rate rising to 6.29% from 6.07% at the end of March 2026.
Current wording
Housing market activity softened during the third quarter of 2026. Existing home sales declined to an annualized rate of 3.99 million, compared to 4.13 million in the second quarter of 2026, amid sharply higher mortgage rates. New home sales declined to a seasonally adjusted annualized rate of approximately 676,000 in September 2026, compared to approximately 680,000 in the second quarter of 2026. Home price growth slowed, with the median resale price rising 1.3% year-over-year in September 2026, compared to 2.3% in June 2026. Mortgage rates increased sharply during the quarter, with the 30-year fixed rate rising to 7.10% from 6.29% at the end of June 2026.
Previous wording
Looking ahead, transaction volumes are expected to continue recovering off the multi-year lows set earlier in the decade, supported by improving leasing fundamentals in office and continued resilience in multifamily and industrial. That said, the path of monetary policy remains a genuine swing factor: continued upside inflation surprises could keep financing costs elevated for longer, or push them higher still, tempering the pace of cap rate compression and transaction growth that many market participants had anticipated earlier in the year. Underwriting discipline remains firmly in place given this uncertainty, and investors continue to differentiate sharply by sector, market, and asset quality rather than allocating broadly. As with recent periods, CRE activity is building from an already-depleted base relative to the broader structured products environment, which may leave the sector somewhat less exposed to renewed volatility than it would have been at the top of the prior cycle.
Current wording
Looking ahead, transaction volumes should continue to recover off the multi-year lows set earlier in the decade, supported by the continued AI build out and improving leasing fundamentals across office, multifamily and industrial. The path of monetary policy is the swing factor: with the 10-year above 5% and further Fed tightening possible, financing costs could stay elevated and delay the capitalization rate compression many participants anticipated earlier in the year. Underwriting discipline remains firmly in place, and investors continue to differentiate by sector, market, and asset quality rather than allocating broadly.
Previous wording
The following table summarizes the variances in our results of operations for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. Our results of operations are not necessarily indicative of our future performance.
Current wording
The following table summarizes the variances in our results of operations for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025. Our results of operations are not necessarily indicative of our future performance.
Previous wording
Interest income decreased by $2.0 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily driven by a decrease in income on CMBS as securities were sold during the period, partially offset by income on the purchased RTLs during the current period and an increase in income on RMBS beneficial interests.
Current wording
Interest income increased by $1.6 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily driven by income earned on RTLs acquired in the current year and an increase in income on RMBS beneficial interests due to accelerated accretion as a result of paydowns on the securitizations, partially offset by decreases in income on CMBS as securities were liquidated during the period, residential mortgage loans held-for-investment and custodial float and cash balances.
Previous wording
Interest expense decreased by $1.1 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily driven by a decrease in financing costs related to CMBS and commercial loan investments as the underlying collateral was sold, and lower interest rates on repurchase financing agreements. This was partially offset by an increase in financing costs related to RMBS and residential mortgage loans, attributable to additional securities pledged, and continued paydown of secured bonds financing related to RMBS as a result of collateral runoff.
Current wording
Interest expense decreased by $0.4 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily driven by a decrease in financing costs related to RMBS and residential mortgage loans, attributable to the paydown of borrowing balances. Financing costs related to CMBS and commercial loan investments also decreased as the underlying collateral was sold, but were largely offset by borrowing costs related to the RTLs acquired during the current period.
Previous wording
Interest income decreased by $1.3 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily driven by a decrease in income on CMBS as securities were sold during the period, partially offset by income on the purchased RTLs during the current quarter and an increase in income on RMBS beneficial interests.
Current wording
Interest income decreased by $0.3 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, primarily driven by decreases in income on CMBS as securities were sold during the period, residential mortgage loans held-for-investment and custodial float and cash balances, partially offset by income earned on RTLs acquired during the current year and an increase in income on RMBS beneficial interests due to accelerated accretion as a result of paydowns on the securitizations.
Previous wording
Interest expense decreased by $1.6 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily driven by a decrease in financing costs related to CMBS and commercial loan investments as the underlying collateral was sold, and a decrease in financing costs related to RMBS and residential mortgage loans repurchase financing agreements. This was partially offset by continued paydown of secured bonds financing related to RMBS as a result of collateral runoff.
Current wording
Interest expense decreased by $2.1 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, primarily driven by a decrease in financing costs related to RMBS and residential mortgage loans, attributable to the paydown of borrowing balances. Financing costs related to CMBS and commercial loan investments also decreased as the underlying collateral was sold, partially offset by borrowing costs related to RTLs acquired during the current year.
