Ares Commercial Real Estate Corp

Previous wording

On April 14, 2026, we closed a $25.0 million senior mortgage loan as part of a co-investment on a multifamily property located in Tennessee. At closing, the outstanding principal balance was $22.2 million. The loan has a per annum interest rate of SOFR plus 2.55%.

Current wording

•We closed a $25.0 million senior mortgage loan as part of a co-investment on a multifamily property located in Tennessee.

Previous wording

On April 16, 2026, we closed a $69.7 million senior mortgage loan as part of a co-investment on a portfolio of self storage properties located in various states. At closing, the outstanding principal balance was $64.7 million. The loan has a per annum interest rate of SOFR plus 2.70%.

Current wording

•We closed a $69.7 million senior mortgage loan as part of a co-investment on a portfolio of self storage properties located in various states.

Previous wording

•We closed a $143.5 million senior mortgage loan as part of a co-investment on a retail property located in California, of which $75.0 million is classified as held for investment and $68.5 million is classified as held for sale.

Current wording

•We sold a $68.5 million portion of a $143.5 million senior mortgage loan as part of a co-investment on a retail property located in California. At the time of the sale, the outstanding principal balance of the portion of the loan that was sold was $61.4 million, which was classified as held for sale in our consolidated balance sheets. The portion of the loan was sold at fair value, which was equal to our carrying amount, and no gain or loss was recognized on the sale. We continue to hold the remaining $75.0 million portion of the senior mortgage loan, which had an outstanding principal balance of $67.3 million as of June 30, 2026 and is classified as held for investment.

Previous wording

During the first quarter of 2026, the U.S. economy continued to expand, supported by continued consumer spending with moderating expectations for U.S. gross domestic product growth and low levels of unemployment amidst heightened geopolitical tensions. During this time, the commercial real estate market exhibited stable to improving conditions. Specifically, individual property transaction volumes expanded while broad market indices demonstrated flat to increasing commercial real estate values on a year-over-year basis.

Current wording

During the second quarter of 2026, the U.S. economy continued to expand, supported by continued consumer spending with moderating expectations for U.S. gross domestic product growth and low levels of unemployment amidst heightened geopolitical tensions. During this time, the commercial real estate market exhibited stable to moderating conditions. Specifically, individual property transaction volumes slowed in the second quarter while broad market indices demonstrated flat to increasing commercial real estate values.

Previous wording

Aiding valuations, new construction starts remained near or at 10-year lows across multifamily, industrial, retail and office property types and lending markets remained supportive given increased activity from capital markets and banks.

Current wording

Aiding valuations, new construction starts remained near or at 10-year lows across multifamily, industrial, retail and office property types and lending markets remained supportive given increased activity from capital markets and banks. During the quarter, the Federal Reserve held interest rates steady and restated its commitment towards its inflation goals, which may result in future monetary policy actions. There is no certainty that there will be a change in interest rates or of the magnitude or pace of potential changes.

Previous wording

On July 30, 2025, our board of directors extended the Repurchase Program of up to $50.0 million, which is expected to be in effect until July 31, 2026, or until the approved dollar amount has been used to repurchase shares. Pursuant to the Repurchase Program, we may repurchase shares of our common stock in amounts, at prices and at such times as we deem appropriate, subject to market conditions and other considerations, including all applicable legal requirements. Repurchases may include purchases on the open market or privately negotiated transactions, under Rule 10b5-1 trading plans, under accelerated share repurchase programs, in tender offers and otherwise. The Repurchase Program does not obligate us to acquire any particular amount of shares of our common stock and may be modified or suspended at any time at our discretion. During the three months ended March 31, 2026, we did not repurchase any shares through the Repurchase Program.

Current wording

On July 30, 2025, our board of directors extended the Repurchase Program of up to $50.0 million, which was expected to be in effect until July 31, 2026, or until the approved dollar amount had been used to repurchase shares. On July 28, 2026, our board of directors further extended the Repurchase Program of up to $50.0 million, which is expected to be in effect until July 31, 2027, or until the approved dollar amount has been used to repurchase shares. Pursuant to the Repurchase Program, we may repurchase shares of our common stock in amounts, at prices and at such times as we deem appropriate, subject to market conditions and other considerations, including all applicable legal requirements. Repurchases may include purchases on the open market or privately negotiated transactions, under Rule 10b5-1 trading plans, under accelerated share repurchase programs, in tender offers and otherwise. The Repurchase Program does not obligate us to acquire any particular amount of shares of our common stock and may be modified or suspended at any time at our discretion. During the three and six months ended June 30, 2026, we did not repurchase any shares through the Repurchase Program.

