ADAM 10-K & 10-Q changes, risk factors and insider trading

•Declines in the market values of assets in our investment portfolioinvestments may adversely affect periodic reported results and credit availability.

•Our investment portfolio of assets may at times be concentrated in certain asset types or secured by properties concentrated in a limited number of real estate sectors or geographic areas, which increases our exposure to economic downturns and risks associated with the real estate and lending industries in general.

•Maintenance of our Investment Company Act exemption imposes significant limits on our operations.

Declines in the market values of assets in our investment portfolioinvestments may adversely affect periodic reported results and credit availability, which may reduce our earnings, book value and the market value of our securities and, in turn, may constrain our liquidity and cash available for distribution to our stockholders.

The market value of our investment portfolioinvestments may move inversely with changes in interest rates. We anticipate that increases in interest rates will generally tend to decrease our net income and the market value of our investment portfolio.investments. Changes in the market values of assets in our investment portfolioinvestments where the Company elected the fair value option will be reflected in earnings and changes in the market values of assets in our investment portfolioinvestments where the Company did not elect the fair value option will be reflected in stockholders’ equity. As a result, a decline in market values of assets in our investment portfolioinvestments may reduce our earnings, book value and the market value of our securities. From early 2022 through late 2024, the Federal Reserve significantly raised the target range for the federal funds rate and held the target range at such relatively elevated levels. Such elevated interest rates contributed to valuation declines in certain portions of our investment portfolio during a portion of this period.

A decline in the market value of our interest-bearing assets may adversely affect us, particularly in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan, as has occurred in the past, which would reducereduces our liquidity and may limit our ability to leverage our assets. In addition, if we are, or anticipate being, unable to post the additional collateral, we may have to sell the assets at a time when we might not otherwise choose to do so. In the event that we do not have sufficient liquidity to meet such requirements, lending institutions may accelerate indebtedness, increase interest rates and terminate or make more difficult our ability to borrow, any of which could result in a rapid deterioration of our financial condition and cash available for distribution to our stockholders. Moreover, if we liquidate the assets at prices lower than the amortized cost of such assets, we will incur realized losses.

An increase in interest rates may cause a decrease in the availability of certain of our targeted assetsassets, including Agency RMBS, and could cause our interest expense to increase, which could materially adversely affect our ability to acquire targeted assets that satisfy our investment objectives, our earnings and our ability to make distributions to our stockholders.

A higher interest rate environment, which we have experienced since 2022, generally results in a reduction in the demand for mortgage loans due to the higher cost of borrowing and new construction redevelopment or renovation.borrowing. A reduction in the volume of mortgage loans originated or in new construction, redevelopment or renovation of multi-family properties may affect the volume of targeted assets available to us, including Agency RMBS, which could adversely affect our ability to acquire assets that satisfy our investment and business objectives. We also expect that higher interest rates will cause our targeted assets that were issued, originated or acquired prior to an interest rate increase to experience, as certain of them did in 2024, a decline in their fair value and/or provide yields that are below prevailing market interest rates. If higher interest rates or interest rate volatility cause us to be unable to acquire a sufficient volume of our targeted assets with a yield that is sufficiently above our borrowing cost, our ability to satisfy our investment objectives and to generate income and make distributions to our stockholders will be materially and adversely affected.

Similarly, as of December 31, 2024,2025, approximately 41.9%31% of our total investment portfolio was comprised of residential loans and non-Agency RMBS, and 42.4%63% was comprised of Agency RMBS. Moreover, as of December 31, 2024,2025, significant portions of the properties that secure our residential loans, including loans that secure Consolidated SLST, were concentrated in California, Florida, Texas, New York, New Jersey, Pennsylvania and IllinoisOhio among other states. California is particularly susceptible to earthquake and wildfire risks while Florida and Texas are susceptible to hurricane, wind and flood risks. To the extent that our portfolio is concentrated in any region, or by type of asset or real estate sector, downturns or developments relating generally to such region, type of borrower, asset or sector may result in defaults or losses on a number of our assets within a short time period, which may materially adversely affect our business, liquidity, financial condition and results of operations and our ability to make distributions to our stockholders. See “-Our business is subject to risks particular to real property and real estate-related assets.”

We acquire and manage residential loans, including performing, re-performing, non-performing and business purpose loansloans, which we also originate, and loans that may not meet or conform to the underwriting standards of any GSE. Residential loans are subject to increased risks of loss. Unlike Agency RMBS, the residential loans we invest in generally are not guaranteed by the federal government or any GSE. Additionally, by directly acquiring residential loans, we do not receive the structural credit enhancements that benefit senior securities of RMBS. A residential loan is directly exposed to losses resulting from default. Therefore, the value of the underlying property, the creditworthiness and financial position of the borrower and the priority and enforceability of the lien will significantly impact the value of such mortgage. In the event of a foreclosure, we may assume direct ownership of the underlying real estate. The liquidation proceeds upon sale of such real estate may not be sufficient to recover our cost basis in the loan, and any costs or delays involved in the foreclosure or liquidation process may increase losses.

The frequency at which prepayments (including both voluntary prepayments by the borrowers and liquidations due to defaults and foreclosures) occur on the residential loans we own and those that underlie our RMBS and some of the multi-family real estate investments and loans we originatehave originated or acquireacquired is difficult to predict and is affected by a variety of factors, including the prevailing level of interest rates as well as economic, demographic, tax, social, legal, legislative and other factors. Generally, borrowers tend to prepay their mortgages when prevailing mortgage rates fall below the interest rates on their mortgage loans.

In general, “premium” assets (i.e., assets, such as Agency RMBS, whose market values exceed their principal or par amounts) are adversely affected by faster-than-anticipated prepayments because the above-market coupon that such premium assets carry will be earned for a shorter period of time. Generally, “discount” assets (assets whose principal or par amounts exceed their market values) are adversely affected by slower-than-anticipated prepayments. Because our portfolio is comprised of both discountpremium assets and premiumdiscount assets, our portfolio may be adversely affected by changes in prepayments in any interest rate environment. Although we estimate prepayment rates to determine the effective yield of our assets and valuations, these estimates are not precise and prepayment rates do not necessarily change in a predictable manner as a function of interest rate changes.

Some of the multi-family realinvestments estatewe investmentshave originated and loans we may originate mayhold allow the borrower or operating partner to make prepayments without incurring a prepayment penalty and some may include provisions allowing the borrower or operating partner to extend the term of the loan or instrument beyond the originally scheduled maturity. Because the decision to prepay or extend such a multi-family loan oran instrument is typically controlled by the borrower,borrower or the operating partner, we may not accurately anticipate the timing of these events, which could affect the earnings and cash flows we anticipate and could impact our ability to finance these assets.

If restructuring is not successful, we may find it necessary to foreclose on the underlying property, and the foreclosure process may be lengthy and expensive, including out-of-pocket costs and increased use of our internal resources. Borrowers may resist mortgage foreclosure actions by asserting numerous claims, counterclaims and defenses against us including, without limitation, numerous lender liability claims and defenses, even when such assertions may have no basis in fact, in an effort to prolong the foreclosure action and exert negotiating pressure on us to agree to a modification of the loan or a favorable buy-out of the borrower’s position. In some states, foreclosure actions can sometimes take several years or more to litigate. Foreclosure may create a negative public perception of the related mortgaged property, resulting in a decrease in its value. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, any costs or delays involved in the completion of a foreclosure of the loan or a liquidation of the underlying property will further reduce the proceeds and thus increase the loss. Any such reductions could materially and adversely affect the value of the loan and could, in aggregate, have a material and adverse effect on our business, results of operations and financial condition.

Our preferred equity and mezzanine loan investments involve greater risks of loss than more senior loans secured by income-producing properties.

