Franklin BSP Realty Trust, Inc. (FBRT)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Franklin BSP Realty Trust, Inc. the notes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the "SEC") on February 25, 2026.

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 FBRT OP LLC, a Delaware limited liability company, which we refer to as the "OP," and to its subsidiaries. We are externally managed by Benefit Street Partners L.L.C. (the "Advisor").

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

Our forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements, and thus our investors should not place undue reliance on these statements. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at http://www.sec.gov. These factors include:

•changes in our business and investment strategy;

•our ability to make investments in a timely manner or on acceptable terms;

•changes in credit market conditions and our ability to obtain long-term financing for our investments in a timely manner and on terms that are consistent with what we project when we invest;

•the effect of general market, real estate market, economic and political conditions, including changing interest rate environments (and sustained high interest rates) and inflation;

•our ability to make scheduled payments on our debt obligations;

•our ability to generate sufficient cash flows to make distributions to our stockholders;

•our ability to generate sufficient debt and equity capital to fund additional investments;

•our ability to refinance our existing financing arrangements;

•our ability to recover unpaid principal on defaulted loans and reinvest it in income producing assets;

•the degree and nature of our competition;

•the ability of us and our external advisor to retain qualified personnel;

•impairment in the value of real estate property securing our loans or that we own;

•our ability to recover or mitigate estimated losses on non-performing assets;

•the impact of national health crises or international military conflicts;

•our ability to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes; and

•other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.

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Overview

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 March 31, 2026.

The Company’s operations are organized into two business units: (i) Commercial Real Estate Financing, and (ii) Agency Business. The Commercial Real Estate Financing unit primarily focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans. Secondarily, this unit also invests in and asset manages real estate securities, with a historical focus on commercial mortgage-backed securities ("CMBS"), commercial real estate collateralized loan obligation bonds and single asset single borrower bonds (collectively "CMBS bonds"), collateralized debt obligations ("CDOs") and other securities. Through this unit the Company also originates conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions, and owns real estate that was either acquired by the Company through foreclosure, deed-in-lieu of foreclosure or that was purchased for investment.

On July 1, 2025, through a wholly owned subsidiary, we acquired NewPoint Holdings JV LLC (“NewPoint”), which now comprises our Agency Business unit. Through this unit, we originate, sell and service a range of multifamily finance products under programs offered by government-sponsored enterprises (“GSEs”), such as the Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) and by government agencies (“Agencies”), such as the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). We retain the servicing rights and asset management responsibilities on substantially all loans we originate and sell under the GSE and HUD programs. We are an approved Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, a Freddie Mac Program Plus Seller/Servicer, a Multifamily Accelerated Processing (“MAP”) and Section 232 LEAN lender for HUD and a Ginnie Mae issuer. Additionally, the Company services external portfolios of commercial real estate financing products.

We are managed by the Advisor pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement"). The 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.

The Advisor, an SEC-registered investment adviser, is a credit-focused alternative asset management firm. The Advisor manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private / opportunistic debt, liquid credit, structured credit and commercial real estate debt. These strategies complement each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass the Advisor’s robust platform. The Advisor is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as "Franklin Templeton".

As of March 31, 2026, we have 243 employees, all of which are employees of NewPoint.

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Book Value Per Share

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

________________________

(1) Book value per share includes unvested shares for restricted stock and restricted stock units.

(2) Fully-converted book value per share assumes conversion of the Company's Series H preferred stock, the redemption for Company common stock of the Class A OP Units of the OP held by third parties, and the vesting of the Company's unvested equity compensation awards.

(3) Excluding the impact of accumulated depreciation and amortization of real property of $18.5 million and $17.5 million as of March 31, 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 million as of March 31, 2026, would result in a fully converted book value per share of $14.58 and $14.34, respectively.

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Critical Accounting Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting estimates are those that require the application of management’s most difficult, subjective or complex judgments on matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

During the three months ended March 31, 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.

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Portfolio

As of March 31, 2026 and December 31, 2025, our portfolio consisted of 177 and 169 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allo

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Franklin BSP Realty Trust, Inc. the notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.

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 FBRT OP LLC, a Delaware limited 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").

This discussion contains forward-looking statements reflecting the Company’s current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections of this Annual Report on Form 10-K entitled “Risk Factors” and “Forward-Looking Statements.”

Overview

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 91% of the common units of membership interests in the OP as of December 31, 2025.

The Company’s operations are organized into two business units: (i) Commercial Real Estate Financing, and (ii) Agency Business. The Commercial Real Estate Financing unit primarily focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans. Secondarily, this unit also invests in and asset manages real estate securities, with a historical focus on commercial mortgage-backed securities ("CMBS"), commercial real estate collateralized loan obligation bonds and single asset single borrower bonds (collectively "CMBS bonds"), collateralized debt obligations ("CDOs") and other securities. Through this unit the Company also originates conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions, and owns real estate that was either acquired by the Company through foreclosure, deed-in-lieu of foreclosure or that was purchased for investment.

On July 1, 2025, through a wholly owned subsidiary, we acquired NewPoint Holdings JV LLC (“NewPoint”), which now comprises our Agency Business unit. Through this unit, we originate, sell and service a range of multifamily finance products under programs offered by government-sponsored enterprises (“GSEs”), such as the Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) and by government agencies (“Agencies”), such as the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). We retain the servicing rights and asset management responsibilities on substantially all loans we originate and sell under the GSE and HUD programs. We are an approved Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, a Freddie Mac Program Plus Seller/Servicer, a Multifamily Accelerated Processing (“MAP”) and Section 232 LEAN lender for HUD and a Ginnie Mae issuer. Additionally, the Company services external portfolios of commercial real estate financing products.

We are managed by the Advisor pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement"). The 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.

The Advisor, an SEC-registered investment adviser, is a credit-focused alternative asset management firm. The Advisor manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private / opportunistic debt, liquid credit, structured credit and commercial real estate debt. These strategies complement each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass the Advisor’s robust platform. The Advisor is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as "Franklin Templeton".

As of December 31, 2025, we had 223 employees, all of which are employees of NewPoint.

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Book Value Per Share

The following table calculates the Company's book value per share as of December 31, 2025 and 2024 (in thousands, except share and per share amounts):

The following table calculates the Company's fully-converted book value per share as of December 31, 2025 and 2024 (in thousands, except share and per share amounts):

________________________

(1) Book value per share includes unvested shares for restricted stock and restricted stock units.

(2) Fully-converted book value per share assumes conversion of the Company's Series H 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 the Company's unvested equity compensation awards.

(3) Excluding the amounts for accumulated depreciation and amortization of real property of $17.5 million and $13.8 million as of December 31, 2025 and 2024, respectively, would result in a fully-converted book value per share of $14.34 and $15.35 as of December 31, 2025 and 2024, respectively.

