株探米国株
英語
エドガーで原本を確認する
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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-34436
__________________________________________________
Starwood Property Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland
27-0247747
(State or Other Jurisdiction of
Incorporation or Organization)		 (I.R.S. Employer
Identification No.)
2340 Collins Avenue, Suite 700
Miami Beach, Florida
33139
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code:
(305) 695-5500
___________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.01 par value per share
STWD
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of November 7, 2025 was 370,331,329.
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Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.
These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to:
•factors described in our Annual Report on Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q, including those set forth under the captions “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
•defaults by borrowers in paying debt service on outstanding indebtedness;
•impairment in the value of real estate property securing our loans or in which we invest;
•availability of mortgage origination and acquisition opportunities acceptable to us;
•potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;
•national and local economic and business conditions, including as a result of the impact of public health emergencies;
•the occurrence of certain geo-political events (such as wars, terrorist attacks and tensions between states, including global trade disputes related to tariffs) that affect the normal and peaceful course of international relations;
•general and local commercial and residential real estate property conditions;
•changes in federal government policies;
•changes in federal, state and local governmental laws and regulations;
•increased competition from entities engaged in mortgage lending and securities investing activities;
•changes in interest rates;
•the availability of, and costs associated with, sources of liquidity; and
•our ability to achieve the benefits that we anticipate and underwrote in connection with the acquisition of Fundamental Income Properties, LLC, which was completed by way of merger.
In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.
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TABLE OF CONTENTS
Page
3
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands, except share data)
As of September 30,
 As of December 31,
2025
2024
Assets:
Cash and cash equivalents $ 301,135  $ 377,831 
Restricted cash 237,972  176,164 
Loans held-for-investment, net of credit loss allowances of $434,051 and $448,295
18,318,757  15,437,013 
Loans held-for-sale, at fair value 2,561,155  2,516,008 
Investment securities, net of credit loss allowances of $31,512 and $24,463 ($120,413 and $126,297 held at fair value)
 258,835  533,258 
Properties, net 3,334,483  1,373,678 
Investments of consolidated affordable housing fund, at fair value 1,861,931  2,073,533 
Investments in unconsolidated entities 81,090  99,370 
Goodwill 259,846  259,846 
Intangible assets, net ($27,522 and $22,390 held at fair value)
 429,818  60,704 
Derivative assets 37,314  175,520 
Accrued interest receivable 167,572  167,767 
Other assets 378,255  368,229 
Variable interest entity (“VIE”) assets, at fair value 34,205,812  38,937,576 
Total Assets $ 62,433,975  $ 62,556,497 
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 532,030  $ 434,584 
Related-party payable 27,939  38,958 
Dividends payable 180,113  163,383 
Derivative liabilities 93,571  94,890 
Secured financing agreements, net 14,663,218  11,151,557 
Securitized financing, net
 3,522,488  3,196,426 
Unsecured senior notes, net 3,245,122  2,994,682 
VIE liabilities, at fair value 32,597,454  37,288,545 
Total Liabilities 54,861,935  55,363,025 
Commitments and contingencies (Note 22)
Temporary Equity: Redeemable non-controlling interests
 385,853  426,695 
Permanent Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding
 —  — 
Common stock, $0.01 per share, 500,000,000 shares authorized, 377,765,140 issued and 370,316,449 outstanding as of September 30, 2025 and 344,858,379 issued and 337,409,688 outstanding as of December 31, 2024
 3,778  3,449 
Additional paid-in capital 6,944,046  6,322,763 
Treasury stock (7,448,691 shares)
 (138,022) (138,022)
Retained earnings 42,577  235,323 
Accumulated other comprehensive income 11,935  13,594 
Total Starwood Property Trust, Inc. Stockholders’ Equity 6,864,314  6,437,107 
Non-controlling interests in consolidated subsidiaries 321,873  329,670 
Total Permanent Equity 7,186,187  6,766,777 
Total Liabilities and Equity $ 62,433,975  $ 62,556,497 
________________________________________________________
Note: In addition to the VIE assets and liabilities which are separately presented, our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 include assets of $4.8 billion and $4.1 billion, respectively, and liabilities of $3.6 billion and $3.2 billion, respectively, related to securitized financing issued by VIEs. These assets can only be used to settle obligations of the securitized financing VIEs, and the related liabilities do not have recourse to Starwood Property Trust, Inc. Refer to Note 15 for additional discussion of VIEs.
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2025 2024 2025 2024
Revenues:
Interest income from loans $ 395,446  $ 418,757  $ 1,134,588  $ 1,309,681 
Interest income from investment securities 7,361  17,227  29,895  52,433 
Servicing fees 23,212  11,827  54,752  37,549 
Rental income 57,528  25,979  114,954  80,285 
Other revenues 5,331  5,750  17,152  12,506 
Total revenues 488,878  479,540  1,351,341  1,492,454 
Costs and expenses:
Management fees 32,243  27,439  103,839  103,970 
Interest expense 334,849  337,859  943,139  1,038,204 
General and administrative 51,523  48,054  150,742  149,799 
Costs of rental operations 15,987  12,133  45,319  34,547 
Depreciation and amortization 26,044  10,188  47,899  30,130 
Credit loss provision, net
 28,359  66,427  9,026  144,975 
Other expense 439  475  4,183  1,434 
Total costs and expenses 489,444  502,575  1,304,147  1,503,059 
Other income (loss):
Change in net assets related to consolidated VIEs 43,735  16,570  112,706  43,836 
Change in fair value of servicing rights 2,016  (341) 5,132  782 
Change in fair value of investment securities, net 1,794  (778) 1,966  504 
Change in fair value of mortgage loans, net 52,367  114,871  140,638  150,279 
Income (loss) from affordable housing fund investments
 324  (5,590) 9,349  10,304 
Earnings from unconsolidated entities
 2,463  349  10,872  9,694 
Gain on sale of investments and other assets, net
 1,027  8,316  32,689  100,278 
Gain (loss) on derivative financial instruments, net
 5,814  (83,941) (135,171) 18,984 
Foreign currency (loss) gain, net
 (12,215) 59,421  106,337  24,436 
(Loss) gain on extinguishment of debt, net
 —  (242) 19,990  (2,801)
Other loss, net
 (3,486) (2,981) (3,195) (8,403)
Total other income 93,839  105,654  301,313  347,893 
Income before income taxes 93,273  82,619  348,507  337,288 
Income tax provision
 (13,343) (10,449) (17,780) (27,533)
Net income 79,930  72,170  330,727  309,755 
Net (income) loss attributable to non-controlling interests
 (7,370) 3,898  (16,098) (1,465)
Net income attributable to Starwood Property Trust, Inc.
 $ 72,560  $ 76,068  $ 314,629  $ 308,290 
Earnings per share data attributable to Starwood Property Trust, Inc.:
Basic $ 0.19  $ 0.23  $ 0.89  $ 0.96 
Diluted $ 0.19  $ 0.23  $ 0.89  $ 0.96 
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, amounts in thousands)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2025 2024 2025 2024
Net income $ 79,930  $ 72,170  $ 330,727  $ 309,755 
Other comprehensive income (loss) (net change by component):
Available-for-sale securities (850) 2,336  (1,659) 904 
Other comprehensive (loss) income
 (850) 2,336  (1,659) 904 
Comprehensive income 79,080  74,506  329,068  310,659 
Less: Comprehensive (income) loss attributable to non-controlling interests
 (7,370) 3,898  (16,098) (1,465)
Comprehensive income attributable to Starwood Property Trust, Inc.
 $ 71,710  $ 78,404  $ 312,970  $ 309,194 
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity
For the Three Months Ended September 30, 2025 and 2024
(Unaudited, amounts in thousands, except share data)
Temporary Equity Common stock Additional
Paid-in
Capital		 Treasury Stock Retained Earnings Accumulated
Other
Comprehensive
Income		 Total
Starwood Property
Trust, Inc.
Stockholders’
Equity		 Non-
Controlling
Interests		 Total Permanent
Equity
Shares Par
Value		 Shares Amount
Balance, June 30, 2025
 $ 425,453  349,087,845  $ 3,491  $ 6,395,441  7,448,691  $ (138,022) $ 148,515  $ 12,785  $ 6,422,210  $ 321,067  $ 6,743,277 
Net proceeds from common stock offering
 —  27,125,000  271  533,242  —  —  —  —  533,513  —  533,513 
Proceeds from DRIP Plan —  16,173  1  331  —  —  —  —  332  —  332 
Proceeds from employee stock purchase plan —  15,534  —  265  —  —  —  —  265  —  265 
Share-based compensation —  1,515,987  15  14,675  —  —  —  —  14,690  —  14,690 
Manager fees paid in stock —  4,601  —  92  —  —  —  —  92  —  92 
Net (loss) income
 (263) —  —  —  —  —  72,560  —  72,560  7,633  80,193 
Dividends declared, $0.48 per share
 —  —  —  —  —  —  (178,498) —  (178,498) —  (178,498)
Other comprehensive loss
 —  —  —  —  —  —  —  (850) (850) —  (850)
Distributions to non-controlling interests (39,337) —  —  —  —  —  —  —  —  (6,827) (6,827)
Balance, September 30, 2025 $ 385,853  377,765,140  $ 3,778  $ 6,944,046  7,448,691  $ (138,022) $ 42,577  $ 11,935  $ 6,864,314  $ 321,873  $ 7,186,187 
Balance, June 30, 2024
 $ 414,095  324,133,801  $ 3,241  $ 5,906,653  7,448,691  $ (138,022) $ 432,682  $ 13,920  $ 6,218,474  $ 341,204  $ 6,559,678 
Net proceeds from common stock offering
 —  20,125,000  201  392,061  —  —  —  —  392,262  —  392,262 
Proceeds from DRIP Plan —  16,863  1  337  —  —  —  —  338  —  338 
Proceeds from employee stock purchase plan —  16,621  —  273  —  —  —  —  273  —  273 
Share-based compensation —  281,952  3  10,785  —  —  —  —  10,788  —  10,788 
Manager fees paid in stock —  90,381  1  1,754  —  —  —  —  1,755  —  1,755 
Net (loss) income
 (1,513) —  —  —  —  —  76,068  —  76,068  (2,385) 73,683 
Dividends declared, $0.48 per share
 —  —  —  —  —  —  (162,571) —  (162,571) —  (162,571)
Other comprehensive income, net
 —  —  —  —  —  —  —  2,336  2,336  —  2,336 
Contributions from non-controlling interests —  —  —  —  —  —  —  —  —  3,786  3,786 
Distributions to non-controlling interests (1,783) —  —  —  —  —  —  —  —  (10,514) (10,514)
Balance, September 30, 2024 $ 410,799  344,664,618  $ 3,447  $ 6,311,863  7,448,691  $ (138,022) $ 346,179  $ 16,256  $ 6,539,723  $ 332,091  $ 6,871,814 
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity (Continued)
For the Nine Months Ended September 30, 2025 and 2024
(Unaudited, amounts in thousands, except share data)
Temporary Equity Common stock Additional
Paid-in
Capital		 Treasury Stock Retained Earnings Accumulated
Other
Comprehensive
Income		 Total Starwood
Property
Trust, Inc.
Stockholders’
Equity		 Non-
Controlling
Interests		 Total Permanent
Equity
Shares Par
Value		 Shares Amount
Balance, December 31, 2024 $ 426,695  344,858,379  $ 3,449  $ 6,322,763  7,448,691  $ (138,022) $ 235,323  $ 13,594  $ 6,437,107  $ 329,670  $ 6,766,777 
Net proceeds from common stock offering
 —  27,125,000  271  533,242  —  —  —  —  533,513  —  533,513 
Net proceeds from ATM Agreement
 —  1,561,634  16  31,089  —  —  —  —  31,105  —  31,105 
Proceeds from DRIP Plan —  50,745  1  991  —  —  —  —  992  —  992 
Proceeds from employee stock purchase plan —  97,559  1  1,654  —  —  —  —  1,655  —  1,655 
Redemption of Class A Units —  64,000  1  1,388  —  —  —  —  1,389  (1,389) — 
Share-based compensation —  3,427,705  33  41,437  —  —  —  —  41,470  —  41,470 
Manager fees paid in stock —  580,118  6  11,482  —  —  —  —  11,488  —  11,488 
Net income
 852  —  —  —  —  —  314,629  —  314,629  15,246  329,875 
Dividends declared, $1.44 per share
 —  —  —  —  —  —  (507,375) —  (507,375) —  (507,375)
Other comprehensive loss
 —  —  —  —  —  —  —  (1,659) (1,659) —  (1,659)
Contributions from non-controlling interests —  —  —  —  —  —  —  —  —  1,489  1,489 
Distributions to non-controlling interests (41,694) —  —  —  —  —  —  —  —  (23,143) (23,143)
Balance, September 30, 2025 $ 385,853  377,765,140  $ 3,778  $ 6,944,046  7,448,691  $ (138,022) $ 42,577  $ 11,935  $ 6,864,314  $ 321,873  $ 7,186,187 
Balance, December 31, 2023 $ 414,348  320,814,765  $ 3,208  $ 5,864,670  7,448,691  $ (138,022) $ 505,881  $ 15,352  $ 6,251,089  $ 357,545  $ 6,608,634 
Net proceeds from common stock offering
 —  20,125,000  201  392,061  —  —  —  —  392,262  —  392,262 
Proceeds from DRIP Plan —  46,468  1  921  —  —  —  —  922  —  922 
Proceeds from employee stock purchase plan —  99,997  1  1,684  —  —  —  —  1,685  —  1,685 
Share-based compensation —  2,520,658  25  31,477  —  —  —  —  31,502  —  31,502 
Manager fees paid in stock —  1,057,730  11  21,050  —  —  —  —  21,061  —  21,061 
Net income 1,024  —  —  —  —  —  308,290  —  308,290  441  308,731 
Dividends declared, $1.44 per share
 —  —  —  —  —  —  (467,992) —  (467,992) —  (467,992)
Other comprehensive income, net
 —  —  —  —  —  —  —  904  904  —  904 
Contributions from non-controlling interests —  —  —  —  —  —  —  —  —  3,786  3,786 
Distributions to non-controlling interests (4,573) —  —  —  —  —  —  —  —  (29,681) (29,681)
Balance, September 30, 2024 $ 410,799  344,664,618  $ 3,447  $ 6,311,863  7,448,691  $ (138,022) $ 346,179  $ 16,256  $ 6,539,723  $ 332,091  $ 6,871,814 

See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
For the Nine Months Ended
September 30,
2025 2024
Cash Flows from Operating Activities:
Net income $ 330,727  $ 309,755 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs, premiums and discounts on secured borrowings 34,243  37,765 
Amortization of discounts and deferred financing costs on unsecured senior notes 8,263  7,824 
Accretion of net discount on investment securities (4,482) (4,047)
Accretion of net deferred loan fees and discounts (46,642) (49,431)
Share-based compensation 41,470  31,502 
Manager fees paid in stock 11,488  21,061 
Change in fair value of investment securities (1,966) (504)
Change in fair value of consolidated VIEs (1,697) 63,753 
Change in fair value of servicing rights (5,132) (782)
Change in fair value of loans (140,638) (150,279)
Change in fair value of affordable housing fund investments 211,602  28,011 
Change in fair value of derivatives 157,002  43,239 
Foreign currency gain, net
 (106,337) (24,436)
Gain on sale of investments and other assets, net
 (32,689) (100,278)
Credit loss provision, net
 9,026  144,975 
Depreciation and amortization 52,030  33,803 
Earnings from unconsolidated entities
 (10,872) (9,694)
Distributions of earnings from unconsolidated entities 10,528  3,910 
(Gain) loss on extinguishment of debt, net
 (19,990) 2,801 
Origination and purchase of loans held-for-sale, net of principal collections (828,802) (1,040,306)
Proceeds from sale of loans held-for-sale 912,415  1,061,590 
Changes in operating assets and liabilities:
Related-party payable (11,019) (19,274)
Accrued and capitalized interest receivable, less purchased interest (78,679) (67,535)
Other assets 36,124  17,622 
Accounts payable, accrued expenses and other liabilities (36,871) 9,961 
Net cash provided by operating activities
 489,102  351,006 
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (6,069,288) (2,069,876)
Proceeds from principal collections on loans 3,270,694  3,528,602 
Proceeds from loans sold 229,867  47,149 
Purchase and funding of investment securities (29,933) (64,486)
Proceeds from sales and redemptions of investment securities 7,561  3,690 
Proceeds from principal collections on investment securities 300,883  82,317 
Proceeds from sales of real estate
 60,480  216,825 
Net cash paid in merger
 (878,493) — 
Purchases and additions to properties and other assets (63,372) (20,941)
Investments in unconsolidated entities —  (338)
Proceeds from sale of interest in an unconsolidated entity
 69,819  — 
Distribution of capital from unconsolidated entities 250  5,494 
Cash acquired in foreclosure
 733  1,054 
Payments for purchase or termination of derivatives (43,486) (12,330)
Proceeds from termination of derivatives 66,184  29,253 
Net cash (used in) provided by investing activities
 (3,078,101) 1,746,413 
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited, amounts in thousands)
For the Nine Months Ended
September 30,
2025 2024
Cash Flows from Financing Activities:
Proceeds from borrowings $ 9,994,652  $ 4,408,393 
Principal repayments on and repurchases of borrowings (7,419,083) (6,102,395)
Payment of deferred financing costs (57,326) (41,428)
Net proceeds from issuances of common stock 567,265  394,869 
Payment of dividends (490,645) (457,210)
Contributions from non-controlling interests 1,489  3,786 
Distributions to non-controlling interests (64,837) (34,254)
Issuance of debt of consolidated VIEs —  12,923 
Repayment of debt of consolidated VIEs (61,980) (126,392)
Distributions of cash from consolidated VIEs 104,338  43,972 
Net cash provided by (used in) financing activities
 2,573,873  (1,897,736)
Net (decrease) increase in cash, cash equivalents and restricted cash
 (15,126) 199,683 
Cash, cash equivalents and restricted cash, beginning of period 553,995  311,972 
Effect of exchange rate changes on cash 238  (1,519)
Cash, cash equivalents and restricted cash, end of period $ 539,107  $ 510,136 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 870,025  $ 994,570 
Income taxes paid
 204  1,735 
Supplemental disclosure of non-cash investing and financing activities:
Dividends declared with respect to the third quarter, but not yet paid
 $ 178,498  $ 162,571 
Consolidation of VIEs (VIE asset/liability additions) 717,180  1,920,430 
Deconsolidation of VIEs (VIE asset/liability reductions) 62,461  891,495 
Net assets acquired in merger:
Assets acquired, less cash 2,204,987  — 
Liabilities assumed
 1,326,494  — 
Net assets acquired through foreclosure or equity control:
Assets acquired, less cash 198,372  180,352 
Liabilities assumed 2,489  2,859 
Loan principal collections temporarily held at master servicer 39,082  3,373 
Redemption of Class A Units for common stock 1,389  — 
Debt assumed by purchaser in sale of real estate
—  (194,900)
Reclassification of loans held-for-investment to loans held-for-sale —  48,695 
See notes to condensed consolidated financial statements.
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Starwood Property Trust, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
As of September 30, 2025
(Unaudited)
1. Business and Organization
Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in the United States (“U.S.”), Europe and Australia. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.
We have four reportable business segments as of September 30, 2025 and we refer to the investments within these segments as our target assets:
•Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in the U.S., Europe and Australia (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
•Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
•Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized and to be stabilized commercial real estate. This includes multifamily properties, multi-tenant medical office net lease properties and diversified single-tenant triple net lease properties, all of which are held for investment.
•Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.
Our segments exclude the consolidation of securitization variable interest entities (“VIEs”), principally representing CMBS trust vehicles that we consolidate by virtue of our role as special servicer. However, they include securitized financing VIEs such as collateralized loan obligations (“CLOs”), single asset securitizations (“SASBs”) and asset-backed securitizations (“ABSs”).
We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements.
We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group Global, L.P. (“Starwood Capital Group”), a privately-held private equity firm founded by Mr. Sternlicht.
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2. Summary of Significant Accounting Policies
Balance Sheet Presentation of Securitization Variable Interest Entities
We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.
Because we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs.
The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, a portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
Refer to the segment data in Note 23 for a presentation of our business segments without consolidation of these VIEs.
Basis of Accounting and Principles of Consolidation
The accompanying condensed consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows have been included.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (our “Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the operating results for the full year.
Refer to our Form 10-K for a description of our recurring accounting policies. We have included disclosure in this Note 2 regarding principles of consolidation and other accounting policies that (i) are required to be disclosed quarterly, (ii) we view as critical, (iii) became significant since December 31, 2024 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”).
Variable Interest Entities
In addition to the securitization VIEs, we also from time to time finance (i) pools of our loans through CLOs and SASBs and (ii) pools of net lease properties through ABSs. All of these financing structures are considered VIEs. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership without cause or (ii) the right to participate in significant decisions made by the partnership.
We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination.
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Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE.
To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE.
To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us.
Our purchased investment securities include unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation.
For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, a portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation.
We perform ongoing reassessments of: (i) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change.
We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our condensed consolidated statements of operations. The residual difference shown on our condensed consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs.
We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”
Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to non-performance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a trust, any existing REO would be consolidated at fair value.
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Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP.
In addition to sharing a similar measurement method as the loans in a trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a trust.
REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 2% of our consolidated securitization VIE assets, with the remaining 98% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually.
Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities.
For these reasons, the assets of our securitization VIEs are presented in the aggregate.
Fair Value Option
The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.
We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for residential loans held-for-investment were made in order to maintain consistency across all our residential loans. The fair value elections for mortgage loans held-for-sale were made due to the expected short-term holding period of these instruments.
Fair Value Measurements
We measure our mortgage-backed securities, investments of consolidated affordable housing fund, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 20 for further discussion regarding our fair value measurements.
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Business Combinations
Under ASC 805, Business Combinations, the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized.
We apply the asset acquisition provisions of ASC 805 in accounting for acquisitions of real estate with in-place leases where substantially all of the fair value of the assets acquired is concentrated in either a single identifiable asset or group of similar identifiable assets. This results in the acquired properties being recognized initially at their purchase price inclusive of acquisition costs, which are capitalized. We also apply the asset acquisition provisions of ASC 805 for acquired real estate assets where a lease is entered into concurrently with the acquisition of the asset.
Loans Held-for-Investment
Loans that are held for investment (“HFI”) are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs, as applicable, and net of credit loss allowances as discussed below, unless we have elected to apply the fair value option at purchase.
Loans Held-For-Sale
Our loans that we intend to sell or liquidate in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. We periodically enter into derivative financial instruments to hedge unpredictable changes in fair value of loans held-for-sale, including changes resulting from both interest rates and credit quality. Because these derivatives are not designated, changes in their fair value are recorded in earnings. In order to best reflect the results of the hedged loan portfolio in earnings, we have elected the fair value option for these loans. As a result, changes in the fair value of the loans are also recorded in earnings.
Investment Securities
We designate our debt investment securities as held-to-maturity (“HTM”), available-for-sale (“AFS”), or trading depending on our investment strategy and ability to hold such securities to maturity. HTM debt securities where we have not elected to apply the fair value option are stated at cost plus any premiums or discounts, which are amortized or accreted through the condensed consolidated statements of operations using the effective interest method. Debt securities we (i) do not hold for the purpose of selling in the near-term, or (ii) may dispose of prior to maturity, are classified as AFS and are carried at fair value in the accompanying financial statements. Unrealized gains or losses on AFS debt securities where we have not elected the fair value option are reported as a component of accumulated other comprehensive income (“AOCI”) in stockholders’ equity. Our HTM and AFS debt securities are also subject to credit loss allowances as discussed below.
Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.
Credit Losses
Loans and Debt Securities Measured at Amortized Cost
ASC 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model (“CECL”) for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under GAAP. The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to our HFI loans and our HTM debt securities which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. However, as permitted by ASC 326, we have elected not to measure an allowance for credit losses on accrued interest receivable (which is classified separately on our condensed consolidated balance sheets), but rather write off in a timely manner by reversing interest income and/or cease accruing interest that would likely be uncollectible.
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As we do not have a history of realized credit losses on our HFI loans and HTM securities, we have subscribed to third party database services to provide us with historical industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. See Note 4 for further discussion of our methodologies.
We also evaluate each loan and security measured at amortized cost for credit deterioration at least quarterly. Credit deterioration occurs when there is a significant decline in credit quality of the loan or security since origination or acquisition and it is deemed probable that we will not be able to fully recover the amortized cost of the loan or security. Recovery may be by way of repayment by the borrower, sale of the loan or security, possible foreclosure or exercise of control over a borrower’s pledged equity interests. The determination of whether a loan or security is credit deteriorated requires significant judgment by management and is based on various factors including (i) the underlying collateral performance and its estimated current and stabilized market values, including projected cash flows, (ii) discussions with the borrower, (iii) availability of reserves and substantive recourse guarantees and (iv) other factors deemed relevant by us. If a loan or security is considered to be credit deteriorated, it is considered to have different risk characteristics from the rest of the loans and securities being evaluated on the collective industry loss rate pool approach described above. In those cases, we depart from the collective pool approach and determine the credit loss allowance as any excess of the amortized cost basis of the loan or security over (i) the present value of expected future cash flows discounted at the contractual effective interest rate or (ii) the fair value of the collateral, if repayment is expected solely from the collateral.
Available-for-Sale Debt Securities
Separate provisions of ASC 326 apply to our AFS debt securities, which are carried at fair value with unrealized gains and losses reported as a component of AOCI. We are required to establish an initial credit loss allowance for those securities that are purchased with credit deterioration (“PCD”) by grossing up the amortized cost basis of each security and providing an offsetting credit loss allowance for the difference between expected cash flows and contractual cash flows, both on a present value basis.
Subsequently, cumulative adverse changes in expected cash flows on our AFS debt securities are recognized currently as an increase to the allowance for credit losses. However, the allowance is limited to the amount by which the AFS debt security’s amortized cost exceeds its fair value. Favorable changes in expected cash flows are first recognized as a decrease to the allowance for credit losses (recognized currently in earnings). Such changes would be recognized as a prospective yield adjustment only when the allowance for credit losses is reduced to zero. A change in expected cash flows that is attributable solely to a change in a variable interest reference rate does not result in a credit loss and is accounted for as a prospective yield adjustment.
Investments of Consolidated Affordable Housing Fund
On November 5, 2021, we established Woodstar Portfolio Holdings, LLC (the “Woodstar Fund”), an investment fund which holds our Woodstar multifamily affordable housing portfolios consisting of 59 properties with 15,057 units located in Central and South Florida. As managing member of the Woodstar Fund, we manage interests purchased by third party investors seeking capital appreciation and an ongoing return, for which we earn (i) a management fee based on each investor’s share of total Woodstar Fund equity; and (ii) an incentive distribution if the Woodstar Fund’s returns exceed an established threshold. In connection with the establishment of the Woodstar Fund, we entered into subscription and other related agreements with certain third party institutional investors to sell, through a feeder fund structure, an aggregate 20.6% interest in the Woodstar Fund for an initial aggregate subscription price of $216.0 million, which was adjusted to $214.2 million post-closing. The Woodstar Fund has an initial term of eight years.