Previous wording
The average carrying balances of our portfolio and debt for the six months ended June 30, 2026 and 2025 are included in the table below:
Current wording
The average carrying balances of our portfolio and debt for the nine months ended September 30, 2026 and 2025 are included in the table below:
Previous wording
The decrease in the average carrying value of the mortgage loan portfolio for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to paydowns and sales of loans held-for-sale. The decrease in the average carrying value of CMBS for the same comparative period was primarily due to sales of CMBS, combined with loan paydowns. The increase in the average carrying value of RTLs over the same comparative period was attributable to the acquisition of a portfolio of multifamily RTLs under the Flow MLPA during the current quarter.
Current wording
The decrease in the average carrying value of the mortgage loan portfolio for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to paydowns and sales of loans held-for-sale. The decrease in the average carrying value of CMBS for the same comparative period was primarily due to sales of CMBS and principal paydowns. The increase in the average carrying value of RTLs over the same comparative period was attributable to the acquisition of RTLs during the current year.
Previous wording
The decrease in the average carrying value of secured bonds payable was primarily attributable to loan paydown associated with collateral runoff. The decrease in the average balance of repurchase financing agreements was primarily due to the sale of CMBS and the payoff of associated borrowings, partially offset by new repurchase financing agreements entered into to fund the purchase of RTLs.
Current wording
The decrease in the average carrying value of secured bonds payable was primarily attributable to loan paydowns associated with collateral runoff. The decrease in the average carrying value of repurchase financing agreements was primarily due to the sale of CMBS and the payoff of associated borrowings, partially offset by new repurchase financing agreements used to fund the purchase of RTLs.
Previous wording
Total expense increased by $1.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily attributable to higher professional fees related to transaction costs associated with investment activity and the evaluation of a potential common equity offering during the current year period. General and administrative expenses also increased, primarily due to higher allocated personnel costs reflected within service provider costs and share grants. These increases were partially offset by decreases in other expenses and taxes and regulatory expenses.
Current wording
Total expense increased by $0.6 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. This increase was primarily attributable to higher professional fees related to transaction costs associated with investment activity and the evaluation of a potential common equity offering during the current quarter. Related party loan servicing fees also increased due to growth of the purchased RTLs portfolio, partially offset by lower general and administrative expenses, primarily service provider costs and share grants and other expense.
Previous wording
Total other income (loss), net increased by $0.7 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by fair value adjustments on CRE equity method investments and unrealized gains on securities carried at fair value (CMBS). This favorable impact was partially offset by unrealized losses on mortgage loans held-for-sale compared to gains in the prior year period, as well as decreases in equity method investment income and dividend income, reflected within other income (loss), net.
Current wording
Total other income (loss) increased by $1.6 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily driven by favorable fair value adjustments on CRE equity method investments and RTLs, lower impairment on REO and lower unrealized losses on securities carried at fair value (CMBS). These favorable changes were partially offset by unrealized losses on mortgage loans held-for-sale and losses on sales of REO, each compared to gains in the prior year period, as well as decreases in equity method investment income and dividend income, reflected within other income (loss), net.
Previous wording
Total other income (loss) increased by $3.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by fair value adjustments on CRE equity method investments and unrealized gains on securities carried at fair value (CMBS). Additionally, there were losses on the sale of securities during the six months ended June 30, 2025 that were not realized in the six months ended June 30, 2026. This favorable impact was partially offset by unrealized losses on mortgage loans held-for-sale compared to gains in the prior year period, as well as decreases in equity method investment income and dividend income, reflected within other income (loss), net.
Current wording
Total other income (loss) increased by $5.1 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily driven by favorable fair value adjustments on CRE equity method investments and RTLs, lower unrealized losses on securities carried at fair value (CMBS), lower losses on sales of securities and lower impairment on REO. These favorable changes were partially offset by unrealized losses on mortgage loans held-for-sale and losses on sales of REO, each compared to gains in the prior year period, as well as decreases in equity method investment income and dividend income, reflected within other income (loss), net.
Previous wording
Our residential mortgage loan portfolio activity for the three and six months ended June 30, 2026 and 2025 is presented below:
Current wording
Our residential mortgage loan portfolio activity for the three and nine months ended September 30, 2026 and 2025 is presented below:
Previous wording
(1)As of June 30, 2026 and December 31, 2025, our loan portfolio consisted of fixed rate (62.3% of UPB), ARM (6.4% of UPB) and Hybrid ARM (31.3% of UPB); and fixed rate (62.8% of UPB), ARM (6.4% of UPB) and Hybrid ARM (30.8% of UPB), respectively.