Critical Accounting Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting estimates are those that require the application of management’s most difficult, subjective or complex judgments on matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

Set forth below is a summary of the critical accounting estimates that management believes are important to the preparation of our financial statements and require complex management judgment. The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 – Summary of Significant Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K.

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Business Combinations

Accounting for business combinations requires us to recognize, separately from goodwill, the assets acquired and the liabilities assumed ("net assets") at their acquisition date fair values. Goodwill is measured as the excess of consideration transferred over the net assets acquired at their respective fair values as of the acquisition date. The estimated fair values require significant estimates and assumptions including, but not limited to, estimating projected revenues and developing appropriate discount rates. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill, based on new information obtained about the facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period or final determination of the values of net assets acquired, whichever comes first, any subsequent adjustments are recorded to our consolidated financial statements. Refer to Note 3 - Business Combinations for critical accounting estimates around the Company's purchase price accounting allocations.

Credit Losses - Estimating Credit Losses

General allowance for credit losses

The general allowance for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments, represents a lifetime estimate of expected credit losses. Factors considered by the Company when determining the general allowance for credit losses reserve include loan-specific characteristics such as LTV ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and forward looking information through the use of projected macroeconomic scenarios over the reasonable and supportable forecasts.

The general allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments. If similar risk characteristics do not exist, the Company measures the general allowance for credit losses on an individual instrument basis. The determination of whether a particular financial instrument should be included in a pool can change over time. If a financial asset’s risk characteristics change, the Company evaluates whether it is appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually.

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 allowance 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.

Specific Allowance for credit losses

For financial instruments where the borrower is experiencing financial difficulty based on the Company’s assessment at the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral, the Company may elect to use as a practical expedient the fair value of the collateral at the reporting date when determining the specific allowance for credit losses.

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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.

Risk Rating

In developing the provision for credit losses for its loans held for investment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability, using similar factors as those in developing the provision for credit losses. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Risk rating categories range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss with the ratings updated quarterly.

The Company designates loans as non-performing when (i) full payment of principal and coupon interest components become 90-days past due ("non-accrual status"); or (ii) the Company has reasonable doubt as to whether the collection of contractual components can be satisfied ("cost recovery status"). When a loan is designated as non-performing and placed on non-accrual status, interest is only recognized as income when payment has been received. Loans designated as non-performing and placed on non-accrual status are removed from their non-performing designation when collection of principal and coupon interest components have been satisfied. When a loan is designated as non-performing and placed on cost recovery status, the cost-recovery method is applied to which receipt of principal or coupon interest is recorded as a reduction to the amortized cost until collection of all contractual components are reasonably assured.

Allowance for Loss Sharing

When a loan is sold under the Fannie Mae DUS program, the Company undertakes an obligation to partially guarantee the performance of the loan. The Company estimates an allowance for loss-sharing under CECL over the contractual period in which we are exposed to credit risk.

For loans that are pooled and collectively evaluated, the allowance for loss-sharing reserve is determined based on detailed loan-specific characteristics, including loan-to-value (LTV) ratio, vintage year, loan term, property type, occupancy, and geographic location. The evaluation also considers the financial performance of the borrower, expected payments of principal and interest, as well as qualitative factors, utilizing both internal and external information. This approach incorporates past events, current conditions, and forward-looking information through the use of projected macroeconomic scenarios over reasonable and supportable forecasts. In instances where payment under the loss-sharing obligations of a loan is determined to be probable and estimable (as the loan is probable of, or is, in foreclosure), we record a liability for the estimated loss-sharing on an individual loan basis.

Real Estate Owned - Estimating Fair Value and Holding Period

Real estate owned assets, held for investment are carried at their estimated fair value at acquisition and presented net of accumulated depreciation and impairment charges. The Company allocates the purchase price of acquired real estate assets based on the fair value of the acquired land, building, furniture, fixtures and equipment.

Real estate owned assets, held for investment are depreciated using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements and up to 15 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate owned assets are capitalized and depreciated over their estimated useful lives. Real estate owned revenue is recognized when the Company satisfies a performance obligation by transferring a promised good or service to a customer. The Company is considered to have satisfied all performance obligation at a point in time.

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Real estate owned assets that are probable to be sold within one year are reported as held for sale. Real estate owned assets classified as held for sale are measured at the lower of its carrying value or estimated fair value less cost to sell. Real estate owned assets are not depreciated or amortized while classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be accrued. Upon the disposition of a real estate owned asset, the Company calculates realized gains and losses as net proceeds received less the carrying value of the real estate owned asset. Net proceeds received are net of direct selling costs associated with the disposition of the real estate owned asset.

Real Estate Securities - Estimating Fair Value

On the acquisition date, all of our real estate securities will be classified as available for sale ("AFS") and will be carried at fair value, with any unrealized gains or losses reported as a component of accumulated other comprehensive income or loss. However, we may elect to transfer these assets to trading securities, and as a result, any unrealized gains or losses on such real estate securities will be recorded as unrealized gains or losses on investments in the consolidated statements of operations. Related discounts, premiums, and acquisition expenses on investments are amortized over the life of the investment using the effective interest method. Amortization is reflected as an adjustment to Interest income in the consolidated statements of operations.

Credit Impairment Analysis of Real Estate Securities

Real estate securities for which the fair value option has not been elected will be periodically evaluated for credit impairment. AFS real estate securities which have experienced a decline in the fair value below their amortized cost basis (i.e., impairment) are evaluated each reporting period to determine whether the decline in fair value is due to credit-related factors. Any impairment that is not credit-related is recognized in other comprehensive income, while credit-related impairment is recognized as an allowance in the consolidated balance sheets with a corresponding adjustment in the consolidated statements of operations. If the Company intends to sell an impaired real estate security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in the consolidated statements of operations with a corresponding adjustment to the security’s amortized cost basis.

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.

Real estate securities for which the fair value option has been elected are not evaluated for other-than-temporary impairment as changes in fair value are recorded in the consolidated statement of operations.

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NewPoint Acquisition

Our Agency Business is conducted through NewPoint, which we acquired on July 1, 2025. NewPoint is a commercial real estate finance company focused on originating and servicing agency mortgage loans. NewPoint is a multifamily originator and servicer and is approved by four government sponsored entities (Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Government National Mortgage Association and U.S. Department of Housing and Urban Development). NewPoint’s mortgage servicing rights ("MSRs") are held as an asset on our consolidated balance sheet. As of December 31, 2025, and as of the closing date of the acquisition, NewPoint had a total servicing portfolio of $47.8 billion and $55.4 billion, respectively. The NewPoint business is complimentary to our historical business as it offers our traditional bridge loan borrowers the opportunity to refinance our bridge loans with agency mortgage loans.