Effective with the third party interest sale, the Woodstar Fund has the characteristics of an investment company under ASC 946, Financial Services – Investment Companies. Accordingly, the Woodstar Fund is required to carry the investments in its properties at fair value. Because we are the primary beneficiary of the Woodstar Fund, which is a VIE (as discussed in Note 15), we consolidate the accounts of the Woodstar Fund into our consolidated financial statements, retaining the fair value basis of accounting for its investments. Realized and unrealized changes in the fair value of the Woodstar Fund’s property investments, and distributions thereon, are recognized in the “Income from affordable housing fund investments” caption within the other income (loss) section of our condensed consolidated statements of operations. See Note 7 for further details regarding the Woodstar Fund’s investments and related income and Note 17 with respect to its contingently redeemable non-controlling interests which are classified as “Temporary Equity” in our condensed consolidated balance sheets.

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Lease Intangibles
In connection with our acquisition of properties, we recognize intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods, both of which are avoided
due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our consolidated balance sheets. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities where we are the lessor are amortized to rental income. Both our favorable and unfavorable lease intangible assets and liabilities are amortized over the remaining noncancelable term of the respective leases on a straight-line basis.
Revenue Recognition
Interest Income
Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections.
We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If full recovery of principal is doubtful or if collection of interest is less than probable, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.
Loans are reported as past due when either interest or principal has been in default for a period of 90 days or more, unless the asset is both (i) well secured and (ii) in the process of collection or modification to restore it to current status.
For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Such excess, if any, is recognized as interest income on a level-yield basis over the life of the loan.
Upon the sale of loans or securities which are not accounted for pursuant to the fair value option, the excess (or deficiency) of net proceeds over the net carrying value of such loans or securities is recognized as a realized gain (loss).
Servicing Fees
We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met.
Rental Income
Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease.
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In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor.
The majority of our leases are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Any rental revenue contingent upon our tenant’s sales, or percentage rent, is recognized only after our tenant exceeds the sales threshold. Rental increases based upon changes in the consumer price indices are recognized only after the changes in the indexes have occurred and are then applied according to the lease agreements. Under triple net leases, taxes and operating expenses paid directly by our tenants are recorded on a net basis.
We assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under ASC 842, Leases. We assess the collectability of our future lease payments based on an analysis of creditworthiness, economic trends and other facts and circumstances related to the applicable tenants. If we conclude the collection of substantially all of lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received going forward. Any existing operating lease receivables, including those related to straight-line rental revenue, are written off as an adjustment to rental revenue, and no further operating lease receivables are recorded for that lease until such future determination is made that substantially all lease payments under that lease are now considered probable. If we subsequently conclude that the collection of substantially all lease payments under a lease is probable, a reversal of lease receivables previously written off is recognized.
Foreign Currency Translation
Our assets and liabilities denominated in foreign currencies are translated into U.S. dollars using foreign currency exchange rates at the end of the reporting period. Income and expenses are translated at the average exchange rates for each reporting period. The effects of translating the assets, liabilities and income of our foreign investments held by entities with a U.S. dollar functional currency are included in foreign currency gain (loss) in the consolidated statements of operations. Realized foreign currency gains and losses and changes in the value of foreign currency denominated monetary assets and liabilities are included in the determination of net income and are reported as foreign currency gain (loss) in our condensed consolidated statements of operations.

Income Taxes
The Company has elected to be taxed as a REIT under the Code. The Company is subject to federal income taxation at corporate rates on its REIT taxable income, however, the Company is allowed a deduction for the amount of dividends paid to its stockholders in arriving at its REIT taxable income. As a result, distributed net income of the Company is subjected to taxation at the stockholder level only. The Company intends to continue operating in a manner that will permit it to maintain its qualification as a REIT for tax purposes.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods.

We recognize tax positions in the financial statements only when it is more likely than not that, based on the technical merits of the tax position, the position will be sustained upon examination by the relevant taxing authority. A tax position is measured at the largest amount of benefit that will more likely than not be realized upon settlement. If, as a result of new events or information, a recognized tax position no longer is considered more likely than not to be sustained upon examination, a liability is established for the unrecognized benefit with a corresponding charge to income tax expense in our consolidated statement of operations. We report interest and penalties, if any, related to income tax matters as a component of income tax expense.

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Earnings Per Share
We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) and any outstanding discounted share purchase options under the Employee Stock Purchase Program (“ESPP”), (ii) shares contingently issuable to our Manager, (iii) the conversion options associated with our senior convertible notes (the “Convertible Notes”) (see Notes 11 and 18) and (iv) non-controlling interests that are redeemable with our common stock (see Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.

Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 17). Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the three and nine months ended September 30, 2025 and 2024, the two-class method resulted in the most dilutive EPS calculation.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our investments, which has a significant impact on the amount of income that we record and/or disclose. In addition, the fair value of assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows. Amounts ultimately realized from our investments may vary significantly from the fair values presented.
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2025. Actual results may ultimately differ from those estimates.
Recent Accounting Developments
On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which improves income tax disclosures by primarily requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for our fiscal year ending December 31, 2025, with early adoption permitted. It is to be applied on a prospective basis, with retrospective application permitted. We do not expect this ASU will have a material impact on the Company’s income tax disclosures.
On November 4, 2024, the FASB issued ASU 2024-03, Income Statement... (Subtopic 220-40) - Disaggregation of Income Statement Expenses, which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU is effective for our fiscal year ending December 31, 2027 and interim quarters beginning in 2028, with early adoption permitted. It may be applied either prospectively to reporting periods after the ASU’s effective date or retrospectively to all prior periods presented. This ASU will only affect footnote disclosures and will not change the expense captions the Company presents on its consolidated statements of operations.
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3. Acquisitions and Divestitures
Acquisitions

Property Segment - Fundamental
On July 23, 2025, we acquired Fundamental Income Properties, LLC (“Fundamental”) by way of merger. The purchase price totaled $2.2 billion, inclusive of $1.3 billion of indebtedness assumed. At acquisition, Fundamental owned 468 properties, spanning 12.3 million square feet across 44 states, 59 industries and 90 tenants. The properties, which consist of retail, industrial and service facilities, are leased under 103 individual and master net operating lease agreements with a 17.1 year weighted-average lease base term.
The merger qualified as an asset acquisition based on the provisions of ASC 805. The total purchase price, including capitalized transaction costs and fair value of indebtedness assumed (see Note 20), was allocated to the assets acquired based on their relative fair values determined by a third party appraisal, as follows: properties of $1.8 billion, in-place lease intangible assets of $307.4 million, favorable lease intangible assets of $71.6 million and unfavorable lease liabilities of $32.9 million. Debt assumed included $878.3 million of ABS financing and $400.6 million of revolving secured financing. Refer to Note 10 for further discussion.

During the three and nine months ended September 30, 2025 and 2024, we had no other significant acquisitions of properties or businesses other than properties acquired through loan foreclosure or obtaining equity control as discussed in Note 4 and additional properties subsequently acquired by Fundamental as discussed in Note 6.

Divestitures

Commercial and Residential Lending Segment

During the nine months ended September 30, 2025, we sold an office building in Texas for $60.0 million, which had been acquired via equity control of the related mezzanine borrower entity in May 2022. In 2023, we recorded a $30.1 million impairment on the property. Upon sale, we recognized a net gain of $4.1 million in our condensed consolidated statements of operations, representing: (i) forgiveness of debt totaling $23.5 million, which is reflected as gain on extinguishment of debt, offset by (ii) the excess of our carrying value over sales proceeds of $19.4 million, which is reflected within gain on sale of investments and other assets in our condensed consolidated statement of operations for the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, we sold an equity interest originally obtained in connection with a 2013 loan origination for gross proceeds of $70.0 million and recognized a gain of $51.4 million. See Note 8 for further discussion.

During the nine months ended September 30, 2024, we sold three units in a residential conversion project in New York for $12.1 million. In connection with these sales, there was no gain or loss recognized in our condensed consolidated statements of operations.

Investing and Servicing Segment Property Portfolio (“REIS Equity Portfolio”)

During the three and nine months ended September 30, 2025, there were no sales of property within the REIS Equity Portfolio. During the three and nine months ended September 30, 2024, we sold an operating property for $18.2 million within the REIS Equity Portfolio. In connection with this sale, we recognized a gain of $8.3 million within gain on sale of investments and other assets in our condensed consolidated statements of operations, of which $2.5 million was attributable to non-controlling interests.

Property Segment Master Lease Portfolio Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option for either.

On February 29, 2024, we sold the 16 retail properties which comprised our Property Segment’s Master Lease Portfolio for a gross sale price of $387.1 million. In connection with the sale, the purchaser assumed the related mortgage debt of $194.9 million, which resulted in net proceeds of $188.0 million after selling costs. We recognized a gain of $92.0 million, which is included within gain on sale of investments and other assets in our condensed consolidated statement of operations for
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the nine months ended September 30, 2024, and a $1.2 million loss on extinguishment of debt. Pretax income attributable to the Master Lease Portfolio prior to its sale was $3.3 million during the nine months ended September 30, 2024.
4. Loans
The following tables summarize our investments in mortgages and loans as of September 30, 2025 and December 31, 2024 (dollars in thousands):
September 30, 2025 Carrying
Value		 Face
Amount		 Weighted
Average
Coupon (1)		 Weighted
Average Life
(“WAL”)
(years)(2)
Loans held-for-investment:
Commercial loans:
First mortgages (3) $ 15,282,765  $ 15,336,397  7.4  % 2.6
Subordinated mortgages (4) 32,803  32,411  13.8  % 0.3
Mezzanine loans (3) 306,864  309,648  10.8  % 3.2
Other 51,093  51,688  9.3  % 2.9
Total commercial loans 15,673,525  15,730,144 
Infrastructure first priority loans
 3,079,283  3,132,399  7.8  % 5.2
Total loans held-for-investment 18,752,808  18,862,543 
Loans held-for-sale:
Residential, fair value option 2,308,388  2,516,397  4.4  % N/A (5)
Commercial, fair value option
 252,767  253,250  6.3  % 5.5
Total loans held-for-sale 2,561,155  2,769,647 
Total gross loans 21,313,963  $ 21,632,190 
Credit loss allowances:
Commercial loans held-for-investment (418,731)
Infrastructure loans held-for-investment (15,320)
Total allowances (434,051)
Total net loans $ 20,879,912 
December 31, 2024
Loans held-for-investment:
Commercial loans:
First mortgages (3) $ 12,931,333  $ 12,955,038  7.9  % 2.4
Subordinated mortgages (4) 31,247  31,000  14.3  % 1.4
Mezzanine loans (3) 323,041  324,021  11.1  % 1.7
Other 46,255  46,688  13.2  % 3.8
Total commercial loans 13,331,876  13,356,747 
Infrastructure first priority loans 2,553,432  2,594,267  8.3  % 4.4
Total loans held-for-investment 15,885,308  15,951,014 
Loans held-for-sale:
Residential, fair value option 2,394,624  2,694,959  4.5  % N/A (5)
Commercial, fair value option 121,384  125,695  7.0  % 7.3
Total loans held-for-sale 2,516,008  2,820,654 
Total gross loans 18,401,316  $ 18,771,668 
Credit loss allowances:
Commercial loans held-for-investment (436,812)
Infrastructure loans held-for-investment (11,483)
Total allowances (448,295)
Total net loans $ 17,953,021 
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(1)Calculated using applicable index rates as of September 30, 2025 and December 31, 2024 for variable rate loans and excludes loans for which interest income is not recognized.
(2)Represents the WAL of each respective group of loans, excluding loans for which interest income is not recognized, as of the respective balance sheet date. For commercial loans held-for-investment, the WAL is calculated assuming all extension options are exercised by the borrower, although our loans may be repaid prior to such date. For infrastructure loans, the WAL is calculated using the amounts and timing of future principal payments, as projected at origination or acquisition of each loan.
(3)First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.3 billion and $0.9 billion being classified as first mortgages as of September 30, 2025 and December 31, 2024, respectively.
(4)Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
(5)Residential loans have a weighted average remaining contractual life of 26.1 years and 26.8 years as of September 30, 2025 and December 31, 2024, respectively.
As of September 30, 2025, our variable rate loans held-for-investment, excluding loans for which interest income is not recognized, were as follows (dollars in thousands):
September 30, 2025 Carrying
Value		 Weighted-average
Spread Above Index
Commercial loans $ 14,516,895  3.4  %
Infrastructure loans 3,079,283  3.5  %
Total variable rate loans held-for-investment $ 17,596,178  3.4  %

Credit Loss Allowances
As discussed in Note 2, we do not have a history of realized credit losses on our HFI loans and HTM securities, so we have subscribed to third party database services to provide us with industry losses for both commercial real estate and infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios.
For our commercial loans, we utilize a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading CMBS data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. We provide specific loan-level inputs which include loan-to-stabilized-value (“LTV”) and debt service coverage ratio (DSCR) metrics, as well as principal balances, property type, location, coupon, origination year, term, subordination, expected repayment dates and future fundings. We also select from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. We categorize the results by LTV range, which we consider the most significant indicator of credit quality for our commercial loans, as set forth in the credit quality indicator table below. A lower LTV ratio typically indicates a lower credit loss risk.
The macroeconomic forecasts do not differentiate among property types or asset classes. Instead, these forecasts reference general macroeconomic conditions (i.e. Gross Domestic Product, employment and interest rates) which apply broadly across all assets. For instance, although the office sector has been adversely affected by the increase in remote working arrangements, the retail sector has been adversely affected by electronic commerce and the multifamily sector has been strained by sustained higher interest rates, the broad macroeconomic forecasts do not account for such differentiation. Accordingly, we have selected more adverse macroeconomic recovery forecasts for these property types than others in determining our credit loss allowance. We have also selected more adverse macroeconomic recovery forecasts for those loans containing higher risk ratings.

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For our infrastructure loans, we utilize a database of historical infrastructure loan performance that is shared among a consortium of banks and other lenders and compiled by a major bond credit rating agency. The database is representative of industry-wide project finance activity dating back to 1983. We derive historical loss rates from the database filtered by industry, sub-industry, term and construction status for each of our infrastructure loans. Those historical loss rates reflect global economic cycles over a long period of time as well as average recovery rates. We categorize the results principally between the power and oil and gas industries, which we consider the most significant indicator of credit quality for our infrastructure loans, as set forth in the credit quality indicator table below.
As discussed in Note 2, we use a discounted cash flow or collateral value approach, rather than the collective pool approach described above, to determine credit loss allowances for any credit deteriorated loans.
The significant credit quality indicators for our loans measured at amortized cost, which excludes loans held-for-sale, were as follows as of September 30, 2025 (dollars in thousands):
Term Loans
Amortized Cost Basis by Origination Year		 Revolving Loans
Amortized Cost
Total		 Total
Amortized
Cost Basis		 Credit
Loss
Allowance
As of September 30, 2025 2025 2024 2023 2022 2021 Prior
Commercial loans:
Credit quality indicator:
LTV < 60% $ 938,421  $ 304,726  $ 359,743  $ 1,708,200  $ 1,115,504  $ 386,342  $ —  $ 4,812,936  $ 4,165 
LTV 60% - 70% 2,277,800  301,487  441,731  784,303  1,898,718  388,881  —  6,092,920  28,736 
LTV > 70% 200,557  426,680  205,784  977,236  1,603,877  1,264,308  —  4,678,442  353,661 
Credit deteriorated —  —  —  —  —  38,134  —  38,134  32,169 
Defeased and other 5,000  —  4,550  41,543  —  —  —  51,093  — 
Total commercial $ 3,421,778  $ 1,032,893  $ 1,011,808  $ 3,511,282  $ 4,618,099  $ 2,077,665  $ —  $ 15,673,525  $ 418,731 
Infrastructure loans:
Credit quality indicator:
Power $ 1,069,054  $ 493,370  $ 239,275  $ 46,095  $ 25,496  $ 95,888  $ 149  $ 1,969,327  $ 8,893 
Oil and gas 598,267  237,488  190,601  —  —  83,600  —  1,109,956  6,427 
Total infrastructure $ 1,667,321  $ 730,858  $ 429,876  $ 46,095  $ 25,496  $ 179,488  $ 149  $ 3,079,283  $ 15,320 
Loans held-for-sale 2,561,155  — 
Total gross loans $ 21,313,963  $ 434,051 


Non-Credit Deteriorated Loans
As of September 30, 2025, we had four commercial loans with a combined amortized cost basis of $589.3 million along with $73.5 million of residential loans that were 90 days or greater past due. All of these loans were on nonaccrual as of September 30, 2025. We also had three commercial loans with a combined amortized cost basis of $319.6 million on nonaccrual that were not 90 days or greater past due as of September 30, 2025. None of these loans were considered credit deteriorated. As of December 31, 2024, we had a total of $1.0 billion of non-credit deteriorated loans on nonaccrual. During the quarter, no additional non-credit deteriorated commercial loans were placed on nonaccrual. Year-to-date commercial loans placed on nonaccrual totaled $162.3 million and resolutions totaled $238.0 million.
Credit Deteriorated Loans
As of September 30, 2025, we had two loans with a combined amortized cost basis of $38.1 million which were deemed credit deteriorated and are on nonaccrual under the cost recovery method: (i) a $33.2 million commercial mezzanine loan placed on nonaccrual during the quarter, secured by an office portfolio in Ireland, for which we assigned a $27.2 million specific credit loss allowance by reclassifying a portion of our general reserve. The loan was deemed credit deteriorated based on the terms of a pending modification whereby the sponsor will not fund future debt service shortfalls or capital expenditures, and (ii) a $4.9 million commercial subordinated loan secured by a department store in Chicago which was deemed credit deteriorated and was fully reserved in prior years.