We own and make preferred equity investments in entities that own multi-familyone property.or We have made in the past, and may originate in the future mezzanine loans, which are loans secured by a pledge of the ownership interests of either the entity owning themore multi-family property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the multi-family property.properties. These types of assets involve a higher degree of risk than senior mortgage lending secured by income-producing real property,property because the loan may become unsecured or our equity investment may be effectively extinguished as a result of foreclosure by the senior lender. In addition, mezzanine loans and preferred equity investments are often used to achieve a very high leverage on large commercial projects, resulting in less equity in the property and increasing the risk of loss of principal or investment. If a borrower defaults on our mezzaninepreferred loanequity investment or debt senior to our loan, or in the event of aan borroweroperating partner bankruptcy, our mezzanine loan or preferred equity investment will be satisfied only after the senior debt, in the case of a mezzanine loan, or all senior and subordinated debt, in the case of a preferred equity investment,debt is paid in full. Where senior debt exists, the presence of intercreditor arrangements, which in this case are arrangements between the lender of the senior loan and the mezzanine lender or preferred equity investor that stipulate the rights and obligations of the parties, may limit our ability to amend our loaninvestment documents, assign or transfer our loans,interests, accept prepayments, exercise our remedies or control decisions made in bankruptcy proceedings relating to borrowers or preferred equity issuers. As a result, we may not recover some or all of our investment, which could result in significant losses.

We periodically evaluate real estate assets for indicators of impairment, which include, among other indicators, deteriorating operational performance, declining market conditions, legal and environmental concerns, and our ability and intent to hold each asset. If impairment indicators exist for long-lived assets to be held and used, such as real estate held by our joint venture equity investments in multi-family properties or our single-family rental properties, we may record an impairment of real estate to reduce the carrying value of such asset to its estimated fair value. Real estate assets that are held for sale or in disposal group held for sale, such as those owned by certain of our joint venture equity investments in multi-family properties, are recorded at the lower of their net depreciated carrying amount or estimated net fair value. In the event that the estimated net fair value of a real estate asset is determined to be less than its net depreciated carrying amount, an impairment of real estate is recorded on our consolidated statements of operations for the amount of the difference. Subsequent decreases, if any, in the net fair value of the real estate assets held for sale are recorded as impairments of real estate. Further, if real estate or joint venture equity investments are determined to no longer meet the criteria to be accounted for as held for sale, they are returned to held and used at the lower of (a) their carrying amount before they were classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the assets remained in their previous classification, or (b) their fair value at the date of the subsequent decision not to sell the real estate or joint venture equity investment, and downward adjustments, if any, are reported in loss on reclassification of disposal group in the consolidated statements of operations.

For the years ended December 31, 20242025 and 2023,2024, we recognized net impairment losses of approximately $48.9$9.8 million and $89.5$48.9 million, respectively. Also inDuring the yearsyear ended December 31, 2024 and 2023,2024, we also recognized losses on reclassification of disposal group of approximately $14.6 million and $16.2 million, respectively.million. These losses have a direct, adverse impact on our net income because recording an impairment loss or loss on reclassification of disposal group results in an immediate negative adjustment to net income. Impairment charges, such as those incurred in 2024recent and 2023,years, adversely affected our financial condition, results of operations, book value, cash available for distribution, including cash available for us to pay distributions to our stockholders, and per share trading price of our common stock. Such impairment charges could adversely affect our earnings and financial condition in the future.

InThe theMezzanine event of any default under a loan held directly by us, we will bear a risk of loss to the extent of any deficiency between the value of the collateral and the outstanding principal and accrued interest of the mortgage loan, and any such losses could have a material adverse effect on our cash flow from operations and our ability to make distributions to our stockholders. Similarly, the mezzanine loan and preferred and joint venture equityLending investments we own may be adversely affected by a default on any of the loans or other instruments that underlie those securities or that are secured by the related property. See “- Our investments may include subordinated tranches of RMBS, CMBS and ABS, which are subordinate in right of payment to more senior securities and have greater risk of loss than other investments.”

We makeown preferred equity investments in, and may in the future originate mezzanine loans to, owners of multi-family properties as part of our investment strategy and presently own joint venture equity investments in owners of multi-family properties.strategy. We consider such owners (or other owners in the case of joint venture equity investments) to be our operating partners with respect to the acquisition, improvementimprovement, operating or financing of the underlying properties, as the case may be. We may also make indirect investments in properties through other arrangements. SuchActions by our operating partners or the property managers of the multi-family properties which underlie our investments are generally out of our control and may subject us to liabilities in excess of those contemplated and thus reduce our investment returns. As such, these investments may involve risks not otherwise present when acquiring real estate directly, including, for example:

•operating partners may share or control certain approval rights over major decisionsdecisions, which, among other things, may limit our ability to dispose of or refinance properties on a timely basis or at all;

•our operating partners may have economic or business interests or goals that are or become inconsistent with our business interests or goals;

•our operating partner in a propertypartners might become insolvent, bankrupt or otherwise refuse or be unable to meet itstheir obligations to us or the venture, which we have experienced in recent years;

•one of our operating partners may benot inperform atheir positionproperty tooversight responsibilities or may take actionactions contrary to our instructionsinstructions, or requests or contrary to ourrequests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT; and

•we rely on our operating partners toor the entities in which we invest may not timely provide us with accurate financial information regarding the performance of the properties underlying our preferred equity, mezzanine loan and joint venture investments on a timely basis to enable us to satisfy our annual, quarterly and periodic reporting obligations under the Exchange Act and our operating partners and the entities in which we investor may have inadequate internal controls or procedures that could cause us to fail to meet our reporting obligations and other requirements under the federal securities laws.

ActionsAdditionally, by one of our operating partners or one of the property managers of the multi-family properties in which we invest, which are generally out of our control, might subject us to liabilities in excess of those contemplated and thus reduce our investment returns. Ifif we have a right of first refusal or buy/sell right to buy out an operating partner, we may be unable to finance such a buy-out if it becomes exercisable or we may be required to purchase such interest at a time when it would not otherwise be in our best interest to do so. If our interest is subject to a buy/sell right, we may not have sufficient cash, available borrowing capacity or other capital resources to allow us to elect to purchase the interest of our operating partner that is subject to the buy/sell right, in which case we may be forced to sell our interest as a result of the exercise of such right when we would otherwise prefer to keep our interest. Pursuant to the operating agreement for one of our jointcross-collateralized venturemezzanine investments,lending investment, third party investors have the ability to sell their ownership interests to us at their election once a year subject to annual minimum and maximum amount limitations and we are obligated to purchase such interests for cash. We may not have sufficient cash, available borrowing capacity or other capital resources to allow us to finance the purchase of such interests, which may cause us to breach our obligations under the operating agreement, or we may be required to purchase such interest at a time when it would not otherwise be in our best interest to do so. Finally, we may not be able to sell our interest in a venture if we desire to exit the venture without our operating partner's consent.

As part of our acquisition or underwriting process for certain assets, including, without limitation, residential loans, directnon-Agency andRMBS, indirect multi-family property investments, non-Agency RMBS, CMBS, ABS or other mortgage-, residential housing- or other credit-related assets, we may conduct (either directly or using third parties) certain due diligence. Such due diligence may include (i) an assessment of the strengths and weaknesses of the asset’s or underlying asset's credit profile, (ii) a review of all or merely a subset of the documentation related to the asset or underlying asset or (iii) other reviews that we may deem appropriate to conduct. There can be no assurance that we will conduct any specific level of due diligence, or that, among other things, the due diligence process will uncover all relevant facts, the materials provided to us or that we review will be accurate and complete or that any purchase or our projection for that purchase will prove successful, which could result in losses on these assets, which, in turn, could adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.