The NewPoint acquisition does not have any impact on our arrangements with the Advisor. The Chief Executive Officer and the Chief Financial Officer / Chief Operating Officer of the Company were appointed as Chief Executive Officer and Chief Operating Officer, respectively, of NewPoint and oversee the business and employees of NewPoint in those roles.

As a result of the NewPoint acquisition, we treat our Agency Business as a new business segment. The Agency Business has and will continue to have a number of impacts on our future consolidated financial statements, including the addition of MSRs to our consolidated balance sheet, the addition of servicing income and gains on sales of originated agency mortgages, and the addition of employee expense. These changes may make it difficult to compare our financial results in future periods with our financial results from periods that preceded the acquisition. In addition, gains on sale from originated agency mortgages will largely be driven by origination volumes in the reported period. As a result, the associated gains on sale may vary significantly quarter to quarter, which may make it difficult to compare future quarter to quarter financial results.

With respect to liquidity, we expect the Agency Business will continue to utilize warehouse agreements as the primary form of financing. The warehouse agreements used for the Agency Business generally have 100% financing. We also expect that the MSRs we hold on our balance sheet will increase our ability to expand our revolving credit facilities.

We issued 8,385,951 OP Units of the OP to equity holders of NewPoint in the acquisition. After 12 months from the closing date, holders of the OP Units may elect to have the OP Units redeemed, in which case the Company will have the option to satisfy the redemption consideration with either cash (based on the trading price of the Company’s common stock) or the delivery of one share of the Company’s common stock for each OP Unit. We expect to pay quarterly per unit cash distributions to holders of OP Units equal to the quarterly per share cash distributions we pay to holders of our common stock.

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New Tax Legislation

Effective July 4, 2025, certain changes to U.S. tax law were approved that impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Internal Revenue Code (the “Code”), (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries (“TRSs”) from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.

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Results of Operations

The Company conducts its business through the following segments:

•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 Agency Business focuses on originating, selling, and servicing loans under programs offered by GSE’s and Agencies, such as Fannie Mae, Freddie Mac, Ginnie Mae, and HUD. Additionally, the business services external portfolios of commercial real estate financing products.

•The commercial real estate conduit business, operated through the Company's TRS, 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.

•The real estate owned business represents real estate acquired by the Company through foreclosure, deed-in-lieu of foreclosure, or purchase.

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

Net Interest Income

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.

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 years ended December 31, 2025 and 2024 (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 years ended December 31, 2025 and 2024, respectively.

(2) Includes the effect of amortization of premium or accretion of discount and deferred fees.

(3) Excludes other income on the real estate owned business segment.

(4) Calculated as interest income or expense divided by average carrying value.

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(5) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.

(6) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.

Interest Income

Interest income for the years ended December 31, 2025 and 2024, totaled $430.3 million and $526.1 million, respectively, a decrease of $95.8 million. The decrease was primarily due to an approximate 91 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease of $585.6 million in the average carrying balance of our real estate debt. As of December 31, 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 and (ii) eleven real estate securities, available for sale, measured at fair value and (iii) three commercial mortgage loans, held for sale, measured at fair value.

Interest Expense

Interest expense for the years ended December 31, 2025 and 2024 totaled $288.3 million and $338.5 million, respectively, a decrease of $50.2 million. The decrease was primarily due to an approximate 91 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease of $515.7 million in the average carrying value of our collateralized loan obligations.

Gain/(Loss) on Sales, including fee-based services, net

Gain on sales, including fee-based services, net for the years ended December 31, 2025 and 2024 totaled $57.6 million and $13.1 million, respectively, which was comprised of our Agency Business and conduit segments.

Gain on sales, including fee-based services, net from our Agency Business segment, which we acquired though the NewPoint acquisition on July 1, 2025, was $37.3 million for the year ended December 31, 2025. This was due to agency loans acquired of $422.0 million, originations post acquisition of $3.2 billion and sales of $3.3 billion. The Company did not have the Agency Business segment during the year ended December 31, 2024.

Gain on sales, including fee-based services, net from our conduit segment for the years ended December 31, 2025 and 2024 totaled $20.3 million and $13.1 million, respectively. The increase was primarily due to $464.4 million in principal amount of commercial real estate loans sold by the Company into the CMBS securitization market resulting in proceeds of $482.4 million for the year ended December 31, 2025. This is compared to the sale of $271.2 million in principal amount of commercial real estate loans sold into the CMBS securitization market resulting in proceeds of $284.3 million for the year ended December 31, 2024.

Mortgage Servicing Rights

Income from mortgage servicing rights for the year ended December 31, 2025 was $28.6 million which related to the fair value on originated MSR's loans rate locked under programs with Fannie Mae, Freddie Mac and HUD. The Company did not have income from mortgage servicing rights for the year ended December 31, 2024.

Servicing Revenue

Servicing revenue for the year ended December 31, 2025 was $12.5 million which was comprised of $23.1 million of servicing fee income and $15.1 million in placement fees on borrower escrows and reserves, partially offset by $25.7 million in reductions to the MSR for amortization, payoffs and impairment. The Company did not have servicing revenue for the year ended December 31, 2024.

Gain/(Loss) on Derivatives

Loss on derivatives for the years ended December 31, 2025 and 2024 totaled $0.2 million and $0.2 million, respectively. For the year ended December 31, 2025, the loss was composed of a $1.1 million unrealized loss related to mark to market on credit default swaps, treasury note futures, and options, partially offset by a $0.9 million realized gain. For the year ended December 31, 2024, loss was composed of a realized loss of $1.3 million due primarily to the termination and settlement of credit default swaps and treasury yields, partially offset by an unrealized gain of $1.1 million.

Revenue from Real Estate Owned

Revenue from real estate owned for the years ended December 31, 2025 and 2024 totaled $29.6 million and $22.8 million, respectively. The $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, 2025.

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Provision/(Benefit) for Credit losses

Benefit for credit losses for the year ended December 31, 2025 totaled $11.9 million. This is compared to a provision for credit losses for the year ended December 31, 2024 of $35.7 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. The $13.2 million decrease in general reserve was primarily due to performance improvement of our portfolio and portfolio turnover since the end of the prior year.

For the year ended December 31, 2025, the increase in specific reserve of $5.7 million was primarily related to (i) two non-performing loans secured by multifamily properties in Texas which we foreclosed on during the second and fourth quarter, respectively, and (ii) three non-performing loans secured by multifamily properties in Pennsylvania, Arizona and North Carolina, partially offset by the reversal of a specific reserve on a non-performing loan secured by an office property in Georgia. For the year ended December 31, 2024, the increase in specific reserve of $36.0 million, compared to the prior year, was primarily related to two non-performing loans collateralized by office properties located in Colorado and Georgia.

