Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net

As discussed above, on the Closing Date, we sold our commercial real estate loan portfolio (other than loans that were repaid prior to closing and one commercial mortgage loan secured by a hotel in Chicago, IL with a principal balance of $46 million, which repaid after the Closing Date (the "Chicago Hotel Loan")) to Athene, a subsidiary of Apollo, for cash consideration of approximately $8.6 billion, which is based on 99.7% of the total commitment amount of such loans as of the Closing Date, subject to certain adjustments as provided in the Purchase Agreement. Accordingly, due to the Asset Sale, there were no outstanding loans as of June 30, 2026.

Our loan portfolio consisted of 96% floating rate loans, based on amortized cost, net of Specific CECL Allowance, as of December 31, 2025.

Activity relating to our loan portfolio for the six months ended June 30, 2026 was as follows ($ in thousands):


	Principal Balance			Deferred Fees/Other Items			Specific CECL Allowance			Carrying Value
December 31, 2025	$	9,204,060		$	(53,090	)	$	(338,000	)	$	8,812,970
New loan fundings	$	299,900		$	—		$	—		$	299,900
Add-on loan fundings(1)	$	373,806		$	—		$	—		$	373,806
Loan repayments and sale	$	(9,500,444	)	$	—		$	—		$	(9,500,444	)
Net realized loss on investments(2)	$	(387,561	)	$	48,474		$	—		$	(339,087	)
Decrease in Specific CECL Allowance(3)	$	—		$	—		$	338,000		$	338,000
Gain (loss) on foreign currency translation	$	5,615		$	(205	)	$	—		$	5,410
Deferred fees and other items(4)	$	—		$	(4,493	)	$	—		$	(4,493	)
Amortization of fees	$	4,624		$	9,314		$	—		$	13,938
June 30, 2026	$	—		$	—		$	—		$	—

(1)

Represents fundings subsequent to loan closing.

(2)

A net realized loss on investments of $339.1 million was recorded during the six months ended June 30, 2026. On the Closing Date, we wrote off $335.0 million of previously recorded Specific CECL Allowance on loans that were included in the Asset sale. We recognized an additional net realized loss of $2.6 million resulting from the discount on the Asset Sale compared to our loan’s cost basis. An additional net realized loss of $1.5 million was recognized upon the discounted repayment of the Chicago Hotel Loan.

(3)

We wrote off $335.0 million of previously recorded Specific CECL Allowance on the Closing Date. Upon the discounted repayment of the Chicago Hotel Loan, we wrote off an additional $1.5 million of previously recorded Specific CECL Allowance and reversed the remaining $1.5 million Specific CECL Allowance. See additional detail below.

(4)

Other items primarily consist of purchase discounts or premiums, cost recovery interest, exit fees, and deferred origination expenses.

As we sold our commercial real estate loan portfolio to Athene during the three months ended June 30, 2026, and there were no outstanding loans as of June 30, 2026. Accordingly, the following tables present information solely as of December 31, 2025.

Property Type

The table below presents information on the property type of the properties securing the loans in our portfolio solely as of December 31, 2025 ($ in thousands):


	December 31, 2025
Property Type	Carrying Value			% of Portfolio(1)
Residential(2)	$	2,315,975		26.3%
Office		2,064,821		23.4
Hotel		1,770,331		20.1
Industrial		1,026,213		11.6
Data Centers		560,699		6.4
Retail		323,327		3.7
Mixed Use		302,544		3.4
Other(3)		449,060		5.1
Total	$	8,812,970		100.0%
General CECL Allowance(4)		(38,754	)
Total Carrying Value, net	$	8,774,216

(1)

Percentage of portfolio calculations are made prior to consideration of General CECL Allowance.

(2)

Includes multifamily (11.4%), senior housing (7.7%), student housing (5.0%), and residential-for-sale (2.2%).

(3)

Other property types include urban predevelopment (2.6%) and pubs (2.5%).

