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

We incurred a net loss attributable to common shareholders for 2024 andbut wereturned to profitability in 2025. We cannot assure you that we will be profitable for 2025.2026.

For the year ended December 31, 2024,2025, we reported net income attributable to common shareholders of $1.8 million compared to a net loss attributable to common shareholders of $43.9 million compared to net income of $12.1 million for the year ended December 31, 2023.2024. This2024 iswas the first annual net loss that we reported since we became a publicly traded company in 2017. There were a number of factors that contributed to this result. For the year ended December 31, 2024, we recorded a $22.0 million realized loss on sale of loans, a $4.9 million valuation allowance for loans held for sale, a $26.9 million provision for credit loss related to loans held for investment and loans transferred to real estate owned, and an impairment charge of $0.5 million relating to real estate owned, all of which are presented on our consolidated statement of operations. Second, top-line revenue for 2024 declined 11.2% compared to 2023, after we had delivered solid growth every year from 2017 through 2023. This decrease was due to the unavailability of capital required to grow our business.business after revenues decreased due to increases in nonperforming loans and distress in the lending markets. Historically, we relied on the capital markets to provide us with the bulk of our growth capital. Given the interest rate environment in 2023 and 2024 and the state of the real estate market in general, we were unable to access the capital markets and our existing credit facilities were not robust enough to fill the gap. TheOn effectstop of this lack of growth was compounded by the fact thatthat, two tranches of outstanding Notes,unsecured public notes, having an aggregate principal amount of $58.2 million came due in 2024 and were repaid from cash flow from operations or drawdowns on our credit facilities. We were able to improve our results of operations in 2025 by obtaining new debt financing and amending existing credit facilities. In addition, we were able to significantly reduce the losses and other charges that we reported in 2024 related to loan sales, valuation allowances and credit losses. For 2025, gains on loan sales were $0.1 million, valuations allowances were $1.0 million and credit losses were $3.3 million. Nonetheless, we cannot assure you that any of these structural issues adversely impacting our operational performancewe will ease or resolve in 2025. If they do not, and we are not able to find suitable solutions to address these issues, we may continue to incurbe lossesprofitable in 2025.2026.

As a real estate investment trust (REIT), toTo maintain our REIT status for income tax purposes, we are required to distribute at least 90% of our taxable income to our shareholders. As a practical matter, since we started to operate as a REIT in 2017 through the end of 2023, we distributed 100% of our GAAP income to shareholders, in cash. However, in 2024,2024 and 2025, primarily because we did not have access to growth capital, we reduced the dividend payable to shareholders. The reduction in the dividend payment does not jeopardize our REIT election because our taxable income has decreased as well. Despite the decrease in taxable income, the Company continued to pay dividends, which were in excess of our taxable income for 2024 and 2025. Any distributions we make to our shareholders, the amount of such dividend and whether such dividend is payable in cash, our Common Shares or other property, or a combination thereof, is at the discretion of the Board and will depend on, among other things, our actual results of operations and liquidity. Our ability to pay distributions will be affected by various factors, including the net interest and other revenue generated from operations, our operating expenses, working capital requirements, the restrictions and limitations imposed by the New York Business Corporation Law (“BCL”), and any restrictions and/or limitations imposed on us by our creditors. Accordingly, we cannot assure you as to the timing or amount of any dividend payments in the future or how they may be paid.

Primarily because of our operating performance and the reduced dividend cuts,payments, in 2024 and 2025, we experienced a steep decline in the trading price of all our equity and debt securities. For example, the opening price of our Common Shares on January 2, 2024, as reported on the NewNYSE York Stock Exchange,American, was $3.73 per share. The closing price on December 31, 2024, as reported by the NewNYSE York Stock Exchange,American, was $1.35 per share. The closing price on December 31, 2025, as reported by the NYSE American, was $1.04 per share. Similarly, the opening price of our 7.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) on January 2, 2024, as reported on the NewNYSE York Stock Exchange,American, was $20.00 per share. The closing price on December 31, 2024, as reported by the NewNYSE York Stock Exchange,American, was $15.49 per share. The closing price on December 31, 2025, as reported by the NYSE American, was $17.75 per share. Similar declines were recorded for the price of our Notes. The declining prices in our securities does not only adversely impact the holders of those securities, it also adversely impacts our ability to raise capital at accretive or market prices. Lower trading prices means we have to sell more securities to raise the funds we need for growth, which dilutes the interests of the existing security holders and raises the cost of issuance through interest expense or dividends. Thus, issuing more securities increases our costs, which, in turn, means we have to raise more money to cover the costs, which means we have to sell more securities. Therefore, during the second half of 2024,2024 and in 2025, we did not sell Common Shares,Shares or debt securities to raise capital. However, we did sell an immaterial amount of shares of our Series A Preferred Stock,Stock orin debtDecember securities to raise capital.2025. We believe it is imperative for us to increase the value of our securities, both debt and equity, and for us to do so, we must improve our operating performance and increase our dividend. We are currently in the market for accretive working capital and working through opportunities to do so.capital. However, we cannot assure you that capital will be available to us or, if it is, what will be the cost of such capital.