Current wording
(1)As of September 30, 2026 and December 31, 2025, our loan portfolio consisted of fixed rate (62.5% of UPB), ARM (6.2% of UPB) and Hybrid ARM (31.3% of UPB); and fixed rate (62.8% of UPB), ARM (6.4% of UPB) and Hybrid ARM (30.8% of UPB), respectively.
Previous wording
Our primary sources of funds are cash provided by net interest income, sales and repayments of our investments, debt financing sources, including secured bonds payable and repurchase financing agreements, and the issuance of equity securities when feasible and appropriate. Our total cash and cash equivalents at June 30, 2026 was $66.7 million.
Current wording
Our primary sources of funds are cash provided by net interest income, sales and repayments of our investments, debt financing sources, including secured bonds payable and repurchase financing agreements, and the issuance of equity securities when feasible and subject to market conditions. Our total cash and cash equivalents at September 30, 2026 was $45.3 million.
Previous wording
Additionally, in February 2026, the Company’s Board of Directors (the “Board”) approved a stock repurchase program, authorizing the repurchase up to an aggregate amount of $10.0 million of its common stock through March 1, 2027. The Company may repurchase shares from time to time through open market purchases, privately negotiated transactions, block trades or other means in accordance with applicable securities laws, subject to market conditions and other considerations. During the six months ended June 30, 2026, the Company repurchased 15,227 shares of common stock for an aggregate purchase price of $0.2 million.
Current wording
Additionally, in February 2026, the Company’s Board of Directors (the “Board”) approved a stock repurchase program, authorizing the repurchase up to an aggregate amount of $10.0 million of its common stock through March 1, 2027. The Company may repurchase shares from time to time through open market purchases, privately negotiated transactions, block trades or other means in accordance with applicable securities laws, subject to market conditions and other considerations. During the nine months ended September 30, 2026, the Company repurchased 15,227 shares of common stock for an aggregate purchase price of $0.2 million.
Previous wording
Currently, our primary sources of financing are repurchase financing agreements and secured bonds payable. As of June 30, 2026, our RMBS and CMBS portfolios had outstanding financing on repurchase financing agreements of $211.4 million, which generally have 90-day terms and are subject to margin calls. Under repurchase financing agreements, we sell a security to a counterparty and concurrently agree to repurchase the same security at a later date for a higher specified price. The sale price represents financing proceeds and the difference between the sale and repurchase prices represents interest on the financing. The price at which the security is sold generally represents the market value of the security less a discount or “haircut,” which can range broadly. During the term of the secured financing agreement, the counterparty holds the security as collateral. If the agreement is subject to margin calls, the counterparty monitors and calculates what it estimates to be the value of the collateral during the term of the agreement. If this value declines by more than a de minimis threshold, the counterparty could require us to post additional collateral, or margin, in order to maintain the initial haircut on the collateral. This margin is typically required to be posted in the form of cash and cash equivalents. We seek to maintain adequate cash reserves and other sources of available liquidity to meet any margin calls or related requirements resulting from decreases in value related to a reasonably possible (in our judgment) change in interest rates.
Current wording
Currently, our primary sources of financing are repurchase financing agreements and secured bonds payable. As of September 30, 2026, our RMBS and CMBS portfolios had outstanding financing on repurchase financing agreements of $169.5 million, which generally have 90-day terms and are subject to margin calls. Under repurchase financing agreements, we sell a security to a counterparty and concurrently agree to repurchase the same security at a later date for a higher specified price. The sale price represents financing proceeds and the difference between the sale and repurchase prices represents interest on the financing. The price at which the security is sold generally represents the market value of the security less a discount or “haircut,” which can range broadly. During the term of the secured financing agreement, the counterparty holds the security as collateral. If the agreement is subject to margin calls, the counterparty monitors and calculates what it estimates to be the value of the collateral during the term of the agreement. If this value declines by more than a de minimis threshold, the counterparty could require us to post additional collateral, or margin, in order to maintain the initial haircut on the collateral. This margin is typically required to be posted in the form of cash and cash equivalents. We seek to maintain adequate cash reserves and other sources of available liquidity to meet any margin calls or related requirements resulting from decreases in value related to a reasonably possible (in our judgment) change in interest rates.
Previous wording
In both February and July 2026, we commenced a public offering of our common stock to raise capital to support additional investments, portfolio repositioning and the growth of our business. We elected not to complete the offerings because the market conditions and available pricing did not meet our objectives. We cannot predict whether or when we will be able to raise additional equity capital or the terms on which such capital may be available, and our ability to obtain borrowings and to raise future equity capital is dependent on our ability to access borrowings and the capital markets on acceptable terms. We continually monitor market conditions for financing opportunities and at any given time may be entering or pursuing one or more of the transactions described above. Our Manager has extensive long-term relationships with investment banks, brokerage firms and commercial banks; however, these relationships do not assure that financing will be available in the amounts, at the times or on the terms we seek.