Many of the assets we own or acquire may be subject to legal, contractual and other restrictions on resale or will otherwise be less liquid than publicly traded securities. For example, certain of our assets may be securitized and are held in a securitization trust and may not be sold or transferred until the note issued by the securitization trust matures or is repaid. Similarly, our joint venture equity and Mezzanine Lendingmulti-family investments may require the consent of our operating partner or a lender to transfer or sell our investment and may also be less attractive to a buyer due to certain contractual provisions. Moreover, because many of our assets are subordinated to more senior securities or loans or depend on the ability of a borrower, tenant or operating partner to meet their contractual obligations, any potential buyer of those assets may request to conduct due diligence on those assets, which may delay the sale or transfer of those assets. In addition, investments in MSRs are highly illiquid and may be subject to numerous restrictions on transfers, including without limitation the receipt of third-party consents. The illiquidity of certain of our assets may make it difficult for us to sell such assets on a timely basis or at all if the need or desire arises. If we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our assets, as was the case in March 2020 when the COVID-19 pandemic caused significant turmoil in our markets. As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could materially adversely affect our results of operationsoperations, cash flow and financial condition.

The difficulty in valuation is particularly significant with respect to our less liquid investments such as our re-performing loans (“RPL”s) and non-performing loans (“NPL”s)., among others. RPLs are loans on which a borrower was previously delinquent but has resumed repaying. Our ability to sell RPLs for a profit depends on the borrower continuing to make payments. An RPL could become a NPL, which could reduce our earnings. Our investments in residential whole loans may require us to engage in workout negotiations, restructuring and/or the possibility of foreclosure. These processes may be lengthy and expensive. If we foreclose on underlying properties, we, through a designated servicer that we retain, will have to manage these properties and may not be able to sell them.

We may work with our third-party servicers and seek to help a borrower to refinance an NPL or RPL to realize greater value from such loan. However, there may be impediments to executing a refinancing strategy for NPLs and RPLs. For example, a number of mortgage lenders may have adjusted their loan programs andor underwriting standards,standards since the borrower first obtained their now NPL or RPL, which has in the past reduced and may in the future reduce the availability of mortgage credit to prospective borrowers.borrowers Thisand has resulted in reducedthe availability of financing alternatives for borrowers seeking to refinance their mortgage loans. In addition, the value of some borrowers’ homes may decline below the amount of the mortgage loans on such homes resulting in higher loan-to-value ratios, which may leave the borrowers with insufficient equity in their homes to permit them to refinance. With prevailing mortgage interest rates havingremaining risenmeaningfully in a meaningful wayelevated from their recent low levels,levels in 2020 through part of 2022, these risks may be exacerbated. The effect of the above would likely serve to make the refinancing of NPLs and RPLs potentially more difficult and less profitable for us.

While we have security measures in place to protect this information and prevent security breaches, these security measures may be compromised as a result of third-party action, including intentional misconduct by computer hackers, cyber-attacks, “phishing” attacks, service provider or vendor error, or malfeasance or other intentional or unintentional acts by third parties and bad actors, including third-party service providers. Threat actors continue to use increasingly sophisticated techniques and tools to gain unauthorized access to enterprise data and information systems, and the use of artificial intelligence may increase the effectiveness and harm caused by such attacks. Furthermore, borrower data, including personally identifiable information, may be lost, exposed, or subject to unauthorized access or use as a result of accidents, errors, or malfeasance by our employees, independent contractors, or others working with us or on our behalf. Our servers and systems, and those of our service providers, operating partners and the companies in which we invest from time to time, may be vulnerable to computer malware, break-ins, denial-of-service attacks, and similar disruptions from unauthorized tampering with our computer systems, which could result in someone obtaining unauthorized access to borrowers’ data or our data, including other confidential business information. We have further developed and enhanced our cybersecurity systems and processes that are intended to protect this type of data and information but they may not be effective in preventing unauthorized access in the future and such unauthorized access could have a material adverse effect on our business and financial results. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period.

Security breaches could also significantly damage our reputation with existing and prospective business partners, borrowers, and third parties with whom we do business. Any publicized security problems affecting our businesses and/or those of such third parties may negatively impact the market perception of our products and discourage market participants from doing business with us. These risks may increase in the future as we continue to increase our reliance on the internet and use of web-based product offerings and on the use of cybersecurity.cybersecurity tools.

We intend to focus on our core portfolio strengths of single-family and multi-family residential assets, which we believe will deliver better risk-adjusted returns over time. Our targeted investmentsassets include (i) Agency RMBS, (ii) residential loans, including business purpose loans, (ii) Agency RMBS, (iii) non-Agency RMBS, (iv) structured multi-family property investments such as preferred equity in, and mezzanine loans to, owners of multi-family propertiesRMBS and (viv) certain other mortgage-, residential housing- and credit-related assetsassets, andas well as strategic investments in companies from which we purchase, or may in the future purchase, our targeted assets. Subject to maintaining our qualification as a REIT and the maintenance of our exclusion from registration as an investment company under the Investment Company Act, we also may opportunistically acquire and manage various other types of mortgage-, residential housing- and other credit-related or alternative investments that we believe will compensate us appropriately for the risks associated with them, including, without limitation, CMBS, collateralized mortgage obligations, MSRs, excess mortgage servicing spreads, preferred equity and joint venture equity investments in multi-family properties, securities issued by newly originated securitizations, including credit sensitive securities from these securitizations, ABS and debt or equity investments in alternative assets or businesses.

During the year ended December 31, 2024,2025, we continued to expand our investment securities and residential loan portfolios.portfolios and completed our purchase of the outstanding membership interests in Constructive that were not previously owned. Our investment activity was offset primarily by prepayments, redemptions, distributionsrepayments and/or sales.sales of investment securities and residential loans. The following table presents theinvesting activity for our investment portfolio for the year ended December 31, 20242025 (dollar amounts in thousands):

(1)Includes draws funded for business purpose bridge loans and existing equity investments in consolidated multi-family properties, cost basis of new TBA positions and capitalized costs for single-family rental properties.

(54)Primarily includes net realized gains or losses, changes in net unrealized gains or losses (including reversals of previously recognized net unrealized gains or losses on sales or redemptions), net amortization/accretion/depreciation, transfers within investment categories and net loss from real estate attributable to the Company.Company and transfers of residential loans to real estate owned.

(a5)IncludedIncludes TBAs that are recorded as derivative instruments in otherthe liabilities on ourCompany's consolidated balancefinancial sheetsstatements. There were no TBAs outstanding as of December 31, 20242025 and 2023.2024.

The results of our business operations are affected by a number of factors, many of which are beyond our control, and primarily depend on, among other things, the level of our net interest income and the market value of our assets, which are driven by numerous factors including changes in interest rates and the supply and demand for mortgage,mortgage-, housinghousing- and creditcredit-related assets in the marketplace, market volatility, our ability to identify and acquire assets on favorable terms, our ability to dispose of assets from time to time on favorable terms, the ability of our operating partners, tenants and borrowers of our loans and those that underlie our investment securities to meet their payment obligations, our ability to control operating costs, the terms and availability of adequate financing and capital, general economic and real estate conditions (both on a national and local level), the impact of government actions in the real estate, mortgage, credit and financial markets, and the credit performance of our credit sensitive assets.

