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

We relymay on the availability ofuse collateralized debt and loan obligation securitization markets to provide long-term financing for our loans and investments.investments which may not be available.

Our commercial real estate debt and real estate securities generally are directly or indirectly secured by a lien on real property. The occurrence of a default on a commercial real estate debt investment could result in our acquiring ownership of the property. We do not know whether the values of the properties ultimately securing our commercial real estate debt and loans underlying our securities will remain at the levels existing on the dates of origination of these loans and the dates of origination of the loans ultimately securing our securities, as applicable. In addition, our borrowers could fraudulently inflate the values of the underlying properties. If the values of the properties drop or are discovered to have been fraudulently inflated, the lower value of the security and reduction in borrower equity associated with such loans will increase our risk. In this manner, reduced real estate values could impact the values of our debt and securityreal estate securities investments, making them subject to the risks typically associated with real estate ownership.

•acts of war or terrorism, or criminal violence, including the consequences of terrorist attacksattacks, civil unrest and other such acts;

•adverse changes in economic and market conditions related to pandemics and health crises, such as COVID-19crises;

•reduced demand for office space, including as a result of changes in work habits, including remote or hybrid work schedulesschedules, whichor allowreductions workin fromemployee remoteheadcount locationsdue otherto thanartificial theintelligence employer’s office premisestechnologies;

WeThe Commercial Real Estate Financing business unit primarily investinvests in transitional loans to borrowers who are typically seeking short-term capital to be used in an acquisition or rehabilitation of a property. If the borrower’s plans or projections with respect to the property are not achieved, some of which, including renovations or expansions, carry heightened risks, the borrower may not receive a sufficient return on the asset to satisfy our transitional loan, and we bear the risk that we may not recover some or all of our investment. In addition, borrowers usually use the proceeds of a conventional mortgage to repay a transitional loan. Transitional loans therefore are subject to risks of a borrower’s inability to obtain such permanent financing, including due to the broader availability of conventional mortgages at amenable rates.

Our loans typically have a term of about three to fiveten years. As a result, a significant amount of our invested capital is repaid at loan maturity each year. Our operating results are dependent upon our ability to identify, structure, consummate, leverage, manage and realize attractive returns on, new loans and other investments. In general, the availability of attractive investment opportunities and, consequently, our operating results, is affected by the level and volatility of interest rates, conditions in the financial markets, general economic conditions, the demand for investment opportunities in our target assets and the supply of capital for such investment opportunities. We cannot assure you that we will be successful in identifying and consummating attractive investments or that such investments, once made, will perform as anticipated.

When we originate or acquire commercial real estate debt investments and there are defaults under those debt investments, we may not be able to repossess and sell the properties securing the commercial real estate debt investment quickly. Foreclosure of a loan can be an expensive and lengthy process that can have a negative effect on our return on the foreclosed loan. Borrowers often resist foreclosure actions by asserting numerous claims, counterclaims and defenses, including but not limited to lender liability claims, in an effort to prolong the foreclosure action. In some states, foreclosure actions can take several years or more to resolve. At any time during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure action and further delaying the foreclosure process. The resulting time delay could reduce the value of the assets under the defaulted loans.loans and delay us in reinvesting the principal associated with such investments in higher yielding assets. Furthermore, an action to foreclose on a property securing a loan is regulated by state statutes and regulations and is subject to the delays and expenses associated with lawsuits if the borrower raises defenses or counterclaims. In the event of default by a borrower, these restrictions, among other things, may impede our ability to foreclose on or sell the property securing the loan or to obtain proceeds sufficient to repay all amounts due to us on the loan.

Subordinate commercial real estate debt that we originate or acquire could expose us to greater losses.losses than primary mortgage loans do.

We invest in CMBS and CMBS bonds, which may include subordinate securities, which entails certain risks.risks, including those related to subordinate securities.

Additionally, CMBS and CMBS bonds are subject to particular risks, including lack of standardized terms and payment of all or substantially all of the principal only at maturity rather than regular amortization of principal. Additional risks may be presented by the type and use of a particular commercial property. For example, special risks are presented by hospitals, nursing homes, hospitality properties and certain other property types. Commercial property values and net operating income are subject to volatility, which may result in net operating income becoming insufficient to cover debt service on the related commercial real estate loan, particularly if the current economic environment deteriorates. The repayment of loans secured by income-producing properties is typically dependent upon the successful operation of the related real estate project rather than upon the liquidation value of the underlying real estate. Furthermore, the net operating income from and the value of any commercial property are each subject to various risks. The exercise of remedies and successful realization of liquidation proceeds relating to CMBS and CMBS bonds may be highly dependent upon the performance of the servicer or special servicer. Expenses of enforcing the underlying commercial real estate loans (including litigation expenses) and expenses of protecting the properties securing the commercial real estate loans may be substantial. Consequently, in the event of a default or loss on one or more commercial real estate loans contained in a securitization, we may not recover a portion or all of our investment.