Previous wording

As of March 31, 2026, our portfolio included 35 loans held for investment, excluding 197 loans that were repaid, sold, converted to real estate owned or written-off since inception. As of March 31, 2026, the aggregate originated commitment under these loans at closing was approximately $1.9 billion and outstanding principal was $1.7 billion. During the three months ended March 31, 2026, we funded approximately $201.7 million of outstanding principal and received repayments of $94.3 million of outstanding principal. As of March 31, 2026, 88.5% of our loans have SOFR floors, with a weighted average floor of 1.64%, calculated based on loans with SOFR floors. References to SOFR or “S” are to 30-day SOFR (unless otherwise specifically stated).

Current wording

As of June 30, 2026, our portfolio included 38 loans held for investment, excluding 197 loans that were repaid, sold, converted to real estate owned or written-off since inception. As of June 30, 2026, the aggregate originated commitment under these loans at closing was approximately $2.0 billion and outstanding principal was $1.8 billion. During the six months ended June 30, 2026, we funded approximately $339.6 million of outstanding principal and received repayments of $110.7 million of outstanding principal. As of June 30, 2026, 89.2% of our loans have SOFR floors, with a weighted average floor of 1.71%, calculated based on loans with SOFR floors. References to SOFR or “S” are to 30-day SOFR (unless otherwise specifically stated).

Previous wording

Our board of directors declared a regular cash dividend of $0.15 per common share for the second quarter of 2026. The second quarter 2026 dividend will be payable on July 15, 2026 to common stockholders of record as of June 30, 2026.

Current wording

Our board of directors declared a regular cash dividend of $0.15 per common share for the third quarter of 2026. The third quarter 2026 dividend will be payable on October 15, 2026 to common stockholders of record as of September 30, 2026.

Previous wording

The following table sets forth a summary of our consolidated results of operations for the three months ended March 31, 2026 and 2025 ($ in thousands):

Current wording

The following table sets forth a summary of our consolidated results of operations for the three and six months ended June 30, 2026 and 2025 ($ in thousands):

Previous wording

The following tables set forth select details of our consolidated results of operations for the three months ended March 31, 2026 and 2025 ($ in thousands):

Current wording

The following tables set forth select details of our consolidated results of operations for the three and six months ended June 30, 2026 and 2025 ($ in thousands):

Previous wording

For the three months ended March 31, 2026 and 2025, net interest margin was approximately $7.5 million and $9.3 million, respectively. For the three months ended March 31, 2026 and 2025, interest income of $24.9 million and $27.5 million, respectively, was generated by weighted average earning assets of $1.7 billion and $1.5 billion, respectively, offset by $17.4 million and $18.2 million, respectively, of interest expense, unused fees and amortization of deferred loan costs. The weighted average borrowings under the Secured Funding Agreements, the Secured Term Loan and securitization debt, as applicable, were $1.2 billion for the three months ended March 31, 2026 and $1.1 billion for the three months ended March 31, 2025. The decrease in net interest margin for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is primarily due to a decrease in SOFR rates on our loans held for investment and a decrease in the weighted average interest-bearing cash and cash equivalents balances held for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Current wording

For the six months ended June 30, 2026 and 2025, net interest margin was approximately $16.1 million and $16.3 million, respectively. For the six months ended June 30, 2026 and 2025, interest income of $52.7 million and $50.6 million, respectively, was generated by weighted average earning assets of $1.8 billion and $1.5 billion, respectively, offset by $36.5 million and $34.3 million, respectively, of interest expense, unused fees and amortization of deferred loan costs. The weighted average borrowings under the Secured Funding Agreements, the Secured Term Loan and securitization debt, as applicable, for the six months ended June 30, 2026 and 2025 were $1.2 billion and $1.0 billion, respectively. The decrease in net interest margin for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 is primarily due to a decrease in SOFR rates on our loans held for investment and a decrease in the weighted average interest-bearing cash and cash equivalents balances held for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Previous wording

On September 19, 2024, we acquired legal title to a multi-building office property located in North Carolina through a deed in lieu of foreclosure. Prior to September 19, 2024, the office property collateralized a $68.6 million senior mortgage loan that we held that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the May 2024 maturity date. In conjunction with the deed in lieu of foreclosure, we derecognized the $68.6 million senior mortgage loan and recognized the office property as real estate owned. Revenues from this property consist primarily of rental revenue from operating leases. For the three months ended March 31, 2026 and 2025, revenue from real estate owned related to this property was $2.7 million and $2.4 million, respectively.