Financial markets experienced modeststrong positive performance in the fourth quarter of 2024 and strong positive performance for the full year 2024,2025, spurred in part by economic growth and the Federal Reserve’s first cuts to the target range for the federal funds rate in approximately four and asignificant half years. Mortgage-related markets were challengedinvestment in 2024artificial as borrowers remained sensitive to higher interest rates and origination volumes were down by some measures as compared to 2023,intelligence, among other considerations.things, and in the face of the longest U.S. federal government shutdown in history near year end. The Dow Jones Industrial Average finished the fourth quarter of 20242025 up 0.51%3.59% and grew 12.88%12.97% for the full year 2024.2025. The Nasdaq Composite Index finished the fourth quarter of 20242025 up 6.17%2.57% and grew 28.64%20.36% for the full year 2024.2025. However,Mortgage-related interestmarkets rateexperienced volatility and monetaryrelatively improved performance in the fourth quarter of and full year 2025. Trade policy turbulence, labor market uncertainty, mixedelevated inflation data and geopolitical instability have cautioned some economic outlooks.outlooks, with concerns regarding the potential for stagflation persisting. We anticipate that due to ongoing uncertainty related to inflation, interest rates, monetarytrade policy, the U.S.labor debtmarket, limitinflation and thegeopolitical implementation of the new U.S. presidential administration’s policies,instability, markets and the pricing for many of our assets will continue to experience volatility in 2025.2026.

Select U.S. Financial and Economic Data. The U.S. economy grew modestly in 20242025 with real gross domestic product (“GDP”) increasing by 2.8%2.2% (advanced estimate) for full year 2024,2025, as compared to the GDP growth of 2.9%2.8% recorded for full year 2023.2024. GDP grew at a 2.3%1.4% (advanced estimate) annualized rate in the fourth quarter of 2024,2025. asBy comparedthese to the annualized 3.1%estimates, GDP growth continued in the thirdfourth quarter of 2024,and annualizedfull 3.0%year 2025, overcoming a 0.6% contraction in GDP growth in the second quarter of 2024 and annualized 1.6% GDP growthseen in the first quarter of 2024.2025; The fourth quarter 2024 GDP increase marks eleven straight quarters of GDP growth. While GDP grew in 2024,however, inflation remains persistently above the Federal Reserve’s target of two percent,percent and jobthe growthlabor remainsmarket robust,has uncertaintyshown signs of cooling. Uncertainty about how the Federal Reserve may adjust its monetary policy or the target range for the federal funds rate in response to such macroeconomic trends and the continued independence of the Federal Reserve may limit or undermine business activity and the potential for future GDP growth,growth or result in further volatility, which could negatively impact the value of credit investments.

AfterThe raisingFederal Reserve raised the target range for the federal funds rate a total of 5.25% in 2022 and 2023, bringing the range to its highest level in over 22 years,years and holding the range at that targetlevel for 14 months,months. In 2024, the Federal Reserve cut the target range by 50100 basis pointspoints, in aggregate, and held the rate at that range until September 20242025. (the first such cut since March 2020), 25 basis pointsThen, in Novemberthe 2024last andfour 25months basisof points2025, inthe DecemberFederal 2024.Reserve In connection with its cuts tocut the target range for the federal funds rate,rate three times for an aggregate reduction of 75 basis points, bringing the Federaltarget Reserverange acknowledgedto thatits inflationlowest haslevel madesince progressSeptember toward2022. Expectations among market commentators for additional rate cuts to the Federal Reserve’s target ofrange twoin percentthe butnear remainsterm somewhatare elevated.subdued. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Federal Reserve stated that it will carefully assess incoming data, the evolving outlook, and the balance of risks to the Federal Reserve’s dual mandate of achieving maximum employment and inflation at a rate of two percent over the longer run. ChangingIn expectationsits withDecember respect2025 statement, the Federal Reserve noted that job gains slowed in 2025, the unemployment rate edged up, inflation remained somewhat elevated and downside risks to employment rose in recent months. As reflected on the “dot plot” included in the projection materials from the Federal Reserve’s actionsDecember regarding2025 the target range for the federal funds rate after quarter end contributed to an uncertain interest rate environment. Particularly, some market commentators have suggested that persistently elevated inflation and continued robust employment readings in recent months may mean that themeeting, Federal Reserve isofficials’ likelyviews toof makethe fewerappropriateness orof smalleradditional cuts to the target range for the federal funds rate inby 2025.the end of 2026 are divided, though a majority of officials indicated that one or more additional cuts by the end of 2026 would be appropriate. Higher interest rates tend to put pressure on our investments, mortgage borrowers, tenants, our operating partnerspartners, our financing and capital costs and economic growth generally.

Single-Family Homes and Residential Mortgage Market. Throughout 2024,2025, the residential real estate market remained competitive for home buyers. Data released by the S&P Dow Jones Indices for their S&P CoreLogicCotality Case-Shiller U.S. National Home Price NSA Indices for October 20242025 showed that, on average, home prices increased 4.2%1.3% for the 20-City Composite over October 2023.2024. Additionally, according to the National Association of Realtors (“NAR”), existing home sales in NovemberDecember 20242025 increased 4.8%5.1% month-over-month and 6.1%1.4% year-over-year. NAR also reported that the median existing-home sales price for all housing types in NovemberDecember 20242025 was $406,100,$405,400, up 4.7%0.4% from $387,800December in2024, Novemberwhich 2023. According to data provided bymarked the U.S.30th Censusconsecutive Bureau and the U.S. Departmentmonth of Housingyear-over-year andprice Urbanincreases. Development,NAR privately-ownednotes that total housing starts for single-family homes averaged a seasonally adjusted annual rate of 1,003,000 and 1,009,917 for the three and twelve months ended December 31, 2024, respectively,inventory as compared to 948,500 for the year ended December 31, 2023. Overall, existing home inventory for sale atof the end of NovemberDecember 20242025 amountedwas down 18.1% month-over-month and up 3.5% year-over-year and that the supply of unsold housing inventory sat at 3.3 months as of the end of December 2025, up 0.1 months from December 2024. Despite interest rates trending downward over the course of 2025, such rates remained relatively elevated and continued to 3.8 months of supply, down from 4.2 months of supply in October 2024 but up from 3.5 months of supply in November 2023, accordingcontribute to theaffordability NAR.challenges for home buyers. According to Freddie Mac, the weekly average 30-year fixed-rate mortgage was up 0.44% year-over-year to 7.04%6.09% as of January 16,22, 2025.2026, down 0.87% year-over-year. Declining single-family housing fundamentals may adversely impact the overall credit profile and value of our existing portfolio of single-family residential credit investments and the value of our single-family rental properties, as well as the availability of certain of our targeted assets.

Rental Housing. According to data provided by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, starts on multi-family homes containing five or more units averaged a seasonally adjusted annual rate of 355,667 and 336,583 for the three and twelve months ended December 31, 2024, respectively, as compared to 459,417 for the year ended December 31, 2023. According to RealPage Analytics,Analytics (“RealPage”), effective rents for professionally managed apartments grewfell a modest 50 basis points1.7% in 2024the asfourth a near-historic numberquarter of new2025 apartmentand units0.6% werefor completed.2025. TheRealPage CoStarnoted Group notes that the majority of the weakest-performing geographic marketsthat, in 2024general, from an asking rent growth perspective weremarkets located in the SoutheastSouth and Texas,West whereof oversupplythe conditionsU.S. remainexperienced challengingthe greatest growth in apartment supply in recent years and wherethe agreatest significantdeclines amountin rents over the course of our2025. Further, Zillow Research forecasts that relatively slower rent growth for both single-family and multi-family investmentsrental arehousing concentrated.is expected to continue through 2026. Weakening multi-family housing fundamentals, including, among other things, increasing supply of apartments and declining rents in the markets or submarkets in which we invest, increasing interest rates, widening capitalization rates and reduced liquidity for owners of multi-family properties, may cause our operating partners to fail to meet their obligations to us and/or contribute to reduced cash flows from and/or valuation declines for multi-family properties, and in turn, many of the multi-family investments that we own.