Under the Credit and Security Agreement, dated as of March 2, 2023, that governed our $65new $50 million revolving credit facility (the “Needham Credit Facility”) with Needham Bank (“Needham”), we wereare required to maintain a debt service coverage ratio of 1.4-to-1.0 throughout the entire term of that facility. In other words, our operating cash flow must be equal to or greater than 1.4 times the interest payable on all our outstanding indebtedness. AnWe identicalhave maintained compliance with that covenant isas containedwell inas the Credit,other Securitycovenants and Guaranty Agreement, dated as of March 20, 2025, that governs our new $50 million revolving credit facility with Needham that replacedgoverning the 2023 $65 million credit facility with Needham. (The term “Needham Credit Facility”Facility. refersHowever, we cannot assure you that we will continue to either the $65 million credit facility or the $50 million credit facility, as applicable depending on the context.) Since September 30, 2024 we were not beenremain in compliance with this covenant, which constituted an “Eventany of Default”these undercovenants during the $65 million Needham Credit. Since the $65 million Needham Credit Facility has now been terminated and replaced by the $50 million Needham Credit Facility, our failure to comply with this covenant is no longer an issue. However, under the termsremainder of the new $50 million Needham Credit Facility, we are required to provide Needham with a certificate no later than May 15, 2025 that we were in compliance with the covenant at March 31, 2025, which we believe we will be to deliver.term. If we cannot deliver that compliance certificate we will bewere in default of the covenant under the newNeedham $50Credit million credit facility,Facility, and if Needham issues a notice of default, it could have significant adverse consequences on our business, operations, and financial condition. First, Needham could declare the entire outstanding balance on its credit facility, which at the time of this report was $36.1 million,facility immediately due and payable. Alternatively, it could look to execute on the collateral securing the loan, which would deprive us of a significant portion of our working capital and cash flow. In addition, a default under the Needham creditCredit facilityFacility would trigger a default under the terms of the $200 million master repurchase financing facility (the “Churchill Credit Facility”) with Churchill MRA Funding I LLC (“Churchill”) as well as our $1.1$0.9 million mortgage with New Haven Bank (the “NHB Mortgage”).

Notes having an aggregate outstanding principal amount of $56.4$173.3 million are due and payable in full onbetween December 2026 and September 30, 2025.2027.

Notes having an aggregate outstanding principal balanceamount of $56.4$173.3 million aremature duebetween December 2026 and payableSeptember in2027, fullincluding $51.8 million on December 30, 2026, $51.7 million on March 30, 2027, $29.7 million on June 30, 2027 and $40.1 million on September 30, 2025.2027. If we cannot repay any of these Notes and the holders of thesesuch Notes call a default, it may trigger defaults under our other obligations and impair our ability to raise capital from other sources. As previously noted, a default under the Notes would also trigger a default under the Master Purchase Agreement with Churchill and under the termterms of the NHB Mortgage. This could have a material adverse impact on our operations, financial condition and business. We believe we will have the ability to repay those notes on the due date from a combination of cash flow from operations and borrowings under our various credit facilities.

To date, we have financed our operations through the sale of our Common Shares, Series A Preferred Stock and the Notes. These securities were covered by an S-3 Registration Statement that the SEC declared effective on February 25, 2022. At that time, we were not subject to any limitations on the volume of securities that we could sell under that Registration Statement. That Registration Statement expired on February 25, 2025. We filed a new S-3 Registration Statement that was declared effective on May 30, 2025. Given the fact that our public float is currently less than $75 million and for so long as the “public float” remains under $75 million, we are limited as to the amount of securities we can sell during any 12-month period. The limit is an amount equal to one-third of our “public float”.

Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on the Company, and may not be available on attractive terms. The Company’sOur inability to continue to raise capital when needed will harm itsour business, financial condition and results of operations, and will likely cause the Company’sour stock value to decline further, which could have a material adverse impact on the Company’sour business, operations and financial condition.

We have experienced a significant increase in the numberbalance of non-performing loans.

We define loans that are more than 90 days in arrears as non-performing status and stop accruing interest on such loans. Over the past two years, we have experienced a significant increase in the outstanding balance of loans in this categorycategory. as well as the number of loans in foreclosure. For example, atAt December 31, 2022, the number of loans in non-performing status washad 72 and the number of loans in foreclosure was 40. Thean aggregate outstanding balance on these loans wasof $45.9 million and $22.6 million, respectively.million. At December 31, 2023, the comparable numbersbalance wereincreased 71to and$84.6 56.million. TheAt December 31, 2024, loans in non-performing status had an aggregate outstanding balance onof these$87.0 loans was $84.6 million and $55.7 million, respectively.million. At December 31, 20242025, the comparable numbers were 35 and 34. The aggregate outstanding balance onincreased theseto loans$117.6 was $87.0 million and $52.1 million, respectively. Of the $52.1 million of loans in foreclosure for the year ended December 31, 2024, $15.9 million was held for sale.million. This has had a material adverse impact on our operational performance and financial condition.

Historically, our mortgage loans were relatively small, and a small number of foreclosures did not have a material adverse impact on our business. However, our business strategy has changed, and we are now making larger loans with increasing frequency, changing the risk profile of our mortgage loan portfolio. When combined with the decline in commercial real estate values and restrictive credit conditions, the rate of foreclosures that we are experiencing is increasing. At December 31, 2025, we had 66 loans, 57.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million. At December 31, 2024, we had 88 loans, 52.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million. At December 31, 2023, we had 113 loans, 36.3% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million. If this trend continues, it could have a material adverse impact on our business, operations and financial condition.

Although the Federal Reserve Board (the "Fed") cutreduced interestthe ratesfederal funds rate in 20242025 and the rate of inflation has decreased as well, inflation still remains above the economicFed's target of 2% and the data ison stillthe notlabor conclusivemarket continues to supportbe volatile. Accordingly, it is clear that the continuationFed of these trends. Thus, there is still the possibility of interest rate increases in the future, especially if there is a recurrence of inflation. Moreover, notwithstanding the reduction in the federal funds rate in 2024, mortgage rateswill continue to increasereduce raisinginterest therates concernin that2026. residentialIn realaddition, estatecommercial valueslending willrates beginremain relatively high, adversely impacting our ability to decline.refinance Risingour existing indebtedness at lower rates and obtain growth capital. High interest rates adversely impacts our business in several ways. First, it makes it more difficult for us to borrow money to sustain our growth. Second, even if we borrow money at higher rates there is no assurance that we can pass these increases on to our borrowers, without adversely impacting the demand for our products. If our borrowers and their related projects cannot manage the increase in interest rates, we may have an increase in non-performing loans. Further, if we cannot raise the rates on our mortgages, the spread between our cost of funds and the yield on our mortgage loan portfolio will decrease. Thus, increases in interest rates could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to our shareholders.

ManyMost of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure.

Most of our loans, by both number of loans and aggregate principal amount, are secured by properties, whether residential or commercial, that are under construction or renovation and are not income producing. The risks of delinquency and foreclosure on these properties may be greater than similar risks associated with loans made on the security of single- family, owner-occupied, residential property. In the case of income producing properties, the ability of a borrower to repay the loan typically depends primarily upon the successful operation of such property. If the net operating income of the subject property is reduced, the borrower’s ability to repay the loan, or our ability to receive adequate returns on our investment, may be impaired.

While we are not a traditional long term mortgage lender, we do lend on commercial use of transitional residential property. At December 31, 2024,2025, 56.2% of the loans in our loan portfolio (representing 49.4%53.6% of our outstanding mortgage loans receivable) are secured by residential real property. None of these loans are guaranteed by the U.S. government or any government sponsored entity. Therefore, the value of the underlying property, the creditworthiness and financial position of the borrower and the priority and enforceability of our lien will significantly impact the value of such mortgage. In the event of foreclosure, we may assume direct ownership of the underlying real estate. The liquidation proceeds upon sale of such real estate may be less than the outstanding balance of the loan (including principal, accrued but unpaid interest and other fees and charges). In addition, any costs or delays involved in the foreclosure or liquidation process may increase losses.