Some of our investments will beare carried at estimated fair value as determined by us and, as a result, there may be uncertainty as to the value of these investments.

Some of our investments will beare in the form of securities that are recorded at fair value but have limited liquidity or are not publicly-traded. The fair value of these securities and potentially other investments that have limited liquidity or are not publicly-traded may not be readily determinable. We estimate the fair value of these investments on a quarterly basis. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on numerous estimates and assumptions, our determinations of fair value may differ materially from the values that would have been used if a readily available market for these securities existed. The value of our common stock could be adversely affected if our determinations regarding the fair value of these investments are materially higher than the values that we ultimately realize upon their disposal.

We have significant competition with respect to our origination and acquisition of assets with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors, many of which have greater resources than we,us, and we may not be able to compete successfully for investments. In addition, the number of entities and the amount of funds competing for suitable investments may increase. Many of our competitors are not subject to the operating constraints associated with REIT rule compliance or maintenance of an exclusion from registration under the Investment Company Act. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and investments, offer more attractive pricing or other terms and establish more relationships than us. Furthermore, competition for originations of and investments in our target assets may lead to the yields of such assets decreasing, which may further limit our ability to generate satisfactory returns.

Before making an investment, we assess the strength and skills of the management of the borrower or the operator of the property and other factors that we believe are material to the performance of the investment. In making the assessment and otherwise conducting customary due diligence, we rely on the resources available to us and, in some cases, an investigation by third parties. This process is particularly important with respect to newly organized or private entities because there may be little or no information publicly available about the entity. However, even if we conduct extensive due diligence on a particular investment, there can be no assurance that this diligence will uncover all material issues relating to such investment, that the information provided by the borrower is truthful or accurate, or that factors outside of our control will not later arise. If our due diligence fails to identify material issues,issues or fraudulent inflation of asset values, we have had to in the past and may in the future have to write-down or write-off assets, restructure our investment or incur impairment or other charges that could result in our reporting losses. Charges of this nature could contribute to negative market perceptions about us or our shares of common stock.

Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326),” which replaced the “incurred loss” model for recognizing credit losses with an “expected loss” model referred to asUnder the Current Expected Credit Loss model (“CECL”) became effectivemodel for usrecognizing oncredit January 1, 2020. Under the CECL model,losses, we are required to provide allowances for credit losses on certain financial assets carried at amortized cost, such as loans held-for-investment and held-to-maturity debt securities, including related future funding commitments and accrued interest receivable. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and forward looking information through the use of projected macroeconomic scenarios over the reasonable and supportable forecasts. This measurement takes place at the time the financial asset is first added to the balance sheet and updated quarterly thereafter. This differs significantly from the “incurred loss” model previously required under GAAP,thereafter, which delayed recognition until it was probable a loss had been incurred. Accordingly, the adoption of the CECL model has materially affected how we determine our credit loss provision and required us to significantly increase our allowance and recognize provisions for credit losses earlier in the lending cycle. Moreover, the CECL model created morecreates volatility in the level of our credit loss provisions. If we are required to materially increase our future level of credit loss allowances for any reason, such increase could adversely affect our business, results of operations, liquidity and financial conditions.

From time to time, we may acquire other companies, such as our 2021 acquisition of Capstead Mortgage Corp. and 2025 acquisition of NewPoint. Our acquisition of companies can createcreates significant risks, including:

•the significant management attention and resources we would needneeded to devote to integrating the acquired business, including any employees of the acquired company;

We utilize warehouse facilities pursuant to which we accumulate mortgage loans in anticipation of a securitization financing, which assets are pledged as collateral for such facilities until the securitization transaction is consummated. In order to borrow funds to acquire assets under any additional warehouse facilities, we expect that our lenders thereunder would have the right to review the potential assets for which we are seeking financing. We may be unable to obtain the consent of a lender to acquire assets that we believe would be beneficial to us and we may be unable to obtain alternate financing for such assets. In addition, no assurance can be given that a securitization transaction would be consummated with respect to the assets being warehoused. If the securitization is not consummated, the lender could liquidate the warehoused collateral and we would then have to pay any amount by which the original purchase price of the collateral assets exceeds its sale price, subject to negotiated caps, if any, on our exposure. In addition, regardless of whether the securitization is consummated, if any of the warehoused collateral is sold before the consummation, we would have to bear any resulting loss on the sale. No assurance can be given that we will be able to obtain additional warehouse facilities on favorable terms, or at all.