Credit Spreads. Investment grade and high-yield credit spreads both tightenedexperienced oversignificant widening in the course of the fourthsecond quarter of and2025 fullbefore tightening through year 2024.end and finishing nearly flat to the start of 2025. At the end of 2024,2025, investment grade spreads tightenedwidened 10 basis points and 223 basis points as compared to the start of the fourth quarter of 20242025 and tightened 3 basis points as compared to the start of 2024, respectively.2025. At the end of 2024,2025, high-yield credit spreads tightenedwidened 111 basis points and 47 basis pointspoint as compared to the start of the fourth quarter of 20242025 and tightened 11 basis points as compared to the start of 2024, respectively.2025. Tightening credit spreads generally increase the value of many of our credit sensitive assets, while widening credit spreads tend to have a negative impact on the value of many of our credit sensitive assets.

Financing Markets. For the first time sinceFrom June 2022,2022 the Treasury curve uninverted atuntil the end of August 2024, marking the endTreasury ofcurve inverted with short term yields greater than long term yields, which was the longest inverted Treasury curve on record. This normalization of the Treasury curve was driven in part by investors’ expectations of the Federal Reserve’s cuts to the target range for the federal funds rate. Inversions and subsequent normalizations of this spread are generally considered to be indicators of a recession in the near term, although some market commentators have cautioned against August 2024’s uninversion being such an indicator. Further, a January 2025 survey of economists by the Wall Street Journal indicated that the respondents believed that the probability of a recession in the next twelve months is at 22%, the lowest probability indicated by the Wall Street Journal’s survey since January 2022. On December 31, 2024,2025, the spread between the 2-Year U.S. Treasury yield and the 10-Year U.S. Treasury yield closed at 3371 basis points, as compared to a negative 3533 basis point spread on December 29,31, 2023.2024. This spread is important as it is indicative of opportunities for investing in levered assets. Increases in interest rates raise the costs of many of our liabilities, while overall interest rate volatility generally increases the costs of hedging and may place downward pressure on some of our strategies.

Monetary Policy and Recent Regulatory Developments. The Federal Reserve took a number of actions to stabilize markets during the COVID-19 pandemic. From March 2020 until March 2022, the Federal Reserve implemented an asset purchase program aimed at providing liquidity to the U.S. Treasury and Agency RMBS markets. Under the Federal Reserve’s asset purchase program, the Federal Reserve’s balance sheet grew from about $4.2 trillion in assets at the start of March 2020 to about $8.9 trillion in assets at the end of the program in March 2022. OnIn June 1, 2022, the Federal Reserve shifted course and began shrinking its balance sheet by reducing its holdings of U.S. Treasuries and Agency RMBS by $47.5 billion per month.RMBS. In SeptemberDecember 2022,2025, the Federal Reserve increasedhalted the reduction of its efforts to reduce its balance sheet by doubling the amountholding of U.S. Treasuries and Agencyannounced RMBSan it rolls off its balance sheetintention to $95purchase billionshort-term eachU.S. month.Treasuries Onin Junean 1,effort 2024,to alleviate expected pressures in money markets, but the Federal Reserve reducedcontinued fromto $60allow up to $35 billion of Agency RMBS to $25 billion the amount of U.S. Treasuries it rollsroll off its balance sheet each monthmonth. whileThe continuingFederal toReserve’s reduceparticipation itsin holdingsthe Agency RMBS market can materially impact mortgage market conditions, affecting supply, pricing, and returns. In January 2026, the FHFA raised the cap on the amount of Agency RMBS bythat $35Fannie Mae and Freddie Mac can hold from $40 billion pereach month.to As$225 ofbillion Januaryeach, 13, 2025,and the Federalcurrent Reserveadministration heldinstructed aboutFannie $6.8Mae trillionand Freddie Mac to purchase $200 billion in assets. Sales or reductions in the pace of purchasing of Agency RMBSRMBS. Asset purchases by the Federal Reserve couldgenerally createdrive headwindsAgency RMBS values higher and tighten mortgage spreads, which increases our adjusted book value but reduces the return potential on new investments. The announced January 2026 purchases, or any other purchases, by Fannie Mae and/or Freddie Mac of Agency RMBS, though such purchases are, and are expected to be, on a smaller scale than purchases of Agency RMBS conducted by the Federal Reserve in recent years, may have similar effects on us and the market. Conversely, actual or anticipated reductions in the marketamount forof the Federal Reserve’s Agency RMBS whereholdings increasedor supplyits couldpurchasing drivepace pricestypically lead to lower values and interestwider ratesspreads, higher.thereby lowering our adjusted book value while improving the return potential on new acquisitions.

InFannie SeptemberMae 2008,and Freddie Mac remain under the U.S.conservatorship Governmentof placedthe FHFA. The current administration is revisiting the idea of taking Fannie Mae and Freddie Mac intopublic. In the conservatorshipfourth quarter of the2025, FHFAreports surfaced that investment banks have been in orderpreliminary todiscussions preservewith andthe conserve their assets and property and restore them to a sound and solvent condition so they can continue to fulfill their statutory missions. In President Trump’s first term, hiscurrent administration soughtabout topotential endpublic the conservatorshipsofferings of Fannie Mae and/or Freddie Mac,Mac butsecurities so far into his second term, President Trump’sand administration hasofficials notindicated explicitlythat expressedsuch itsdiscussions intentionswere with respectcontinuing to the conservatorships. However, many market and political commentators believe President Trump may seek to end the conservatorships of Fannie Mae and Freddie Mac.advance. Together, Fannie Mae and Freddie Mac guarantee a significant amount of the nearly $13 trillion U.S. Homehome loan market. If the conservatorships of Fannie Mae and Freddie Mac were ended, Fannie Mae and Freddie Mac may need to hold additional capital against riskier loans which may, in turn, cause Fannie Mae and Freddie Mac to charge borrowers higher mortgage rates or to lessen the amount of their lending, among other things. We invest in Agency RMBS and other mortgage-related assets that may be guaranteed by Fannie Mae or Freddie Mac. Higher interest rates tend to put pressure on our investments, mortgage borrowers, tenants, our operating partners and economic growth generally. For further discussion, please see the risk factor titled “The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in such conservatorship or laws and regulations affecting the relationship between Fannie Mae, Freddie Mac and Ginnie Mae and the U.S. Government, may materially adversely affect our business, financial condition and results of operations, and our ability to pay dividends to our shareholders” in Part I, Item “1A. Risk Factors” inof this Annual Report on Form 10-K.

The scope and nature of the actions the Federal Reserve andor other governmental authorities will ultimately undertake are unknown and will continue to evolve. There can be no assurance as to how, in the long term, these and other actions, as well as the negative impacts from ongoing geopolitical instability and uncertainty surrounding inflation, interest ratesrates, U.S. tariff and trade policies and the outlook for the U.S. and global economies, will affect the efficiency, liquidity and stability of the financial, credit and mortgage markets, and thus, our business. Greater uncertainty frequently leads to wider asset spreads or lower prices and higher hedging costs.

•Purchased approximately $2.2$4.4 billion of investment securities, including $1.5$4.1 billion of Agency RMBS with an average coupon of 5.69%.investments.

•PurchasedAcquired approximately $1.9$1.7 billion of residential loans with an average gross coupon of 9.93%.loans.

•“TBA dollar roll income” refers to the difference in price between two TBA contracts within theTBA samedollar termsroll but different settlement dates that are simultaneously bought and soldtransactions; and

During the three months ended MarchJune 31,30, 2026, we continued to expand our investment securities and residential loan portfolios. Our investment activity was offset primarily by repayments and sales of investment securities and residential loans. The following table presents investment activity for the three months ended MarchJune 31,30, 2026 (dollar amounts in thousands):

(5)Includes TBAs that are recorded as derivative instruments in the Company's condensed consolidated financial statements. As of MarchJune 31,30, 2026, our TBAs had a net carrying value of $1.5$1.4 million reported in other liabilitiesassets on the Company's condensed consolidated balance sheets. The net carrying value represents the difference between the implied fair value of the underlying security in the TBA contract and the price to be paid or received for the underlying security (or cost basis).