Current wording

On September 19, 2024, we acquired legal title to a multi-building office property located in North Carolina through a deed in lieu of foreclosure. Prior to September 19, 2024, the office property collateralized a $68.6 million senior mortgage loan that we held that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the May 2024 maturity date. In conjunction with the deed in lieu of foreclosure, we derecognized the $68.6 million senior mortgage loan and recognized the office property as real estate owned. Revenues from this property consist primarily of rental revenue from operating leases. For the three and six months ended June 30, 2026, revenue from real estate owned related to this property was $2.6 million and $5.3 million, respectively. For the three and six months ended June 30, 2025, revenue from real estate owned related to this property was $2.3 million and $4.7 million, respectively. The increase in revenue from real estate owned related to this property for both the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 is primarily due to an increase in rental revenue from new operating leases.

Previous wording

On September 8, 2023, we acquired legal title to a mixed-use property located in Florida through a consensual foreclosure. Prior to September 8, 2023, the mixed-use property collateralized an $82.9 million senior mortgage loan that we held that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the February 2023 maturity date. In conjunction with the consensual foreclosure, we derecognized the $82.9 million senior mortgage loan and recognized the mixed-use property as real estate owned. Revenues from this property consist primarily of rental revenue from operating leases. For the three months ended March 31, 2026 and 2025, revenue from real estate owned related to this property was $3.2 million and $3.3 million, respectively.

Current wording

On September 8, 2023, we acquired legal title to a mixed-use property located in Florida through a consensual foreclosure. Prior to September 8, 2023, the mixed-use property collateralized an $82.9 million senior mortgage loan that we held that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the February 2023 maturity date. In conjunction with the consensual foreclosure, we derecognized the $82.9 million senior mortgage loan and recognized the mixed-use property as real estate owned. Revenues from this property consist primarily of rental revenue from operating leases. For the three and six months ended June 30, 2026, revenue from real estate owned related to this property was $3.2 million and $6.4 million, respectively. For the three and six months ended June 30, 2025, revenue from real estate owned related to this property was $3.3 million and $6.5 million, respectively.

Previous wording

See the Related Party Expenses, Other Expenses and Expenses from Real Estate Owned discussions below for the cause of the changes in operating expenses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Current wording

See the Related Party Expenses, Other Expenses and Expenses from Real Estate Owned discussions below for the cause of the changes in operating expenses for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, respectively.

Previous wording

For the three months ended March 31, 2026, related party expenses included $2.4 million in management fees due to our Manager pursuant to the Management Agreement. No incentive fees were incurred for the three months ended March 31, 2026. For the three months ended March 31, 2026, related party expenses also included $0.8 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. For the three months ended March 31, 2025, related party expenses included $2.6 million in management fees due to our Manager pursuant to the Management Agreement. No incentive fees were incurred for the three months ended March 31, 2025. For the three months ended March 31, 2025, related party expenses also included $1.0 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. The decrease in management fees for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily relates to a decrease in our weighted average stockholders’ equity for the three months ended March 31, 2026 as a result of realized losses on loans. The decrease in allocable general and administrative expenses due to our Manager for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 relates to changes in the mix of employees of our Manager that allocated time to us.

Current wording

For the six months ended June 30, 2026, related party expenses included $4.8 million in management fees due to our Manager pursuant to the Management Agreement. No incentive fees were incurred for the six months ended June 30, 2026. For the six months ended June 30, 2026, related party expenses also included $1.6 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. For the six months ended June 30, 2025, related party expenses included $5.0 million in management fees due to our Manager pursuant to the Management Agreement. No incentive fees were incurred for the six months ended June 30, 2025. For the six months ended June 30, 2025, related party expenses also included $2.0 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. The decrease in management fees for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily relates to a decrease in our weighted average stockholders’ equity for the six months ended June 30, 2026 as a result of realized losses on loans. The decrease in allocable general and administrative expenses due to our Manager for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 relates to changes in the mix of employees of our Manager that allocated time to us.