Current wording
In both February and July 2026, we evaluated a public offering of our common stock to raise capital to support additional investments, portfolio repositioning and the growth of our business. We elected not to complete the offerings because the market conditions and available pricing did not meet our objectives. We cannot predict whether or when we will be able to raise additional equity capital or the terms on which such capital may be available, and our ability to obtain borrowings and to raise future equity capital is dependent on our ability to access borrowings and the capital markets on acceptable terms. We continually monitor market conditions for financing opportunities and at any given time may be entering or pursuing one or more of the transactions described above. Our Manager has extensive long-term relationships with investment banks, brokerage firms and commercial banks; however, these relationships do not assure that financing will be available in the amounts, at the times or on the terms we seek.
Previous wording
With respect to the next 12 months, we expect that our cash on hand, combined with our cash flow provided by our investments and our ability to roll our repurchase financing agreements will be sufficient to satisfy our anticipated liquidity needs with respect to our current investment portfolio, including related financings, potential margin calls and operating expenses. Our ability to roll over short-term borrowings is critical to our liquidity outlook. We have a significant number of near-term maturities, which we expect to be able to refinance. If we cannot repay or refinance our debt on favorable terms, we will need to seek out other sources of liquidity. This assessment does not assume that we will complete an equity offering during that period. Additional capital would, however, be required for us to execute certain elements of our growth and portfolio re-positioning strategy at the pace and scale currently contemplated. While it is inherently more difficult to forecast beyond the next 12 months, we currently expect to meet our long-term liquidity requirements through our cash on hand and, if needed, additional borrowings, proceeds received from secured financing agreements and other financings, proceeds from equity offerings and the liquidation or refinancing of our assets.
Current wording
If we cannot repay or refinance our debt on favorable terms, we will need to seek out other sources of liquidity. This assessment does not assume that we will complete an equity offering during that period. Additional capital would, however, be required for us to execute certain elements of our growth and portfolio re-positioning strategy at the pace and scale currently contemplated. While it is inherently more difficult to forecast beyond the next 12 months, we currently expect to meet our long-term liquidity requirements through our cash on hand and, if needed, additional borrowings, proceeds received from secured financing agreements and other financings, proceeds from equity offerings and the liquidation or refinancing of our assets.
Previous wording
Net cash used in operating activities increased by $2.3 million in the six months ended June 30, 2026, when compared to the six months ended June 30, 2025. The increase was primarily driven by higher cash outflows for operating expenses in connection with one-time transaction costs for the period compared to prior years.
Current wording
Net cash used in operating activities increased by $4.5 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily driven by higher cash outflows for operating expenses in connection with one-time transaction costs for the period compared to prior years.
Previous wording
Net cash provided by investing activities increased by $107.5 million in the six months ended June 30, 2026, when compared to the six months ended June 30, 2025, primarily attributable to (i) cash proceeds from sales of CMBS of approximately $159.4 million in the current period, compared to cash outflows for purchases of CMBS of $49.1 million in the prior year period, partially offset by (ii) cash outflows of approximately $115.7 million for the purchase of RTLs and subsequent draws, compared to no such activity in the prior year period, and (iii) an increase in collections of principal and interest on RMBS, due to higher borrower payments during the current period.
Current wording
Net cash provided by investing activities increased by $60.6 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily attributable to (i) cash proceeds from sales of CMBS of $159.6 million in the current period, compared to cash outflows for purchases of CMBS of $49.1 million in the prior year period, (ii) an increase in collections of principal and interest on mortgage-backed securities of $68.5 million, due to higher borrower payments during the current period, (iii) cash outflows in the prior year period of $17.5 million for equity investments and $16.0 million for the origination of a commercial loan, with no such activity in the current period and (iv) increases in proceeds from sales of mortgage loans of $10.2 million and distributions from affiliates of $9.8 million, partially offset by (v) cash outflows of $199.7 million for the purchase of RTLs and $44.4 million for subsequent draws, compared to no such activity in the prior year period, and (vi) proceeds from sales of RMBS available-for-sale of $14.3 million and paydowns on other investments of $8.0 million in the prior year period, with no such activity in the current period.
Previous wording
Net cash used in financing activities was $118.3 million for the six months ended June 30, 2026, compared to net cash provided by financing activities of $34.3 million for the six months ended June 30, 2025, a decrease of $152.6 million. For the six months ended June 30, 2026, financing activities included a net cash outflow of $152.3 million related to the payoff of repurchase financing agreements associated with the sales and calls of CMBS during the current period. For the six months ended June 30, 2025, financing activities primarily consisted of cash proceeds from the issuance of Series C Preferred Stock of $50.8 million, which did not recur in the current period.