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Foreclosure and Equity Control
During the nine months ended September 30, 2025, we foreclosed on or otherwise obtained control over the following loan collateral:
In June 2025, we obtained a deed in lieu of foreclosure on a first mortgage and mezzanine loan on a life science property in Boston, Massachusetts, which resulted in our obtaining physical possession of the underlying collateral. The net carrying value of our loan related to this property (including previously accrued interest) totaled $55.7 million, net of a specific credit loss allowance of $17.2 million provided during the three months ended June 30, 2025 in accordance with a valuation provided by a third party appraisal. In connection with the foreclosure, we recorded properties of $55.7 million in accordance with the asset acquisition provisions of ASC 805. As noted above, this loan was previously placed on nonaccrual.

In May 2025, we obtained control over the pledged equity interests of a mezzanine borrower entity related to a multifamily property in Windermere, Florida, which resulted in our consolidating the mezzanine borrower entity including the underlying property collateral. The net carrying value of our loans related to this property totaled $83.9 million and consisted of first mortgage and mezzanine loans. In connection with the consolidation of the mezzanine borrower entity, we recorded properties of $83.9 million in accordance with the asset acquisition provisions of ASC 805. As noted above, this loan was previously placed on nonaccrual.
In February 2025, we foreclosed on a first mortgage and mezzanine loan on a multifamily property in Conyers, Georgia. The net carrying value of our loan related to this property (including previously accrued interest) totaled $45.0 million. In connection with the foreclosure, we recorded properties of $45.0 million in accordance with the asset acquisition provisions of ASC 805. As noted above, this loan was previously placed on nonaccrual.

Loan Modifications
We may amend or modify a loan based on its specific facts and circumstances. The modified terms and subsequent performance of the modified loans are considered in the determination of our general CECL reserve. During the nine months ended September 30, 2025, we made no modifications to commercial loans disclosable under ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures.
Performance of Previously Modified Loans:
Loans with modifications disclosed in the previous twelve months under ASU 2022-02 are performing in accordance with their modified terms through September 30, 2025, except for a $139.1 million first mortgage and mezzanine loan on an office condominium in Brooklyn, New York which was in maturity default as of September 30, 2025. Subsequent to September 30, 2025, the loan was restructured into two separate performing loans, one of which relates to space subject to a newly executed long-term lease, and the other of which relates to space that is currently vacant but subject to a pending long-term lease whose terms have been finalized.

Credit Loss Allowance Activity
The following tables present the activity in our credit loss allowance for funded loans and unfunded commitments (amounts in thousands):
Funded Commitments Credit Loss Allowance
Loans Held-for-Investment Total
Funded Loans
Nine Months Ended September 30, 2025
 Commercial Infrastructure
Credit loss allowance at December 31, 2024 $ 436,812  $ 11,483  $ 448,295 
Credit loss (reversal) provision, net (856) 3,837  2,981 
Charge-offs (1) (17,225) —  (17,225)
Credit loss allowance at September 30, 2025 $ 418,731  $ 15,320  $ 434,051 
______________________________________________________________________________________________________________________
(1)Represents the charge-off of a $17.2 million specific credit loss allowance that was established during the three months ended June 30, 2025 related to a first mortgage and mezzanine loan on a life science property in Boston, Massachusetts. The loan was originated in December 2021 and foreclosed in June 2025.

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Unfunded Commitments Credit Loss Allowance (1)
Loans Held-for-Investment HTM Preferred
Nine Months Ended September 30, 2025
 Commercial Infrastructure Interests (2) CMBS (2) Total
Credit loss allowance at December 31, 2024 $ 16,530  $ 950  $ 14,018  $ 21  $ 31,519 
Credit loss provision (reversal), net
 146  489  (1,618) (21) (1,004)
Credit loss allowance at September 30, 2025 $ 16,676  $ 1,439  $ 12,400  $ —  $ 30,515 
Memo: Unfunded commitments as of September 30, 2025 (3)
 $ 1,402,453  $ 167,915  $ 71,643  $ —  $ 1,642,011 
______________________________________________________________________________________________________________________
(1)Included in accounts payable, accrued expenses and other liabilities in our consolidated balance sheets.
(2)See Note 5 for further details.
(3)Represents amounts expected to be funded (see Note 22).
Loan Portfolio Activity
The activity in our loan portfolio was as follows (amounts in thousands):
Held-for-Investment Loans
Nine Months Ended September 30, 2025
 Commercial Infrastructure Held-for-Sale Loans Total Loans
Balance at December 31, 2024 $ 12,895,064  $ 2,541,949  $ 2,516,008  $ 17,953,021 
Acquisitions/originations/additional funding 4,157,182  1,912,106  994,731  7,064,019 
Capitalized interest (1) 79,260  —  —  79,260 
Basis of loans sold (2) (230,267) —  (912,415) (1,142,682)
Loan maturities/principal repayments (1,848,893) (1,414,236) (166,634) (3,429,763)
Discount accretion/premium amortization 22,566  24,076  —  46,642 
Changes in fair value —  —  140,638  140,638 
Foreign currency translation gain, net
 361,229  3,905  —  365,134 
Credit loss reversal (provision), net
 856  (3,837) —  (2,981)
Loan foreclosures
 (182,203) —  (11,173) (193,376) (3)
Balance at September 30, 2025 $ 15,254,794  $ 3,063,963  $ 2,561,155  $ 20,879,912 
Held-for-Investment Loans
Nine Months Ended September 30, 2024
 Commercial Infrastructure Held-for-Sale Loans Total Loans
Balance at December 31, 2023 $ 15,078,589  $ 2,495,660  $ 2,645,637  $ 20,219,886 
Acquisitions/originations/additional funding 1,237,827  832,049  1,206,016  3,275,892 
Capitalized interest (1) 68,109  —  —  68,109 
Basis of loans sold (2) —  —  (1,108,740) (1,108,740)
Loan maturities/principal repayments (2,523,781) (883,880) (165,610) (3,573,271)
Discount accretion/premium amortization 32,144  17,287  —  49,431 
Changes in fair value —  —  150,279  150,279 
Foreign currency translation loss, net
 101,420  2,611  —  104,031 
Credit loss (provision) reversal, net
 (105,826) 130  (1,546) (107,242)
Loan foreclosures
(174,879) —  (1,352) (176,231) (4)
Transfer to/from other asset classifications or between segments —  (48,695) 48,695  — 
Balance at September 30, 2024 $ 13,713,603  $ 2,415,162  $ 2,773,379  $ 18,902,144 
______________________________________________________________________________________________________________________
(1)Represents accrued interest income on loans whose terms do not require current payment of interest.
(2)See Note 12 for additional disclosure on these transactions.
(3)Represents (i) the $83.9 million carrying value of a first mortgage and mezzanine loan on a multifamily property in Windermere, Florida foreclosed in May 2025, (ii) the $54.3 million carrying value of a first mortgage and mezzanine loan on a life science property in Boston, Massachusetts foreclosed in June 2025, (iii) the $44.0 million carrying value of a first mortgage and mezzanine loan on a multifamily property in Conyers, Georgia foreclosed in February 2025 and (iv) $11.2 million of residential mortgage loans foreclosed.
(4)Represents (i) the $114.2 million carrying value of a senior mortgage loan on an office building in Washington, D.C. foreclosed in May 2024, (ii) the $51.5 million carrying value of a first mortgage and mezzanine loan on a multifamily
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property in Nashville, Tennessee foreclosed in May 2024, (iii) the $9.2 million carrying value of a loan on a hospitality asset in New York City foreclosed in June 2024 and (iv) a $1.3 million residential mortgage loan foreclosed.
5. Investment Securities
Investment securities were comprised of the following as of September 30, 2025 and December 31, 2024 (amounts in thousands):
Carrying Value as of
September 30, 2025 December 31, 2024
RMBS, available-for-sale $ 89,474  $ 93,806 
RMBS, fair value option (1) 408,823  421,122 
CMBS, fair value option (1), (2) 1,197,170  1,225,024 
HTM debt securities, amortized cost net of credit loss allowance of $31,512 and $24,463
 138,422  406,961 
Equity security, fair value 2,166  5,146 
Subtotal—Investment securities
 1,836,055  2,152,059 
VIE eliminations (1) (1,577,220) (1,618,801)
Total investment securities $ 258,835  $ 533,258 
_____________________________________________________________________________________________________________________
(1)Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810.
(2)Includes $140.1 million and $148.6 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2025 and December 31, 2024, respectively.
Purchases, sales and redemptions, and principal collections for all investment securities were as follows (amounts in thousands):
RMBS,
available-for-sale		 RMBS, fair
value option		 CMBS, fair
value option		 HTM
Securities		 Equity
Security		 Securitization
VIEs (1)		 Total
Three Months Ended September 30, 2025
Purchases/fundings $ —  $ —  $ —  $ 8,360  $ —  $ —  $ 8,360 
Sales and redemptions —  —  —  —  2,018  —  2,018 
Principal collections 2,177  9,509  9,799  243,555  —  (19,109) 245,931 
Three Months Ended September 30, 2024
Purchases/fundings $ —  $ —  $ 126,071  $ 45,778  $ —  $ (126,071) $ 45,778 
Sales and redemptions —  —  7,144  —  2,376  (7,144) 2,376 
Principal collections 4,364  11,118  4,702  611  —  (15,779) 5,016 
RMBS,
available-for-sale		 RMBS, fair
value option		 CMBS, fair
value option		 HTM
Securities		 Equity
Security		 Securitization
VIEs (1)		 Total
Nine Months Ended September 30, 2025
Purchases/fundings $ —  $ —  $ 65,665 
(2)
 $ 25,906  $ —  $ (61,638) $ 29,933 
Sales and redemptions —  —  4,193  —  3,368  —  7,561 
Principal collections 6,075  29,667  74,956  294,523  —  (104,338) 300,883 
Nine Months Ended September 30, 2024
Purchases/fundings $ —  $ —  $ 133,979  $ 56,578  $ —  $ (126,071) $ 64,486 
Sales and redemptions —  —  12,923  —  3,690  (12,923) 3,690 
Principal collections 9,183  34,884  9,231  72,991  —  (43,972) 82,317 
_________________________________________________________________________________________________________________
(1)Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as issuance or repayment of debt of, or distributions from, consolidated VIEs in our consolidated statements of cash flows.
(2)There was an additional $3.4 million of CMBS purchased from a consolidated partnership that is eliminated in consolidation.
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RMBS, Available-for-Sale
The Company classified all of its RMBS not eliminated in consolidation as available-for-sale as of September 30, 2025 and December 31, 2024. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in accumulated other comprehensive income (“AOCI”).

The tables below summarize various attributes of our investments in available-for-sale RMBS as of September 30, 2025 and December 31, 2024 (amounts in thousands):
Unrealized Gains or (Losses)
Recognized in AOCI
Amortized
Cost		 Credit
Loss
Allowance		 Net
Basis		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Net
Fair Value
Adjustment		 Fair Value
September 30, 2025
RMBS $ 77,539  $ —  $ 77,539  $ 13,689  $ (1,754) $ 11,935  $ 89,474 
December 31, 2024
RMBS $ 80,212  $ —  $ 80,212  $ 15,163  $ (1,569) $ 13,594  $ 93,806 
Weighted Average Coupon (1) WAL 
(Years) (2)
September 30, 2025
RMBS 4.8  % 7.6
______________________________________________________________________________________________________________________
(1)Calculated using the September 30, 2025 SOFR rate of 4.129% for floating rate securities.
(2)Represents the remaining WAL of each respective group of securities as of the balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments.
As of September 30, 2025, approximately $79.7 million, or 89%, of RMBS were variable rate. We purchased all of the RMBS at a discount, a portion of which is accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.
We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $0.2 million for both the three months ended September 30, 2025 and 2024, respectively, and $0.5 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively, recorded as management fees in the accompanying condensed consolidated statements of operations.
The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024, and for which an allowance for credit losses has not been recorded (amounts in thousands):
Estimated Fair Value Unrealized Losses
Securities with a
loss less than
12 months		 Securities with a
loss greater than
12 months		 Securities with a
loss less than
12 months		 Securities with a
loss greater than
12 months
As of September 30, 2025
RMBS $ —  $ 11,184  $ —  $ (1,754)
As of December 31, 2024
RMBS $ 2,076  $ 9,742  $ (178) $ (1,391)
As of September 30, 2025 and December 31, 2024, there were 14 and 13 securities, respectively, with unrealized losses reflected in the table above. After evaluating the securities, we concluded that the unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the securities, it was not considered more likely than not that we would be forced to sell the securities prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, if any, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our net amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or credit losses could be materially different from what is currently projected and/or reported.
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CMBS and RMBS, Fair Value Option
As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for certain CMBS and RMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of September 30, 2025, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $1.2 billion and $2.7 billion, respectively. As of September 30, 2025, the fair value and unpaid principal balance of RMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $408.8 million and $326.3 million, respectively. The $1.6 billion total fair value balance of CMBS and RMBS represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $28.8 million at September 30, 2025) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities.
As of September 30, 2025, none of our CMBS or RMBS were variable rate.
HTM Debt Securities, Amortized Cost
The table below summarizes our investments in HTM debt securities as of September 30, 2025 and December 31, 2024 (amounts in thousands):
Amortized
Cost Basis		 Credit Loss
Allowance		 Net Carrying
Amount		 Gross Unrealized
Holding Gains		 Gross Unrealized
Holding Losses		 Fair Value
September 30, 2025
CMBS $ 70,497  $ (3) $ 70,494  $ 263  $ (12,081) $ 58,676 
Preferred interests 72,961  (21,448) 51,513  —  (16,780) 34,733 
Infrastructure bonds 26,476  (10,061) 16,415  13  —  16,428 
Total $ 169,934  $ (31,512) $ 138,422  $ 276  $ (28,861) $ 109,837 
December 31, 2024
CMBS $ 357,012  $ (85) $ 356,927  $ 315  $ (21,326) $ 335,916 
Preferred interests 47,069  (14,308) 32,761  —  (3,568) 29,193 
Infrastructure bonds 27,343  (10,070) 17,273  21  (9) 17,285 
Total $ 431,424  $ (24,463) $ 406,961  $ 336  $ (24,903) $ 382,394 
The following table presents the activity in our credit loss allowance for HTM debt securities (amounts in thousands):
CMBS Preferred
Interests		 Infrastructure
Bonds		 Total HTM
Credit Loss
Allowance
Nine Months Ended September 30, 2025
Credit loss allowance at December 31, 2024 $ 85  $ 14,308  $ 10,070  $ 24,463 
Credit loss (reversal) provision, net
 (82) 7,140  (9) 7,049 
Credit loss allowance at September 30, 2025 $ 3  $ 21,448  $ 10,061  $ 31,512 
As of September 30, 2025 and December 31, 2024, we had a $10.0 million specific credit loss allowance on a $19.2 million infrastructure bond that is collateralized by a first priority lien on a coal-fired power plant in Mississippi. It was deemed credit deteriorated when we acquired the Infrastructure Lending Segment in 2018 and was placed on nonaccrual under the cost recovery method in 2023 due to a forbearance and restructuring plan agreed between the lenders and borrower that was necessitated by operating shortfalls at the plant.
We also had seven commercial lending preferred interests with a combined amortized cost basis of $55.1 million on nonaccrual that were not 90 days or greater past due as of September 30, 2025, with total unfunded commitments of $86.2 million. All of these investments were made in connection with loan modifications, but are not considered credit deteriorated.

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The table below summarizes the maturities of our HTM debt securities by type as of September 30, 2025 (amounts in thousands):
CMBS Preferred
Interests		 Infrastructure
Bonds		 Total
Less than one year $ 25,453  $ 14,443  $ —  $ 39,896 
One to three years —  20,652  7,301  27,953 
Three to five years 45,041  16,418  —  61,459 
Thereafter —  —  9,114  9,114 
Total $ 70,494  $ 51,513  $ 16,415  $ 138,422 
Equity Security, Fair Value
During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. As of December 31, 2024, we held 4,480,649 shares of SEREF that had not yet been redeemed. During the three and nine months ended September 30, 2025, 1,568,451 and 2,628,716 shares were redeemed by SEREF, for proceeds of $2.0 million and $3.4 million, respectively, leaving 1,851,933 shares held as of September 30, 2025. The fair value of the investment remeasured in USD was $2.2 million and $5.1 million as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, our shares represent an approximate 2.3% interest in SEREF.
6. Properties
Our properties are held within the following portfolios:
Property Segment - Fundamental
In July 2025, we acquired Fundamental, as discussed in Note 3. As of September 30, 2025, Fundamental owned 475 single-tenant properties, spanning 12.8 million square feet across 43 states, 61 industries and 96 tenants. The properties, which consist of retail, industrial and service facilities, among others, are leased under 109 individual and master net operating lease agreements with a 17.1 year weighted-average lease base term. Fundamental had total gross properties and lease intangibles of $2.2 billion and debt of $1.3 billion as of September 30, 2025. From its acquisition through September 30, 2025, Fundamental acquired eight additional net lease properties for cash of $39.3 million and the non-cash conversion of two existing loans for the development of net lease properties totaling $14.4 million. It also sold a property for $0.5 million.
Property Segment - Medical Office Portfolio
The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $789.8 million and debt of $481.5 million as of September 30, 2025.
Property Segment - D.C. Multifamily Conversion
A vacant office building in Washington, D.C. was acquired in a loan foreclosure in May 2024 and transferred to our Property Segment with the expectation that we will convert it to multifamily use. That property has a carrying value of $117.1 million, of which $91.0 million represents construction in progress and $26.1 million represents land and land improvements, and no associated debt as of September 30, 2025.

Investing and Servicing Segment Property Portfolio (“REIS Equity Portfolio”)
The REIS Equity Portfolio is comprised of 7 commercial real estate properties and one equity interest in an unconsolidated real estate property (see Note 8), which were acquired from CMBS trusts over time. The REIS Equity Portfolio includes total gross properties and lease intangibles of $116.8 million and debt of $57.8 million as of September 30, 2025.
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Commercial and Residential Lending Segment Property Portfolio
The Commercial and Residential Lending Segment Portfolio represents properties acquired through loan foreclosure or exercise of control over a mezzanine loan borrower’s pledged equity interests. This portfolio includes total gross properties and lease intangibles of $780.3 million and debt of $29.8 million as of September 30, 2025.
Woodstar Portfolios
Refer to Note 7 for a discussion of our Woodstar I and Woodstar II Portfolios which are not included in the table below.
The table below summarizes our properties held-for-investment as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Depreciable Life September 30, 2025 December 31, 2024
Property Segment
Land and land improvements
0 - 15 years
 $ 714,814  $ 95,642 
Buildings and building improvements
0 - 40 years
 1,855,441  635,636 
Construction in progress
N/A
 126,078  89,167 
Furniture & fixtures
3 - 5 years
 1,286  1,139 
Investing and Servicing Segment
Land and land improvements
0 - 15 years
 23,346  23,345 
Buildings and building improvements
3 - 40 years
 72,462  69,582 
Furniture & fixtures
1 - 5 years
 2,951  3,251 
Commercial and Residential Lending Segment
Land and land improvements
0 - 13 years
 143,090  117,983 
Buildings and building improvements
0 - 50 years
 381,922  326,603 
Construction in progress
N/A
 248,932  219,868 
Furniture & fixtures
5 years
 2,003  2,003 
Properties, cost 3,572,325  1,584,219 
Less: accumulated depreciation (237,842) (210,541)
Properties, net $ 3,334,483  $ 1,373,678 

During the nine months ended September 30, 2025, we sold an office building in Texas for $60.0 million, which had been acquired via equity control of the related mezzanine borrower entity in May 2022 within the Commercial and Residential Lending Segment. In 2023, we recorded a $30.1 million impairment on the property. Upon sale, we recognized a net gain of $4.1 million in our condensed consolidated statements of operations, representing: (i) forgiveness of debt totaling $23.5 million, which is reflected as gain on extinguishment of debt, offset by (ii) the excess of our carrying value over sales proceeds of $19.4 million, which is reflected within gain on sale of investments and other assets in our condensed consolidated statement of operations for the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, we also sold a multifamily property within the Commercial and Residential Lending Segment for $54.5 million which did not qualify for sale accounting treatment under GAAP. In connection therewith, we provided $45.8 million of three-year senior secured financing to the purchaser, along with an up to $6.0 million unfunded commitment for future property improvements during the loan term. Such sale will be recognized under GAAP if and when collection of the financed amount becomes probable. In the meantime, the $53.8 million net carrying value of the property as of September 30, 2025 remains within properties on our condensed consolidated balance sheet and the initial down payment of $8.9 million and subsequent interest payments of $0.4 million received from the purchaser are recorded as a deposit liability within accounts payable, accrued expenses and other liabilities on our condensed consolidated balance sheet as of September 30, 2025.