Previous wording

For the three months ended March 31, 2026 and 2025, professional fees were $0.8 million and $0.9 million, respectively, which was relatively consistent for both periods. For the three months ended March 31, 2026 and 2025, general and administrative expenses were $1.4 million and $1.7 million, respectively. The decrease in general and administrative expenses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily relates to a decrease in stock-based compensation expense due to a reduction in the weighted average grant date fair value for restricted stock and restricted stock unit awards granted after March 31, 2025 and a reduction in various operating expenses for the three months ended March 31, 2026.

Current wording

For both the three months ended June 30, 2026 and 2025, professional fees were $0.7 million. For the three months ended June 30, 2026 and 2025, general and administrative expenses were $1.7 million and $2.0 million, respectively. The decrease in general and administrative expenses for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily relates to a decrease in stock-based compensation expense due to a reduction in the weighted average grant date fair value for restricted stock and restricted stock unit awards granted after June 30, 2025 and a reduction in various operating expenses for the three months ended June 30, 2026.

Previous wording

For thethree months ended March 31, 2026 and 2025, expenses from real estate owned were comprised of the following ($ in thousands):

Current wording

For thethree and six months ended June 30, 2026 and 2025, expenses from real estate owned were comprised of the following ($ in thousands):

Previous wording

For both the three months ended March 31, 2026 and 2025, mixed-use property operating expenses were $1.2 million. Mixed-use property operating expenses consisted primarily of expenses incurred in the day-to-day operation of our mixed-use property, including common area maintenance costs, property taxes and insurance. Common area maintenance costs include items such as maintenance and repairs, utilities, janitorial services, security and property management fees.

Current wording

For both the three months ended June 30, 2026 and 2025, mixed-use property operating expenses were $1.1 million. For both the six months ended June 30, 2026 and 2025, mixed-use property operating expenses were $2.3 million. Mixed-use property operating expenses consisted primarily of expenses incurred in the day-to-day operation of our mixed-use property, including common area maintenance costs, property taxes and insurance. Common area maintenance costs include items such as maintenance and repairs, utilities, janitorial services, security and property management fees.

Previous wording

For the three months ended March 31, 2026 and 2025, office property operating expenses were $1.0 million and $1.1 million, respectively, which was relatively consistent for both periods and consists of operating expenses for our multi-building office property that was acquired on September 19, 2024. Office property operating expenses consisted primarily of expenses incurred in the day-to-day operation of our office property, including common area maintenance costs, property taxes and insurance. Common area maintenance costs include items such as maintenance and repairs, utilities, janitorial services, security and property management fees.

Current wording

For both the three months ended June 30, 2026 and 2025, office property operating expenses were $1.3 million. For the six months ended June 30, 2026 and 2025, office property operating expenses were $2.3 million and $2.4 million, respectively. Office property operating expenses consisted primarily of expenses incurred in the day-to-day operation of our multi-building office property, including common area maintenance costs, property taxes and insurance. Common area maintenance costs include items such as maintenance and repairs, utilities, janitorial services, security and property management fees.

Previous wording

For the three months ended March 31, 2026, depreciation and amortization expense was $0.9 million and relates primarily to our mixed-use property acquired on September 8, 2023. For the three months ended March 31, 2026, no depreciation or amortization expense was incurred for our multi-building office property acquired on September 19, 2024 as the multi-building office property was classified as real estate owned held for sale. For the three months ended March 31, 2025, depreciation and amortization expense was $2.2 million and related primarily to our mixed-use property acquired on September 8, 2023 and our multi-building office property acquired on September 19, 2024.

Current wording

For the three and six months ended June 30, 2026, depreciation and amortization expense was $0.9 million and $1.8 million, respectively, and relates primarily to our mixed-use property acquired on September 8, 2023. For the three and six months ended June 30, 2026, no depreciation or amortization expense was incurred for our multi-building office property acquired on September 19, 2024 as the multi-building office property was classified as real estate owned held for sale. For the three and six months ended June 30, 2025, depreciation and amortization expense was $2.2 million and $4.4 million, respectively, and related primarily to our mixed-use property acquired on September 8, 2023 and our multi-building office property acquired on September 19, 2024.