At December 31, 2024,2025, 53.6%41.8% of our mortgage loans held for investment (representing 34.4%26.9% of the aggregate outstanding principal balance of our loans held for investment portfolio) were secured by property located in Connecticut; 14.7%13.9% (representing 30.6%30.3% of the aggregate outstanding principal balance of our loans held for investment portfolio) were secured by property located in Florida; and 13.5%14.8% (representing 8.8%8.2% of the aggregate outstanding principal balance of our loans held for investment portfolio) were secured by property located in New York. As a result, we are particularly subject to the general economic and market conditions in those markets as well as in other markets where we lend.markets. For example, other geographic markets in neighboring states could become more attractive for developers, investors and owners based on favorable costs and other conditions to construct or improve or renovate real estate properties. Some states have created tax and other incentives to attract businesses to relocate or to establish new facilities in their jurisdictions. These changes in other markets may increase demand in those markets and result in a corresponding decrease in demand in the markets in which we currently operate. Any adverse economic or real estate developments or any adverse changes in the local business climate in any geographic market in which we have a concentration of properties, could have a material adverse effect on us. To the extent any of the foregoing risks arise in Connecticut, New York and Florida, our business, financial condition and results of operations and ability to make distributions to shareholders could be materially adversely affected.

For us to maintain our qualification as a REIT under the Code, not more than 50% in value of the issued and outstanding shares of our capital stock may be owned, actually or constructively, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year (other than our first year as a REIT). This test is known as the “5/50 test.” Attribution rules in the Code apply to determine if any individual or entity actually or constructively owns our capital stock for purposes of this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of each taxable year (other than our first year as a REIT). To help ensure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock. Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and provides that, unless exempted by the Board, no person may own more than 4.99% in value of the aggregate of the outstanding shares of our capital stock or more than 4.99% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Shares. Our founder John L. Villano, is exempt from this provision. The ownership limits contained in our charter could delay or prevent a transaction or a change in control of our company under circumstances that otherwise could provide our shareholders with the opportunity to realize a premium over the then current market price for our Common Shares or would otherwise be in the best interests of our shareholders.

In order to raise working capital, we may sell or transfer mortgage loans to a third party, including a securitization entity. In December 2024, we consummated the sale of 32 mortgage loans, having an aggregate outstanding principal balance of $55.8 million to a number of buyers, all of whom specialize in distressed debt. Most of the loans sold were designated as pending/pre-foreclosure by us. In connection with these sales, we weremay be required to make certain representations and warranties to the buyers that are typical in these types of transactions. If there is a material breach in any of thesesthese representations and warranties, we may be liable for any damages incurred by the buyer as a result of such breach or we may be obligated to repurchase one or more of the sold loans that is directly impacted by the breach or replace the impacted loan with another loan. Any remedy, whether we have to pay damages or repurchase or replace a loan, could have a material adverse impact on our business, operations and financial condition.

In addition to the usual operating expenses, we have significant other cash requirements, notably interest and dividend payments (to maintain our REIT status, we are required to distribute at least 90% of our taxable income on a annual basis) and loan repayments ($56.4 million principal amount of Notes will become due in September of 2025 and another $51.8 million principal amount of Notes will become due in December 2026 and an aggregate of 2026.an additional $121.5 million principal amount of Notes will become at various due dates in 2027.) Consequently, we rely on third-party sources of capital to fund a substantial amount of our working capital needs. Our access to third-party sources of capital depends, in part, on general market conditions, the market’s perception of our growth potential, leverage, current and expected results of operations, liquidity, financial condition and cash distributions to shareholders and the market price of our equity securities. If we cannot obtain capital when needed, we may not be able to execute our business and growth strategies, satisfy our debt service obligations, make the cash distributions to our shareholders necessary to qualify and maintain our qualification as a REIT (which would expose us to significant penalties and corporate level taxation), or fund our other business needs, any of which could have a material adverse effect on us.

Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 20172017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company operates its business as one segment. The Company offers short-term (i.e., one to three years), secured, non-bank loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. The Company does not lend to owner occupants of residential real estate. The Company’s primary underwriting criteria is a conservative loan to value ratio. In addition, the Company may make opportunistic real estate purchases and investments apart from its lending activities.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Significant estimates include the provisions for current expected credit losses and real estate owned, See Note 2 – Significant Accounting Policies for further details.