On February 29, 2024, we sold the 16 retail properties which comprised our Property Segment’s Master Lease Portfolio for a gross sale price of $387.1 million. In connection with the sale, the purchaser assumed the related mortgage debt of $194.9 million, which resulted in net proceeds of $188.0 million after selling costs. We recognized a gain of $92.0 million, which is included within gain on sale of investments and other assets in our condensed consolidated statement of operations for
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the nine months ended September 30, 2024, and a $1.2 million loss on extinguishment of debt. Pretax income attributable to the Master Lease Portfolio prior to its sale was $3.3 million during the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025, there were no sales of property within the REIS Equity Portfolio. During the three and nine months ended September 30, 2024, we sold an operating property for $18.2 million within the REIS Equity Portfolio. In connection with this sale, we recognized a gain of $8.3 million within gain on sale of investments and other assets in our condensed consolidated statements of operations, of which $2.5 million was attributable to non-controlling interests.

During the nine months ended September 30, 2024, we sold three units in a residential conversion project in New York for $12.1 million within the Commercial and Residential Lending Segment. In connection with these sales, there was no gain or loss recognized in our condensed consolidated statements of operations.

7. Investments of Consolidated Affordable Housing Fund
As discussed in Note 2, we established the Woodstar Fund effective November 5, 2021, an investment fund which holds our Woodstar multifamily affordable housing portfolios. The Woodstar Portfolios consist of the following:

Woodstar I Portfolio
The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio, with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes properties at fair value of $1.8 billion and debt at fair value of $925.6 million as of September 30, 2025.
Woodstar II Portfolio
The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. We acquired eight of the 27 affordable housing communities in December 2017, with the final 19 communities acquired during the year ended December 31, 2018. The Woodstar II Portfolio includes properties at fair value of $1.4 billion and debt at fair value of $497.0 million as of September 30, 2025.
Income (loss) from the Woodstar Fund’s investments reflects the following components for the three and nine months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Operating distributions from affordable housing fund investments
 $ 15,928  $ 14,571  $ 42,931  $ 38,315 
Distributions from refinancing (1)
 178,020  —  178,020  — 
Unrealized change in fair value of investments attributable to refinancing (1) (178,020) —  (178,020) — 
Other unrealized change in fair value of investments (2)
 (15,604) (20,161) (33,582) (28,011)
Income (loss) from affordable housing fund investments
 $ 324  $ (5,590) $ 9,349  $ 10,304 
______________________________________________________________________________________________________________________
(1)Represents a distribution of excess proceeds from the refinancing of maturing mortgage debt on certain Woodstar properties, which also affects the unrealized change in fair value of debt within the Woodstar Fund investments.
(2)The fair value of the Woodstar Fund’s investments are dependent upon the real estate and capital markets, which are cyclical in nature. Property and investment values are affected by, among other things, capitalization rates, the availability of capital, occupancy, rental rates and interest and inflation rates.
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8. Investments in Unconsolidated Entities
The table below summarizes our investments in unconsolidated entities as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Participation /
Ownership % (1)		 Carrying value as of
September 30, 2025 December 31, 2024
Equity method investments:
Equity interests in two natural gas power plants
10% - 12%
 $ 53,896  $ 53,645 
Equity interest in a retail center in Hawaii
 25% 5,475  6,184 
Investor entity which owns equity in an online real estate company
 50% 5,283  5,178 
Various (2)
(3)
 —  17,927 
64,654  82,934 
Other equity investments:
Equity interest in a servicing and advisory business 2% 7,462  7,462 
Equity interest in a data center business in Ireland (4)
0.72%
 7,672  7,672 
Investment funds which own equity in a loan servicer and other real estate assets
4% - 6%
 695  695 
Various
3% - 15%
 607  607 
16,436  16,436 
$ 81,090  $ 99,370 
______________________________________________________________________________________________________________________
(1)None of these investments are publicly traded and therefore quoted market prices are not available.
(2)During the nine months ended September 30, 2025, we sold an equity interest originally obtained in connection with a $47.0 million loan that was originated in 2013 and fully repaid in 2022. In connection with the sale, we received gross proceeds of $70.0 million and recognized a gain of $51.4 million within gain on sale of investments and other assets in our condensed consolidated statement of operations for the nine months ended September 30, 2025.
(3)Includes common equity interests ranging from 20% to 70%, received in connection with loan modifications involving preferred equity interests, that currently have no carrying value.
(4)This equity interest was acquired in connection with the origination of a loan in 2021. The loan was repaid during the three months ended March 31, 2024. In connection with the repayment, an observable price change occurred when a 50% voting interest in this entity was acquired by related parties, including an investment fund and certain other entities affiliated with our Manager. As a result of the acquisition and resulting observable price change, we recorded a $6.0 million increase in the carrying value of our investment during the nine months ended September 30, 2024 to reflect its fair value implied by the acquisition.
There were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of September 30, 2025.
During the three and nine months ended September 30, 2025, we did not become aware of (i) any observable price changes in our other equity investments accounted for under the fair value practicability election or (ii) any indicators of impairment.
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9. Goodwill and Intangibles
Goodwill
Goodwill is tested for impairment annually in the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Infrastructure Lending Segment
The Infrastructure Lending Segment’s goodwill of $119.4 million at both September 30, 2025 and December 31, 2024 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s lending platform.
LNR Property LLC (“LNR”)
The Investing and Servicing Segment’s goodwill of $140.4 million at both September 30, 2025 and December 31, 2024 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets.
Intangible Assets
Servicing Rights Intangibles
In connection with the LNR acquisition, we identified domestic servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. As of September 30, 2025 and December 31, 2024, the balance of the domestic servicing intangible was net of $36.4 million and $35.7 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of September 30, 2025 and December 31, 2024, the domestic servicing intangible had a balance of $63.9 million and $58.1 million, respectively, which represents our economic interest in this asset.
Lease Intangibles
In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties.
The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of September 30, 2025 and December 31, 2024 (amounts in thousands):
As of September 30, 2025 As of December 31, 2024
Gross Carrying
Value		 Accumulated
Amortization		 Net Carrying
Value		 Gross Carrying
Value		 Accumulated
Amortization		 Net Carrying
Value
Domestic servicing rights, at fair value $ 27,522  $ —  $ 27,522  $ 22,390  $ —  $ 22,390 
In-place lease intangible assets 390,339  (71,092) 319,247  93,826  (70,569) 23,257 
Favorable lease intangible assets 95,780  (12,731) 83,049  27,798  (12,741) 15,057 
Total net intangible assets $ 513,641  $ (83,823) $ 429,818  $ 144,014  $ (83,310) $ 60,704 
Memo: Unfavorable lease (liabilities) (1)
 $ (35,432) $ 2,354  $ (33,078) $ (3,105) $ 2,019  $ (1,086)
_____________________________________________________________________________________________________________________
(1)Balance as of September 30, 2025 includes $32.4 million of unfavorable lease liabilities related to the acquisition of Fundamental in July 2025. Unfavorable lease liabilities are classified within accounts payable, accrued expenses and other liabilities on our condensed consolidated balance sheets.
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The following table summarizes the activity within intangible assets for the nine months ended September 30, 2025 (amounts in thousands):
Domestic
Servicing
Rights		 In-place Lease
Intangible
Assets		 Favorable Lease
Intangible
Assets
Total Intangible Assets
Memo: Unfavorable Lease Liabilities
Balance as of January 1, 2025
 $ 22,390  $ 23,257  $ 15,057  $ 60,704  $ (1,086)
Acquisition (1)
 —  307,448  71,562  379,010  (32,885)
Amortization —  (6,446) (1,802) (8,248) 549 
Sales —  (5,012) (1,768) (6,780) 344 
Changes in fair value due to changes in inputs and assumptions 5,132  —  —  5,132  — 
Balance as of September 30, 2025 $ 27,522  $ 319,247  $ 83,049  $ 429,818  $ (33,078)
___________________________________________________
(1)    Represents in-place and favorable lease intangible assets and unfavorable lease liabilities related to the acquisition of Fundamental in July 2025. The weighted average amortization period of these lease intangible assets and unfavorable lease liabilities is 17.2 years and 15.1 years, respectively.
The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities for the next five years and thereafter (amounts in thousands):
Asset Amortization
Liability Amortization
2025 (remainder of) $ 6,853  $ (594)
2026 26,515  (2,342)
2027 26,251  (2,318)
2028 26,247  (2,317)
2029 26,213  (2,316)
Thereafter 290,217  (23,191)
Total $ 402,296  $ (33,078)


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10. Secured Borrowings
Secured Financing Agreements
The following table is a summary of our secured financing agreements in place as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Outstanding Balance at
Current
Maturity		    
Extended
Maturity (a)
    
Weighted Average
Coupon
 Pledged Asset
Carrying Value		 Maximum
Facility Size		     September 30, 2025 December 31, 2024
Repurchase Agreements:
Commercial Loans Oct 2025 to May 2031
(b)
 Oct 2028 to Dec 2033
(b)
Index + 1.90%
(c)
$ 11,792,848  $ 11,638,378 
(d)
 $ 7,258,133  $ 5,137,103 
Residential Loans Mar 2026 to Oct 2027 Mar 2026 to Apr 2028
SOFR + 1.65%
 2,305,757  3,450,000  2,061,738  2,126,692 
Infrastructure Loans Sep 2027 Sep 2029
Index + 2.20%
 426,353  650,000  326,743  264,432 
Conduit Loans Dec 2025 to Jun 2028 Dec 2026 to Jun 2029
SOFR + 2.15%
 —  375,000  —  87,061 
CMBS/RMBS Dec 2025 to Apr 2032
(e)
 Dec 2025 to Oct 2032
(e)
 (f) 1,215,230  906,650  645,886 
(g)
 721,097 
Total Repurchase Agreements 15,740,188  17,020,028  10,292,500  8,336,385 
Other Secured Financing:
Borrowing Base Facility Oct 2027 Oct 2029
SOFR + 2.00%
 267,632  1,250,000 
(h)
 8,000  2,000 
Commercial Financing Facilities Jan 2026 to Apr 2030 Jan 2027 to Dec 2033
Index + 1.97%
 687,866  977,423 
(i)
 477,187  330,081 
Infrastructure Financing Facilities Oct 2025 to Aug 2028 Oct 2027 to Jul 2033
SOFR + 1.87%
 997,100  1,175,000  773,710  499,242 
Property Financing
 Dec 2025 to Dec 2026 Dec 2025 to May 2029 (j) 1,304,254  1,130,240  942,397  615,854 
Term Loans and Revolver Nov 2027 to Sep 2032 N/A
SOFR + 2.00%
 N/A
(k)
 2,475,879  2,275,879  1,452,567 
Total Other Secured Financing 3,256,852  7,008,542  4,477,173  2,899,744 
$ 18,997,040  $ 24,028,570  14,769,673  11,236,129 
Unamortized net discount (20,671) (19,338)
Unamortized deferred financing costs (85,784) (65,234)
$ 14,663,218  $ 11,151,557 
______________________________________________________________________________________________________________________
(a)Subject to certain conditions as defined in the respective facility agreement.
(b)For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.
(c)Certain facilities with an outstanding balance of $2.5 billion as of September 30, 2025 are indexed to EURIBOR, BBSY, SARON and SONIA. The remainder are indexed to SOFR.
(d)Certain facilities with an aggregate initial maximum facility size of $11.2 billion may be increased to $11.6 billion, subject to certain conditions. The $11.6 billion amount includes such upsizes.
(e)Certain facilities with an outstanding balance of $229.4 million as of September 30, 2025 carry a rolling 12-month term which may reset quarterly with the lender’s consent. These facilities carry no maximum facility size.
(f)A facility with an outstanding balance of $320.8 million as of September 30, 2025 has a weighted average fixed annual interest rate of 3.96%. All other facilities are variable rate with a weighted average rate of SOFR + 1.83%.
(g)Includes: (i) $320.8 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $26.7 million outstanding on one of our repurchase facilities that represents the 49% pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 15).
(h)The maximum facility size as of September 30, 2025 of $615.0 million may be increased to $1.3 billion, subject to certain conditions. The $1.3 billion amount includes such upsize.
(i)Certain facilities with an aggregate initial maximum facility size of $877.4 million may be increased to $977.4 million, subject to certain conditions. The $977.4 million amount includes such upsizes.
(j)Certain facilities with an outstanding balance of $20.0 million as of September 30, 2025 have a weighted average fixed annual interest rate of 4.51%. All other facilities are variable rate with a weighted average rate of SOFR + 2.51%. Of the total balance, $414.6 million relates to Fundamental.
(k)These facilities are secured by the equity interests in certain of our subsidiaries which totaled $8.0 billion as of September 30, 2025.

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In the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations.
In July 2025, we assumed property financing under a revolving credit agreement in connection with the acquisition of Fundamental. The maximum facility size is $600.0 million, of which $414.6 million is outstanding as of September 30, 2025. The facility is used to temporarily fund real estate acquisitions until securitization in the form of ABS financing (see discussion of securitized financing below). The facility matures in December 2026, carries an annual interest rate of SOFR + 2.50% (floor of 0.50%) and requires monthly interest-only payments, with no principal payments due until the earlier of maturity or the release of a property through sale or refinance.
In September 2025, we entered into a term loan facility totaling $700.0 million that carries a seven-year term, an annual interest rate of SOFR + 2.25%, and an issue discount of 50 bps.
In July 2025, we amended our $682.6 million November 2027 and $893.3 million January 2030 term loan facilities, reducing the spreads by 50 bps and 25 bps, to SOFR + 1.75% and SOFR + 2.00%, respectively.
During the nine months ended September 30, 2025, we amended several commercial credit facilities resulting in an aggregate net upsize of $1.5 billion and extended the weighted average maturity on amended facilities by 1.4 years to 3.1 years.
In March 2025, we amended a credit facility within the Infrastructure Lending Segment, increasing the facility size by $125.0 million and reducing the spread by 20 bps.
In January 2025, we amended our January 2030 term loan facility, increasing the facility size to $900.0 million, reducing the spread by 73 bps and extending the maturity date from July 2026 to January 2030. We also amended our existing revolving credit facility, increasing the facility by $50.0 million, to $200.0 million, and extending the maturity date from April 2026 to January 2030.

Our secured financing agreements contain certain financial tests and covenants. As of September 30, 2025, we were in compliance with all such covenants.

We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 65% of these agreements, do not permit valuation adjustments based on capital market events and are limited to collateral-specific credit marks generally determined on a commercially reasonable basis. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For the 35% of repurchase agreements which do permit valuation adjustments based on capital market events, approximately 6% of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreement.
For the three and nine months ended September 30, 2025, approximately $9.1 million and $26.7 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2024, approximately $9.0 million and $28.1 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our condensed consolidated statements of operations.

As of September 30, 2025, JPMorgan Chase Bank, N.A., Morgan Stanley Bank, N.A. and Wells Fargo Bank, N.A. held collateral sold under certain of our repurchase agreements with carrying values that exceeded the respective repurchase obligations by $1.3 billion, $1.1 billion and $816.1 million, respectively. The weighted average extended maturity of those repurchase agreements is 4.9 years, 4.6 years and 8.0 years, respectively.


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Securitized Financing

Commercial and Residential Lending Segment

In February 2022, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2022-FL3. On the closing date, the CLO issued $1.0 billion of notes and preferred shares, of which $842.5 million of notes were purchased by third party investors. We retained $82.5 million of notes along with preferred shares with a liquidation preference of $75.0 million.

In July 2021, we contributed into a SASB, STWD 2021-HTS, a previously originated $230.0 million first mortgage and mezzanine loan on a portfolio of 41 extended stay hotels with $210.1 million of third party financing.

In May 2021, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2021-FL2. On the closing date, the CLO issued $1.3 billion of notes and preferred shares, of which $1.1 billion of notes were purchased by third party investors. We retained $70.1 million of notes, along with preferred shares with a liquidation preference of $127.5 million.

In August 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2019-FL1. On the closing date, the CLO issued $1.1 billion of notes and preferred shares, of which $936.4 million of notes were purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. During the nine months ended September 30, 2025, we redeemed at par the third party financing of the CLO for $220.1 million.

During the nine months ended September 30, 2025, we repaid debt of STWD 2021-HTS, STWD 2022-FL3, STWD 2021-FL2 and STWD 2019-FL1 in the amount of $30.9 million, $169.5 million, $135.3 million and $220.2 million, respectively.

Infrastructure Lending Segment

In April 2025, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, Starwood 2025-SIF5. On the closing date, the CLO issued $500.0 million of notes, of which $413.5 million of notes were purchased by third party investors and $86.5 million of subordinated notes were retained by us. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years. The CLO also contains a ramp-up feature that, for a certain period of time after closing date, allows us to utilize unused proceeds of the CLO to acquire additional collateral to complete the CLO portfolio. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF2 CLO for $410.0 million and contributed certain loans previously held in that CLO to Starwood 2025-SIF5. See related discussion below.

In October 2024, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, Starwood 2024-SIF4. On the closing date, the CLO issued $600.0 million of notes, of which $496.2 million of notes were purchased by third party investors and $103.8 million of subordinated notes were retained by us. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years. The CLO also contains a ramp-up feature that, for a certain period of time after closing date, allows us to utilize unused proceeds of the CLO to acquire additional collateral to complete the CLO portfolio. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF1 CLO for $402.8 million and contributed certain loans previously held in that CLO to Starwood 2024-SIF4.

In May 2024, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2024-SIF3. On the closing date, the CLO issued $400.0 million of notes, of which $330.0 million of notes were purchased by third party investors and $70.0 million of subordinated notes were retained by us. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years.

In January 2022, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2021-SIF2. On the closing date, the CLO issued $500.0 million of notes and preferred shares, of which $410.0 million of notes were purchased by third party investors. We retained preferred shares with a liquidation preference of $90.0 million. The CLO contained a reinvestment feature that, subject to certain eligibility criteria, allowed us to contribute new loans or participation interests in loans to the CLO for a period of three years. During the nine months ended September 30, 2025, we redeemed at par the third party financing of the CLO for $410.0 million and contributed certain loans previously held in the CLO to Starwood 2025-SIF5.
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During the nine months ended September 30, 2025, we utilized the reinvestment feature for Starwood 2025-SIF5, Starwood 2024-SIF4, STWD 2024-SIF3 and STWD 2021-SIF2, contributing $103.1 million, $349.1 million, $186.1 million and $24.1 million, respectively, of additional interests into the CLOs. During the nine months ended September 30, 2025, the ramp-up feature was utilized for Starwood 2025-SIF5 and Starwood 2024-SIF4, acquiring $52.4 million and $19.0 million, respectively, of additional assets.
Property Segment

Fundamental utilizes ABS financing in the form of net-lease mortgage notes issued under a master trust by wholly-owned consolidated special purpose vehicles (“SPVs”). Each ABS note series requires monthly principal and interest payments with a balloon payment due at maturity. In connection with the ABS notes, Fundamental is subject to various restrictive financial and nonfinancial covenants, which, among other things, require certain minimum debt service coverage ratios. Fundamental was in compliance with all such covenants as of September 30, 2025.
The CLOs, SASB and ABS SPVs are considered VIEs, for which we are deemed the primary beneficiary and therefore consolidate. Refer to Note 15 for further discussion.
The following table is a summary of our securitized financing as of September 30, 2025 and December 31, 2024 (amounts in thousands):
September 30, 2025 Count Face
Amount		 Carrying
Value
Weighted
Average Rate
 Maturity
STWD 2022-FL3
Collateral assets 26 $ 742,487  $ 757,236 
SOFR + 3.00%
 (a) February 2027 (b)
Financing 1 594,709  594,709 
SOFR + 1.75%
 (c) November 2038 (d)
STWD 2021-HTS
Collateral assets 1 143,524  144,227 
SOFR + 3.97%
 (a) April 2026 (b)
Financing 1 123,615  123,615 
SOFR + 3.26%
 (c) April 2034 (d)
STWD 2021-FL2
Collateral assets 18 894,877  916,701 
SOFR + 3.24%
 (a) February 2027 (b)
Financing 1 693,802  693,802 
SOFR + 1.76%
 (c) April 2038 (d)
Starwood 2025-SIF5
Collateral assets 29 466,061  518,977 
SOFR + 3.68%
 (a) September 2030 (b)
Financing 1 413,500  410,733 
SOFR + 1.94%
 (c) April 2037 (d)
Starwood 2024-SIF4
Collateral assets 29 557,121  612,678 
SOFR + 3.75%
 (a) October 2030 (b)
Financing 1 496,200  493,583 
SOFR + 2.10%
 (c) October 2036 (d)
STWD 2024-SIF3
Collateral assets 29 380,994  408,666 
SOFR + 3.83%
 (a) July 2030 (b)
Financing 1 330,000  328,104 
SOFR + 2.41%
 (c) April 2036 (d)
Subtotal - CLOs and SASB
Collateral assets
 3,185,064  3,358,485 
Financing
 2,651,826  2,644,546 
ABS Financing
Collateral assets
 334 N/A 1,443,462 
N/A
N/A
ABS Master Series
3 877,942  877,942 
5.94%
(e)
 Mar 2028 to Oct 2029
Total Securitized Financing
Collateral assets $ 3,185,064  $ 4,801,947 
Financing $ 3,529,768  $ 3,522,488 
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December 31, 2024 Count Face
Amount		 Carrying
Value
Weighted
Average Rate
 Maturity
STWD 2022-FL3
Collateral assets 35 $ 921,139  $ 927,656 
SOFR + 3.32%
 (a) October 2026 (b)
Financing 1 764,223  762,992 
SOFR + 1.94%
 (c) November 2038 (d)
STWD 2021-HTS
Collateral assets 1 174,417  175,338 
SOFR + 4.01%
 (a) April 2026 (b)
Financing 1 154,508  154,508 
SOFR + 2.81%
 (c) April 2034 (d)
STWD 2021-FL2
Collateral assets 22 1,047,685  1,053,503 
SOFR + 3.64%
 (a) August 2026 (b)
Financing 1 829,137  829,137 
SOFR + 1.68%
 (c) April 2038 (d)
STWD 2019-FL1
Collateral assets 7 383,853  385,712 
SOFR + 3.50%
 (a) August 2026 (b)
Financing 1 220,228  220,228 
SOFR + 2.10%
 (c) July 2038 (d)
Starwood 2024-SIF4
Collateral assets 33 558,707  609,072 
SOFR + 3.95%
 (a) June 2029 (b)
Financing 1 496,200  492,936 
SOFR + 2.10%
 (c) October 2036 (d)
STWD 2024-SIF3
Collateral assets 31 394,070  410,263 
SOFR + 4.01%
 (a) April 2029 (b)
Financing 1 330,000  327,553 
SOFR + 2.41%
 (c) April 2036 (d)
STWD 2021-SIF2
Collateral assets 30 500,898  515,425 
SOFR + 3.79%
 (a) May 2029 (b)
Financing 1 410,000  409,072 
 SOFR + 2.11%
 (c) January 2033 (d)
Total Securitized Financing
Collateral assets $ 3,980,769  $ 4,076,969 
Financing $ 3,204,296  $ 3,196,426 
______________________________________________________________________________________________________________________________
(a)Represents the weighted-average coupon earned on variable rate loans during the respective year-to-date period and excludes loans for which interest income is not recognized.
(b)Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets.
(c)Represents the weighted-average cost of financing, inclusive of any related deferred issuance costs.
(d)Repayments of the CLOs and SASB are tied to timing of the related collateral asset repayments. The term of the CLOs and SASB financing obligations represents the legal final maturity date.
(e)Includes: (i) $240.5 million outstanding under ABS Series 2024-1 with a weighted average fixed rate of 5.03%; (ii) $313.4 million outstanding under ABS Series 2023-2 with a weighted average fixed rate of 5.89% and (iii) $324.1 million outstanding under ABS Series 2023-1 with a weighted average fixed rate of 6.65%.
We incurred issuance costs in connection with our securitized financing, which is amortized on an effective yield basis over the estimated life of the debt. For the three and nine months ended September 30, 2025, approximately $0.8 million and $3.1 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. For the three and nine months ended September 30, 2024, approximately $2.0 million and $5.9 million, respectively, of amortization of deferred financing costs was included in interest expense on our condensed consolidated statements of operations. As of September 30, 2025 and December 31, 2024, our unamortized issuance costs were $7.3 million and $7.9 million, respectively.