We rely on the Advisor and the executive officers and other key real estate professionals employed by our Advisor to identify suitable investment opportunities for us. The Advisor and its employees are subject to very limited restrictions on engaging in investment and investment management activities that are unrelated to us and compete with us. The Advisor currently manages other investment programs that share similar investment objectives with us and target similar investments as us, including Franklin BSP Real Estate Debt, Inc. (a non-traded REIT) and twothree private funds, and the Advisor may in the future advise additional competing investment programs (together, the “Other Funds”). Some investment opportunities that are suitable for the Other Funds.Funds Thus,are thealso suitable for us. The executive officers and real estate professionals of the Advisor could direct attractive investment opportunities to other entities or investors, including the Other Funds. In addition, we have in the past and expect in the future to engage in transactions with the Other Funds, including co-investment transactions, and these transactions may not be on terms as favorable as transactions with unaffiliated third parties. Such events could result in us investing in assets that provide less attractive returns, which may reduce our ability to make distributions. In addition, the fees paid to the Advisor by the Other Funds differ from the fees we pay pursuant to the Advisory Agreement, and these differences could create incentives for the Advisor to favor the Other Funds.

•The fact that we own direct or indirect interests in an entity that willhas electelected to be taxed as a REIT under the U.S. federal income tax laws (a “Subsidiary REIT”), further complicates the application of the REIT requirements for us. The Subsidiary REIT is subject to the various REIT qualification requirements that are applicable to us and certain other requirements. If the Subsidiary REIT were to fail to qualify as a REIT, then (i) it would become subject to regular U.S. federal corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to qualify as a REIT unless we could avail ourselves of relief provisions.

U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. Changes to the U.S. federal income tax laws, including the possibility of major tax legislation,laws could have a material and adverse effect on us or our stockholders. We cannot predict whether, when, to what extent or with what effective dates new U.S. federal tax laws, regulations, interpretations or rulings will be issued. Prospective investors are urged to consult their tax advisors regarding the effect of potential changes to the U.S. federal tax laws on an investment in our stock.

There are many factors that can affect the amount and timing of cash distributions to stockholders and our board of directors can decide to reduce or eliminate our cash distributions at any time and without prior notice to our stockholders. The amount of cash available for distributions is affected by many factors, such as the cash provided by the Company's investments and obligations to repay indebtedness as well as many other variables. There is no assurance that the Company will be able to pay or maintain the current level of distributions or that distributions will increase over time. In certain prior periods, including the last ten quarters, quarterly distributions have been in excess of our quarterly earnings.GAAP net income. Distributions in excess of earnings decrease the book value per share of common stock. The Company cannot give any assurance that returns from the investments will be sufficient to maintain or increase cash available for distributions to stockholders. Actual results may differ significantly from the assumptions used by the board of directors in establishing the distribution rate to stockholders. The Company may not have sufficient cash from operations to make a distribution required to qualify for or maintain our REIT status, which may materially adversely affect the value of our securities. There is no assurance that the Company will be able to pay or maintain the current level of distributions or that distributions will increase over time.

As reliance on technology in our industry has increased, so have the risks posed to the systems of our Advisor and other parties that provide us or the Advisor with services essential to our operations, both internal and outsourced. In addition, the risk of a cyber-incident, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The rapid evolution and increased adoption of artificial intelligence technologies may also heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain, and mitigate. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted attacks and intrusions evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.

In addition, global climate change concerns could result in additional legislation and regulatory requirements, including those associated with the transition to a low-carbon economy,requirements which could increase expenses or otherwise adversely impact our business, results of operations and financial condition, or the business, results of operations and financial condition of our borrowers.

As used herein, the terms "the Company," "we," "our" and "us" refer to Franklin BSP Realty Trust, Inc., a Maryland corporation and, as required by context, to BenefitFBRT StreetOP Partners Realty Operating Partnership, L.P.,LLC, a Delaware limited partnership,liability company, which we refer to as the "OP," and to its subsidiaries. We are externally managed by Benefit Street Partners L.L.C. (our "Advisor").

The Company is a Maryland corporation and has made tax elections to be treated as a real estate investment trust ("REIT") for U.S. federal income tax purposes since 2013. The Company, through one or more subsidiaries which are each treated as a TRS, is indirectly subject to U.S. federal, state and local income taxes. We commenced business in May 2013. We primarily originate, acquire and manage a diversified portfolio of commercial real estate debt investments secured by properties located within and outside of the United States. Substantially all of our business is conducted through the OP, a Delaware limited partnership.liability company. We are the solemanaging generalmember partnerof the OP and directly or indirectly holdheld all91% of the common units of limited partnermembership interests in the OP.OP as of December 31, 2025.

The Company has no employees. We are managed by ourthe Advisor pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement.Agreement"). OurThe Advisor manages our affairs on a day-to-day basis. The Advisor receives compensation and fees for services related to the investment and management of our assets and our operations.