(6)Consolidated SLST is primarily presented on our condensed consolidated balance sheets as residential loans, at fair value and collateralized debt obligations, at fair value. A reconciliation to our condensed consolidated financial statements as of MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively, follows (dollar amounts in thousands):

(a)Included in other liabilities on our condensed consolidated balance sheets as of MarchJune 31,30, 2026 and DecemberMarch 31, 2025.2026.

TheWe firstdelivered quarterstrong results in a volatile market environment, marked by significant intra-quarter interest rate movements and a meaningful bear flattening of 2026the reflectedyield continuedcurve. executionOur ofdiversified thisportfolio strategy,performed highlightedwell byamid strongthese conditions, driving solid earnings performance,and growth in book value, and disciplined capital deployment.value. Net income attributable to common stockholders was $36.9$43.4 million, or $0.41$0.48 per share, for the quarter ended MarchJune 31,30, 2026. Earnings available for distribution (“EAD”), a non-GAAP financial measure, increased to $0.29$0.30 per share, representing a 45%36% increase year-over-year. GAAP bookBook value per share as of MarchJune 31,30, 2026 increasedalso 4.0%grew, with GAAP book value up 1.8% to $9.98,$10.16, whileand adjusted book value per share, a non-GAAP financial measure, asup of March 31, 2026 rose 1.6%2.3% to $10.80,$11.05, resulting in a quarterly economic return of 6.35%4.51% and 3.76%4.81% on GAAP book value per share and adjusted book value per share, respectively. Supported by this sustained earnings momentum, our Board of Directors declared a quarterly dividend of $0.23$0.27 per share, equating to a 12.50%11.51% annualized dividend yield as of MarchJune 31,30, 2026.

Our investment portfolio grew to approximately $10.9$11.7 billion as of MarchJune 31,30, 2026, driven by $1.0$1.5 billion of new single-family residential investments during the quarter, including $510.1$798.3 million of Agency RMBSinvestments and $487.2$632.3 million of business purpose loans. Our capital allocation remains focused on liquidity, stability and income generation, with Agency RMBSinvestments representing a majority of our capital. We believe our capital allocation strategy will enhance our earnings profile and strengthen our ability to navigate evolving market conditions.

Constructive continues to scale as a strategic origination platform and become a more prominent contributor to earnings. During the quarter, Constructive funded approximately $400.8$406.1 million of business purpose loans, supported by strong underwriting standards and an established national platform.platform, Wereinforcing believeits furtherrole as a contributor to earnings as integration ofwith Constructive'sthe businessCompany and operational efficiencies will drive incremental earnings growth and diversify our income streams over time.continues.

We also continued to actively manage our liability structure and liquidity profile. During the quarter, we issued $90.0 million of 9.25% 2031 Senior Notes, completed a $310.4 milliontwo business purpose rental loan securitization,securitizations andfor redeemedwhich $100.0the millionCompany received aggregate net proceeds of 2026approximately Senior$518.0 Notes.million. Our Company Recourse Leverage Ratio and Portfolio Recourse Leverage Ratio (as defined in "Capital Allocation" below) as of MarchJune 31,30, 2026 were 5.2x5.5x and 4.9x,5.2x, respectively. We also had $199.0$181.8 million of available cash and cash equivalents (excluding cash and cash equivalents held by Consolidated Real Estate VIEs and cash reserved for potential TBA variation margin) as of MarchJune 31,30, 2026. We believe that our leverage and cash levels, combined with no near-term debt maturities, provide us with the flexibility to support continued investment activity.

Financial markets experienced heightened volatility and generally negative performancerebounded during the firstsecond quarter of 2026, as investorsinvestor reactedsentiment toshifted escalatingfrom the geopolitical conflictsfears that had dominated the first quarter toward renewed optimism driven by de-escalation of the Iran conflict, a strong artificial intelligence-led earnings revival, and tensions,resilient corporate profitability, notwithstanding elevated energy prices,inflation and uncertainty regarding the timing and extent of futureshifting monetary policy easing by the Federal Reserve.expectations. Major U.S. equity indices declined during the first quarter of 2026 before staging a powerful rebound in the second quarter of 2026, with the S&P 500 returning approximately 15.2% during the second quarter of 2026, its strongest quarterly performance since the pandemic rebound in the second quarter of 2020, the Dow Jones Industrial Average decliningrecovering approximatelyfrom 3.6%its first quarter losses and the Nasdaq Composite Index declininggaining approximately 7.1%21.6% during the firstsecond quarter of 2026, beforeone recovering,of its strongest single quarterly performances in part, after the quarterlast end25 andyears. into mid-April 2026. Mortgage‑relatedMortgage-related markets experiencedremained sensitive to rate and spread volatility during the firstsecond quarter of 2026, drivenas 30-year fixed mortgage rates, which briefly dipped below 6%, rose approximately 50 basis points before moderating toward quarter-end. Geopolitical de-escalation and lower oil prices provided relief to markets by fluctuationsquarter-end, though inflation rose to its highest level in interestthree ratesyears due to energy price shocks, keeping concerns about the Federal Reserve’s inflation-fighting path front and geopolitical events. Geopolitical conflicts, pressures on energy markets, labor market uncertainty and elevated inflation have cautioned some economic outlooks, with concerns regarding the potential for stagflation persisting.center. We anticipate that due to ongoing geopolitical conflictdevelopments and uncertainty related to the labor market, and inflation, markets and the pricing for many of our assets will continue to experience volatility in 2026.

Select U.S. Financial and Economic Data. The U.S. economy grew modestly in the firstsecond quarter of 2026 with real gross domestic product (“GDP”) increasing by 2.0%1.5% (advanced estimate), as compared to the GDP growth of 2.1% recorded for full year 2025. By this estimate, GDP growthcontinued continuedto grow in the firstsecond quarter of 2026, accelerating from the 0.5% growth in GDP seen in the fourth quarter of 20252026; however, inflation remains persistently above the Federal Reserve’s target of two percent, the labor market has shown signs of cooling and geopolitical conflicts have pressured global markets. Uncertainty about how the Federal ReserveReserve, under Chair Warsh’s leadership, may adjust its monetary policy or the target range for the federal funds rate in response to such macroeconomic trends and—including the continued independencepossibility of therate Federalhikes Reserverather than cuts in 2026 or 2027—may limit or undermine business activity and the potential for future GDP growth or result in further volatility, which could negatively impact the value of credit investments.

Over the course of last year, the U.S. labor market experienced some cooling as the unemployment rate, according to the U.S. Department of Labor, reached 4.5% at the end of November 2025, the highest unemployment rate since October 2021. Into 2026, the U.S. labor market has seen modest improvement, as compared to the cooling trend in 2025, with the unemployment rate declining from 4.4% as of the end of December 2025 to 4.3%4.2% as of the end of MarchJune 2026. However, some commentators have suggested that the labor market has grown static and reflects a cautious and uncertain outlook by employers. AsThrough the first half of February 2026, employers arehave been hiring at theirhistorically lowestlow rates since 2013 (other than at the start of the COVID-19 pandemic),rates, employers are laying off employees at relatively low ratesrates, and employees are leaving their jobs at low rates. Additionally, since July 2025, the number of unemployed persons has exceeded the number of available job openings, further signaling a potential softening in or uncertain outlook to the labor market and/or U.S. economy. Uncertainty with respect to international conflicts, energy prices and higher costs due to inflation,inflation havehas been suggested by some market commentators as having contributed to the slackening labor market.