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Maturities
Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The following table sets forth our principal repayments schedule for secured financings based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):
Repurchase
Agreements		 Other Secured
Financing
Securitized Financing (a)
 Total
2025 (remainder of) $ 310,741  $ 38,336  $ 201,529  $ 550,606 
2026 1,930,539  461,142  938,774  3,330,455 
2027 2,435,286  1,243,659  456,715  4,135,660 
2028 1,907,654  188,854  164,647  2,261,155 
2029 1,162,225  530,844  155,944  1,849,013 
Thereafter 2,546,054  2,014,338  1,612,159  6,172,551 
Total $ 10,292,499  $ 4,477,173  $ 3,529,768  $ 18,299,440 
______________________________________________________________________________________________________________________
(a)For the CLOs, the above does not assume utilization of their reinvestment features. The SASB and ABS financings do not have reinvestment features.
11. Unsecured Senior Notes
The following table is a summary of our unsecured senior notes outstanding as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Coupon
Rate		 Swapped Rate (1) Effective
Rate (2)		 Maturity
Date		 Remaining
Period of
Amortization		 Carrying Value at
September 30, 2025 December 31, 2024
2027 Convertible Notes
 6.75%
N/A
 7.38% 7/15/2027 1.8 years 380,750  380,750 
2025 Senior Notes 4.75%
SOFR + 2.64%
 5.04% 3/15/2025 N/A —  250,000 
2026 Senior Notes 3.63%
N/A
 3.77% 7/15/2026 0.8 years 400,000  400,000 
2027 Senior Notes 4.38%
SOFR + 2.95%
 4.49% 1/15/2027 1.3 years 500,000  500,000 
2029 Senior Notes
 7.25%
SOFR + 3.25%
 7.37% 4/1/2029 3.5 years 600,000  600,000 
April 2030 Senior Notes 6.00%
SOFR + 2.70%
 6.14% 4/15/2030 4.5 years 400,000  400,000 
July 2030 Senior Notes 6.50%
SOFR + 2.55%
 6.64% 7/1/2030 4.8 years 500,000  500,000 
October 2030 Senior Notes
 6.50%
SOFR + 2.61%
 6.64% 10/15/2030 5.0 years 500,000  — 
Total principal amount 3,280,750  3,030,750 
Unamortized discount—Convertible Notes (4,661) (6,399)
Unamortized discount—Senior Notes (11,470) (10,501)
Unamortized deferred financing costs (19,497) (19,168)
Total carrying amount $ 3,245,122  $ 2,994,682 
______________________________________________________________________________________________________________________
(1)We entered into interest rate swaps on certain of our senior notes at closing to effectively convert them to floating rates.
(2)Effective rate reflects the coupon rate plus the effects of underwriter purchase discount.
Our unsecured senior notes contain certain financial tests and covenants. As of September 30, 2025, we were in compliance with all such covenants.
Senior Notes Due October 2030
On April 8, 2025, we issued $500.0 million of 6.50% Senior Notes due 2030 (the “October 2030 Senior Notes”). The October 2030 Senior Notes mature on October 15, 2030. Prior to April 15, 2030, we may redeem some or all of the October 2030 Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after April 15, 2030, we may redeem some or all of the October 2030 Notes at a price equal to 100% of the principal amount thereof.
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In addition, prior to April 15, 2028, we may redeem up to 40% of the October 2030 Notes at the applicable redemption price using the proceeds of certain equity offerings.
Senior Notes Due 2025
On December 4, 2017, we issued $500.0 million of 4.75% Senior Notes due 2025 (the “2025 Senior Notes”). On November 21, 2024, we redeemed $250.0 million of the 2025 Senior Notes and the remaining $250.0 million was repaid at maturity on March 15, 2025.
Convertible Notes
In July 2023, we issued $380.8 million of 6.75% Convertible Senior Notes due 2027 (the “2027 Convertible Notes”) for net proceeds of $371.2 million. The notes mature on July 15, 2027.
We recognized interest expense from our Convertible Notes of $7.1 million and $21.2 million, respectively, during the three and nine months ended September 30, 2025. We recognized interest expense from our Convertible Notes of $7.0 million and $21.0 million, respectively, during the three and nine months ended September 30, 2024.
The following table details the conversion attributes of our Convertible Notes outstanding as of September 30, 2025 (amounts in thousands, except rates):
September 30, 2025
Conversion Conversion
Rate (1) Price (2)
2027 Convertible Notes 48.1783 $ 20.76 

(1)    The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of 2027
Convertible Notes converted, as adjusted in accordance with the indenture governing the 2027 Convertible Notes
(including the applicable supplemental indenture).

(2)    As of September 30, 2025, the market price of the Company’s common stock was $19.37.

The if-converted value of the 2027 Convertible Notes was less than their principal amount by $25.4 million at September 30, 2025 as the closing market price of the Company’s common stock of $19.37 was less than the implicit conversion price of $20.76 per share. The if-converted value of the principal amount of the 2027 Convertible Notes was $355.3 million as of September 30, 2025. As of September 30, 2025, the net carrying amount and fair value of the 2027 Convertible Notes was $375.7 million and $393.0 million, respectively.

Upon conversion of the 2027 Convertible Notes, settlement may be made in common stock, cash, or a combination of both, at the option of the Company.

Conditions for Conversion

Prior to January 15, 2027, the 2027 Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% of the conversion price of the 2027 Convertible Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the 2027 Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.

On or after January 15, 2027, holders of the 2027 Convertible Notes may convert each of their notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.
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12. Loan Securitization/Sale Activities
As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint and transfer of control.
Loan Securitizations
Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE by third parties. Within the Commercial and Residential Lending Segment, we acquire residential loans with the intent to sell these mortgage loans to VIEs for the purpose of securitization. These VIEs then issue RMBS that are collateralized by these assets.
In certain instances, we retain an interest in the CMBS or RMBS VIE and serve as special servicer or servicing administrator for the VIE. In these circumstances, we generally consolidate the VIE into which the loans were sold. The securitizations are subject to optional redemption after a certain period of time or when the pool balance falls below a specified threshold.
The following summarizes the face amount and proceeds of commercial loans securitized for the three and nine months ended September 30, 2025 and 2024 (amounts in thousands):
Commercial Loans
Face Amount Proceeds
For the Three Months Ended September 30,
2025 $ 140,147  $ 144,378 
2024 622,835  634,235 
For the Nine Months Ended September 30,
2025 $ 843,121  $ 868,954 
2024 972,305  992,644 
There were no residential loans securitized during the three and nine months ended September 30, 2025 and 2024.
The securitization of these commercial and residential loans does not result in a discrete gain or loss since they are carried under the fair value option.
Our securitizations have each been structured as bankruptcy-remote entities whose assets are not intended to be available to the creditors of any other party.
Commercial and Residential Loan Sales
Within the Commercial and Residential Lending Segment, we originate or acquire commercial mortgage loans, subsequently selling all or a portion thereof. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. We also may sell certain of our previously-acquired residential loans to third parties outside a securitization.

During the three months ended September 30, 2025, there were no sales of commercial or residential loans within the Commercial and Residential Lending Segment. During the nine months ended September 30, 2025, we sold a $231.7 million senior interest in a first mortgage originated during the period for proceeds of $229.9 million. During the three and nine months ended September 30, 2024, there were no sales of commercial or residential loans within the Commercial and Residential Lending Segment.

Investing and Servicing Loan Sales

During the three months ended September 30, 2025, the Investing and Servicing Segment sold loans outside of securitizations with a face amount of $24.5 million for proceeds of $24.9 million. During the nine months ended September 30, 2025, the Investing and Servicing Segment sold loans outside of securitizations with a face amount of $42.5 million for proceeds of $43.5 million. During the three and nine months ended September 30, 2024, the Investing and Servicing Segment sold loans outside of securitization with a face amount of $70.9 million for proceeds of $68.9 million.
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The sale of these loans does not result in a discrete gain or loss since they are carried under the fair value option.
Infrastructure Loan Sales
During the three and nine months ended September 30, 2025 and the three months ended September 30, 2024, there were no sales of loans by the Infrastructure Lending Segment. During the nine months ended September 30, 2024, the Infrastructure Lending Segment sold a loan with a face amount of $49.5 million for proceeds of $47.1 million. The loan had been reclassified as held-for-sale during the three months ended March 31, 2024, at which time a $1.5 million fair value adjustment was provided within credit loss provision based on the contractual sale price.
13. Derivatives and Hedging Activity
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. Refer to Note 14 to the consolidated financial statements included in our Form 10-K for further discussion of our risk management objectives and policies.
Designated Hedges
The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. As of September 30, 2025 and December 31, 2024, the Company did not have any designated hedges.
Non-designated Hedges and Derivatives
We have entered into the following types of non-designated hedges and derivatives:
•Foreign exchange (“Fx”) forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments;
•Interest rate contracts which hedge a portion of our exposure to changes in interest rates;
•Credit instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; and
The following table summarizes our non-designated derivatives as of September 30, 2025 (notional amounts in thousands):

Type of Derivative Number of Contracts Aggregate Notional Amount Notional Currency Maturity
Fx contracts – Buy Euros (“EUR”) 16 257,343  EUR December 2025 - September 2027
Fx contracts – Buy Pounds Sterling (“GBP”) 10 9,127  GBP December 2025 - January 2027
Fx contracts – Buy Australian dollar (“AUD”) 3 747,608  AUD January 2026 - October 2029
Fx contracts – Sell EUR 132 604,635  EUR October 2025 - July 2028
Fx contracts – Sell GBP 149 410,504  GBP October 2025 - November 2027
Fx contracts – Sell AUD 87 1,481,324  AUD October 2025 - October 2029
Fx contracts – Sell Swiss Franc (“CHF”) 11 17,635  CHF November 2025
Fx contracts – Sell Swedish Kronas (“SEK”)
 13 172,019  SEK November 2025 - November 2028
Interest rate swaps – Paying fixed rates 32 2,676,770  USD October 2025 - October 2033
Interest rate swaps – Receiving fixed rates 6 2,538,380  USD January 2027 - October 2030
Interest rate futures
 8 137,100  USD November 2025
Interest rate caps 3 509,000  USD May 2026 - June 2030
Credit instruments 1 70,000  USD July 2030
Total 471

The above table excludes certain interest rate derivatives which serve as an economic hedge related to our residential loan portfolio. In 2024, we entered into a series of derivative transactions related to this loan portfolio in an effort to extend hedge duration. The current high interest rate environment has caused these loans to experience lower prepayment speeds than was originally anticipated at the time of their origination.
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In order to minimize volatility in future earnings and cash flows while minimizing the current cash outflow, we: (i) entered into a series of reverse swap trades to offset approximately 100% of the dollar duration of our existing interest rate swaps through the end of 2024 and approximately 80% between 2025 through their termination in the second quarter of 2027; and (ii) entered into a forward starting swap from June 2027 for four years which pays fixed and receives floating in order to replace the swaps reversed. Given the volume of these hedges and their sequential nature, the notional value of these new swaps is not representative of the notional value of our portfolio, and they were thus excluded from the table above. The notional value of the swaps described in (i) above that were effective and included as of September 30, 2025 totaled $2.9 billion. The notional value of the swaps described in (i) above that were not yet effective and not included as of September 30, 2025 totaled $6.5 billion. Because the reverse swaps and the forward starting swap are not specifically designated to assets or liabilities, changes in their respective fair values are recorded currently in earnings. The above table also excludes $3.6 billion notional amount of certain other interest rate swaps we entered into prior to September 30, 2025, but that were not yet effective.

The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 (amounts in thousands):
Fair Value of Derivatives
in an Asset Position (1) as of		 Fair Value of Derivatives
in a Liability Position (2) as of
September 30,
2025
December 31, 2024
September 30,
2025
December 31, 2024
Foreign exchange contracts $ 28,478  $ 137,577  $ 79,121  $ 67,452 
Interest rate contracts 8,836  37,758  12,870  27,292 
Credit instruments —  185  1,580  146 
Total derivatives $ 37,314  $ 175,520  $ 93,571  $ 94,890 
___________________________________________________
(1)Classified as derivative assets in our condensed consolidated balance sheets.
(2)Classified as derivative liabilities in our condensed consolidated balance sheets.
The table below presents the effect of our derivative financial instruments on the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024 (amounts in thousands):

Derivatives Not Designated
as Hedging Instruments		 Location of Gain (Loss) 
Recognized in Income
Amount of Gain (Loss)
Recognized in Income for the
Three Months Ended September 30,
Amount of Gain (Loss)
Recognized in Income for the
Nine Months Ended September 30,
2025 2024 2025 2024
Foreign exchange contracts Gain (loss) on derivative financial instruments, net $ 18,316  $ (56,178) $ (109,301) $ (8,823)
Interest rate contracts Gain (loss) on derivative financial instruments, net (12,302) (27,359) (24,973) 28,596 
Credit instruments Gain (loss) on derivative financial instruments, net (200) (404) (897) (789)
$ 5,814  $ (83,941) $ (135,171) $ 18,984 
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14. Offsetting Assets and Liabilities
The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting, which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands):
(ii)  
Gross Amounts
Offset in the
Statement of
Financial Position		 (iii) = (i) - (ii)
Net Amounts
Presented in
the Statement of
Financial Position		 (iv)
Gross Amounts Not
Offset in the Statement
of Financial Position
(i)
Gross Amounts
Recognized		 Financial
Instruments		 Cash Collateral
Received / Pledged		 (v) = (iii) - (iv)
Net Amount
As of September 30, 2025
Derivative assets $ 37,314  $ —  $ 37,314  $ 35,872  $ —  $ 1,442 
Derivative liabilities $ 93,571  $ —  $ 93,571  $ 35,872  $ 57,699  $ — 
Repurchase agreements 10,292,500  —  10,292,500  10,292,500  —  — 
$ 10,386,071  $ —  $ 10,386,071  $ 10,328,372  $ 57,699  $ — 
As of December 31, 2024
Derivative assets $ 175,520  $ —  $ 175,520  $ 94,440  $ 20,760  $ 60,320 
Derivative liabilities $ 94,890  $ —  $ 94,890  $ 94,440  $ 450  $ — 
Repurchase agreements 8,336,385  —  8,336,385  8,336,385  —  — 
$ 8,431,275  $ —  $ 8,431,275  $ 8,430,825  $ 450  $ — 
15. Variable Interest Entities
Investment Securities
As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS, RMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs.
Securitization VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, a portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
VIEs in which we are the Primary Beneficiary
The inclusion of the assets and liabilities of securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures.
As discussed in Note 10, we have financed (i) various pools of our commercial and infrastructure loans held-for-investment through multiple CLOs and an SASB and (ii) pools of net lease properties through ABSs, all of which are considered to be VIEs. We are the primary beneficiary of, and therefore consolidate, all these securitized financing VIEs in our financial statements as we have both (i) the power to direct the activities in our role as collateral manager, collateral advisor, controlling class representative and/or special servicer that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIEs that could be potentially significant through the subordinate interests we own.
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The following table details the assets and liabilities of our consolidated securitized financing VIEs as of September 30, 2025 and December 31, 2024 (amounts in thousands):
September 30, 2025 December 31, 2024
Assets:
Cash and cash equivalents $ 133,719  $ 76,320 
Loans held-for-investment 3,183,233  3,975,964 
Investment securities —  216 
Properties, net
 1,186,832  — 
Intangible assets, net
 239,345  — 
Accrued interest receivable 12,089  20,755 
Other assets 46,729  3,714 
Total Assets $ 4,801,947  $ 4,076,969 
Liabilities
Accounts payable, accrued expenses and other liabilities $ 73,006  $ 23,540 
Securitized financing, net
 3,522,488  3,196,426 
Total Liabilities $ 3,595,494  $ 3,219,966 
Assets held by the securitized financing VIEs are restricted and can be used only to settle obligations of those VIEs, including the subordinate interests owned by us. The liabilities of those VIEs are non-recourse to us and can only be satisfied from the assets of the VIEs.
We also hold controlling interests in other non-securitization entities that are considered VIEs. The Woodstar Fund, Woodstar Feeder Fund, L.P. and one of the Woodstar Fund’s indirect investees, SPT Dolphin Intermediate LLC (“SPT Dolphin”), the entity which holds the Woodstar II Portfolio, are each VIEs because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of those VIEs because we possess both the power to direct the activities of the VIEs that most significantly impact their economic performance and a significant economic interest in each entity. The Woodstar Fund had total assets of $1.9 billion, including its indirect investment in SPT Dolphin, and no significant liabilities as of September 30, 2025. As of September 30, 2025, Woodstar Feeder Fund, L.P. and its consolidated subsidiary which is also considered a VIE, Woodstar Feeder REIT, LLC, had a $0.5 billion investment in the Woodstar Fund, had no significant liabilities and had temporary equity of $0.4 billion consisting of the contingently redeemable non-controlling interests of the third party investors (see Note 17).
We also hold a 51% controlling interest in a joint venture (the “CMBS JV”) within our Investing and Servicing Segment, which is considered a VIE because the third party interest holder does not carry kick-out rights or substantive participating rights. We are deemed the primary beneficiary of the CMBS JV. This VIE had total assets of $218.4 million and liabilities of $55.2 million as of September 30, 2025. Refer to Note 17 for further discussion.
In addition to the above non-securitization entities, we have smaller VIEs with total assets of $70.0 million and no significant liabilities as of September 30, 2025.
VIEs in which we are not the Primary Beneficiary
In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or servicing administrator or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer without cause. In these instances, we do not have the power to direct activities that most significantly impact the VIE’s economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs.
As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of September 30, 2025, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $28.8 million on a fair value basis.
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As of September 30, 2025, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances, excluding the notional value of interest-only securities, of $4.4 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations.
We also hold passive non-controlling interests in certain unconsolidated entities that are considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore report our interests, which totaled $6.2 million as of September 30, 2025, within investments in unconsolidated entities on our condensed consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments.
16. Related-Party Transactions
Management Agreement
We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks. Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement.
Base Management Fee. For the three months ended September 30, 2025 and 2024, approximately $25.1 million and $22.4 million, respectively, was incurred for base management fees. For the nine months ended September 30, 2025 and 2024, approximately $71.9 million and $66.3 million, respectively, was incurred for base management fees. As of September 30, 2025 and December 31, 2024, there were $25.1 million and $23.5 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.
Incentive Fee. There were no incentive fees incurred during the three months ended September 30, 2025 and 2024. For the nine months ended September 30, 2025 and 2024, approximately $10.2 million and $22.6 million, respectively, was incurred for incentive fees. As of December 31, 2024, there were $12.7 million of unpaid incentive fees included in related-party payable in our condensed consolidated balance sheets. There were no unpaid incentive fees as of September 30, 2025.
Expense Reimbursement. For the three months ended September 30, 2025 and 2024, approximately $1.3 million and $1.5 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2025 and 2024, approximately $4.4 million and $3.6 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 2025 and December 31, 2024, there were $2.9 million and $2.7 million, respectively, of unpaid reimbursable executive compensation and other expenses included in related-party payable in our condensed consolidated balance sheets.
Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. These RSAs generally vest over a three-year period. There were no RSAs granted during the three months ended September 30, 2025 and 2024. During the nine months ended September 30, 2025 and 2024, we granted 416,780 and 924,092 RSAs, respectively, at grant date fair values of $8.4 million and $18.8 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.4 million and $2.3 million during the three months ended September 30, 2025 and 2024, respectively, and $7.3 million and $6.0 million during the nine months ended September 30, 2025 and 2024, respectively, which are reflected in general and administrative expenses in our condensed consolidated statements of operations. Compensation expense related to the ESPP (refer to Note 17) for employees of affiliates of our Manager was not material during the three and nine months ended September 30, 2025 and 2024, and is reflected in general and administrative expenses in our condensed consolidated statements of operations.
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Manager Equity Plan
In April 2022, the Company’s shareholders approved the Starwood Property Trust, Inc. 2022 Manager Equity Plan (the “2022 Manager Equity Plan”) which replaced the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”). In March 2025, we granted 1,350,000 RSUs to our Manager under the 2022 Manager Equity Plan. In March 2024, we granted 1,300,000 RSUs to our Manager under the 2022 Manager Equity Plan. In November 2022, we granted 1,500,000 RSUs to our Manager under the 2022 Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $7.0 million and $4.8 million within management fees in our condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, we recognized share-based compensation expense of $21.2 million and $14.5 million, respectively, related to these awards. Refer to Note 17 for further discussion.
Investments in Loans and Securities
The following five related-party loan transactions were each approved by our board of directors, with those affiliated with the respective transaction recusing themselves.
In June 2025, we co-originated 49% of a $587.1 million first mortgage loan for the construction of a data center in Herndon, Virginia that is fully leased to an investment grade tenant. Of our $287.7 million share of the total loan commitment, $44.9 million has been funded and is outstanding as of September 30, 2025. The loan has an initial term of four-years with two one-year extension options (subject to certain conditions) and initially bears interest at SOFR plus 3.00%. This pricing was negotiated in a competitive bid process with a third party who is retaining the remaining 51% interest in the loan. The borrower is an affiliate of our Manager. Because of the affiliated interest, we lack certain consent rights under the co-lender agreement.