(12) Fully-converted book value per share reflects fullassumes conversion of ourthe outstandingCompany's seriesSeries ofH convertible preferred stock, the redemption for Company common stock of the Class A Units of the OP (" OP Units") held by third parties, and the vesting of ourthe outstandingCompany's unvested equity compensation awards.

In measuring the general allowance for credit losses for financial instruments, such as loans held for investment and unfunded loan commitments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the provisionallowance for credit losses is calculated as the product of PD, LGD and exposure at default (“EAD”). estimates. The Company’s model to determine the general allowance for credit losses principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 2002 to 2021 provided by a reputable third party, forecasting the loss parameters based on a projected macroeconomic scenario using a probability-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.

For loans held for investment which the Company identifies reasonable doubt as to whether the collection of contractual components can be satisfied, a loan specific allowance for credit losses analysis is performed. Determining whether a specific allowance for credit losses for a loan is required entails significant judgment from management and is based on several factors including (i) the underlying collateral performance, (ii) discussions with the borrower, (iii) borrower events of default, and (iv) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the loan. If a loan is determined to have a specific allowance for credit losses, the specific allowance for credit losses is recorded as a component of our Current Expected Credit Loss ("CECL") reserve by applying the practical expedient for collateral dependent loans. The CECL reserve is assessed on an individual basis for such loans by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. The estimated fair value of underlying collateral requires judgments, which may include assumptions regarding capitalization rates, discount rates, leasing, creditworthiness of major tenants, occupancy rates, availability and cost of financing, exit plans, loan sponsorship, actions of other lenders, and other factors deemed relevant by the Company. Actual losses, if any, could ultimately differ materially from these estimates. The Company only expects to write-off specific provisions if and when such amounts are deemed non-recoverable. Non-recoverability is generally determined at the time a loan is settled, or in the case of foreclosure, when the underlying asset is sold. Non-recoverability may also be concluded if, in the Company's determination, it is deemed certain that all amounts due will not be collected. If a loan is determined to be impaired based on the above considerations, management records a write-off through a charge to the allowance for credit losses and the respective loan balance.

The Company analyzes the AFS security portfolio on a periodic basis for credit losses at the individual security level using the same criteria described above for those amortized cost financial assets subject to an allowance for credit losses including but not limited to; performance of the underlying assets in the security, borrower financial resources and investment in collateral, collateral type, credit ratings, project economics and geographic location as well as national and regional economic factors. The non-credit loss component of the unrealized loss within the Company’s AFS portfolio is recognized as an adjustment to the individual security’s asset balance with an offsetting entry to Accumulated other comprehensive income/(loss) in the consolidated balance sheets.

•The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgages, subordinate mortgages, mezzanine loans and participations in such loans. The business also focuses on investing in and asset managing real estate securities, historically focusing on CMBS, CMBS bonds, CDO notes, and other securities.

•The commercial real estate conduit businessbusiness, operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit. The TRS may also hold certain mezzanine loans that don't qualify as good REIT assets due to any potential loss from foreclosure.

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securitiessecurities, agency and TRSconduit segments.programs.

Interest income for the years ended December 31, 20242025 and 2023,2024, totaled $526.1$430.3 million and $552.5$526.1 million, respectively, a decrease of $26.4$95.8 million. The decrease was primarily due to thean recognitionapproximate 91 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease of a non-recurring item of $20.4$585.6 million of interest income from the sale of a Brooklyn hotel asset in the secondaverage quartercarrying balance of 2023,our coupledreal withestate andebt. increase in the numberAs of non-performing loans in 2024, which averaged $190.9 million in principal for the year ended December 31, 2024.2025, our portfolio consisted of (i) 169 commercial mortgage loans, held for investment, (ii) 10 real estate securities, available for sale, measured at fair value, and (iii) 17 commercial mortgage loans, held for sale, measured at fair value. As of December 31, 2024, our portfolio consisted of (i) 155 commercial mortgage loans, held for investment,investment and (ii) 11eleven real estate securities, available for sale, measured at fair value,value and (iii) three commercial mortgage loans, held for sale, measured at fair value. As of December 31, 2023, our portfolio consisted of (i) 144 commercial mortgage loans, held for investment and (ii) seven real estate securities, available for sale, measured at fair value.

Interest expense for the years ended December 31, 20242025 and 20232024 totaled $338.5$288.3 million and $305.6$338.5 million, respectively, ana increasedecrease of $32.9$50.2 million. The increasedecrease was primarily due to an increaseapproximate 91 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease of $429.6$515.7 million in the average carrying value of our collateralized loan obligations ("CLOs") coupled with an increase in deferred fee amortization due to the utilization of expected duration of our CLOs compared to contractual duration, partially offset by a decrease of $144.0 million in the average carrying values of our repurchase agreements - commercial mortgage loans and real estate securities.obligations.