Previous wording

For the three months ended March 31, 2026 and 2025, the net (provision for) reversal of current expected credit losses was $(11.1) million and $5.3 million, respectively. For the three months ended March 31, 2026, the net provision for current expected credit losses is primarily due to changes in loan and collateral specific attributes and new loan closings during the three months ended March 31, 2026. These factors were partially offset by a realized loss on a multifamily loan, resulting in a reversal of the associated CECL Reserve, shorter average remaining loan term, loan repayments, a relative improvement in the near-term macroeconomic forecasts and changes in loan and collateral specific attributes during the three months ended March 31, 2026. For the three months ended March 31, 2025, the net reversal of current expected credit losses was primarily due to a relative improvement in the near-term macroeconomic forecasts, shorter average remaining loan term and loan repayments during the three months ended March 31, 2025.

Current wording

For the three months ended June 30, 2026 and 2025, the net (provision for) reversal of current expected credit losses was $(0.9) million and $20.2 million, respectively. For the three months ended June 30, 2026, the net provision for current expected credit losses is primarily due to changes in loan- and collateral-specific attributes, new loan closings and a relative decline in the near-term macroeconomic forecasts during the three months ended June 30, 2026. These factors were partially offset by shorter average remaining loan term and other changes in loan- and collateral-specific attributes during the three months ended June 30, 2026. For the three months ended June 30, 2025, the net reversal of current expected credit losses was primarily due to a realized loss on an office (life sciences) loan, resulting in a reversal of the associated CECL Reserve, shorter average remaining loan term, loan repayments and other loan- and collateral-specific attributes during the three months ended June 30, 2025. These factors were partially offset by a relative decline in the near-term macroeconomic forecasts, including higher tariffs, high inflation and interest rates, and other loan- and collateral-specific attributes during the three months ended June 30, 2025.

Previous wording

•We received a discounted payoff of a $28.2 million senior mortgage loan, which was collateralized by a multifamily property in Pennsylvania, in conjunction with the sale of the multifamily property by the borrower. At the time of the discounted payoff, the senior mortgage loan was on non-accrual status. For the three months ended March 31, 2026, we received $0.4 million of interest payments in cash on the senior Pennsylvania loan that was recognized as a reduction to the Carrying Value of the loan and the borrower was current on all contractual interest payments. We recognized a realized loss of $3.3 million as the Carrying Value exceeded the net proceeds from the payoff of the loan.

Current wording

In June 2025, we received a discounted payoff on a senior mortgage loan with outstanding principal of $51.5 million, which was collateralized by an office (life sciences) property located in Massachusetts. The discounted payoff was received in conjunction with the sale of the office (life sciences) property by the borrower. For both the three and six months ended June 30, 2025, we recognized a realized loss of $33.0 million in our consolidated statements of operations upon the payoff of the senior mortgage loan as the Carrying Value exceeded the net proceeds from the payoff of the loan.

Previous wording

In March 2026, we received a discounted payoff on a senior mortgage loan with outstanding principal of $28.2 million, which was collateralized by a multifamily property located in Pennsylvania. The discounted payoff was received in conjunction with the sale of the multifamily property by the borrower. For the three months ended March 31, 2026, we recognized a realized loss of $3.3 million in our consolidated statements of operations upon the payoff of the senior mortgage loan as the Carrying Value exceeded the net proceeds from the payoff of the loan.

Current wording

In March 2026, we received a discounted payoff on a senior mortgage loan with outstanding principal of $28.2 million, which was collateralized by a multifamily property located in Pennsylvania. The discounted payoff was received in conjunction with the sale of the multifamily property by the borrower. For the six months ended June 30, 2026, we recognized a realized loss of $3.3 million in our consolidated statements of operations upon the payoff of the senior mortgage loan as the Carrying Value exceeded the net proceeds from the payoff of the loan.