In May 2025, we co-originated one-third of a $638.5 million first mortgage loan for the construction of a data center in Ashburn, Virginia that is fully leased to an investment grade tenant. Of our $212.8 million share of the total loan commitment, $131.4 million has been funded and is outstanding as of September 30, 2025. The loan has a five-year term and initially bears interest at SOFR (floor of 2.00%) plus 2.50%. This pricing was negotiated in a competitive bid process with other third parties who are retaining the remaining two-thirds interest in the loan. An affiliate of our Manager is general partner of, and holds a 92.5% limited partnership interest in, the borrower. Because of the affiliated interest, we lack certain consent rights under the co-lender agreement.

In January 2025, we co-originated 49% of a $388.4 million first mortgage loan for the construction of a luxury 81 unit condominium project in Miami Beach, Florida. Of our $190.3 million share of the total loan commitment, $64.4 million has been funded and is outstanding as of September 30, 2025. The loan has an initial term of four years with a one-year extension option (subject to certain conditions) and bears interest at SOFR (floor of 3.00%) plus 4.25%. This pricing was negotiated in a competitive bid process with a third party who is retaining the remaining 51% interest in the loan. An affiliate of our Manager is general partner of, and holds a 90% limited partnership interest in, the borrower. Because of the affiliated interest, we lack certain consent rights under the co-lender agreement.
In December 2024, we modified a loan that was originated in March 2022 for the development and recapitalization of a portfolio of luxury rental cabins, where our CEO and another non-independent member of our board of directors own minority equity interests in the borrower. In connection with a new $25.0 million investment in the borrower by a major hotel brand, we granted: (i) a 24-month term extension with a one-year extension option subject to certain conditions and with an extension fee due at maturity, (ii) a 2.25% reduction in the interest rate to SOFR + 4.25%, and (iii) deferral of half of the remaining interest payments until maturity in December 2026. Previous modifications to the loan were as follows: (i) in July 2023, we agreed to a 10-month 300 bps partial interest payment deferral, which in January 2024 was extended to December 2024; and (ii) in June 2024, we deferred all remaining interest payments due under the loan and formally extended its initial maturity until December 2024. The loan had an original commitment of $200.0 million, of which $147.6 million was outstanding as of September 30, 2025. The deferred interest balance was $17.3 million as of September 30, 2025.
In connection with the May 2024 refinancing of our Medical Office Portfolio, we obtained $450.5 million of securitization debt (“MED 2024-MOB”) and a $39.5 million mezzanine loan (the “Mezz Loan”). The Mezz Loan and the $23.0 million horizontal risk retention certificates of MED 2024-MOB (“HRR”) were funded by affiliates of investment funds which are managed by the real estate investment firm for which one of our independent directors is co-founder and co-chief executive officer. One of such affiliates also serves as controlling class representative of MED 2024-MOB. Both the Mezz Loan and the HRR bear interest at SOFR + 5.50% and have an initial term of two years, followed by three successive one-year extension options.
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The final structure and cost of debt for this refinancing was selected after a competitive marketing process led by a third party broker.
In April 2024, we acquired from Starwood Real Estate Income Trust, Inc. (“SREIT”), an affiliate of our Manager, a £176.0 million ($219.8 million) first mortgage loan participation on a portfolio of vacation cottages, caravan homes and resorts across the United Kingdom at its fair value, determined as par less a 1.0% discount. The loan bears interest at SONIA + 5.40% and matures in February 2026 with two one-year extension options. Prior to acquisition, we had an existing participation in this loan, of which the outstanding balance was £352.0 million. In August 2025, the loan was repaid in full.
In July 2024, we purchased all the controlling class certificates in the newly-formed Freddie Mac multifamily mortgage trust, FREMF 2024-KF163 (the “Trust”), for their aggregate principal amount of $77.1 million. The certificates have a pass-through interest rate of one-month SOFR + 6.00% and an expected final distribution date in May 2034. As of September 30, 2025, the Trust holds 25 SOFR based floating rate multifamily mortgage loans with a total principal balance of approximately $1.0 billion, of which affiliates of our Manager are borrowers under 11 of those loans totaling approximately $495.0 million. As directing certificate holder, we are considered the primary beneficiary of, and therefore consolidate the Trust as a securitization VIE. However, while we are able to appoint and remove the special servicer of the unaffiliated loans in the VIE, we cannot name ourselves or an affiliate as special servicer, and we cannot remove or direct the third party special servicer with respect to the affiliate loans.
In December 2012, the Company acquired 9,140,000 ordinary shares in SEREF, a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange, for approximately $14.7 million, which equated to approximately 4% ownership of SEREF. As of December 31, 2024, we held 4,480,649 shares of SEREF that had not yet been redeemed. During the three and nine months ended September 30, 2025, 1,568,451 and 2,628,716 shares were redeemed by SEREF, for proceeds of $2.0 million and $3.4 million, respectively, leaving 1,851,933 shares held as of September 30, 2025. As of September 30, 2025, our shares represent an approximate 2.3% interest in SEREF. Refer to Note 5 for additional details.
Lease Arrangements
In March 2020, we entered into an office lease agreement with an entity which is controlled by our Chairman and CEO through majority equity ownership of the entity. The leased premises serve as our new Miami Beach office following the expiration of our former lease in Miami Beach. The lease, as amended in September 2022, is for 64,424 square feet of office space, commenced July 1, 2022 and has an initial term of 15 years from the monthly lease payment commencement date of November 1, 2022. The lease payments are based on an annual base rate of $52.00 per square foot that increases by 3% each November, plus our pro rata share of building operating expenses. Prior to the execution of this lease, we engaged an independent third party leasing firm and external counsel to advise the independent directors of our board of directors on market terms for the lease. The terms of the lease and subsequent amendment were approved by our independent directors. In April 2020, we provided a $1.9 million cash security deposit to the landlord.
During the three and nine months ended September 30, 2025, we made payments to the landlord under the terms of the lease of $1.8 million and $5.1 million, respectively, for rent, parking and our pro rata share of building operating expenses. During the three and nine months ended September 30, 2024, we made payments to the landlord under the terms of the lease of $1.6 million and $4.9 million, respectively. During the three and nine months ended September 30, 2025, we recognized $1.9 million and $5.5 million, respectively, of expenses with respect to this lease within general and administrative expenses in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2024, we recognized $1.8 million and $5.3 million, respectively, of expenses with respect to this lease.
Other Related-Party Arrangements
In August 2025, we entered into a shared services agreement with Starwood Capital Group Management, L.L.C. (“SCG Management”), that governs the reimbursement arrangements for SCG Management and its affiliates when our employees or contractors provide services to those entities. The agreement is effective as of January 2, 2024. The reimbursement parameters were informed by a transfer pricing study conducted by a third party. Amounts previously billed to SCG Management have been adjusted in accordance with the terms of this agreement as of the August 2025 execution date. The final amounts billed in accordance with the agreement are $4.4 million with respect to the year ended December 31, 2024 and $2.8 million with respect to the nine months ended September 30, 2025, which are reflected within other assets in our condensed consolidated balance sheet as of September 30, 2025.

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In March 2025, an affiliate of our Manager acquired Worldwide Mission Critical (“Worldwide”), an entity which provides asset management services for loans secured by data center projects, including construction loans. Prior to Worldwide’s acquisition by our Manager, we entered into a $0.3 million contract with Worldwide to provide services on a $550.0 million construction loan that was originated by us during the three months ended March 31, 2025. During the three months ended September 30, 2025, we incurred less than $0.1 million of costs related to this contract. During the nine months ended September 30, 2025, we incurred $0.1 million of costs related to this contract.

Essex Title, LLC (“Essex”), which is majority-owned by Starwood Capital Group as a limited partner, acts as an agent for one or more underwriters in issuing title policies and/or providing support services related to investments by the Company, its affiliates and other third parties. Essex earns fees, which would have otherwise been paid to third parties, by providing title agency services and facilitating the placement of title insurance with underwriters. During the three and nine months ended September 30, 2025, we paid $0.2 million of fees relating to such services provided by Essex. During the nine months ended September 30, 2024, we paid $1.7 million of fees relating to such services provided by Essex.

Highmark Residential (“Highmark”), an affiliate of our Manager, provides property management services for properties within our Woodstar I and Woodstar II Portfolios. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the three months ended September 30, 2025 and 2024, property management fees to Highmark of $1.8 million and $1.7 million, respectively, were recognized within our Woodstar Portfolios. During the nine months ended September 30, 2025 and 2024, property management fees to Highmark were $5.2 million and $4.8 million, respectively.

Refer to Note 17 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements.
17. Stockholders’ Equity and Non-Controlling Interests
Dividends Declared

During the nine months ended September 30, 2025, our board of directors (the “Board”) declared the following dividends:

Declaration Date Record Date Payment Date Amount Frequency
7/16/25 9/30/25 10/15/25 $ 0.48  Quarterly
6/11/25 6/30/25 7/15/25 0.48  Quarterly
3/13/25 3/31/25 4/15/25 0.48  Quarterly
Common Stock Offering

During the three and nine months ended September 30, 2025, we issued 27,125,000 shares of common stock in a public offering for gross proceeds of $534.4 million, at a price of $19.70 per share.
ATM Agreement
In May 2025, we entered into a Starwood Property Trust, Inc. Common Stock Sales Agreement (the “ATM Agreement”) with a syndicate of financial institutions to sell shares of the Company’s common stock of up to $500.0 million from time to time, through an “at the market” equity offering program. Sales of shares under the ATM Agreement are made by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale or at negotiated prices. The ATM Agreement replaces a similar agreement previously entered into in May 2022 with a syndicate of financial institutions. During the nine months ended September 30, 2025, we issued 1,561,634 shares of common stock under the ATM Agreement for gross proceeds of $31.6 million at an average price of $20.22 and paid related commission costs of $0.5 million. There were no shares issued under the ATM Agreement during the three months ended September 30, 2025. There were no shares issued under the previous ATM agreement during the three and nine months ended September 30, 2024.
Dividend Reinvestment and Direct Stock Purchase Plan
During the three and nine months ended September 30, 2025 and 2024, shares issued under the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) were not material.
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Employee Stock Purchase Plan
In April 2022, the Company’s shareholders approved the ESPP which allows eligible employees to purchase common stock of the Company at a discounted purchase price. The discounted purchase price of a share of the Company’s common stock is 85% of the fair market value (closing market price) at the lower of the beginning or the end of the quarterly offering period. Participants may purchase shares not exceeding an aggregate fair market value of $25,000 in any calendar year. The maximum aggregate number of shares subject to issuance in accordance with the ESPP is 2,000,000 shares.
During the three and nine months ended September 30, 2025, 15,534 and 97,559 shares, respectively, of common stock were purchased by participants at weighted average discounted purchase prices of $17.06 and 16.96 per share, respectively. During the three and nine months ended September 30, 2024, 16,621 and 99,997 shares, respectively, of common stock were purchased by participants at weighted average discounted purchase prices of $16.36 and $16.85 per share, respectively. During the three and nine months ended September 30, 2025, the Company recognized $0.1 million and $0.4 million, respectively, of compensation expense related to its ESPP based on the estimated fair value of the discounted purchase options granted to the participants as of the beginning of the quarterly offering periods determined using the Black-Scholes option pricing model. During the three and nine months ended September 30, 2024, the Company recognized $0.1 million and $0.4 million, respectively, of compensation expense related to its ESPP.
As of September 30, 2025, there were 1.6 million shares of common stock available for future issuance through the ESPP.

Equity Incentive Plans
In April 2022, the Company’s shareholders approved the 2022 Manager Equity Plan and the Starwood Property Trust, Inc. 2022 Equity Plan (the “2022 Equity Plan”), which allow for the issuance of up to 18,700,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2022 Manager Equity Plan succeeds and replaces the 2017 Manager Equity Plan and the 2022 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”).
The table below summarizes our share awards granted or vested under the 2022 Manager Equity Plan during the nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):
Grant Date Type Amount Granted Grant Date Fair Value Vesting Period
March 2025 RSU 1,350,000  $ 27,081  3 years
March 2024 RSU 1,300,000  $ 26,104  3 years
November 2022 RSU 1,500,000  $ 31,605  3 years
Schedule of Non-Vested Shares and Share Equivalents (1)

Equity Plan
Manager
Equity Plan		 Total Weighted Average
Grant Date Fair
Value (per share)
Balance as of January 1, 2025
 2,645,260  1,241,668  3,886,928  $ 20.46 
Granted 2,403,212  1,350,000  3,753,212  20.01 
Vested (841,795) (1,037,499) (1,879,294) 20.76 
Forfeited (13,006) —  (13,006) 20.02 
Balance as of September 30, 2025 4,193,671  1,554,169  5,747,840  20.04 
(1)    Equity-based award activity for awards granted under the 2017 and 2022 Equity Plans is reflected within the Equity Plan column, and for awards granted under the 2017 and 2022 Manager Equity Plans, within the Manager Equity Plan column.
As of September 30, 2025, there were 9.7 million shares of common stock available for future grants under the 2022 Manager Equity Plan and the 2022 Equity Plan.
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Non-Controlling Interests in Consolidated Subsidiaries
As discussed in Note 2, on November 5, 2021 we sold a 20.6% non-controlling interest in the Woodstar Fund to third party investors for net cash proceeds of $214.2 million. Under the Woodstar Fund operating agreement, such interests are contingently redeemable by us, at the option of the interest holder, for cash at liquidation fair value if any assets remain upon termination of the Woodstar Fund. The Woodstar Fund operating agreement specifies an eight-year term with two one-year extension options, the first at our option and the second subject to consent of an advisory committee representing the non-controlling interest holders. Accordingly, these contingently redeemable non-controlling interests have been classified as “Temporary Equity” in our condensed consolidated balance sheets and represent the fair value of the Woodstar Fund’s net assets allocable to those interests. During the three and nine months ended September 30, 2025, net (loss) income attributable to these non-controlling interests was $(0.3) million and $0.9 million, respectively. During the three and nine months ended September 30, 2024, net (loss) income attributable to these non-controlling interests was $(1.5) million and $1.0 million, respectively.
In connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in our subsidiary, SPT Dolphin, and rights to receive an additional 1.9 million Class A Units if certain contingent events occur. As of September 30, 2025, all of the 1.9 million contingent Class A Units were issued. The Class A Units are redeemable for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. During the nine months ended September 30, 2025, redemptions of 0.1 million of the Class A Units were received and settled in common stock, leaving 9.6 million Class A Units outstanding as of September 30, 2025. The outstanding Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our condensed consolidated balance sheets, the balance of which was $205.7 million and $207.1 million as of September 30, 2025 and December 31, 2024, respectively.
To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company’s common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2025, we recognized net income attributable to non-controlling interests of $4.6 million and $13.9 million, respectively, associated with these Class A Units. During the three and nine months ended September 30, 2024, we recognized net income attributable to non-controlling interests of $4.7 million and $14.0 million, respectively.
As discussed in Note 15, we hold a 51% controlling interest in the CMBS JV within our Investing and Servicing Segment. Because the CMBS JV is deemed a VIE for which we are the primary beneficiary, the 49% interest of our joint venture partner is reflected as a non-controlling interest in consolidated subsidiaries on our condensed consolidated balance sheets, and any net income attributable to this 49% joint venture interest is reflected within net income attributable to non-controlling interests in our condensed consolidated statements of operations. The non-controlling interests in the CMBS JV were $88.0 million and $94.5 million as of September 30, 2025 and December 31, 2024, respectively. During the three and nine months ended September 30, 2025, net income (loss) attributable to these non-controlling interests was $1.9 million and $(0.4) million, respectively. During the three and nine months ended September 30, 2024, net loss attributable to these non-controlling interests was $10.8 million and $18.4 million, respectively.
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18. Earnings per Share
The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts):
For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
2025 2024 2025 2024
Basic Earnings
Income attributable to STWD common stockholders $ 72,560  $ 76,068  $ 314,629  $ 308,290 
Less: Income attributable to participating shares not already deducted as non-controlling interests (2,472) (1,747) (6,836) (5,583)
Basic earnings $ 70,088  $ 74,321  $ 307,793  $ 302,707 
Diluted Earnings
Income attributable to STWD common stockholders $ 72,560  $ 76,068  $ 314,629  $ 308,290 
Less: Income attributable to participating shares not already deducted as non-controlling interests (2,472) (1,747) (6,836) (5,583)
Diluted earnings $ 70,088  $ 74,321  $ 307,793  $ 302,707 
Number of Shares:
Basic — Average shares outstanding 360,136  319,690  344,139  315,021 
Effect of dilutive securities — Unvested non-participating shares 258  89  160  281 
Diluted — Average shares outstanding 360,394  319,779  344,299  315,302 
Earnings Per Share Attributable to STWD Common Stockholders:
Basic $ 0.19  $ 0.23  $ 0.89  $ 0.96 
Diluted $ 0.19  $ 0.23  $ 0.89  $ 0.96 
As of September 30, 2025 and 2024, participating shares of 14.8 million and 13.3 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Such participating shares at September 30, 2025 and 2024 included 9.6 million and 9.7 million potential shares, respectively, of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 17. Our Convertible Notes were not dilutive for the three and nine months ended September 30, 2025 and 2024.
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19. Accumulated Other Comprehensive Income
The changes in AOCI by component are as follows (amounts in thousands):
Cumulative
Unrealized Gain
(Loss) on
Available-for-
Sale Securities
Three Months Ended September 30, 2025
Balance at July 1, 2025 $ 12,785 
OCI before reclassifications (850)
Amounts reclassified from AOCI — 
Net period OCI (850)
Balance at September 30, 2025 $ 11,935 
Three Months Ended September 30, 2024
Balance at July 1, 2024 $ 13,920 
OCI before reclassifications 2,336 
Amounts reclassified from AOCI — 
Net period OCI 2,336 
Balance at September 30, 2024 $ 16,256 
Nine Months Ended September 30, 2025
Balance at January 1, 2025 $ 13,594 
OCI before reclassifications (1,659)
Amounts reclassified from AOCI — 
Net period OCI (1,659)
Balance at September 30, 2025 $ 11,935 
Nine Months Ended September 30, 2024
Balance at January 1, 2024 $ 15,352 
OCI before reclassifications 904 
Amounts reclassified from AOCI — 
Net period OCI 904 
Balance at September 30, 2024 $ 16,256 


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20. Fair Value
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:
Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
Valuation Process
We have valuation control processes in place to validate the fair value of the Company’s financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.
Pricing Verification—We use recently executed transactions, other observable market data such as exchange data, broker/dealer quotes, third party pricing vendors and aggregation services for validating the fair values generated using valuation models. Pricing data provided by approved external sources is evaluated using a number of approaches; for example, by corroborating the external sources’ prices to executed trades, analyzing the methodology and assumptions used by the external source to generate a price and/or by evaluating how active the third party pricing source (or originating sources used by the third party pricing source) is in the market.
Unobservable Inputs—Where inputs are not observable, we review the appropriateness of the proposed valuation methodology to ensure it is consistent with how a market participant would arrive at the unobservable input. The valuation methodologies utilized in the absence of observable inputs may include extrapolation techniques and the use of comparable observable inputs.
Any changes to the valuation methodology will be reviewed by our management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while we anticipate that our valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value could result in a different estimate of fair value at the reporting date.
Fair Value on a Recurring Basis
We determine the fair value of our financial assets and liabilities measured at fair value on a recurring basis as follows:
Loans held-for-sale, commercial
We measure the fair value of our commercial mortgage loans held-for-sale using a discounted cash flow analysis unless observable market data (i.e., securitized pricing) is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs relates to credit spreads and is unobservable. Thus, we have determined that the fair values of mortgage loans valued using a discounted cash flow analysis should be classified in Level III of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified in Level II of the fair value hierarchy. Mortgage loans classified in Level III are transferred to Level II if securitized pricing becomes available.
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Loans held-for-sale, residential
We measure the fair value of our residential loans held-for-sale based on the net present value of expected future cash flows using a combination of observable and unobservable inputs. Observable market participant assumptions include pricing related to trades of residential loans with similar characteristics. Unobservable inputs include the expectation of future cash flows, which involves judgments about the underlying collateral, the creditworthiness of the borrower, estimated prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs, these loans have been classified within Level III.
RMBS
RMBS are valued utilizing observable and unobservable market inputs. The observable market inputs include recent transactions, broker quotes and vendor prices (“market data”). However, given the implied price dispersion amongst the market data, the fair value determination for RMBS has also utilized significant unobservable inputs in discounted cash flow models including prepayments, default and severity estimates based on the recent performance of the collateral, the underlying collateral characteristics, industry trends, as well as expectations of macroeconomic events (e.g., housing price curves, interest rate curves, etc.). At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs these securities have been classified within Level III.
CMBS
CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar securities and the spreads used in the prior valuation. We obtain current market spread information where available and use this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are classified in either Level II or Level III of the fair value hierarchy. CMBS may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the CMBS become or cease to be observable.
Equity security
The equity security is publicly registered and traded in the U.S. and its market price is listed on the London Stock Exchange. The security has been classified within Level I.
Woodstar Fund Investments
The fair value of investments held by the Woodstar Fund is determined based on observable and unobservable market inputs. The initial fair value of the Woodstar Fund’s investments at its November 5, 2021 establishment date was determined by reference to the purchase price paid by third party investors, which was consistent with both a recent external appraisal as well as our extensive marketing efforts to sell interests in the Woodstar Fund, plus working capital. The fair value of the Woodstar Fund’s investments as of December 31, 2024 was determined by reference to an external appraisal as of that date.