Revenue from real estate owned for the years ended December 31, 20242025 and 20232024 totaled $22.8$29.6 million and $17.0$22.8 million, respectively. The $5.8$6.8 million increase was primarily the result of rental income from obtaining possession of additional multifamily and office properties brought on as real estate owned, through foreclosure or deed-in-lieu of foreclosure, for the year ended December 31, 2024.2025.

ProvisionBenefit for credit losses for the yearsyear ended December 31, 2025 totaled $11.9 million. This is compared to a provision for credit losses for the year ended December 31, 2024 and 2023 totaledof $35.7 million and $33.7 million, respectively.million.

General benefit for credit losses was $13.5 million for the year ended December 31, 2025 compared to a general benefit of $0.3 million for the year ended December 31, 2024 compared to a general provision of $21.4 million for the year ended December 31, 2023.2024. The $21.7$13.2 million decrease in general reserve was primarily due to theperformance improvement of our portfolio and portfolio turnover of older vintage loans with newly originated loans coupled with a more favorable macro-economic outlook compared tosince the precedingend period.of the prior year.

Realized gain on real estate securities, available for sale for the year ended December 31, 2025 of $0.1 million related to eight sales of our CRE CLO bonds. Realized gain on real estate securities, available for sale for the year ended December 31, 2024 of $0.1 million was primarily related to the sale of six CMBS bonds. Realized gain on real estate securities, available for sale for the year ended December 31, 2023 of $0.1 million was primarily related to the sale of 12 CMBS bonds.

The Company did not realize any gains or losses on dispositions of commercial mortgage loans, held for investment for the year ended December 31, 2025. Realized gain on commercial mortgage loans, held for investment, for the year ended December 31, 2024 of $0.1 million was related to the disposition of two senior and one mezzanine commercial mortgage loans. The Company did not have any dispositions of commercial mortgage loans for the year ended December 31, 2023.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale, Measured at Fair ValueSale

Realized gainloss on commercial mortgage loans, held for sale, measuredfor atthe fairyear valueended December 31, 2025 of $0.2 million was related to the disposition one senior loan collateralized by a portfolio of retail properties. The Company did not realize any gains or losses on dispositions of commercial mortgage loans, held for sale for the year ended December 31, 2024 of $13.1 million was related to the sale of $271.2 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $284.3 million. Realized gain on commercial mortgage loans, held for sale, measured at fair value for the year ended December 31, 2023 of $3.9 million was related to the sale of $118.1 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $122.1 million.2024.

•changes in Company management and our board of directors and the ability of us and our external advisor to hire and retain qualified personnel;

The Company is a Maryland corporation and has made tax elections to be treated as a real estate investment trust ("REIT") for U.S. federal income tax purposes since 2013. Substantially all of our business is conducted through the OP, a Delaware limited liability company. We are the managing member of the OP and directly or indirectly held 90% of the common units of membership interests in the OP ("OP Units") as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, we have 243252 employees, all of which are employees of NewPoint.

The following table calculates our book value per share as of MarchJune 31,30, 2026 and December 31, 2025 (in thousands, except share and per share amounts):

The following table calculates our fully-converted book value per share as of MarchJune 31,30, 2026 and December 31, 2025 (in thousands, except share and per share amounts):

(3) Excluding the impact of accumulated depreciation and amortization of real property of $18.5$19.5 million and $17.5 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively, as well as including the impact of the fair value of our MSRs over their carrying value of $19.2$26.2 million as of MarchJune 31,30, 2026, would result in a fully converted book value per share of $14.58$14.74 and $14.34, respectively.

During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 2025, our portfolio consisted of 177172 and 169 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allowance for credit losses, as of MarchJune 31,30, 2026 and December 31, 2025 had a total carrying value of $4,546.8$4,275.1 million and $4,383.1 million, respectively. As of MarchJune 31,30, 2026, our commercial mortgage loans, held for sale, measured at fair value, were comprised of fiveone conduit loansloan and nine11 Agency loans, with a total fair value of $423.0$251.8 million. As of December 31, 2025, our commercial mortgage loans, held for sale, measured at fair value, were comprised of two conduit loans and 15 Agency loans, with a total fair value of $360.7 million. As of MarchJune 31,30, 2026 and December 31, 2025, we had $178.7$187.2 million and $151.7 million, respectively, of real estate securities, available for sale, measured at fair value. As of MarchJune 31,30, 2026 and December 31, 2025, our real estate owned, held for investment portfolio was composed of three and two properties with carrying values of $98.7$164.6 million and $99.3 million, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, we had fivefour and six positions classified as real estate owned, held for sale with combined carrying values of $192.7$115.7 million and $198.9 million, respectively. As of MarchJune 31,30, 2026 and December 31, 2025 our equity method investments consisted of five and four investments with carrying values of $98.6$89.2 million and $71.7 million, respectively.