(4)

$5.8 million of the General CECL Allowance is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheet.

All sale transactions are evaluated in accordance with ASC Topic 860, "Transfers and Servicing" ("ASC 860").

As discussed above, in April 2026, we sold our commercial real estate loan portfolio (other than loans that were repaid prior to closing and the Chicago Hotel Loan which repaid after the Closing Date) to Athene for cash consideration of approximately $8.6 billion, which is based on 99.7% of the total commitment amount of such loans as of the Closing Date. We evaluated the transaction under ASC 860 and determined the Asset Sale met the criteria for sale accounting. We recorded a net loss of $2.6 million resulting from the discount on the Asset Sale compared to our loan’s cost basis within net realized loss on investments in our condensed consolidated statement of operations related to this transaction.

In February 2025, we originated a $114.0 million commercial mortgage loan secured by a multifamily property located in Miami, FL, which included a $24.0 million contiguous subordinate loan. In March 2025, we sold our interest in the $24.0 million subordinate loan. We evaluated the transaction under ASC 860 and determined the sale met the criteria for sale accounting. We recorded no gain or loss related to this transaction.

We assess the risk factors of each loan and assign a risk rating based on a variety of factors, including, without limitation, loan to value ("LTV") ratio, debt yield, property type, geographic and local market dynamics, physical condition, cash flow volatility, leasing and tenant profile, loan structure and exit plan, and project sponsorship. We apply these various factors on a case-by-case basis depending on the facts and circumstances for each loan, and the different factors may be given different weightings in different situations. This review was performed quarterly. Based on a 5-point scale, our loans were rated "1" through "5," from less risk to greater risk, which ratings are defined as follows:

4. High risk/potential for loss: a loan that has a risk of realizing a principal loss

5. Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss, or an impairment has been recorded

The following table presents the carrying value of our loan portfolio by year of origination and internal risk rating and gross write-offs by year of origination solely as of December 31, 2025 ($ in thousands):


December 31, 2025
									Amortized Cost(1) by Year Originated
Risk Rating	Number of Loans		Total			% of Portfolio			2025		2024		2023		2022		2021		Prior
1		—	$	—			—	%	$	—	$	—	$	—	$	—	$	—	$	—
2		1		654,594		7.4%				—		—		—		654,594		—		—
3		51		7,918,714		89.9%				3,459,542		1,319,897		559,238		675,090		1,051,358		853,589
4		1		73,112		0.8%				—		—		—		—		—		73,112
5		3		166,550		1.9%				—		—		—		—		—		166,550
Total		56	$	8,812,970		100.0%			$	3,459,542	$	1,319,897	$	559,238	$	1,329,684	$	1,051,358	$	1,093,251
General CECL Allowance(2)				(38,754	)
Total loans, net			$	8,774,216
Weighted-Average Risk Rating				3.0
Gross write-offs			$	6,200					$	—	$	—	$	—	$	—	$	—	$	6,200

(1)

Net of Specific CECL Allowance.

(2)

$5.8 million of the General CECL Allowance for 2025 is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets.

In accordance with ASC Topic 326 "Financial Instruments – Credit Losses" ("ASC 326"), which we refer to as the "CECL Standard," we record allowances for loans and held-to-maturity debt securities that are deducted from the carrying amount of the assets to present the net carrying value of the amounts expected to be collected on the assets. We record loan specific allowances as a practical expedient under the CECL Standard ("Specific CECL Allowance"), which we apply to assets that are collateral dependent and where the borrower or sponsor is experiencing financial difficulty. For the remainder of the portfolio, we record a general allowance ("General CECL Allowance," and together with the Specific CECL Allowance, "CECL Allowances") on a collective basis by assets with similar risk characteristics. We have elected to use the weighted-average remaining maturity ("WARM") method in determining a General CECL Allowance for a majority of our portfolio. In the future, we may use other acceptable methods, such as a probability-of-default/loss-given-default method. Refer to "Note 2 – Summary of Significant Accounting Policies" and "Note 4 – Commercial Mortgage Loans, Subordinate Loans and Other Lending Assets, Net" to our consolidated financial statements of our most recent Annual Report on Form 10-K for further detail on our accounting policies related to CECL Allowances.