From 2022 into 2024, the Federal Reserve raised the target range for the federal funds rate to its highest level in over two decades before cutting the target range by 175 basis points, in aggregate, between September 2024 and December 2025. Following the Federal Reserve’s last cut to the target range for the federal funds rate in December 2025, the target range was reduced to 3.50% to 3.75%, where it remains as of the end of the firstsecond quarter of 2026. Expectations among market commentators for additional rate cuts to the target range in the near term are subdued. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Federal Reserve stated that it will carefully assess incoming data, the evolving outlook and the balance of risks to the Federal Reserve’s dual mandate of achieving maximum employment and inflation at a rate of two percent over the longer run. In its MarchJune 2026 statement,statement—Chair Warsh’s first Federal Open Market Committee (“FOMC”) meeting—the Federal Reserve noted that jobinflation gainsremains remainedelevated lowabove asits oftwo Marchpercent 2026,target and affirmed that the unemploymentcommittee “will deliver price stability,” while removing prior forward guidance language indicating a bias toward future rate hascuts. beenAs little changedreflected in the startJune 2026 Summary of 2026Economic and that inflation remained somewhat elevated. As reflected on the “dot plot” included in the projection materials from the Federal Reserve’s March 2026 meeting, a majority ofProjections, Federal Reserve officials indicatedrevised their outlook significantly, with a majority projecting that one or more additional cuts to the target range for the federal funds rate bywill remain at 3.50% to 3.75% or be raised before the end of 2026—a wouldstark bereversal appropriate.from the March 2026 projections which had anticipated rate cuts in 2026. Higher interest rates tend to put pressure on our investments, mortgage borrowers, tenants, our operating partners, our financing and capital costs and economic growth generally.

Concerns regarding an economic recession – —a significant decline in economic activity that is spread across the economy and that lasts more than a few months, as defined by the National Bureau of Economic Research – —in the U.S. grewmoderated somewhat inover the firstcourse of the second quarter of 2026 dueas to,oil amongprices otherretreated things,from heightenedtheir April peak of approximately $120 per barrel and equity markets recovered, though recession risk remains elevated relative to historical norms given persistent inflation and uncertainty around geopolitical conflicts andover the outlookFederal forReserve’s thenext laborpolicy market.moves. According to some market commentators, the durability of the Iran ceasefire framework, trajectory of energy prices and persistentcore inflationinflation, alsoand presentthe Federal Reserve’s response to such conditions remain the primary downside risks to the economy. An economic recession, stagnating economic growth or market disruption may put pressure on the ability of our operating partners, joint ventures, tenants and borrowers to meet their obligations to us, and would likely adversely impact the value of our assets, among other things, any of which could materially adversely affect our results of operations and financial condition.

Single-Family Homes and Residential Mortgage Market. In the firstsecond quarter of 2026, the residential real estate market remainedcontinued competitiveto forreflect homethe buyerstension despitebetween increasesimproving inaffordability inventoryyear-over-year asand elevated mortgage rates pressuredthat homehave buyers.risen approximately 50 basis points since the onset of the Iran conflict, keeping many prospective buyers on the sidelines. Data released by the S&P Dow Jones Indices for their S&P Cotality Case-Shiller U.S. National Home Price NSA Indices for JanuaryApril 2026 showed that, on average,that home prices increased 1.2%1.1% for the 20-City Composite over JanuaryApril 2025.2025, with nominal home price growth remaining slow as elevated inflation caused real home values to decline for an 11th consecutive month. Additionally, according to the National Association of Realtors (“NAR”), existing home sales in MarchJune 2026 decreased 3.6%2.4% month-over-month andbut 1.0%increased 2.8% year-over-year. NAR also reported that the median existing-home sales price for all housing types in MarchJune 2026 was $408,800,$440,600, up 1.4%1.8% from MarchJune 2025, which marked the 33rd36th consecutive month of year-over-year price increases. NAR notes that total housing inventory as of the end of MarchJune 2026 was updown 3.0%0.6% month-over-month andbut up 2.3%1.3% year-over-year and that the supply of unsold housing inventory satwas atapproximately 4.14.6 months as of the end of MarchJune 2026. Mortgage rates, which had briefly dipped below 6% prior to the Iran conflict, rose to approximately 6.5% during the second quarter of 2026, up 0.1 months from March 2025. Rising interest rates, particularly following the start of the geopolitical conflict in Iran, contributedcontributing to affordability challenges for some home buyers. According to Freddie Mac, the weekly average 30-year fixed-rate mortgage was 6.30%6.49% as of AprilJune 16,25, 2026, down 0.53%approximately 0.28% year-over-year. Declining single-family housing fundamentals may adversely impact the overall credit profile and value of our existing portfolio of single-family residential credit investments and the value of our single-family rental properties, as well as the availability of certain of our targeted assets.

Rental Housing. According to RealPage Analytics (“RealPage”), effective asking rents for professionally managed apartments fellrose 0.5%1.4% year-over-yearduring the second quarter of 2026, though rents remained 0.2% below year-earlier levels on an annual basis, reflecting ongoing absorption of new supply. RealPage noted that national apartment occupancy improved to 95.5% in the firstsecond quarter of 2026.2026—the RealPagefirst noted that,time in general,three marketsyears locatedthat inannual apartment deliveries fell below the decade average—though the South and West ofremained the only U.S. experiencedregion thewith greatestyear-over-year growthrent in apartment supply in recent yearsdeclines and theoccupancy greatestbelow declines95%, inreflecting rentscontinued overelevated the course of the first quarter of 2026.supply. Further, Zillow Research forecasts that relatively slower rent growth for both single-family and multi-family rental housing is expected to continue through 2026. Weakening multi-family housing fundamentals, including, among other things, increasing supply of apartments and declining rents in the markets or submarkets in which we invest, increasing interest rates, widening capitalization rates and reduced liquidity for owners of multi-family properties, may cause our operating partners to fail to meet their obligations to us and/or contribute to reduced cash flows from and/or valuation declines for multi-family properties, and in turn, many of the multi-family investments that we own.

Credit Spreads. Investment grade and high-yield credit spreadsspreads, which had both widened over the course of the first quarter of 2026,2026 particularlyin followingresponse to the startIran ofconflict, tightened over the geopoliticalsecond conflict in Iran in February 2026, before tightening into mid-April 2026.quarter. At the end of the firstsecond quarter of 2026, investment grade spreads widenedtightened 1114 basis points and high-yield credit spreads widenedtightened 4753 basis points as compared to the start of the firstsecond quarter of 2026. Tightening credit spreads generally increase the value of many of our credit sensitive assets, while widening credit spreads tend to have a negative impact on the value of many of our credit sensitive assets.

Financing Markets. On MarchJune 31,30, 2026, the spread between the 2-Year U.S. Treasury yield and the 10-Year U.S. Treasury yield closed at 5130 basis points, as compared to a 7151 basis point spread on DecemberMarch 31, 2025.2026. This spread is important as it is indicative of opportunities for investing in levered assets. Increases in interest rates raise the costs of many of our liabilities, while overall interest rate volatility generally increases the costs of hedging and may place downward pressure on some of our strategies.