For the properties, the third party appraisals applied the income capitalization approach with corroborative support from the sales comparison approach. The cost approach was not employed, as it is typically not emphasized by potential investors in the multifamily affordable housing sector. The income capitalization approach estimates an income stream for a property over a 10-year period and discounts this income plus a reversion (presumed sale) into a present value at a risk adjusted discount rate. Terminal capitalization rates and discount rates utilized in this approach are derived from market transactions as well as other financial and industry data.

For secured financing, we discounted the contractual cash flows at the interest rate at which such arrangements would bear if executed in the current market. The fair value of investment level working capital is assumed to approximate carrying value due to its primarily short-term monetary nature. The fair value of interest rate derivatives is determined using the methodology described in the Derivatives discussion below.

Internal valuations at interim quarter ends, including September 30, 2025, are prepared by management. The valuation of properties is based on a direct income capitalization approach, whereby a direct capitalization market rate is applied to annualized in-place net operating income at the portfolio level. The direct capitalization rate is initially calibrated to the implied rate from the latest appraisal and adjusted for subsequent changes in current market capitalization rates for sales of comparable multifamily properties.
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The valuations of secured financing agreements, working capital and interest rate derivatives are consistent with the methodologies described in the paragraph above.

Given the significance of the unobservable inputs used in the respective valuations, the Woodstar Fund’s investments have been classified within Level III of the fair value hierarchy.
Domestic servicing rights
The fair value of this intangible is determined using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, including forecasted loan defeasance, control migration, delinquency and anticipated maturity defaults which are calculated assuming a debt yield at which default occurs. Since the most significant of these inputs are unobservable, we have determined that the fair values of this intangible in its entirety should be classified in Level III of the fair value hierarchy.
Derivatives
The valuation of derivative contracts are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market based inputs, including interest rate curves, spot and market forward points and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
The valuation of over the counter derivatives are determined using discounted cash flows based on Overnight Index Swap (“OIS”) rates. Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a SOFR OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. For credit instruments, fair value is determined based on changes in the relevant indices from the date of initiation of the instrument to the reporting date, as these changes determine the amount of any future cash settlement between us and the counterparty. These indices are considered Level II inputs as they are directly observable.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level II of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level III inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of September 30, 2025 and December 31, 2024, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level II of the fair value hierarchy.
Liabilities of consolidated VIEs
Our consolidated VIE liabilities generally represent bonds that are not owned by us. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level II, where the valuation is based upon quoted prices for similar instruments traded in active markets. We generally utilize third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, we conduct an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, we consider a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond’s ratings and the bond’s subordination levels.
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For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable.
Assets of consolidated VIEs
The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets of the VIE, we maximize the use of observable inputs over unobservable inputs. The individual assets of a VIE are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Because our methodology for valuing these assets does not value the individual assets of a VIE, but rather uses the value of the VIE liabilities as an indicator of the fair value of VIE assets as a whole, we have determined that our valuations of VIE assets in their entirety should be classified in Level III of the fair value hierarchy.
Fair Value on a Nonrecurring Basis
We determine the fair value of our financial assets measured at fair value on a nonrecurring basis as follows:
Indebtedness assumed in Fundamental merger

We determined the fair value of the revolving secured financing and ABS securitized financing assumed in the Fundamental merger (see Note 3) by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market as of the July 23, 2025 merger date. The cash flows were discounted through the earliest contractually open prepayment dates under the assumption that the respective debt could be refinanced at then current market rates, with such assumption further supported by our intentions with regards to refinancing this indebtedness. The resulting fair values approximated the respective outstanding principal balances. We have determined that our valuation of these instruments would be classified in Level III of the fair value hierarchy.

Investments in unconsolidated entities, other equity investments
Our other equity investments set forth in Note 8 do not have readily determinable fair values. Therefore, we have elected the fair value practicability exception under ASC 321, Equity Securities, whereby we measure those investments within its scope at cost, less any impairment, plus or minus observable price changes from identical or similar investments of the same issuer. As such price changes represent observable market data, the fair value of the specific investments affected would be classified in Level II of the fair value hierarchy as of the date of the observable price change.
Fair Value Only Disclosed
We determine the fair value of our financial instruments and assets where fair value is disclosed as follows:
Loans held-for-investment
We estimate the fair values of our loans not carried at fair value on a recurring basis by discounting their expected cash flows at a rate we estimate would be demanded by the market participants that are most likely to buy our loans. The expected cash flows used are generally the same as those used to calculate our level yield income in the financial statements. Since these inputs are unobservable, we have determined that the fair value of these loans in their entirety would be classified in Level III of the fair value hierarchy.
HTM debt securities
We estimate the fair value of our mandatorily redeemable preferred equity interests in commercial real estate companies and infrastructure bonds using the same methodology described for our loans held-for-investment. We estimate the fair value of our HTM CMBS using the same methodology described for our CMBS carried at fair value on a recurring basis.
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Secured financing agreements and securitized financing
The fair value of the secured financing agreements and securitized financing are determined by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market. We have determined that our valuation of these instruments should be classified in Level III of the fair value hierarchy.
Unsecured senior notes
The fair value of our unsecured senior notes is determined based on the last available bid price for the respective notes in the current market. As these prices represent observable market data, we have determined that the fair value of these instruments would be classified in Level II of the fair value hierarchy.
Fair Value Disclosures
The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the consolidated balance sheets by their level in the fair value hierarchy as of September 30, 2025 and December 31, 2024 (amounts in thousands):
September 30, 2025
Total Level I Level II Level III
Financial Assets:
Loans under fair value option $ 2,561,155  $ —  $ 86,497  $ 2,474,658 
RMBS 89,474  —  —  89,474 
CMBS 28,773  —  —  28,773 
Equity security 2,166  2,166  —  — 
Woodstar Fund investments 1,861,931  —  —  1,861,931 
Domestic servicing rights 27,522  —  —  27,522 
Derivative assets 37,314  —  37,314  — 
VIE assets 34,205,812  —  —  34,205,812 
Total $ 38,814,147  $ 2,166  $ 123,811  $ 38,688,170 
Financial Liabilities:
Derivative liabilities $ 93,571  $ —  $ 93,571  $ — 
VIE liabilities 32,597,454  —  28,677,251  3,920,203 
Total $ 32,691,025  $ —  $ 28,770,822  $ 3,920,203 

December 31, 2024
Total Level I Level II Level III
Financial Assets:
Loans under fair value option $ 2,516,008  $ —  $ —  $ 2,516,008 
RMBS 93,806  —  —  93,806 
CMBS 27,345  —  —  27,345 
Equity security 5,146  5,146  —  — 
Woodstar Fund investments 2,073,533  —  —  2,073,533 
Domestic servicing rights 22,390  —  —  22,390 
Derivative assets 175,520  —  175,520  — 
VIE assets 38,937,576  —  —  38,937,576 
Total $ 43,851,324  $ 5,146  $ 175,520  $ 43,670,658 
Financial Liabilities:
Derivative liabilities $ 94,890  $ —  $ 94,890  $ — 
VIE liabilities 37,288,545  —  31,774,393  5,514,152 
Total $ 37,383,435  $ —  $ 31,869,283  $ 5,514,152 
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The changes in financial assets and liabilities classified as Level III are as follows for the three and nine months ended September 30, 2025 and 2024 (amounts in thousands):

Three Months Ended September 30, 2025
 Loans at
Fair Value		 RMBS CMBS Woodstar
Fund Investments		 Domestic
Servicing
Rights		 VIE Assets VIE
Liabilities		 Total
July 1, 2025 balance
 $ 2,494,838  $ 91,363  $ 27,338  $ 2,055,555  $ 25,506  $ 36,522,250  $ (3,857,378) $ 37,359,472 
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale 52,367  —  1,633  (193,624) 2,016  (2,316,438) 24,346  (2,429,700)
Net accretion —  1,138  —  —  —  —  —  1,138 
Included in OCI —  (850) —  —  —  —  —  (850)
Purchases / Originations 238,636  —  —  —  —  —  —  238,636 
Sales (169,251) —  —  —  —  —  —  (169,251)
Cash repayments / receipts (52,425) (2,177) (198) —  —  —  (9,601) (64,401)
Transfers into Level III —  —  —  —  —  —  (80,089) (80,089)
Transfers out of Level III (89,507) —  —  —  —  —  2,519  (86,988)
September 30, 2025 balance
 $ 2,474,658  $ 89,474  $ 28,773  $ 1,861,931  $ 27,522  $ 34,205,812  $ (3,920,203) $ 34,767,967 
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2025:
Included in earnings $ 37,020  $ 1,138  $ 1,633  $ (193,624) $ 2,016  $ (2,316,438) $ 24,346  $ (2,443,909)
Included in OCI $ —  $ (850) $ —  $ —  $ —  $ —  $ —  $ (850)
Three Months Ended September 30, 2024
 Loans at
Fair Value		 RMBS CMBS Woodstar Fund Investments Domestic
Servicing
Rights		 VIE Assets VIE
Liabilities		 Total
July 1, 2024 balance
 $ 2,588,657  $ 98,438  $ 19,992  $ 2,004,983  $ 20,507  $ 39,665,392  $ (5,042,474) $ 39,355,495 
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale 114,871  —  (1,083) (20,161) (341) (1,455,907) 62,194  (1,300,427)
Net accretion —  1,076  —  —  —  —  —  1,076 
Included in OCI —  2,336  —  —  —  —  —  2,336 
Purchases / Originations 600,966  —  —  —  —  —  —  600,966 
Sales (471,812) —  —  —  —  —  —  (471,812)
Issuances —  —  —  —  —  —  (7,144) (7,144)
Cash repayments / receipts (57,951) (4,364) (40) —  —  —  (4,661) (67,016)
Transfers into Level III —  —  7,908  —  —  —  (256,091) (248,183)
Transfers out of Level III (1,352) —  —  —  —  —  335,598  334,246 
Consolidation of VIEs —  —  —  —  —  1,920,430  —  1,920,430 
Deconsolidation of VIEs —  —  —  —  —  (179,520) 48,059  (131,461)
September 30, 2024 balance
 $ 2,773,379  $ 97,486  $ 26,777  $ 1,984,822  $ 20,166  $ 39,950,395  $ (4,864,519) $ 39,988,506 
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2024:
Included in earnings $ 92,282  $ 1,076  $ 125  $ (20,161) $ (341) $ (1,455,907) $ 62,194  $ (1,320,732)
Included in OCI $ —  $ 2,336  $ —  $ —  $ —  $ —  $ —  $ 2,336 
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Nine Months Ended September 30, 2025
 Loans at
Fair Value		 RMBS CMBS Woodstar Fund Investments Domestic
Servicing
Rights		 VIE Assets VIE
Liabilities		 Total
January 1, 2025 balance
 $ 2,516,008  $ 93,806  $ 27,345  $ 2,073,533  $ 22,390  $ 38,937,576  $ (5,514,152) $ 38,156,506 
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale 140,638  —  1,712  (211,602) 5,132  (5,386,483) 425,868  (5,024,735)
Net accretion —  3,402  —  —  —  —  —  3,402 
Included in OCI —  (1,659) —  —  —  —  —  (1,659)
Purchases / Originations 994,731  —  —  —  —  —  —  994,731 
Sales (912,415) —  —  —  —  —  —  (912,415)
Cash repayments / receipts (166,634) (6,075) (284) —  —  —  (74,672) (247,665)
Transfers into Level III —  —  —  —  —  —  (108,211) (108,211)
Transfers out of Level III (97,670) —  —  —  —  —  1,350,926  1,253,256 
Consolidation of VIEs —  —  —  —  —  717,180  —  717,180 
Deconsolidation of VIEs —  —  —  —  —  (62,461) 38  (62,423)
September 30, 2025 balance
 $ 2,474,658  $ 89,474  $ 28,773  $ 1,861,931  $ 27,522  $ 34,205,812  $ (3,920,203) $ 34,767,967 
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2025:
Included in earnings $ 79,196  $ 3,402  $ 1,770  $ (211,602) $ 5,132  $ (5,386,483) $ 425,868  $ (5,082,717)
Included in OCI $ —  $ (1,659) $ —  $ —  $ —  $ —  $ —  $ (1,659)
Nine Months Ended September 30, 2024
 Loans at
Fair Value		 RMBS CMBS Woodstar Fund Investments Domestic
Servicing
Rights		 VIE Assets VIE
Liabilities		 Total
January 1, 2024 balance
 $ 2,645,637  $ 102,368  $ 18,600  $ 2,012,833  $ 19,384  $ 43,786,356  $ (5,604,796) $ 42,980,382 
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale 150,279  —  (172) (28,011) 782  (4,864,896) 297,447  (4,444,571)
Net accretion —  3,397  —  —  —  —  —  3,397 
Included in OCI —  904  —  —  —  —  —  904 
Purchases / Originations 1,206,016  —  —  —  —  —  —  1,206,016 
Sales (830,221) —  —  —  —  —  —  (830,221)
Issuances —  —  —  —  —  —  (12,923) (12,923)
Cash repayments / receipts (165,610) (9,183) (143) —  —  —  (9,088) (184,024)
Transfers into Level III —  —  7,908  —  —  —  (948,401) (940,493)
Transfers out of Level III (232,722) —  —  —  —  —  1,340,427  1,107,705 
Consolidation of VIEs —  —  —  —  —  1,920,430  —  1,920,430 
Deconsolidation of VIEs —  —  584  —  —  (891,495) 72,815  (818,096)
September 30, 2024 balance
 $ 2,773,379  $ 97,486  $ 26,777  $ 1,984,822  $ 20,166  $ 39,950,395  $ (4,864,519) $ 39,988,506 
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2024:
Included in earnings $ 93,384  $ 3,397  $ 172  $ (28,011) $ 782  $ (4,864,896) $ 297,447  $ (4,497,725)
Included in OCI $ —  $ 904  $ —  $ —  $ —  $ —  $ —  $ 904 
Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity.
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The following table presents the fair values of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands):
September 30, 2025 December 31, 2024
Carrying
Value		 Fair
Value		 Carrying
Value		 Fair
Value
Financial assets not carried at fair value:
Loans $ 18,318,757  $ 18,420,644  $ 15,437,013  $ 15,546,013 
HTM debt securities 138,422  109,837  406,961  382,394 
Financial liabilities not carried at fair value:
Secured financing agreements
 $ 14,663,218  $ 14,776,547  $ 11,151,557  $ 11,215,974 
Securitized financing
 3,522,488  3,525,269  3,196,426  3,190,559 
Unsecured senior notes 3,245,122  3,357,799  2,994,682  3,017,102 
The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):
Carrying Value at
September 30, 2025
 Valuation
Technique		 Unobservable
Input		 Range (Weighted Average) as of (1)
September 30, 2025 December 31, 2024
Loans under fair value option $ 2,474,658  Discounted cash flow, market pricing Coupon (d)
2.8% - 10.8% (4.6%)
2.8% - 10.5% (4.6%)
Remaining contractual term (d)
2.5 - 36.8 years (24.7 years)
3.3 - 37.5 years (25.9 years)
FICO score (a)
585 - 829 (750)
585 - 829 (750)
LTV (b)
2% - 100% (63%)
4% - 93% (64%)
Purchase price (d)
80.0% - 106.8% (101.3%)
80.0% - 106.8% (101.3%)
RMBS 89,474  Discounted cash flow Constant prepayment rate (a)
2.2% - 11.9% (4.6%)
2.2% - 9.2% (4.5%)
Constant default rate (b)
0.8% - 3.4% (1.6%)
0.8% - 3.3% (1.6%)
Loss severity (b)
0% - 93% (10%) (e)
0% - 62% (13%) (e)
Delinquency rate (c)
7% - 26% (13%)
8% - 25% (13%)
Servicer advances (a)
23% - 70% (50%)
22% - 78% (51%)
CMBS 28,773  Discounted cash flow Yield (b)
0% - 67.7% (11.9%)
0% - 58.5% (12.6%)
Duration (c)
0 - 7.2 years (1.5 years)
0 - 6.7 years (2.2 years)
Woodstar Fund investments 1,861,931  Discounted cash flow Discount rate - properties (b) N/A
6.5% - 7.3% (7.0%)
Discount rate - debt (a)
3.0% - 5.7% (4.8%)
3.0% - 6.4% (4.7%)
Terminal capitalization rate (b)
 N/A
4.8% - 5.5% (5.2%)
Direct capitalization rate (b)
4.73% (4.73%)
 4.43% (4.43%) (Implied)
Domestic servicing rights 27,522  Discounted cash flow Debt yield (a)
9.00% (9.00%)
8.50% (8.50%)
Discount rate (b)
15% (15%)
15% (15%)
VIE assets 34,205,812  Discounted cash flow Yield (b)
0% - 531.7% (20.9%)
0% - 753.1% (26.4%)
Duration (c)
0 - 8.3 years (2.1 years)
0 - 9.0 years (2.6 years)
VIE liabilities 3,920,203  Discounted cash flow Yield (b)
0% - 531.7% (11.6%)
0% - 753.1% (17.1%)
Duration (c)
0 - 8.3 years (2.5 years)
0 - 9.0 years (2.0 years)
______________________________________________________________________________________________________________________
(1)Unobservable inputs were weighted by the relative carrying value of the instruments as of September 30, 2025 and December 31, 2024.
Information about Uncertainty of Fair Value Measurements
(a)Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.
(b)Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.
(c)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question.
(d)This unobservable input is not subject to variability as of the respective reporting dates.
(e)3% of the portfolio falls within a range of 45% - 80% as of both September 30, 2025 and December 31, 2024.
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21. Income Taxes
Certain of our domestic subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT.
Our TRSs engage in various real estate-related operations, including special servicing of commercial real estate, originating and securitizing mortgage loans, and investing in entities which engage in real estate-related operations. As of both September 30, 2025 and December 31, 2024, approximately $3.0 billion and $2.9 billion, respectively, of assets were owned by TRS entities. Our TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs.
The following table is a reconciliation of our U.S. federal income tax provision determined using our statutory federal tax rate to our reported income tax provision for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2025 2024 2025 2024
Federal statutory tax rate $ 19,587  21.0  % $ 17,350  21.0  % $ 73,186  21.0  % $ 70,830  21.0  %
REIT and other non-taxable income (9,000) (9.6) % (9,069) (11.0) % (59,114) (16.9) % (49,091) (14.5) %
State income taxes 3,478  3.7  % 2,721  3.3  % 4,623  1.3  % 7,143  2.1  %
Federal benefit of state tax deduction (731) (0.8) % (571) (0.7) % (971) (0.3) % (1,500) (0.4) %
Other 9  —  % 18  —  % 56  —  % 151  —  %
Effective tax rate $ 13,343  14.3  % $ 10,449  12.6  % $ 17,780  5.1  % $ 27,533  8.2  %

For the three and nine months ended September 30, 2025 and 2024, we have utilized the discrete effective tax rate method, as allowed by ASC 740-270-30-18, “Income Taxes—Interim Reporting,” to calculate our interim income tax provision. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. We believe that due to market dislocation and volatility, particularly with respect to the Company’s residential assets that are housed in TRSs, the use of the discrete method is more appropriate at this time than the annual effective tax rate method due to the high degree of uncertainty in estimating annual pretax earnings.
22. Commitments and Contingencies