For the year ended December 31, 2025, allowance for loss sharing was established from our Agency Business segment, which we acquired though the NewPoint acquisition on July 1, 2025. The $4.1 million change in reserve from the NewPoint acquisition date related to a $1.8 million decrease to the general CECL reserve due to an increased overall economic outlook coupled with a $2.3 million decrease in the specific loan reserve due to improvement in the performance of at risk loans.

Realized Gain/(Loss) on Extinguishment of Debt

The Company realized a loss on extinguishment of debt of $7.7 million for the year ended December 31, 2025 which related to the redemption of the outstanding notes issued by BSPRT 2021-FL6 Issuer, Ltd., BSPRT 2021-FL7 Issuer, Ltd. and BSPRT 2022-FL9 Issuer, Ltd. The Company did not realize a gain or loss on extinguishment of debt for the year ended December 31, 2024.

Realized Gain/(Loss) on Real Estate Securities, Available for Sale

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/(Loss) on Sale of Commercial Mortgage Loans, Held for Investment

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.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale

Realized loss on commercial mortgage loans, held for sale, for the year ended 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.

Gain/(Loss) on Other Real Estate Investments

Loss on other real estate investments for the year ended December 31, 2025 was $3.4 million primarily due to sales of our multifamily and retail properties and fair value write downs of our multifamily properties, partially offset by settled litigation regarding the Walgreens Portfolio. This is compared to a loss of $8.0 million for the year ended December 31, 2024 primarily due to sales and write offs related to the Walgreens Portfolio coupled with the onboarding of real estate owned, held for sale multifamily properties.

Income/(loss) from equity method investments

Income from equity method investments for the year ended December 31, 2025 was $3.6 million related to the Company's net allocated percentage of income generated by our equity method investments. The Company did not have any equity method investment income during the year ended December 31, 2024.

(Provision)/Benefit for Income Tax

Provision for income tax for the year ended December 31, 2025 was $3.9 million compared to a provision of $1.1 million for the year ended December 31, 2024. The difference is related to changes in taxable earnings in our TRS segment.

Net (Income)/Loss Attributable to Non-controlling Interest

Net income attributable to non-controlling interest in our consolidated joint ventures for the year ended December 31, 2025 was $1.8 million, compared to a net loss attributable to non-controlling interest in our consolidated joint ventures of $3.5 million for the year ended December 31, 2024.

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Preferred Share Dividends

Preferred share dividends were $27.0 million for the years ended December 31, 2025 and 2024.

Expenses from Operations

Expenses from operations for the years ended December 31, 2025 and 2024 consisted of the following (dollars in thousands):

Refer to Note 18 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

The increase in operating expense for the year ended December 31, 2025 compared to 2024 was primarily due to (i) our incurrence of compensation and benefits cost of $53.7 million compared to no such expenses in 2024, resulting from our acquisition of NewPoint and the fact we now have employees and were responsible for six months of associated compensation expense, (ii) a significant increase in professional fees related to the NewPoint acquisition, (iii) an increase in other expenses related to property operating expenses and third party management fees incurred in order to operate various real estate owned investments in our portfolio, coupled with other expenses related to the NewPoint acquisition and (iv) an increase in administrative service expense due to the time spent on the NewPoint acquisition. While the increase in professional fees primarily related to the completed NewPoint acquisition, we will be responsible for NewPoint compensation and benefits for the full year in 2026 and we will continue to be responsible for property operating expenses and third party management fees related to operating our real estate owned assets.

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Comparison of the Three Months Ended December 31, 2025 to the Three Months Ended September 30, 2025

Net Interest Income

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.

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 December 31, 2025 and three months ended September 30, 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 December 31, 2025 and September 30, 2025, respectively.

(2) Includes the effect of amortization of premium or accretion of discount and deferred fees.

(3) Excludes other income on the real estate owned business segment.

(4) Calculated as interest income or expense divided by average carrying value.

(5) Annualized.

(6) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.

(7) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.

Interest Income

Interest income for the three months ended December 31, 2025 and September 30, 2025 totaled $99.0 million and $106.2 million, respectively, a decrease of $7.2 million. The decrease was primarily due to an approximate 32 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a $213.9 million decrease in the average carrying value of our real estate debt. As of December 31, 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 September 30, 2025, our portfolio consisted of (i) 147 commercial mortgage loans, held for investment, (ii) 36 commercial mortgage loans, held for sale, measured at fair value, (iii) two commercial mortgage loans, held for sale and (iv) five real estate securities, available for sale, measured at fair value.

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Interest Expense

Interest expense for the three months ended December 31, 2025 and September 30, 2025 totaled $71.0 million and $76.5 million, respectively, a decrease of $5.5 million due primarily to a decrease of $216.1 million in the carrying value of our repurchase agreements - commercial mortgage loans coupled with an approximate 32 basis point decrease in daily average SOFR and SOFR equivalent rates.

(Gain)/loss on sales, including fee-based services, net

Gain on sales, including fee-based services, net for the three months ended December 31, 2025 and September 30, 2025 was $22.9 million and $29.4 million, respectively, which was comprised of our Agency Business and conduit segments.

Gain on sales, including fee-based services, net from our Agency Business segment for the three months ended December 31, 2025 and September 30, 2025 was $11.3 million and $26.0 million, respectively. The $14.7 million decrease was primarily due to an approximate 50% reduction in rate locked loans in our Agency Business segment for the three months ended December 31, 2025 compared to the three months ended September 30, 2025.

Gain on sales, including fee-based services, net from our conduit segment for the three months ended December 31, 2025 and September 30, 2025 was $11.6 million and $3.4 million, respectively. The increase was primarily due to $290.6 million in principal amount of commercial real estate loans sold by the Company into the CMBS securitization market resulting in proceeds of $299.8 million for the three months ended December 31, 2025. This is compared to the sale of $59.4 million in principal amount of commercial real estate loans sold into the CMBS securitization market resulting in proceeds of $62.8 million for the three months ended September 30, 2025.

Mortgage servicing rights

Income for mortgage servicing rights for the three months ended December 31, 2025 and September 30, 2025 was $8.8 million and $19.7 million, respectively. The $10.9 million decrease is due to lower origination volume of the underlying loans for the three months ended December 31, 2025 compared to the three months ended September 30, 2025.

Servicing Revenue

Servicing revenue for the three months ended December 31, 2025 and September 30, 2025 was $8.9 million and $3.6 million, respectively. The $5.3 million quarter over quarter increase is primarily due to approximately $4.4 million of MSR impairment during the three months ended September 30, 2025 arising from increased CPR assumption. The Company did not have MSR impairment during the three months ended December 31, 2025.