As of bothJune March30, 31, 2026 and December 31, 2025,2026, we had sevennine loans (one secured by an office property and sixeight secured by multifamily properties), designated as non-performing status with a total amortized cost of $308.9$344.2 million and $214.0 million, respectively.million. As of MarchDecember 31, 20262025, we had seven loans (six secured by a multifamily properties and one secured by an office property), designated as non-performing status with a total amortized cost of $214.0 million. As of June 30, 2026, four loans designated as non-performing and put on cost recovery status were determined to have a combined $17.8 million specific allowance for credit losses. As of December 31, 2025, three loans designated as non-performing and put on cost recovery status were determined to have a combined $16.3 million and $4.1 million specific allowance for credit losses, respectively.losses.

As of MarchJune 31,30, 2026 and December 31, 2025 our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 7.0%7.1% and 7.1%, respectively, and a weighted average remaining contractual maturity life of 1.1 years and 1.1 years, respectively.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company had a total servicing portfolio consisting of 1,9331,948 and 1,596 loans with an unpaid principal balance of $58.1$59.8 billion and $47.8 billion, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, the Company owned Mortgage Servicing Rights (“MSRs”) of $211.9$205.5 million and $212.2 million, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, the MSRs consisted of 1,0451,051 and 1,042 loans with an unpaid principal balance of $22.0$22.3 billion and $21.6 billion, respectively.

The following charts summarize our commercial mortgage loans, held for investment, by coupon rate type, collateral type, geographical region and state as of MarchJune 31,30, 2026 and December 31, 2025:

The following charts show the par value by contractual maturity year for the commercial mortgage loans, held for investment in our portfolio as of MarchJune 31,30, 2026 and December 31, 2025:

The following table shows selected data from our commercial mortgage loans, held for investment in our portfolio as of MarchJune 31,30, 2026 (dollars in thousands):

The following table shows selected data from our commercial mortgage loans, held for sale, measured at fair value as of MarchJune 31,30, 2026 (dollars in thousands):

The following table shows selected data from our real estate owned assets in our portfolio as of MarchJune 31,30, 2026 (dollars in thousands):

(1) Includes intangible lease assetsassets.

The following table shows selected data from our equity method investments, in our portfolio as of MarchJune 31,30, 2026 (dollars in thousands):

The following table shows selected data from our real estate securities, measured at fair value as of MarchJune 31,30, 2026 (dollars in thousands):

Comparison of the ThreeSix monthsMonths endedEnded MarchJune 31,30, 2026 to the ThreeSix Months Ended MarchJune 31,30, 2025

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit programs.segments.

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the threesix months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

(1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities. Amounts are calculated based on daily averages for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Interest income for the threesix months ended MarchJune 31,30, 2026 and 2025 totaled $92.2$189.4 million and $113.9$225.1 million, respectively, a decrease of $21.7$35.7 million. The decrease was primarily due to i) an approximate 6668 basis point decrease in daily average SOFR and SOFR equivalent rates, a decrease in spreadsrates and aii) decreaseapproximately $344.2 million of approximatelyloans $109.6being on non-accrual as of June 30, 2026 versus $56.9 million in the average carrying balanceas of ourJune interest30, earning assets.2025. As of MarchJune 31,30, 2026, our portfolio consisted of (i) 177172 commercial mortgage loans, held for investment, (ii) 1412 commercial mortgage loans, held for sale, measured at fair value and (iii) twelve13 real estate securities, available for sale, measured at fair value. As of MarchJune 31,30, 2025, our portfolio consisted of (i) 152145 commercial mortgage loans, held for investment, (ii) onethree commercial mortgage loan,loans, held for sale, measured at fair value and (iii) tenfive real estate securities, available for sale, measured at fair value.

Interest expense for the threesix months ended MarchJune 31,30, 2026 and 2025 was $65.2$132.5 million and $70.6$140.8 million, respectively, a decrease of $5.4$8.3 million. The decrease was primarily due to an approximate 6668 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease in spreads.

Gain on sales, including fee-based services, net for the threesix months ended MarchJune 31,30, 2026 and 2025 was $21.3$37.1 million and $5.0$5.3 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments. As discussed below, the increase was primarily attributable to the contributions of the Agency Business in the 2026 period, as the Company did not have the Agency Business segment during the 2025 period.

Gain on sales, including fee-based services, net from our Agency Business segment for the threesix months ended MarchJune 31,30, 2026 was $16.5$26.2 million. This was due to Agency loans originated of $572.2$1.0 millionbillion and sales of $684.9$1.1 million.billion. The Company did not have the Agency Business segment during the threesix months ended MarchJune 31,30, 2025.