Previous wording

We expect our primary sources of cash to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future. As a result of the commercial real estate environment during 2025 and 2026, certain borrowers have been unable to make interest and principal payments timely, including at the maturity date of the borrower’s loan. We increase our CECL Reserve from time to time, as necessary, to reflect this risk. Our Secured Funding Agreements contain margin call provisions following the occurrence of certain mortgage loan credit events. If we are unable to make the required payment or if we fail to meet or satisfy any of the covenants in our Financing Agreements, we would be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral, including cash to satisfy margin calls, and enforce their interests against existing collateral. For example, certain of our Financing Agreements contain (i) negative covenants that limit, among other things, our ability to repurchase our common stock, make distributions to our stockholders, employ leverage beyond certain amounts, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates (including amending the Management Agreement in a material respect) and (ii) operating and financial covenants, including those requiring us to maintain a certain tangible net worth, asset coverage ratio, total net leverage ratio and loan concentration. We are also subject to cross-default and acceleration rights with respect to our Financing Agreements. If we experience borrower default as a result of macroeconomic conditions or otherwise, we may not be able to negotiate modifications to our borrowings with our lenders or receive financing from our Secured Funding Agreements with respect to our commitments to fund our loans held for investment in the future. See “Summary of Financing Agreements” below for a description of our Financing Agreements.

Current wording

We expect our primary sources of cash to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future. As a result of the commercial real estate environment during 2025 and 2026, certain borrowers have been unable to make interest and principal payments timely, including at the maturity date of the borrower’s loan. We assess our CECL Reserve and increase it or decrease it from time to time, as necessary, to reflect this risk. Our Secured Funding Agreements contain margin call provisions following the occurrence of certain mortgage loan credit events. If we are unable to make the required payment or if we fail to meet or satisfy any of the covenants in our Financing Agreements, we would be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral, including cash to satisfy margin calls, and enforce their interests against existing collateral. For example, certain of our Financing Agreements contain (i) negative covenants that limit, among other things, our ability to repurchase our common stock, make distributions to our stockholders, employ leverage beyond certain amounts, sell assets, engage in mergers or consolidations, grant liens, and enter into transactions with affiliates (including amending the Management Agreement in a material respect) and (ii) operating and financial covenants, including those requiring us to maintain a certain tangible net worth, asset coverage ratio, total net leverage ratio and loan concentration. We are also subject to cross-default and acceleration rights with respect to our Financing Agreements. If we experience borrower default as a result of macroeconomic conditions or otherwise, we may not be able to negotiate modifications to our borrowings with our lenders or receive financing from our Secured Funding Agreements with respect to our commitments to fund our loans held for investment in the future. See “Summary of Financing Agreements” below for a description of our Financing Agreements.

Previous wording

As of May 4, 2026, we had approximately $101 million in liquidity including $24 million of cash and $77 million of availability under our Secured Funding Agreements.

Current wording

As of July 30, 2026, we had approximately $105 million in liquidity including $16 million of cash and $89 million of availability under our Secured Funding Agreements.

Previous wording

The following table sets forth changes in cash, cash equivalents and restricted cash for the three months ended March 31, 2026 and 2025 ($ in thousands):

Current wording

The following table sets forth changes in cash, cash equivalents and restricted cash for the six months ended June 30, 2026 and 2025 ($ in thousands):

Previous wording

During the three months ended March 31, 2026 and 2025, cash, cash equivalents and restricted cash increased by $67.2 million and $62.8 million, respectively.

Current wording

During the six months ended June 30, 2026 and 2025, cash, cash equivalents and restricted cash increased (decreased) by $(8.6) million and $27.8 million, respectively.

Previous wording

For the three months ended March 31, 2026 and 2025, net cash provided by (used in) operating activities totaled $(56.6) million and $8.0 million, respectively. For the three months ended March 31, 2026, adjustments to net income (loss) related to operating activities primarily included the origination of a loan held for sale with a carrying amount of $60.5 million, the net provision for current expected credit losses of $11.1 million, accretion of discounts, deferred loan origination fees and costs of $1.2 million, amortization of deferred financing costs of $1.1 million, realized losses on loans of $3.3 million and change in other assets of $3.5 million. For the three months ended March 31, 2025, adjustments to net income (loss) related to operating activities primarily included the net reversal of current expected credit losses of $5.3 million, accretion of discounts, deferred loan origination fees and costs of $1.3 million, amortization of deferred financing costs of $1.2 million and change in other assets of $1.6 million.

Current wording

For the six months ended June 30, 2026 and 2025, net cash provided by operating activities totaled $6.9 million and $12.9 million, respectively. For the six months ended June 30, 2026, adjustments to net income (loss) related to operating activities primarily included the net provision for current expected credit losses of $12.0 million, accretion of discounts, deferred loan origination fees and costs of $2.6 million, amortization of deferred financing costs of $2.4 million, realized losses on loans of $3.3 million and change in other assets of $7.7 million. For the six months ended June 30, 2025, adjustments to net income (loss) related to operating activities primarily included the net reversal of current expected credit losses of $25.5 million, accretion of discounts, deferred loan origination fees and costs of $2.0 million, amortization of deferred financing costs of $2.4 million and realized losses on loans of $33.0 million.