As a result of the Asset Sale, we did not hold any commercial mortgage loans or subordinate loans as of June 30, 2026. Accordingly, there were no CECL Allowances recorded as of June 30, 2026. In connection with the Asset Sale, we wrote off $335.0 million of the Specific CECL Allowance previously recorded. Further, upon discounted repayment of the Chicago Hotel Loan, we reversed $1.5 million and wrote off $1.5 million of the previously recorded Specific CECL Allowance. The General CECL Allowance previously recorded was reversed in full upon closing of the Asset Sale.

The following table summarizes changes in CECL Allowances for the six months ended June 30, 2026 ($ in thousands):


	Specific CECL			General CECL Allowance									Total CECL			CECL Allowance as % of Amortized Cost
	Allowance(1)			Funded			Unfunded			Total			Allowance			General(1)			Total
December 31, 2025	$	338,000		$	38,754		$	5,759		$	44,513		$	382,513			0.51	%		4.18	%
Changes:
Allowances (Reversals), net(2)		—			(1,256	)		(2,033	)		(3,289	)		(3,289	)
March 31, 2026	$	338,000		$	37,498		$	3,726		$	41,224		$	379,224			0.47	%		4.10	%
Changes:
Reversals		(1,464	)		(37,498	)		(3,726	)		(41,224	)		(42,688	)
Write-offs		(336,536	)		—			—			—			(336,536	)
June 30, 2026	$	—		$	—		$	—		$	—		$	—			0.00	%		0.00	%

(1)

Loans evaluated for Specific CECL Allowance are excluded from General CECL Allowance pool.

(2)

During the three months ended March 31, 2026, our General CECL Allowance decreased by $3.3 million. The decrease was primarily due to the favorable impacts of portfolio seasoning. The decrease was partially offset by the effect of loan originations.

The following table summarizes changes in CECL Allowances for the six months ended June 30, 2025 ($ in thousands):


	Specific CECL		General CECL Allowance							Total CECL		CECL Allowance as % of Amortized Cost
	Allowance(1)		Funded		Unfunded			Total		Allowance		General(1)			Total
December 31, 2024	$	342,500	$	30,836	$	5,948		$	36,784	$	379,284		0.52	%		5.07	%
Changes:
Allowances (Reversals), net(2)		—		3,876		132			4,008		4,008
March 31, 2025	$	342,500	$	34,712	$	6,080		$	40,792	$	383,292		0.54	%		4.75	%
Changes:
Allowances (Reversals), net(3)		—		4,136		(1,023	)		3,113		3,113
June 30, 2025	$	342,500	$	38,848	$	5,057		$	43,905	$	386,405		0.51	%		4.29	%

(1)

Loans evaluated for Specific CECL Allowance are excluded from General CECL Allowance pool.

(2)

During the three months ended March 31, 2025, our General CECL Allowance increased by $4.0 million. The increase was primarily due to a more adverse macroeconomic outlook as well as the effect of loan originations. The increase was partially offset by the favorable impacts of portfolio seasoning.

(3)

During the three months ended June 30, 2025, our General CECL Allowance increased by $3.1 million. The increase was primarily due to the effect of
loan originations as well as extending our expected loan repayment dates. The increase was partially offset by the favorable impacts of portfolio seasoning.

We recognized $0.7 million and $1.8 million in pre-payment penalties and accelerated fees for the three and six months ended June 30, 2026, respectively. We recognized $0.4 million in pre-payment penalties and accelerated fees for both the three and six months ended June 30, 2025.

We recognized PIK interest of $0.5 million and $3.8 million for the three and six months ended June 30, 2026, respectively. We recognized PIK interest of $0.3 million for both the three and six months ended June 30, 2025.