I would like to highlight that we have posted the third quarter 2025 earnings presentation to our website. Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with Generally Accepted Accounting Principles are contained in the earnings presentation for the past quarter. We expect a substantial number of new loan closings in the fourth quarter, which will produce positive growth in the portfolio for the full year. During the quarter, we sold one of our real estate investments, which resulted in a gross capital gain of $13.1 million.
This gain on sale represented a significant part of our strategic plan to use our capital loss carryforwards to maximize shareholder value. As we exit our real estate investments and the loan portfolio continues to amortize, we expect to redeploy capital into attractive CRE loans. Earnings available for distribution, or EAD, for the third quarter 2025 was $1.01 per share as compared to $0.04 per share for the second quarter. Quarter-over-quarter EAD saw a net $1.30 increase due to the real estate investment gain on sale offset by a $0.37 decrease from real estate operations.
We have a full pipeline that will soon be available for securitization and get the company on track to maximize income in EAD. If not, have you guys committed any capital loans quarter-to-date just to try and target kind of that 1.5 to 1.7 year end target that you guys have laid out in the past? It is also great to see the REO sale and growth in book value, and kudos to you guys for being patient and sticking to your strategy. I don't want to give guidance really too much ahead or above that.
| Metric | Period | Current guidance |
|---|---|---|
| Loan portfolio growth | FY2025 | Expects a substantial number of new loan closings in Q4 that will produce positive net portfolio growth for the full year |
| New CRE securitization (CLO) | Q1 2026 | Building a pipeline and warehousing collateral to price a new CRE CLO sometime in the first quarter of 2026 |
| Book value per share | Medium term | Reaffirmed ~$30 per share as a reasonable objective with roughly three REO properties remaining to be sold |
| Common dividend | Not specified | Will consider resuming once book-value objectives are met and remaining assets/tax losses are monetized (one or two properties left) |
| Metric | YoY | Note |
|---|---|---|
| GAAP net income allocable to common | $9.8 million ($1.34 per share) | Included a $13.1 million gross gain on the sale of a real estate investment, partly offset by a $2.8 million loss in net real estate operations. |
| Earnings available for distribution (EAD) | $1.01 per share (vs. $0.04 in Q2) | The allocable portion of the real estate gain on sale added about $1.30, offset by a $0.37 decrease from real estate operations. |
| GAAP book value per share | $29.63 (vs. $27.93 at June 30) | Driven by the realized real estate gain and accretive share repurchases below book value. |
| CRE loan portfolio | $1.4 billion across 46 loans (net -$46.8 million) | Payoffs, sales and paydowns of $153.2 million outpaced $106.4 million of new fundings; weighted average floating-rate spread of 3.63% over one-month SOFR. |
| Allowance for credit losses | $26.4 million / 189 bps | A $4.0 million CECL release; composed of $4.7 million of specific reserves and $21.7 million of general reserves. |
| Leverage | 2.7x (from 3.0x) | Net repayments on the CRE loan portfolio and payoff of asset-specific financing on the sold real estate investment. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Monetizing real estate (REO) and recycling capital | Executing a plan to sell REO and redeploy into loans | Sold one REO for a $13.1 million gain, converted a Chicago REO office into a 252-unit Class A multifamily project via a JV (grand opening expected Q3 2026), and reiterated a ~$30 book-value target with roughly three properties left. | — |
| Portfolio quality and asset management | Proactive management of a $1.4 billion CRE loan book | Weighted average risk rating at 3.0 with 13 loans rated 4 or 5; management emphasized sound underwriting and does not expect significant near-term payoffs of watch-list loans. | — |
| Path to a new securitization | Rebuilding the pipeline | Originating new loans and warehousing collateral to execute a new CRE CLO in Q1 2026, with roughly $650-700 million of construction on the fund side expected to migrate into the REIT over time. | — |
| Capital return and dividend timing | Buybacks at discounts to book value; dividend suspended | Repurchased shares at a ~36% discount to book with ~$2.5 million left on the program; a common dividend would follow once book-value and asset-monetization goals are met. | — |