(Gain)/Loss on derivatives

Gain on derivatives for the three months ended December 31, 2025 was $0.3 million composed of a $0.4 million realized gain related to the termination and settlement of credit default swaps and treasury note futures, partially offset by a $0.1 million unrealized loss. This is compared to a loss on derivatives for the three months ended September 30, 2025 of $0.1 million composed of a $0.4 million realized loss related to the termination and settlement of credit default swaps and treasury note futures, partially offset by a $0.3 million unrealized gain.

Revenue from Real Estate Owned

For the three months ended December 31, 2025 and September 30, 2025, revenue from real estate owned was $7.3 million and $7.2 million, respectively, staying relatively consistent quarter-over-quarter.

(Provision)/Benefit for Credit losses

Benefit for credit losses was $7.9 million during the three months ended December 31, 2025 compared to a benefit of $0.6 million during the three months ended September 30, 2025.

For the three months ended December 31, 2025 and September 30, 2025, general benefit for credit losses was $7.8 million and $1.5 million, respectively, an increase in benefit of $6.3 million primarily due to performance improvement of our portfolio since the end of the prior quarter.

For the three months ended December 31, 2025 and September 30, 2025, specific provision for credit losses was $3.0 million and $1.9 million, respectively. For the three months ended December 31, 2025, the specific provision was primarily related to three non-performing loans secured by multifamily properties in Pennsylvania, Arizona and North Carolina, coupled with a non-performing loan secured by a multifamily property in Texas which we foreclosed on during the fourth quarter. For the three months ended September 30, 2025, the increase in specific reserve was primarily related to a non-performing loan secured by a multifamily property in Pennsylvania.

For the three months ended December 31, 2025, allowance for loss sharing decreased $3.1 million related to a $4.1 million decrease to the specific loan reserve due to improvement in the performance of at risk loans. This is offset by a $1.0 million increase to the general CECL reserve due to growth in the Fannie Mae loss sharing portfolio.

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Realized Gain/(Loss) on Extinguishment of Debt

The Company realized a loss on extinguishment of debt of $7.7 million for the three months ended December 31, 2025 which related to the redemption of the outstanding notes issued by BSPRT 2021-FL6 Issuer, Ltd., BSPRT 2021-FL7 Issuer, Ltd. and BSPRT 2022-FL9 Issuer, Ltd. The Company did not realize a gain or loss on extinguishment of debt for the three months ended September 30, 2025.

Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale

Realized loss on commercial mortgage loans, held for sale, for the three months ended 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 three months ended September 30, 2025.

Gain/(Loss) on Other Real Estate Investments

Loss on other real estate investments for the three months ended December 31, 2025 was $1.7 million primarily due to the sales of real estate owned, held for sale, multifamily and retail properties coupled with the fair value write down on one multifamily property located in North Carolina. This is compared to a loss of $2.1 million for the three months ended September 30, 2025 primarily due to the sales of real estate owned, held for sale, multifamily and retail properties coupled with the fair value write down on one multifamily property located in Ohio.

Income/(loss) from equity method investments

For the three months ended December 31, 2025 and September 30, 2025, income from equity method investments was $3.4 million and $6.0 thousand, respectively. The increase was primarily related to the Company's share of increases to the fair value of the assets held by our equity method investments.

(Provision)/Benefit for Income Tax

Provision for income tax for the three months ended December 31, 2025 was $6.3 million compared to a benefit of $2.9 million for the three months ended September 30, 2025. The difference is related to changes in taxable earnings in our TRS segment.

Net (Income)/Loss Attributable to Non-controlling Interest

Net income attributable to non-controlling interest in our consolidated joint ventures for the three months ended December 31, 2025 and September 30, 2025 totaled $0.7 million and $0.3 million, respectively.

Expenses from operations

Expenses from operations for the three months ended December 31, 2025 and September 30, 2025 consisted of the following (dollars in thousands):

For the three months ended December 31, 2025, we incurred asset management and subordinated performance fees and administrative services expenses of $6.3 million and $2.7 million, respectively, which are payable to our Advisor under our asset management agreement. For the three months ended December 31, 2025 compared to September 30, 2025, asset management and incentive fees increased due to increases in applicable average equity between periods, while administrative services expenses decreased due to less personnel time spent in the current three months compared to the prior three months. Refer to Note 18 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

The decrease in operating expense for the three months ended December 31, 2025 was primarily related to (i) a decrease in compensation and benefits related to NewPoint employees as a result of lower commission expense resulting from a decrease in agency loan production during the quarter, and (ii) a decrease in other expenses related to the NewPoint acquisition.

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Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023

See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 26, 2025, for a discussion of the comparison of the year ended December 31, 2024 to the year ended December 31, 2023.

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Portfolio

As of December 31, 2025 and 2024, our Commercial Real Estate Financing portfolio consisted of 169 and 155 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans held for investment, net of allowance for credit losses, as of December 31, 2025 and 2024, had a total carrying value of $4,383.1 million and $4,908.7 million, respectively. 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 December 31, 2024, our commercial mortgage loans, held for sale, measured at fair value, were comprised of three senior loans with a total fair value of $87.3 million. As of December 31, 2025 and 2024, we had $151.7 million and $203.0 million, respectively, of real estate securities, available for sale, measured at fair value. As of December 31, 2025 and 2024, our real estate owned, held for investment portfolio was composed of two and three properties with carrying values of $99.3 million and $113.2 million, respectively. As of December 31, 2025 and 2024, we had six and twelve positions classified as real estate owned, held for sale with combined carrying values of $198.9 million and $222.9 million, respectively. As of December 31, 2025 and 2024, our equity method investments consisted of four investments and one investment with carrying values of $71.7 million and $13.4 million, respectively.

As of December 31, 2025, 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 December 31, 2024, we had three loans designated as non-performing status with a total amortized cost of $133.2 million. As of December 31, 2025, three loans designated as non-performing and put on cost recovery status were determined to have a combined $4.1 million specific allowance for credit losses. During the year ended December 31, 2024, three loans designated as non-performing and put on cost recovery status were determined to have a combined $31.2 million specific allowance for credit losses.

As of December 31, 2025 and 2024, our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 7.1% and 8.0%, respectively, and a weighted average remaining life of 1.1 years and 1.1 years, respectively.

As of December 31, 2025, the Company had a total servicing portfolio consisting of 1,596 loans with an unpaid principal balance of $47.8 billion. As of December 31, 2025, the Company owned MSRs of $212.2 million, which consisted of 1,042 loans with an unpaid principal balance of $21.6 billion.

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The following charts summarize our commercial mortgage loans, held for investment, by coupon rate type, collateral type geographical region and state as of December 31, 2025 and 2024:

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An investments region classification is defined according to the below map based on the location of investments secured property.