Near the end of 2025 and into 2026, some market commentators began expressing concerns about the ongoing independence of the Federal Reserve to make monetary policy decisions, including setting interest rates, without direct interference from the executive branch or U.S. Congress. If the independence of the Federal Reserve is eroded or eliminated, or perceived to be, economists and market commentators suggest that higher inflation, greater stock market volatility and higher long-term interest rates on mortgages and other loans could result. Such outcomes may limit or undermine business activity or raise the costs of many of our liabilities, which could negatively impact the value of our investments We own and rent single-family rental homes to families that are eligible to receive housing assistance through the U.S. Department of Housing and Urban Development Housing Choice Vouchers program. In January 2026, the president issued an executive order (the “Order”) directing executive agencies to identify ways to prevent GSEs from facilitating the acquisition by large institutional investors of single-family homes or from selling homes owned by the U.S. Government to large institutional investors and instructsinstructing the U.S. Department of Housing and Urban Development to track single-family rental owners that receive federal housing assistance to determine any involvement of large institutional investors, among other things. The Order does not address immediate steps for implementation. In MarchJune 2026, the U.S. SenateCongress passed athe bill21st Century ROAD to Housing Act (the “Housing Act”), which wouldbecame placelaw certainin prohibitionsJuly on2026 and, among other things, generally prohibits large institutional investors that ownhave investment control of 350 or more single-family homes from purchasing additional single-family homes, subject to certain additionalexceptions, but does not require the divestment of single-family homes (theowned “Senateprior Bill”).to Asenactment of mid-April 2026, the SenateHousing Bill was before the U.S. House of Representatives for consideration, where its passage is uncertain.Act. There can be no guarantee how the Order will be implemented, what legislation may be enacted to furtheror the Order,Housing how “single-family” or “large institutional investor”Act will be definedimplemented byand executiveapplied agenciesor implementinghow the Orderexceptions or whetherto the Senatepurchase Billprohibition orin similarthe legislationHousing Act will beapply enactedto us; however, such policies could materially adversely affect our investments in single-family rental homes.

FirstSecond Quarter 2026 Summary

The following table presents key earnings and return metrics for the three and six months ended MarchJune 31,30, 2026 (dollar amounts in thousands, except per share data):

(2)Calculated as the quotient of our adjusted interest income and our average interest earning assets including the cost basis of outstanding TBAs and excludesexcluding all Consolidated SLST assets other than those securities owned by the Company.

Key Developments During FirstSecond Quarter 2026

•Completed atwo residential loan securitizationsecuritizations generating approximately $308.5$518.0 million of net proceeds to us after deducting expenses associated with the transaction. We utilized the net proceeds to repay approximately $287.3$490.5 million on outstanding repurchase agreements related to residential loans.

The following provides an overview of the allocation of our total equity as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We fund our investing and operating activities with a combination of cash flow from operations, proceeds from common and preferred equity and debt securities offerings, short-term and longer-term repurchase agreements and warehouse facilities and CDOs. A detailed discussion of our liquidity and capital resources is provided in “Liquidity and Capital Resources” elsewhere in this section.

The following tables set forth our allocated capital at MarchJune 31,30, 2026 and December 31, 2025, respectively (dollar amounts in thousands).

At MarchJune 31,30, 2026:

(1)Includes implied fair value of outstanding TBAs of $147.9$664.4 million. TBAs are recorded as derivative instruments in the Company's condensed consolidated financial statements. As of MarchJune 31,30, 2026, our TBAs had a net carrying value of $1.5$1.4 million reported in other liabilitiesassets on the Company's condensed consolidated balance sheets. The net carrying value represents the difference between the implied fair value of the underlying security in the TBA contract and the price to be paid or received for the underlying security (or cost basis).

The following discussion provides information regarding our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, including a comparison of year-over-year results and related commentary. A number of the tables contain a “change” column that indicates the amount by which results from the three and six months ended MarchJune 31,30, 2026 are greater or less than the results from the respective period in 2025. Unless otherwise specified, references in this section to increases or decreases in 2026the “three-month period” refer to the change in results for the three months ended MarchJune 31,30, 2026 when compared to the three months ended MarchJune 31,30, 2025 and increases or decreases in the “six-month period” refer to the change in results for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025.

The following table presents the main components of our net income (loss) for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands, except per share data):

Interest income increased in 2026the three- and six-month periods primarily due to increased investments in Agency RMBS and business purpose rental loans. WeIn 2026, we also recognized additionaltwo full quarters of interest income from residential loans consolidated in connection with the purchase of a Consolidated SLST subordinated bond sincein Marchthe second quarter of 2025. The increase in interest income was partially offset by a decrease in income from business purpose bridge loans due to portfolio runoff since MarchJune 2025. The increase in interest expense in 2026 was due primarily to increases in financing obtained to fund investing and origination activity through repurchase agreements, warehouse facilities and securitizations, the issuance of senior unsecured notes and additional expense related to CDOs consolidated in connection with the aforementioned Consolidated SLST subordinated bond purchased since Marchin 2025.

The following table presents the components of net loss from real estate for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

Both income from real estate and total expenses related to real estate decreased induring 2026the three- and six-month periods due to sales of multi-family real estate assets since MarchJune 2025.

The following table presents the components of realized losses, net recognized for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

InDuring 2026,the six months ended June 30, 2026 and 2025, we recognized $10.7$23.6 million and $44.9 million, respectively, of net realized losses, primarily related to valuationthe adjustmentssale of U.S. Treasury securities, losses incurred on foreclosed properties and relatedlosses receivables,recognized discountedon payoffsthe ofwrite certain non-performing business purpose bridge loans as part of ongoing asset resolution efforts, and write-downsdown of certain investment securities.

The following table presents the components of unrealized (losses) gains, net recognized for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

We recognized net unrealized losses in the three and six months ended June 30, 2026 primarily driven by increases in interest rates and wider Agency and credit spreads,rates, which reduced the fair value of our investment securities and residential loans. These impacts were partially offset by unrealized gains on CDOs and corporate debt,CDOs, also reflecting the effects of increases in interest rates.

We recognized net unrealized gains in the three and six months ended June 30, 2025 primarily due to a decreasedecreases in interest rates, which impacted the pricing of our investment securities and residential loans. These impacts were partially offset by unrealized gains on CDOs, also reflecting the effects of decreases in interest rates.

The following table presents the components of gains (losses) on derivative investments, net for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

We recognized unrealized gains on derivative instruments infor the three and six months ended June 30, 2026 primarily due to increases in interest rates, which resulted in higher valuations of our interest rate swaps, andpartially anoffset increase inby the fair valuereversal of U.S.net Treasuryunrealized futuregains positionson enteredsettlements intoof during the quarter.derivatives. We also recognized net realized gains on contract terminations and net payments received on instruments in 2026,instruments, including realized gains of approximately $48.6 million on the settlement of treasury and commodity futures. We utilize, from time to time, commodity futures and other derivative instruments to manage broader market, geopolitical, interest rate or credit-related risks. We had no$0.3 million in outstanding commodity future positions as of MarchJune 31,30, 2026.

Net losses on derivative instruments in the three and six months ended June 30, 2025 were primarily due to decreases in interest rates which resulted in lower valuations of our interest rate swaps. This was partially offset by gains realized on contract terminations and net payments received on instruments in 2025.

The following table presents the components of mortgage banking activities, net for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

The increase in mortgage banking activities duringin the periodthree- and six-month periods reflects the inclusion of Constructive's results following its consolidation in the third quarter of 2025.

(Loss) Income from Equity Investments

The following table presents the components of (loss) income from equity investments for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively (dollar amounts in thousands):

The decreasechanges in (loss) income from equity investments induring 2026the wasthree- and six-month periods were primarily due to (1) a reduction in our share of incomeloss from our equity investment in Constructive, following its consolidation in our financial statements in the third quarter of 2025 and2025, (2) lower preferred return and unrealized gain (loss) activityincome on Mezzanine Lending investments accounted for as equity as a result of redemptions that have occurred since MarchJune 31,30, 2025 and a decline in fair value of Mezzanine Lending investments as compared to unrealized gains in 2025 and (3) a reduction in losses from unconsolidated joint venture investments that were disposed in 2025.