Previous wording

For the three months ended March 31, 2026, net cash used in investing activities totaled $89.8 million and was primarily related to cash used for the origination and funding of loans held for investment exceeding cash received from principal collections and cost-recovery proceeds on loans held for investment. For the three months ended March 31, 2025, net cash provided by investing activities totaled $298.7 million and was primarily related to cash received from principal collections and cost-recovery proceeds on loans held for investment exceeding the cash used for the origination and funding of loans held for investment.

Current wording

For the six months ended June 30, 2026, net cash used in investing activities totaled $211.3 million and was primarily related to cash used for the origination and funding of loans held for investment exceeding cash received from principal collections and cost-recovery proceeds on loans held for investment. For the six months ended June 30, 2025, net cash provided by investing activities totaled $325.0 million and was primarily related to cash received from principal collections and cost-recovery proceeds on loans held for investment exceeding the cash used for the origination and funding of loans held for investment.

Previous wording

For the three months ended March 31, 2026, net cash provided by financing activities totaled $213.6 million and was primarily related to proceeds from our Secured Funding Agreements of $333.0 million partially offset by repayments of our Secured Funding Agreements of $9.1 million, repayments of debt of consolidated VIEs of $99.9 million and dividends paid of $8.4 million. For the three months ended March 31, 2025, net cash used in financing activities totaled $244.0 million and was primarily related to repayments of our Secured Funding Agreements of $28.9 million, repayments of debt of consolidated VIEs of $304.0 million, repayments of our Secured Term Loan of $10.0 million and dividends paid of $13.9 million, partially offset by proceeds from our Secured Funding Agreements of $114.8 million.

Current wording

For the six months ended June 30, 2026, net cash provided by financing activities totaled $195.8 million and was primarily related to proceeds from our Secured Funding Agreements of $430.6 million partially offset by repayments of our Secured Funding Agreements of $115.7 million, repayments of debt of consolidated VIEs of $99.9 million and dividends paid of $16.9 million. For the six months ended June 30, 2025, net cash used in financing activities totaled $310.0 million and was primarily related to repayments of our Secured Funding Agreements of $61.4 million, repayments of debt of consolidated VIEs of $318.4 million, repayments of our Secured Term Loan of $20.0 million and dividends paid of $22.3 million, partially offset by proceeds from our Secured Funding Agreements of $114.8 million.

Previous wording

(3)In March 2026, we amended the secured revolving funding facility with City National Bank (the “CNB Facility”) to, among other things, extend the maturity date to December 31, 2026. The interest rate on advances under the CNB Facility is a per annum rate equal to the sum of, at our option, either (a) a SOFR-based rate plus 3.25% or (b) a base rate plus 2.25%, in each case, subject to an interest rate floor. The amount immediately available under the CNB Facility at any given time can fluctuate based on the fair value of the collateral in the borrowing base that secures the CNB Facility. As of March 31, 2026, there was $51.1 million of immediate availability under the CNB Facility based on the fair value of the collateral in the borrowing base at such time. The amount immediately available under the CNB Facility may be increased to up to $75.0 million by the pledge of additional collateral into the borrowing base in accordance with the CNB Facility agreement.

Current wording

(3)In March 2026, we amended the secured revolving funding facility with City National Bank (the “CNB Facility”) to, among other things, extend the maturity date to December 31, 2026. The interest rate on advances under the CNB Facility is a per annum rate equal to the sum of, at our option, either (a) a SOFR-based rate plus 3.25% or (b) a base rate plus 2.25%, in each case, subject to an interest rate floor. The amount immediately available under the CNB Facility at any given time can fluctuate based on the fair value of the collateral in the borrowing base that secures the CNB Facility. As of June 30, 2026, there was $51.6 million of immediate availability under the CNB Facility based on the fair value of the collateral in the borrowing base at such time. The amount immediately available under the CNB Facility may be increased to up to $75.0 million by the pledge of additional collateral into the borrowing base in accordance with the CNB Facility agreement.