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The following charts show the par value by contractual maturity year for the commercial mortgage loans, held for investment in our portfolio as of December 31, 2025 and 2024:

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The following table shows selected data from our commercial mortgage loans, held for investment in our portfolio as of December 31, 2025 (dollars in thousands):

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_______________________

(1) For a discussion of risk ratings, see Note 4 - Commercial Mortgage Loans, Held for Investment in our Consolidated Financial Statements included in this Form 10-K.

(2) Date loan was originated or acquired by us. The origination or acquisition date is not updated for subsequent loan modifications.

(3) Fully extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date.

(4) Our floating rate loan agreements generally contain the contractual obligation for the borrower to maintain an interest rate cap to protect against rising interest rates. In a simple interest rate cap, the borrower pays a premium for a notional principal amount based on a capped interest rate (the “cap rate”). When the floating rate exceeds the cap rate, the borrower receives a payment from the cap counterparty equal to the difference between the floating rate and the cap rate on the same notional principal amount for a specified period of time. When interest rates rise, the value of an interest rate cap will increase, thereby reducing the borrower's exposure to rising interest rates.

(5) As of December 31, 2025, all of our commercial mortgage loans, held for investment which had been indexed at LIBOR were converted to SOFR utilizing the 11.448 basis points adjustment and the applicable spreads remain unchanged. The loans which have the SOFR adjustment are indicated with “Adj. 1M SOFR Term.”

(6) Effective yield is calculated as the spread of the loan plus the greater of the applicable index or index floor.

(7) LTV represents the ratio of the loan amount to the appraised value of the property at the time of origination. However, for predevelopment construction loans at origination, LTV is not applicable and is therefore nil.

(8) Commitment on the loan was unfunded as of December 31, 2025.

The following table shows selected data from our commercial mortgage loans, held for sale, measured at fair value as of December 31, 2025 (dollars in thousands):

________________________

(1) Loan to value percentage (LTV) represents the ratio of the loan amount to the appraised value of the property at the time of origination.

(2) Interest rates and effective yields represent weighted averages.

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The following table shows selected data from our real estate owned assets in our portfolio as of December 31, 2025 (dollars in thousands):

________________________

(1) Includes intangible lease assets

The following table shows selected data from our equity method investments, in our portfolio as of December 31, 2025 (dollars in thousands):

The following table shows selected data from our real estate securities, available for sale, measured at fair value as of December 31, 2025 (dollars in thousands):

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Liquidity and Capital Resources

Overview

Our expected material cash requirements over the next twelve months and thereafter are composed of (i) contractually obligated payments, including payments of principal and interest and contractually-obligated fundings on our loans; (ii) other essential expenditures, including operating and administrative expenses and dividends paid in accordance with REIT distribution requirements; and (iii) opportunistic investments, including new loans.

Our contractually obligated payments primarily consist of payment obligations under the debt financing arrangements which are set forth below, and included in the table under Contractual Obligations and Commitments.

We may from time to time purchase or retire outstanding debt securities and repurchase or redeem our equity securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors.

We closely monitor our liquidity position and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for the next 12 months and beyond.

Debt-to-Equity Ratio and Total Leverage Ratio

The following table presents our debt-to-equity and total leverage ratios:

________________________

(1) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, less cash and cash equivalents, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse net debt-to-equity ratio was 0.8x and 0.3x as of December 31, 2025 and 2024, respectively.

(2) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse leverage ratio was 0.9x and 0.4x as of December 31, 2025 and 2024, respectively.

Sources of Liquidity

Our primary sources of liquidity include unrestricted cash, capacity in our collateralized loan obligations available for reinvestment, and funds available and in progress on financing lines.

Our current sources of near-term liquidity as of December 31, 2025 and 2024 are set forth in the following table (dollars in millions):

________________________

(1) See discussion below for further information on the Company's collateralized loan obligations.

(2) Represents cash available to invest at a market advance rate utilizing available capacity on financing lines.

We expect to use additional debt and equity financing as a source of capital. Our board of directors currently intends to operate at a leverage level of between one to three times book value of equity. However, our board of directors may change this target without shareholder approval. We anticipate that our debt and equity financing sources and our anticipated cash generated from operations will be adequate to fund our anticipated uses of capital.

We have an effective shelf registration statement for offerings of equity securities that is not limited on the amount of securities we may issue. We also have authorized an at-the-market sales program (“ATM”) pursuant to which we may sell up to $200 million of shares of our common stock from time to time. We have not sold any shares of common stock under the ATM to date. We also may access liquidity through our dividend reinvestment and stock purchase plan (“DRIP”), which includes a direct stock purchase option.

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In addition to our current mix of financing sources, we may also access additional forms of financings, including credit facilities, securitizations, public and private, secured and unsecured debt issuances by the Company or its subsidiaries, or through capital recycling initiatives whereby we sell certain assets in our portfolio and reinvest the proceeds in assets with more attractive risk-adjusted returns.

Collateralized Loan Obligations

During the year ended December 31, 2025, the Company raised $1.1 billion through the issuance of our CLO, BSPRT 2025-FL12 Issuer, LLC. Additionally, as of December 31, 2025, the Company had $29.5 million of reinvestment capital available across all outstanding collateralized loan obligations. The following table shows the par value outstanding for each CLO and the respective reinvestment end dates (dollars in millions):

Repurchase Agreements and Revolving Credit Facilities (“Repo and Revolving Credit Facilities”)

The Repo and Revolving Credit Facilities are financing sources through which the Company may pledge one or more mortgage loans to the financing entity in exchange for funds typically at an advance rate that typically range between 60% to 75% of the principal amount of the mortgage loan being pledged.

We expect to use the advances from these Repo and Revolving Credit Facilities to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein.

The Repo and Revolving Credit Facilities generally provide that in the event of a decrease in the value of our collateral, the lenders can demand additional collateral. Should the value of our collateral decrease as a result of deteriorating credit quality, resulting margin calls may cause an adverse change in our liquidity position.

The following tables summarize our Repo and Revolving Credit Facilities and our master repurchase agreements (“MRAs”) for the years ended December 31, 2025, 2024, and 2023, respectively:

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The use of our warehouse lines is dependent upon a number of factors including but not limited to: origination volume, loan repayments and prepayments, our use of other financing sources such as collateralized loan obligations, our liquidity needs and types of loan assets and underlying collateral that we hold.

During the twelve months ended December 31, 2025, the maximum monthly average outstanding balance was $1.5 billion, of which $1.3 billion was related to repurchase agreements on our commercial mortgage loans and $0.2 billion for repurchase agreements on our real estate securities.

During the twelve months ended December 31, 2024, the maximum monthly average outstanding balance was $1.1 billion, of which $0.8 billion was related to repurchase agreements on our commercial mortgage loans and $0.3 billion for repurchase agreements on our real estate securities.