Gain on sales, including fee-based services, net from our conduit segment for the threesix months ended MarchJune 31,30, 2026 and 2025 was $4.8$10.9 million and $5.0$5.3 million, respectively. During the threesix months ended MarchJune 31,30, 2026, the Company sold $105.0$354.5 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $109.3$362.3 million. This is compared to the sale of $106.5$114.4 million in principal amount of commercial real estate loans sold into the CMBS securitization market resulting in proceeds of $111.5$119.7 million for the threesix months ended MarchJune 31,30, 2025.

Income from mortgage servicing rights for the threesix months ended MarchJune 31,30, 2026 was $6.7$10.7 million which related to the fair value of originated MSR loans rate locked under programs with Fannie Mae, Freddie Mac and HUD. The Company did not have income from mortgage servicing rights for the threesix months ended MarchJune 31,30, 2025.

Servicing revenue for the threesix months ended MarchJune 31,30, 2026 was $10.6$20.2 million which related to $12.7$25.7 million of servicing fee income, $6.9$14.8 million in placement fees on borrower escrows and reserves and $2.6 million in MSR impairment recovery. This is offset by $11.6$22.9 million in reductions to the MSR for amortization and payoffs. The Company did not have servicing revenue for the threesix months ended MarchJune 31,30, 2025.

Gain on derivatives for the threesix months ended MarchJune 31,30, 2026 was $1.9$2.3 million, compared to a loss of $0.1$0.3 million for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, the gain was composed of a $1.3$0.1 million unrealized gain related to mark to market on credit default swaps,swaps and treasury note futures, and options, coupled with a $0.6$2.2 million realized gain primarily due to the termination and settlement of credit default swapsswaps, options and options.treasury Thisnote isfutures. compared to a $0.1 million loss forFor the threesix months ended MarchJune 31,30, 20252025, the loss was primarily composed primarily of a $1.0$1.2 million unrealized loss on mark to market on credit default swaps, treasury note futures, and options, partially offset by a realized gain of $0.9 million due to the termination and settlement of treasury note futures.

For the threesix months ended MarchJune 31,30, 2026 and 2025, revenue from real estate owned was $6.9$12.4 million and $6.8$15.1 million, respectively,respectively. stayingThe relativelydecrease consistentwas period-over-period.primarily due to the sale of one real estate owned property at the beginning of the second quarter of the current period, which was located in Raleigh, NC.

Provision for credit losses during the threesix months ended MarchJune 31,30, 2026 was $11.4$18.6 million, compared with a benefit of $1.9$3.4 million during the threesix months ended MarchJune 31,30, 2025.

For the threesix months ended MarchJune 31,30, 2026, general benefitprovision for credit losses was $1.3$2.3 million compared to a benefit of $1.6$4.2 million during the threesix months ended MarchJune 31,30, 2025. General benefitprovision for the threesix months ended MarchJune 31,30, 2026 iswas attributable to morea favorableworsening economic assumptionsscenario projection utilized for the CECL model compared to preceding periods. General provisionbenefit for the threesix months ended MarchJune 31,30, 2025 was primarily due to a decrease in the portfolio turnoversize of olderthe vintageoverall loans with newly originated loans.portfolio.

For the threesix months ended MarchJune 31,30, 2026, specific provision for credit losses was $14.8$16.4 million compared to a specific benefitprovision for credit losses of $0.3$0.8 million for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, the increase in specific reserve was primarily related to a $13.2 million provision for a non-performing loan secured by two multifamily properties located in North Carolina, coupled with an aggregate increase to existing provisions of $1.6 million for non-performing loans secured by multifamily properties located in Pennsylvania, ArizonaArizona, Texas and North Carolina. For the threesix months ended MarchJune 31,30, 2025, the decreaseincrease in specific reserve was primarily related to a non-performing loan secured by a multifamily property in Texas, partially offset by a partial paydown on oura non-performing loan secured by an office property in Georgia.

For the threesix months ended MarchJune 31,30, 2026, benefit for loss sharing was $2.1$0.1 million which related to a $1.2$1.0 million decreaseincrease to the general CECL reserve due to ana improved overallworsening economic scenario outlook, coupledoffset with a $0.9$1.1 million decrease in the specific loan reserve due to the removal of a large at-risk loan from the reserve. The Company did not have an allowance for loss sharing for the threesix months ended MarchJune 31,30, 2025.

LossGain on other real estate investments for the threesix months ended MarchJune 31,30, 2026 was $4.5$3.2 million primarily due to a fairgain valueon write-downforeclosure of a property located in Huntersville, NC, partially offset with losses on sales of one of our multifamily propertiesproperty whichand wasone subsequentlyretail soldproperty, as well as a write down on an office property located in theDenver, second quarter, coupled with a loss realized on the sale of the final property from the Walgreens Portfolio.CO. This is compared to a lossgain of $2.2$0.5 million for the threesix months ended MarchJune 31,30, 2025 primarily due to the sales and settled litigation regarding the Walgreens Portfolio (as defined in Note 8 – Real Estate Owned), partially offset by losses related to the onboarding of real estate owned, held for sale, multifamily and office propertiesproperties, coupledas withwell lossesas fair value write downs on the saletwo of three, held for sale,our multifamily properties and one, held for sale, retail property from our Walgreens Portfolio.properties.