OtherNet (loss)interest income

•we have incurred, and will continue to incur, significant transaction costs,expenses, including legal, accounting, financial advisor, filing, printing and mailing fees, regardless of whether the Transaction closes; and

We and/or IRG Global may beare the target of securities class action and derivative lawsuits and othercertain legal or regulatory proceedings, which could result in substantial costs and may delay or prevent the Transaction from being completed.

Securities class action lawsuits, derivative lawsuits and derivativeother lawsuitslegal proceedings are often brought against companies that have entered into significant transaction agreements. LawsuitsOn July 27, 2026, a group of seventeen plaintiffs filed a complaint in the Superior Court of the State of California in the County of Los Angeles, Case No. 26STCV23391, against us, IRG Master Holdings, IRG Holdings Manager, LLC (“IRGHM”), IRG Global and Stuart Lichter (together with IRG Master Holdings, IRGHM and IRG Global, the “IRG Defendants”). The plaintiffs purport to be investors who hold interests in IRG Master Holdings. The complaint alleges, among other things, that the plaintiffs are pursuing certain claims against the IRG Defendants in an underlying arbitration (the “Arbitration”). We are not a party to the underlying Arbitration. The Complaint asserts a single cause of action for injunctive relief in aid of arbitration, pursuant to California Code of Civil Procedure sections 1281.8 and 525, et seq., seeking to enjoin the closing of the previously announced Transaction and certain related transactions, until the conclusion of the Arbitration. We intend to vigorously defend ourself against the claims made in the complaint. Additional lawsuits or other proceedings may be brought against us and/or IRG Global challenging, among other things, the adequacy of the disclosures in the proxy statement or other disclosures we make in connection with the Transaction, the process conducted by our respective boards of directors, the terms of the Contribution Agreement, alleged breaches of fiduciary duties by our respective directors and/or officers, or the fairness of the consideration in connection with the Transaction. Even if such lawsuits or other legal or regulatory proceedings are without merit, defending against these claims can result in substantial costs and divert management time and resources from us and/or IRG Global. An adverse judgment in any such lawsuits or proceedings could result in monetary damages payable by us and/or IRG Global, which could have a negative impact on our and/or IRG Global’s liquidity, results of operations and financial condition. In addition, the pendency of such litigation could create uncertainty and negatively affect our relationships with borrowers, lenders, noteholders, service providers and other counterparties, and could impair our ability to recruit and retain employees.

Effective internal controls are necessary to provide reliable financial reporting and prevent fraud. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common shares could be adversely affected and we could become subject to litigation or regulatory investigations. We continue to evaluate and implement steps to remediate the material weakness. These remediation measures may be time-consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. The material weakness in our internal control over financial reporting will not be considered remediated until the management review control operates for a sufficient period of time and management concludes, through testing, that the control operates effectively. If we do not successfully remediate the material weakness, or if other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, specifically potential goodwill impairments, which could cause our financial results to be materially misstated. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which could adversely affect investor confidence in us, our business, results of operations and financial condition, the trading price of our common shares, and our ability to remain listed on the NYSE American.

Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. TheWe Company operatesoperate its business as one segment. TheWe Company offersoffer short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing the Company’sour loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. TheWe Company doesdo not lend to owner occupants of residential real estate. The Company’sOur primary underwriting criteriacriterion is a conservative loan to value ratio. In addition, the Companywe may make opportunistic real estate purchases and investments apart from its lending activities.

Prior to the closing of the Transaction (the “Closing”), which is expected to be by the end of 2026, we will complete a series of pre-closing reorganization steps (the “Pre-Closing Reorganization”), including (i) forming the Operating Partnership and contributing all or substantially all of our assets thereto, (ii) redomesticating from the State of New York to the State of Delaware, (iii) effecting a 20-to-1 reverse stock split of our issued and outstanding common shares, following which such shares will be redesignated as our Class A common stock (the “Class A Shares”), (iv) authorizing a new class of Class B Common Stock (the “Class B Shares”), (v) adjusting the conversion and anti-dilution rights applicable to our issued and outstanding preferred stock in accordance with the applicable certificate of designations to reflect the reverse stock split, and (vi) changing our corporate name to “IRG Realty Trust, Inc.”