During the twelve months ended December 31, 2023, the maximum monthly average outstanding balance was $1.2 billion, of which $0.9 billion was related to repurchase agreements on our commercial mortgage loans and $0.3 billion for repurchase agreements on our real estate securities.

Distributions

In order to maintain our election to qualify as a REIT, we must currently distribute, at a minimum, an amount equal to 90% of our taxable income, without regard to the deduction for distributions paid and excluding net capital gains. The Company must distribute 100% of its taxable income (including net capital gains) to avoid paying corporate U.S. federal income taxes.

Distributions on our common stock are payable when declared by our board of directors.

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Dividends payable on each share of Series H convertible preferred stock ("Series H Preferred Stock") is generally equal to the quarterly dividend that would have been paid had such share of preferred stock been converted to a share of common stock, except to the extent common stock dividends have been reduced below certain specified levels. To the extent dividends on shares of preferred stock are not authorized and declared by our board of directors and paid by the Company monthly, the dividend amounts will accrue.

Holders of shares of the Company's 7.50% Series E Cumulative Redeemable Preferred Stock ("Series E Preferred Stock") are entitled to receive, when, as and if authorized by our board of directors and declared by the Company, out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 7.50% of the $25.00 per share liquidation preference per annum (equivalent to $1.875 per annum per share).

In December 2025, the Company's board of directors declared the following: (i) a fourth quarter 2025 dividend of $0.355 per share on the Company's common stock (equivalent to $1.42 per annum), (ii) a fourth quarter 2025 dividend of $106.216 per share on the Company’s Series H Preferred Stock, and (iii) a fourth quarter 2025 dividend of $0.46875 per share on the Company’s Series E Preferred Stock and (iv) a fourth quarter 2025 dividend of $0.355 per unit on the OP Units, all of which were paid in January 2026 to holders of record as of December 31, 2025.

Under the ("DRIP"), the Company may elect to supply shares for reinvestment via newly issued shares of common stock under the DRIP or via shares of common stock acquired by the DRIP administrator on the open market. For the year ended December 31, 2025, 0 and 160,137 shares of common stock were issued by the Company and purchased in the open market by the DRIP administrator and allocated to DRIP participants, respectively, under the dividend reinvestment component of DRIP.

During the year ended December 31, 2025 and 2024, the Company paid an aggregate of $118.6 million and $117.9 million, respectively, of common stock distributions. In addition, during the year ended December 31, 2025, the Company's operating partnership paid $3.0 million of distributions to holders of OP Units. There were no OP Units outstanding in 2024.

Cash Flows

The following table sets forth changes in cash, cash equivalents and restricted cash for the years ended December 31, 2025 2024, and 2023, respectively

Cash Flows from Operating Activities

During the year ended December 31, 2025, cash inflows of $291.9 million from operating activities were primarily driven by (i) net income of $84.1 million, (ii) net cash proceeds of $166.7 million related to originations, sales and repayment of commercial mortgage loans, held for sale, measured at fair value and (iii) certain non-cash expenses.

During the year ended December 31, 2024, cash inflows of $57.2 million from operating activities were primarily driven by (i) net income of $92.4 million and (ii) certain non-cash expenses, partially offset by net cash outlay of $74.1 million related to originations, sales and repayment of commercial mortgage loans, held for sale, measured at fair value.

Cash Flows from Investing Activities

During the year ended December 31, 2025 cash inflows of $380.8 million from investing activities were primarily driven by (i) proceeds from principal repayments of $1.5 billion received on commercial mortgage loans, held for investment, (ii) proceeds received from the sale or paydown of real estate securities, available for sale of $184.0 million, (iii) proceeds from the sale of real estate owned, held for sale assets of $60.9 million and (iv) proceeds from the sale of commercial mortgage loans, held for investment of $35.2 million. Inflows were partially offset by (i) the origination and purchase of commercial mortgage loans, held for investment for $924.4 million, (ii) the purchase of real estate securities, available for sale for $132.3 million and (iii) the payment of the cash portion of the consideration in the acquisition of NewPoint, which was $297.3 million.

During the year ended December 31, 2024, cash outflows of $155.5 million from investing activities were primarily driven by (i) the origination and purchase of commercial mortgage loans, held for investment for $1.8 billion, (ii) the purchase of real estate securities, available for sale for $79.5 million and (iii) the purchase of equity method investment in real estate for $13.4 million. Outflows were partially offset by (i) proceeds from principal repayments of $1.5 billion received on commercial mortgage loans, held for investment, (ii) proceeds from the sale or paydown of real estate securities, available for sale of $120.0 million, (iii) proceeds from the sale of real estate owned, held for sale assets of $34.4 million and (iv) proceeds from the sale of commercial mortgage loans, held for investment of $33.4 million.

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Cash Flows from Financing Activities

During the year ended December 31, 2025 cash outflows of $684.4 million from financing activities were primarily driven by (i) net repayments from borrowings on collateralized loan obligations of $900.2 million, (ii) $145.6 million of distributions paid to shareholders, (iii) $7.4 million of distributions paid to non-controlling interest, (iv) payments of deferred financing costs of $15.9 million, (v) net repayments on repurchase agreements for real estate securities of $49.2 million and (vi) $14.4 million of common stock repurchases. Outflows were partially offset by (i) net borrowings on repurchase agreements and revolving credit facilities for commercial mortgage loans of $343.5 million and (ii) borrowings from new issuance of unsecured debt of $107.0 million.

During the year ended December 31, 2024, cash outflows of $48.6 million from financing activities were primarily driven by (i) repayments on our other financings of $23.7 million, (ii) $144.9 million of distributions paid to shareholders, (iii) $16.2 million of distributions paid to non-controlling interest, (iv) payments of deferred financing costs of $9.3 million and (v) $4.9 million of common stock repurchases. Outflows were partially offset by (i) net borrowings on collateralized loan obligations of $59.1 million, (ii) net borrowings on repurchase agreements for real estate securities of $62.6 million and (iii) net borrowings on repurchase agreements and revolving credit facilities for commercial mortgage loans of $30.1 million.

Election as a REIT

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2013. As a REIT, if we meet certain organizational and operational requirements and distribute at least 90% of our "REIT taxable income" (determined before the deduction of dividends paid and excluding net capital gains) to our stockholders in a year, we will not be subject to U.S. federal income tax to the extent of the income that we distribute. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and U.S. federal income and excise taxes on our undistributed income.

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Contractual Obligations and Commitments

Our contractual obligations, excluding interest obligations (as amounts are not fixed or determinable), as of December 31, 2025 are summarized as follows (dollars in thousands):

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(1) The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the loan maturity date.