Income from equity method investments for the threesix months ended MarchJune 31,30, 2026 of $12.4$13.8 million primarily related to the Company's allocated percentage of unrealized gains on a mixed use property located in New Jersey and an industrial property located in California. WeThis didis notcompared have anyto income from our equity method investmentinvestments duringfor the threesix months ended MarchJune 31,30, 2025.2025 of $0.2 million related to the Company's allocated percentage of quarterly income for a mixed use property located in New Jersey.

ProvisionBenefit for income tax for the threesix months ended MarchJune 31,30, 2026 was $0.9$2.0 million compared to a provision of $0.7$0.5 million for the threesix months ended MarchJune 31,30, 2025. The increase was primarily due to taxable income related to our Agency Business segment,and whichconduit was acquired on July 1, 2025.segments.

Net income attributable to non-controlling interest in our consolidated joint ventures for the threesix months ended MarchJune 31,30, 2026 and 2025 was $0.3$1.0 million comparedand to$0.8 amillion, net loss of $0.4 million for the three months ended March 31, 2025.respectively.

Expenses from operations for the threesix months ended MarchJune 31,30, 2026 and 2025 consisted of the following (dollars in thousands):

The increase in operating expense for the threesix months ended MarchJune 31,30, 2026 compared to 2025 was primarily related to increases resulting from our acquisition of NewPoint, including (i) an increase in professional fees related to correspondent fees paid from our Agency Business segment and (ii) our incurrence of compensation and benefits cost of $22.8$43.8 million compared to no such expenses during the threesix months ended MarchJune 31,30, 2025, resulting from our acquisition of NewPoint.2025.

Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended March 31, 2026 to the Three Months Ended December 31, 2025

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit programs.segments.

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 (dollars in thousands):

(1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities. Amounts are calculated based on daily averages for the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively.

Interest income for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 totaled $92.2$97.2 million and $99.0$92.2 million, respectively, a decreaseincrease of $6.8$5.0 million. The decreaseincrease was primarily due to an approximateincrease 32in basisinterest pointcollected on non-accrual loans, partially offset by a decrease in spreads while daily average SOFR and SOFR equivalent rates,rates astayed decreaserelatively inconsistent. spreadsAs of June 30, 2026, our portfolio consisted of (i) 172 commercial mortgage loans, held for investment, (ii) 12 commercial mortgage loans, held for sale, measured at fair value and a(iii) decrease13 ofreal approximatelyestate $36.3securities, millionavailable infor thesale, averagemeasured carryingat balancefair of our interest earning assets.value. As of March 31, 2026, our portfolio consisted of (i) 177 commercial mortgage loans, held for investment, (ii) 14 commercial mortgage loans, held for sale, measured at fair value and (iii) twelve12 real estate securities, available for sale, measured at fair value. As of December 31, 2025, our portfolio consisted of (i) 169 commercial mortgage loans, held for investment, (ii) 17 commercial mortgage loans, held for sale, measured at fair value and (iii) ten real estate securities, available for sale, measured at fair value.

Interest expense for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 totaled $65.2$67.3 million and $71.0$65.2 million, respectively, aan decreaseincrease of $5.8$2.1 million. The decreaseincrease was primarily due to antransaction approximatecosts 32 basis point decreaseincurred in dailya averageCMBS SOFRtrust securitization in May 2026, where the Company purchased the B Piece (see Note 23 – Consolidated Variable Interest Entities Assets and SOFRLiabilities, equivalentat ratesFair coupled with a decrease in spreads.Value).

Gain on sales, including fee-based services, net for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 was $21.3$15.8 million and $22.9$21.3 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments.

Gain on sales, including fee-based services, net from our Agency Business segment for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 was $16.5$9.8 million and $11.3$16.5 million, respectively. The increasedecrease was primarily due to higherlower premiums earned on loans rate locked during the three months ended MarchJune 31,30, 2026 as compared with three months ended DecemberMarch 31, 2025.2026.

Gain on sales, including fee-based services, net from our conduit segment for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 was $4.8$6.0 million and $11.6$4.8 million, respectively. During the three months ended MarchJune 31,30, 2026, the Company sold $249.5 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $252.6 million. This is compared to the sale of $105.0 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $109.3 million. This is compared to the sale of $290.6 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $299.8 million for the three months ended DecemberMarch 31, 2025.2026.

Income for mortgage servicing rights for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025 was $6.7$3.9 million and $8.8$6.7 million, respectively. The decrease is related to $421.8 million in lower origination volume of the underlying loans forsold during the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 2025.2026.