For additional information on the Contribution Agreement, see our Current Report on Form 8-K filed with the SEC on May 18, 2026 and Note 211 – SubsequentThe EventsCompany, Contribution Agreement with Industrial Realty Group Global, LLC – to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Our Mortgage Loan Portfolio

The following table presents certain information regarding our real estate lending activities for the three and six months ended MarchJune 31,30, 2026:

The table below presents our loans held for investment by loan size as of MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, the primary geographic markets in which we were exposed were Connecticut, Florida, Massachusetts and New York. The following table presents our loans held for investment by state as of MarchJune 31,30, 2026:

The following table presents our loans held for investment as of MarchJune 31,30, 2026 by year of origination:

The following table presents additional information regarding the types of properties securing loans held for investment as of MarchJune 31,30, 2026 and December 31, 2025:

Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions. A loan is considered non-performing once it has been delinquent on its monthly payments more than 90 days.days or more.

The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment as of MarchJune 31,30, 2026 and December 31, 2025:

As of MarchJune 31,30, 2026, we owned eightfive propertiesprojects that were classified as investments in developmental real estate. The projects are in various phases of completion. The following table details the carrycarrying value of our investments in developmental real estate owned property reflected on our unaudited Condensed Consolidated Balance Sheet as of MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, we owned twelveeleven properties, each of which previously served as collateral for first mortgage loans. The following table presents the carrying value of each of our properties reflected on our unaudited Condensed Consolidated Balance Sheet as of MarchJune 31,30, 2026:

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

Net (loss) income and net (loss) income attributable to common shareholders are the primary metrics by which we assess our business performance. Accordingly, we closely monitor the following primary drivers of these metrics:

Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the endbeginning of each ofand the fiveend mostthe recent fiscal quarters.quarter.

Interest income from loans - increaseddecreased from the corresponding period in the prior year, as further analyzed below.

•Average loans held for investment were $365.5$346.7 million and $370.3$376.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The effective yield on total loans held for investment was 10.0%8.4% and 8.5%,8.0%, respectively.

•Average total performing loans held for investment were $270.9$254.3 million and $275.1262.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The effective yield on performing loans was 13.5%11.4% and 11.5%,11.4%, respectively.

•Average nonperforming loans held for investment were $95.7$92.4 million and $97.3$113.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment vehiclesfunds decreased from the corresponding period in the prior year. The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment vehiclesfunds during 2026. As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures. In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.

We evaluate these minority investments as part of its broader capital allocation framework. Given the short-term nature of the underlying assets and the return of capital upon loan repayment, investment balances may fluctuate period to period depending on repayment activity and redeployment decisions. Capital returned from these vehiclesfunds may be redeployed into other investment opportunities or retained to support liquidity and balance sheet objectives.

See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026.

Interest expense and amortization of deferred financing costs - consistentincreased withfrom the corresponding period in the prior year, primarily attributable to lowersimilar average borrowings but at higher average interest rates.

During 2025, as a result of maturing unsecured notes payable, we began repositioning itsour capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of MarchJune 31,30, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030. The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.

Net interest margin in the firstsecond quarter of 2026 was 3.9%1.9% compared to 4.0%2.3% in the firstsecond quarter of 2025. The decrease in net interest margin reflects both structural and cyclical factors. Structurally, refinancing activity during 2025 increased the weighted average cost of capital. Cyclically, lower average earning assets reduced interest-earning balances.

While asset yields remained strong on performing loans, 13.5%11.4% in firstsecond quarter 2026 as compared to 11.5%11.4% in the firstsecond quarter 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.

Net interest (loss) income after provision for credit losses, loss on sale of loans, and changes in valuation allowance

Total other income remained relatively consistentdecreased from the corresponding period in the prior year, with underlying components shifting in composition rather than magnitude.year.

LossGain on equity securities - The balance includes net mark-to-market lossesgains on equity securities held within the investment portfolio. These lossesgains reflect changes in fair value and are inherently subject to market volatility.

Other income - Other income consists primarily of ancillary revenue streams, including property-related income and miscellaneous recoveries. The increasedecrease from the corresponding period in the prior year reflects rentsrent recognized on certainthe Westport, CT investments in developmental real estate andduring real2025 estatewhich ownedwere anddisposed certainof non-recurringin recoveries.December 2025.