(2) Excludes $366.1 million of CLO notes, held by the Company, which are eliminated in Collateralized loan obligations in the consolidated balance sheets as of December 31, 2025.

In addition to its cash requirements, the Company pays a quarterly dividend and has an existing share repurchase authorization. As of December 31, 2025, the Company’s quarterly cash dividend was $0.355 per share of common stock (which was paid on an as-converted basis on the Company’s shares of Series H Preferred Stock), and $0.46875 per share on the Company’s shares of Series E Preferred Stock. The payment of future dividends is subject to declaration by the Board of Directors. The Company’s Board of Directors also has authorized a $65 million share repurchase program, of which $16.7 million remained available as of December 31, 2025. The authorization does not obligate the Company to acquire any specific number of shares.

Related Party Arrangements

Benefit Street Partners L.L.C.

Amended Advisory Agreement

Refer to “Note 18 - Related Party Transactions and Arrangements” for a summary of the Company’s Advisory Agreement with the Advisor and amounts paid to the Advisor pursuant to the Advisory Agreement for the years ended December 31, 2025 and December 31, 2024.

The Nominating and Corporate Governance Committee (the “Committee”) of the Company's board of directors, which consists solely of the Company’s independent directors, negotiated, approved and recommended that the board of directors approve, the amended Advisory Agreement. The Committee engaged independent legal counsel to assist the Committee in negotiating the amended Advisory Agreement.

Pursuant to the amended Advisory Agreement, the Advisor provides the daily management for the Company and the Operating Partnership, including an investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the board of directors. The initial term of the amended Advisory Agreement was three-years and was automatically renewed for an additional one-year period on January 19, 2026 and will continue to automatically renew for additional one-year periods unless either party elects not to renew.

The Company may terminate the amended Advisory Agreement for a Cause Event (as defined in the amended Advisory Agreement) without payment of a termination fee. Following the expiration of a term, and upon 180 days’ prior written notice, the Company may, without cause, elect not to renew the amended Advisory Agreement upon the determination by two-thirds of the Company’s independent directors that (i) there has been unsatisfactory performance by the Advisor or (ii) that the asset management fee and annual subordinated performance fee payable to the Advisor are not fair, subject to certain conditions. In such case, the Company shall be obligated to pay a termination fee.

During the term of the amended Advisory Agreement, the Advisor shall not, directly or indirectly, manage or advise another REIT that is engaged in the business of the Company in any geographical region in which the Company has a significant investment, or provide any services related to fixed-rate conduit lending to any other person, subject to certain conditions.

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Loan Referral Agreement

Effective July 1, 2025, NewPoint shall refer prospective clients to the Advisor on a non-exclusive basis. If any loan referred to the Advisor during the term of the agreement successfully closes, and the Advisor actually receives a fee in connection therewith, the Advisor shall pay NewPoint a referral fee (the “Referral Fee”) equal to 0.10% of the total amount of the loan. The Advisor or NewPoint may terminate this arrangement at any time, without notice and without cause.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements as of December 31, 2025 and through the date of the filing of this Form 10-K.

Non-GAAP Financial Measures

Distributable Earnings and Distributable Earnings to Common

Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans and derivatives, including CECL reserves and impairments, net of realized gains and losses, as described further below, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) realized gains and losses on debt extinguishment and CLO calls, (vii) non-cash income from mortgage servicing rights, and (viii) certain other non-cash items. Further, Distributable Earnings to Common, a non-GAAP measure, presents Distributable Earnings net of (x) perpetual preferred stock dividend payments and (y) non-controlling interests in joint ventures.

As noted above, we exclude unrealized gains and losses on loans and other investments, including CECL reserves and impairments, from our calculation of Distributable Earnings and include realized gains and losses. The nature of these adjustments is described more fully in the footnotes to our reconciliation tables. GAAP loan loss reserves and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing definition of Distributable Earnings. We expect to only recognize such potential credit or property impairment losses in Distributable Earnings if and when such amounts are deemed nonrecoverable upon a realization event. This is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold. Amounts may also be deemed non-recoverable if, in our determination, it is nearly certain the carrying amounts will not be collected or realized. The realized loss amount reflected in Distributable Earnings will generally equal the difference between the cash received and the

Distributable Earnings basis of the asset. The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding loss reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.

The Company believes that Distributable Earnings and Distributable Earnings to Common provide meaningful information to consider in addition to the disclosed GAAP results. The Company believes Distributable Earnings and Distributable Earnings to Common are useful financial metrics for existing and potential future holders of its common stock as historically, over time, Distributable Earnings to Common has been an indicator of common dividends per share. As a REIT, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock. Further, Distributable Earnings to Common helps investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's board of directors considers when dividends are declared.

Distributable Earnings and Distributable Earnings to Common do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss). The methodology for calculating Distributable Earnings and Distributable Earnings to Common may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.

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The following table provides a reconciliation of GAAP net income to Distributable Earnings and Distributable Earnings to Common for the years ended December 31, 2025, 2024, and 2023 (dollars in thousands):

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(1) Before Q1 2024, we adjusted GAAP income for non-cash CLO amortization acceleration to effectively amortize the issuance costs of our CLOs over the expected lifetime of the CLOs. We assume our CLOs will be outstanding for approximately four years and amortized the financing costs over approximately four years in our distributable earnings as compared to effective yield methodology in our GAAP earnings. Starting in Q1 2024, we amortized the issuance costs incurred on our CLOs over the expected lifetime of the CLOs in our GAAP presentation, making our previous adjustment no longer necessary.

(2) Represents unrealized gains and losses on (i) commercial mortgage loans, held for sale, measured at fair value, (ii) other real estate investments, measured at fair value and (iii) derivatives.

(3) Represents accrued and unpaid subordinated performance fee. In addition, reversal of subordinated performance fee represents cash payment obligations during the period.

(4) Represents transaction-related and non-recurring costs associated with the acquisition of NewPoint.

(5) Represents loan workout charges the Company incurred, which the Company deemed likely to be recovered. Reversal of loan workout charges represent recoveries received. During the second quarter of 2023, the Company recovered $5.1 million of loan workout charges, in aggregate, related to the loan workout charges incurred in 2022.

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(6) Represents amounts deemed nonrecoverable upon a realization event, which is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold. Amounts may also be deemed non-recoverable if, in our determination, it is nearly certain the carrying amounts will not be collected or realized upon sale. Amount may be different than the GAAP basis. As of December 31, 2025, the Company has $8.1 million of GAAP loss adjustments that would run through distributable earnings if and when cash losses are realized.

(7) Represents the average of all classes of equity except the Series E Preferred Stock.

(8) Fully Converted assumes conversion of our series of convertible preferred stock and OP Units along with full vesting of our outstanding equity compensation awards.