Current wording
Net cash used in financing activities was $84.6 million for the nine months ended September 30, 2026, compared to net cash provided by financing activities of $24.2 million for the nine months ended September 30, 2025, a decrease of $108.8 million. For the nine months ended September 30, 2026, financing activities included net cash outflows of $54.0 million related to repurchase financing agreements, primarily reflecting the payoff of borrowings associated with the sales and calls of mortgage-backed securities during the current period, net of new borrowings to fund the purchase of RTLs, compared to net cash inflows of $4.6 million in the prior year period. For the nine months ended September 30, 2025, financing activities included cash proceeds from the issuance of Series C Preferred Stock of $50.8 million, with no comparable issuance in the current period.
Previous wording
We generally need to distribute at least 90% of our taxable income each year (subject to certain adjustments) to our stockholders to qualify as a REIT under the Code. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities. During the six months ended June 30, 2026, the Company accrued dividends of $2.6 million on Series C Preferred Stock, and in the same period the Company declared the following dividends on common stock:
Current wording
We generally need to distribute at least 90% of our taxable income each year (subject to certain adjustments) to our stockholders to qualify as a REIT under the Code. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital to support our activities. During the nine months ended September 30, 2026, the Company accrued dividends of $3.9 million on Series C Preferred Stock, and in the same period the Company declared the following dividends on common stock:
Previous wording
Other than our investments in RMBS and beneficial interests issued by joint ventures and our investment in a certain equity REIT, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide funding to any such entities. As such, we are not materially exposed to any market, credit, liquidity or financing risk that could arise if we had engaged in such relationships.
Current wording
Other than our investments in RMBS and beneficial interests issued by joint ventures, our investment in a certain equity REIT and our equity method investment in certain investment vehicles that indirectly hold a portfolio of CRE properties, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. Further, we have not guaranteed any obligations of unconsolidated entities. Other than our remaining commitment to make additional capital contributions of up to $3.5 million to these investment vehicles under certain circumstances, we do not have any commitment or intent to provide funding to any such entities. As of September 30, 2026, we had commitments to fund additional advances on existing loans and investments of $112.6 million, which are subject to customary funding conditions and, in the case of RTLs, borrower covenants and other terms and conditions that must be met before we fund the commitments. As of September 30, 2026, we did not have any other commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
Previous wording
For 2026, our contractual obligations include secured bonds payable, repurchase financing agreements and our 2027 Notes. For additional information on our borrowing obligations, see Note 10—Debt in our consolidated financial statements included in this quarterly report.
Current wording
For 2026, our contractual obligations include secured bonds payable, our commitment for capital contributions related to our investment in the Aggregators, unfunded commitments on commercial loans and RTLs, repurchase financing agreements and our 2027 Notes, which mature on September 1, 2027. For additional information on our borrowing obligations, see Note 10—Debt in our consolidated financial statements included in this quarterly report.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Total expense increased by $2.1 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily attributable to higher professional fees related to transaction costs associated with investment activity and the evaluation of potential common equity offerings during the current year period. Related party loan servicing fees due to growth of the purchased RTLs portfolio, and service provider costs and share grants also increased, partially offset by a decrease in other expense.
Current report — wording carried from elsewhere
With respect to the next 12 months, we expect that our cash on hand, combined with our cash flow provided by our investments and our ability to roll our repurchase financing agreements will be sufficient to satisfy our anticipated liquidity needs with respect to our current investment portfolio, including related financings, potential margin calls and operating expenses. Our ability to roll over short-term borrowings is critical to our liquidity outlook. We have a significant number of near-term maturities, including our unsecured debt maturing within 12 months, which we expect to be able to refinance. As of September 30, 2026, we had $110.0 million aggregate principal amount of unsecured senior notes outstanding that mature on September 1, 2027. We intend to refinance these notes prior to maturity, subject to market conditions. We believe our cash on hand, together with expected cash flows from operations and principal repayments on our investments or liquidation of our investments, net of related financing repayments, will be sufficient to meet our anticipated liquidity requirements, including repayment of these notes at maturity if they are not refinanced.
Current report — wording carried from elsewhere
On October 20, 2026, the Company’s Board of Directors declared a common stock cash dividend of $0.36 per share to be paid on November 30, 2026, to stockholders of record as of October 30, 2026.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Total expense increased by $0.5 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily attributable to higher professional fees related to transaction costs associated with investment activity for the period.