As of September 30, 2025, our Commercial and Residential Lending Segment had future commercial loan funding commitments totaling $1.7 billion, of which we expect to fund $1.5 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions.
As of September 30, 2025, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $398.9 million, including $231.0 million under revolvers and letters of credit (“LCs”) and $167.9 million under delayed draw term loans. Additionally, as of September 30, 2025, our Infrastructure Lending Segment had outstanding loan purchase commitments of $50.5 million.
As of September 30, 2025, our Property Segment had future construction funding commitments of $53.3 million related to development projects which have estimated rental revenue commencement dates between October 2025 and August 2027.
Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower.
Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our consolidated financial statements.
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23. Segment Data
In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information to assess the performance of the business segments identified in Note 1, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis. The financial condition and operating results of Fundamental have been aggregated into the Property Segment, which is characterized by owning and leasing commercial properties, given its similar economic characteristics.
The table below presents our results of operations for the three months ended September 30, 2025 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Revenues:
Interest income from loans $ 315,894  $ 76,724  $ 246  $ 2,582  $ —  $ 395,446  $ —  $ 395,446 
Interest income from investment securities 18,405  150  —  23,329  —  41,884  (34,523) 7,361 
Servicing fees 81  —  —  28,351  —  28,432  (5,220) 23,212 
Rental income 6,233  —  45,603  5,692  —  57,528  —  57,528 
Other revenues 2,513  844  347  934  693  5,331  —  5,331 
Total revenues 343,126  77,718  46,196  60,888  693  528,621  (39,743) 488,878 
Costs and expenses:
Management fees 172  —  —  —  32,071  32,243  —  32,243 
Interest expense 181,639  41,402  24,302  6,788  80,925  335,056  (207) 334,849 
General and administrative 14,224  4,941  6,100  21,850  4,408  51,523  —  51,523 
Costs of rental operations 5,688  —  6,726  3,573  —  15,987  —  15,987 
Depreciation and amortization 2,840  10  21,181  1,762  251  26,044  —  26,044 
Credit loss provision, net
 26,805  1,554  —  —  —  28,359  —  28,359 
Other expense 73  430  —  (64) —  439  —  439 
Total costs and expenses 231,441  48,337  58,309  33,909  117,655  489,651  (207) 489,444 
Other income (loss):
Change in net assets related to consolidated VIEs —  —  —  —  —  —  43,735  43,735 
Change in fair value of servicing rights —  —  —  2,327  —  2,327  (311) 2,016 
Change in fair value of investment securities, net 1,111  —  —  4,531  —  5,642  (3,848) 1,794 
Change in fair value of mortgage loans, net 40,544  —  —  11,823  —  52,367  —  52,367 
Income from affordable housing fund investments
 —  —  324  —  —  324  —  324 
(Loss) earnings from unconsolidated entities
 —  (294) —  2,797  —  2,503  (40) 2,463 
Gain (loss) on sale of investments and other assets, net
 1,048  —  (21) —  —  1,027  —  1,027 
Gain (loss) on derivative financial instruments, net
 14,276  7  (7,971) 1,295  (1,793) 5,814  —  5,814 
Foreign currency loss, net
 (11,995) (210) (10) —  —  (12,215) —  (12,215)
Other loss, net
 (2,354) —  (578) (554) —  (3,486) —  (3,486)
Total other income (loss) 42,630  (497) (8,256) 22,219  (1,793) 54,303  39,536  93,839 
Income (loss) before income taxes 154,315  28,884  (20,369) 49,198  (118,755) 93,273  —  93,273 
Income tax (provision) benefit
 (7,432) 234  6  (6,151) —  (13,343) —  (13,343)
Net income (loss) 146,883  29,118  (20,363) 43,047  (118,755) 79,930  —  79,930 
Net income attributable to non-controlling interests
 (3) —  (4,366) (3,001) —  (7,370) —  (7,370)
Net income (loss) attributable to Starwood Property Trust, Inc.
 $ 146,880  $ 29,118  $ (24,729) $ 40,046  $ (118,755) $ 72,560  $ —  $ 72,560 
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The table below presents our results of operations for the three months ended September 30, 2024 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Revenues:
Interest income from loans $ 349,589  $ 63,910  $ —  $ 5,258  $ —  $ 418,757  $ —  $ 418,757 
Interest income from investment securities 29,392  123  —  24,882  —  54,397  (37,170) 17,227 
Servicing fees 109  —  —  15,448  —  15,557  (3,730) 11,827 
Rental income 4,267  —  16,352  5,360  —  25,979  —  25,979 
Other revenues 2,149  1,410  212  1,338  641  5,750  —  5,750 
Total revenues 385,506  65,443  16,564  52,286  641  520,440  (40,900) 479,540 
Costs and expenses:
Management fees 185  —  —  —  27,254  27,439  —  27,439 
Interest expense 209,464  38,381  10,375  10,160  69,687  338,067  (208) 337,859 
General and administrative 14,430  4,440  1,236  24,249  3,699  48,054  —  48,054 
Costs of rental operations 3,140  —  6,057  2,936  —  12,133  —  12,133 
Depreciation and amortization 2,264  14  5,914  1,745  251  10,188  —  10,188 
Credit loss provision, net
 65,021  1,406  —  —  —  66,427  —  66,427 
Other expense 15  175  —  285  —  475  —  475 
Total costs and expenses 294,519  44,416  23,582  39,375  100,891  502,783  (208) 502,575 
Other income (loss):
Change in net assets related to consolidated VIEs —  —  —  —  —  —  16,570  16,570 
Change in fair value of servicing rights —  —  —  975  —  975  (1,316) (341)
Change in fair value of investment securities, net 2,913  —  —  (29,277) —  (26,364) 25,586  (778)
Change in fair value of mortgage loans, net 95,747  —  —  19,124  —  114,871  —  114,871 
Loss from affordable housing fund investments
 —  —  (5,590) —  —  (5,590) —  (5,590)
Earnings (loss) from unconsolidated entities
 1,277  (963) —  183  —  497  (148) 349 
Gain on sale of investments and other assets, net
 —  —  —  8,316  —  8,316  —  8,316 
(Loss) gain on derivative financial instruments, net
 (108,436) (104) (546) (3,592) 28,737  (83,941) —  (83,941)
Foreign currency gain (loss), net
 58,930  546  (55) —  —  59,421  —  59,421 
Loss on extinguishment of debt
 (142) —  —  (100) —  (242) —  (242)
Other (loss) income, net
 (2,146) —  (879) 44  —  (2,981) —  (2,981)
Total other income (loss) 48,143  (521) (7,070) (4,327) 28,737  64,962  40,692  105,654 
Income (loss) before income taxes 139,130  20,506  (14,088) 8,584  (71,513) 82,619  —  82,619 
Income tax (provision) benefit
 (7,422) 156  —  (3,183) —  (10,449) —  (10,449)
Net income (loss) 131,708  20,662  (14,088) 5,401  (71,513) 72,170  —  72,170 
Net (income) loss attributable to non-controlling interests
 (3) —  (3,148) 7,049  —  3,898  —  3,898 
Net income (loss) attributable to Starwood Property Trust, Inc.
 $ 131,705  $ 20,662  $ (17,236) $ 12,450  $ (71,513) $ 76,068  $ —  $ 76,068 


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The table below presents our results of operations for the nine months ended September 30, 2025 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Revenues:
Interest income from loans $ 919,788  $ 203,129  $ 246  $ 11,425  $ —  $ 1,134,588  $ —  $ 1,134,588 
Interest income from investment securities 63,629  452  —  73,281  —  137,362  (107,467) 29,895 
Servicing fees 257  —  —  68,807  —  69,064  (14,312) 54,752 
Rental income 20,968  —  78,155  15,831  —  114,954  —  114,954 
Other revenues 7,857  2,946  821  4,204  1,324  17,152  —  17,152 
Total revenues 1,012,499  206,527  79,222  173,548  1,324  1,473,120  (121,779) 1,351,341 
Costs and expenses:
Management fees 529  —  —  —  103,310  103,839  —  103,839 
Interest expense 527,684  115,662  42,346  22,715  235,344  943,751  (612) 943,139 
General and administrative 44,365  15,482  8,751  68,712  13,432  150,742  —  150,742 
Costs of rental operations 16,156  —  18,674  10,489  —  45,319  —  45,319 
Depreciation and amortization 8,938  29  32,921  5,257  754  47,899  —  47,899 
Credit loss provision, net
 4,709  4,317  —  —  —  9,026  —  9,026 
Other expense 48  4,046  (76) 165  —  4,183  —  4,183 
Total costs and expenses 602,429  139,536  102,616  107,338  352,840  1,304,759  (612) 1,304,147 
Other income (loss):
Change in net assets related to consolidated VIEs —  —  —  —  —  —  112,706  112,706 
Change in fair value of servicing rights —  —  —  5,781  —  5,781  (649) 5,132 
Change in fair value of investment securities, net 6,450  —  —  (14,370) —  (7,920) 9,886  1,966 
Change in fair value of mortgage loans, net 91,543  —  —  49,095  —  140,638  —  140,638 
Income from affordable housing fund investments —  —  9,349  —  —  9,349  —  9,349 
Earnings (loss) from unconsolidated entities
 2,708  251  —  8,689  —  11,648  (776) 10,872 
Gain (loss) on sale of investments and other assets, net
 32,710  —  (21) —  —  32,689  —  32,689 
(Loss) gain on derivative financial instruments, net
 (167,702) (12) (8,082) (1,082) 41,707  (135,171) —  (135,171)
Foreign currency gain (loss), net
 105,878  656  (197) —  —  106,337  —  106,337 
Gain (loss) on extinguishment of debt
 20,773  (783) —  —  —  19,990  —  19,990 
Other (loss) income, net (3,580) —  (2,042) 2,427  —  (3,195) —  (3,195)
Total other income (loss) 88,780  112  (993) 50,540  41,707  180,146  121,167  301,313 
Income (loss) before income taxes 498,850  67,103  (24,387) 116,750  (309,809) 348,507  —  348,507 
Income tax (provision) benefit
 (2,231) 189  6  (15,744) —  (17,780) —  (17,780)
Net income (loss) 496,619  67,292  (24,381) 101,006  (309,809) 330,727  —  330,727 
Net income attributable to non-controlling interests
 (10) —  (14,776) (1,312) —  (16,098) —  (16,098)
Net income (loss) attributable to Starwood Property Trust, Inc.
 $ 496,609  $ 67,292  $ (39,157) $ 99,694  $ (309,809) $ 314,629  $ —  $ 314,629 



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The table below presents our results of operations for the nine months ended September 30, 2024 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Revenues:
Interest income from loans $ 1,102,810  $ 194,526  $ —  $ 12,345  $ —  $ 1,309,681  $ —  $ 1,309,681 
Interest income from investment securities 90,170  391  —  70,663  —  161,224  (108,791) 52,433 
Servicing fees 361  —  —  48,512  —  48,873  (11,324) 37,549 
Rental income 11,819  —  52,863  15,603  —  80,285  —  80,285 
Other revenues 4,455  2,690  574  2,836  1,951  12,506  —  12,506 
Total revenues 1,209,615  197,607  53,437  149,959  1,951  1,612,569  (120,115) 1,492,454 
Costs and expenses:
Management fees 569  —  —  —  103,401  103,970  —  103,970 
Interest expense 662,124  115,229  35,325  26,952  199,200  1,038,830  (626) 1,038,204 
General and administrative 49,003  14,625  3,701  71,407  11,063  149,799  —  149,799 
Costs of rental operations 8,577  —  17,309  8,661  —  34,547  —  34,547 
Depreciation and amortization 6,349  43  17,695  5,289  754  30,130  —  30,130 
Credit loss provision, net 142,993  1,982  —  —  —  144,975  —  144,975 
Other expense 771  175  35  453  —  1,434  —  1,434 
Total costs and expenses 870,386  132,054  74,065  112,762  314,418  1,503,685  (626) 1,503,059 
Other income (loss):
Change in net assets related to consolidated VIEs —  —  —  —  —  —  43,836  43,836 
Change in fair value of servicing rights —  —  —  (1,521) —  (1,521) 2,303  782 
Change in fair value of investment securities, net (4,352) —  —  (69,445) —  (73,797) 74,301  504 
Change in fair value of mortgage loans, net 102,781  —  —  47,498  —  150,279  —  150,279 
Income from affordable housing fund investments —  —  10,304  —  —  10,304  —  10,304 
Earnings (loss) from unconsolidated entities
 10,293  (694) —  1,046  —  10,645  (951) 9,694 
(Loss) gain on sale of investments and other assets, net
 (41) —  92,003  8,316  —  100,278  —  100,278 
Gain on derivative financial instruments, net
 11,636  59  1,442  129  5,718  18,984  —  18,984 
Foreign currency gain (loss), net
 23,970  479  (13) —  —  24,436  —  24,436 
Gain (loss) on extinguishment of debt
 173  (620) (2,254) (100) —  (2,801) —  (2,801)
Other (loss) income, net (7,337) 40  (1,156) 50  —  (8,403) —  (8,403)
Total other income (loss) 137,123  (736) 100,326  (14,027) 5,718  228,404  119,489  347,893 
Income (loss) before income taxes 476,352  64,817  79,698  23,170  (306,749) 337,288  —  337,288 
Income tax (provision) benefit
 (18,930) 414  —  (9,017) —  (27,533) —  (27,533)
Net income (loss) 457,422  65,231  79,698  14,153  (306,749) 309,755  —  309,755 
Net (income) loss attributable to non-controlling interests
 (10) —  (15,010) 13,555  —  (1,465) —  (1,465)
Net income (loss) attributable to Starwood Property Trust, Inc.
 $ 457,412  $ 65,231  $ 64,688  $ 27,708  $ (306,749) $ 308,290  $ —  $ 308,290 
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The table below presents our consolidated balance sheet as of September 30, 2025 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Assets:
Cash and cash equivalents $ 21,189  $ 135,689  $ 36,478  $ 6,288  $ 101,491  $ 301,135  $ —  $ 301,135 
Restricted cash 164,241  49,872  10,499  347  13,013  237,972  —  237,972 
Loans held-for-investment, net 15,254,794  3,063,963  —  —  —  18,318,757  —  18,318,757 
Loans held-for-sale 2,308,388  —  —  252,767  —  2,561,155  —  2,561,155 
Investment securities 622,469  16,416  —  1,197,170  —  1,836,055  (1,577,220) 258,835 
Properties, net 764,063  —  2,505,635  64,785  —  3,334,483  —  3,334,483 
Investments of consolidated affordable housing fund —  —  1,861,931  —  —  1,861,931  —  1,861,931 
Investments in unconsolidated entities 8,514  54,356  —  32,964  —  95,834  (14,744) 81,090 
Goodwill —  119,409  —  140,437  —  259,846  —  259,846 
Intangible assets, net 2,965  —  394,574  68,673  —  466,212  (36,394) 429,818 
Derivative assets 28,478  —  —  304  8,532  37,314  —  37,314 
Accrued interest receivable 156,005  10,242  504  635  186  167,572  —  167,572 
Other assets 205,970  9,937  108,722  (9,333) 62,959  378,255  —  378,255 
VIE assets, at fair value —  —  —  —  —  —  34,205,812  34,205,812 
Total Assets $ 19,537,076  $ 3,459,884  $ 4,918,343  $ 1,755,037  $ 186,181  $ 29,856,521  $ 32,577,454  $ 62,433,975 
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 219,001  $ 39,187  $ 105,907  $ 44,584  $ 123,351  $ 532,030  $ —  $ 532,030 
Related-party payable —  —  —  —  27,939  27,939  —  27,939 
Dividends payable —  —  —  —  180,113  180,113  —  180,113 
Derivative liabilities 79,121  —  —  —  14,450  93,571  —  93,571 
Secured financing agreements, net 9,958,349  1,100,722  896,034  498,660  2,229,453  14,683,218  (20,000) 14,663,218 
Securitized financing, net
 1,412,126  1,232,420  877,942  —  —  3,522,488  —  3,522,488 
Unsecured senior notes, net —  —  —  —  3,245,122  3,245,122  —  3,245,122 
VIE liabilities, at fair value —  —  —  —  —  —  32,597,454  32,597,454 
Total Liabilities 11,668,597  2,372,329  1,879,883  543,244  5,820,428  22,284,481  32,577,454  54,861,935 
Temporary Equity: Redeemable non-controlling interests
—  —  385,853  —  —  385,853  —  385,853 
Permanent Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock —  —  —  —  3,778  3,778  —  3,778 
Additional paid-in capital 1,283,096  760,702  383,549  (616,981) 5,133,680  6,944,046  —  6,944,046 
Treasury stock —  —  —  —  (138,022) (138,022) —  (138,022)
Retained earnings (accumulated deficit) 6,573,329  326,853  2,063,233  1,712,845  (10,633,683) 42,577  —  42,577 
Accumulated other comprehensive income 11,935  —  —  —  —  11,935  —  11,935 
Total Starwood Property Trust, Inc. Stockholders’ Equity 7,868,360  1,087,555  2,446,782  1,095,864  (5,634,247) 6,864,314  —  6,864,314 
Non-controlling interests in consolidated subsidiaries 119  —  205,825  115,929  —  321,873  —  321,873 
Total Permanent Equity 7,868,479  1,087,555  2,652,607  1,211,793  (5,634,247) 7,186,187  —  7,186,187 
Total Liabilities and Equity $ 19,537,076  $ 3,459,884  $ 4,918,343  $ 1,755,037  $ 186,181  $ 29,856,521  $ 32,577,454  $ 62,433,975 
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The table below presents our consolidated balance sheet as of December 31, 2024 by business segment (amounts in thousands):
Commercial and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Subtotal Securitization
VIEs		 Total
Assets:
Cash and cash equivalents $ 19,743  $ 122,134  $ 24,717  $ 11,946  $ 199,291  $ 377,831  $ —  $ 377,831 
Restricted cash 147,502  21,986  1,133  5,543  —  176,164  —  176,164 
Loans held-for-investment, net 12,895,064  2,541,949  —  —  —  15,437,013  —  15,437,013 
Loans held-for-sale 2,394,624  —  —  121,384  —  2,516,008  —  2,516,008 
Investment securities 909,762  17,273  —  1,225,024  —  2,152,059  (1,618,801) 533,258 
Properties, net 650,966  —  657,246  65,466  —  1,373,678  —  1,373,678 
Investments of consolidated affordable housing fund —  —  2,073,533  —  —  2,073,533  —  2,073,533 
Investments in unconsolidated entities 26,441  54,105  —  33,640  —  114,186  (14,816) 99,370 
Goodwill —  119,409  —  140,437  —  259,846  —  259,846 
Intangible assets, net
 10,637  —  22,101  63,711  —  96,449  (35,745) 60,704 
Derivative assets 174,507  —  115  898  —  175,520  —  175,520 
Accrued interest receivable 150,474  13,961  —  684  2,648  167,767  —  167,767 
Other assets 206,103  8,190  52,243  8,700  92,993  368,229  —  368,229 
VIE assets, at fair value —  —  —  —  —  —  38,937,576  38,937,576 
Total Assets $ 17,585,823  $ 2,899,007  $ 2,831,088  $ 1,677,433  $ 294,932  $ 25,288,283  $ 37,268,214  $ 62,556,497 
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 185,303  $ 30,157  $ 13,232  $ 57,624  $ 148,268  $ 434,584  $ —  $ 434,584 
Related-party payable —  —  —  —  38,958  38,958  —  38,958 
Dividends payable —  —  —  —  163,383  163,383  —  163,383 
Derivative liabilities 67,452  —  —  —  27,438  94,890  —  94,890 
Secured financing agreements, net 7,912,536  760,299  479,732  591,094  1,428,227  11,171,888  (20,331) 11,151,557 
Securitized financing, net
 1,966,865  1,229,561  —  —  —  3,196,426  —  3,196,426 
Unsecured senior notes, net —  —  —  —  2,994,682  2,994,682  —  2,994,682 
VIE liabilities, at fair value —  —  —  —  —  —  37,288,545  37,288,545 
Total Liabilities 10,132,156  2,020,017  492,964  648,718  4,800,956  18,094,811  37,268,214  55,363,025 
Temporary Equity: Redeemable non-controlling interests
—  —  426,695  —  —  426,695  —  426,695 
Permanent Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock —  —  —  —  3,449  3,449  —  3,449 
Additional paid-in capital 1,363,238  619,428  (398,205) (706,746) 5,445,048  6,322,763  —  6,322,763 
Treasury stock —  —  —  —  (138,022) (138,022) —  (138,022)
Retained earnings (accumulated deficit) 6,076,720  259,562  2,102,389  1,613,151  (9,816,499) 235,323  —  235,323 
Accumulated other comprehensive income 13,594  —  —  —  —  13,594  —  13,594 
Total Starwood Property Trust, Inc. Stockholders’ Equity 7,453,552  878,990  1,704,184  906,405  (4,506,024) 6,437,107  —  6,437,107 
Non-controlling interests in consolidated subsidiaries 115  —  207,245  122,310  —  329,670  —  329,670 
Total Permanent Equity 7,453,667  878,990  1,911,429  1,028,715  (4,506,024) 6,766,777  —  6,766,777 
Total Liabilities and Equity $ 17,585,823  $ 2,899,007  $ 2,831,088  $ 1,677,433  $ 294,932  $ 25,288,283  $ 37,268,214  $ 62,556,497 

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24. Subsequent Events
Our significant events subsequent to September 30, 2025 were as follows:
Securitized Financings
In October 2025, we refinanced a $500.0 million pool of our infrastructure loans held-for-investment through a CLO, Starwood 2025-SIF6, with $413.5 million of third party financing at a weighted average coupon of SOFR + 1.72%. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of three years.
In October 2025, we refinanced a $492.1 million pool of our Fundamental net lease properties through an ABS, FI Series 2025-1, with $391.1 million of third party financing at a weighted average fixed rate of 5.26% and weighted average maturity of 6.45 years.
Unsecured Senior Notes
In October 2025, we issued $500.0 million of 5.25% Senior Notes due 2028 which mature on October 15, 2028. At closing, we swapped the notes to a floating rate of SOFR + 1.88%.
In October 2025, we also issued $550.0 million of 5.75% Senior Notes due 2031 which mature on January 15, 2031. At closing, we swapped $275.0 million principal amount of the notes to a floating rate of SOFR + 2.24%.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the information included elsewhere in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (our “Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements. See “Special Note Regarding Forward-Looking Statements” at the beginning of this Quarterly Report on Form 10-Q.
Overview
Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in the United States (“U.S.”), Europe and Australia. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.

We have four reportable business segments as of September 30, 2025 and we refer to the investments within these segments as our target assets:
•Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in the U.S., Europe and Australia (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.

•Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.

•Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized and to be stabilized commercial real estate. This includes multifamily properties, multi-tenant medical office net lease properties and diversified single-tenant triple net lease properties, all of which are held for investment.

•Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.

Our segments exclude the consolidation of securitization variable interest entities (“VIEs”), principally representing CMBS trust vehicles that we consolidate by virtue of our role as special servicer. However, they include securitized financing VIEs such as collateralized loan obligations (“CLOs”), single asset securitizations (“SASBs”) and asset-backed securitizations (“ABSs”).
Refer to Note 1 of our condensed consolidated financial statements included herein (the “Condensed Consolidated Financial Statements”) for further discussion of our business and organization.
Economic Environment

Although the Federal Reserve began to lower interest rates in September 2025, after having held rates steady for a year, it is not clear what actions it may take going forward given the uncertain economic effects of tariffs which increase the possibility of an economic slowdown as well as inflationary pressures in the U.S. Elevated interest rates and tariffs over time may adversely affect our borrowers and our tenants. Higher costs may dampen consumer spending and slow income growth, which may negatively impact the collateral underlying certain of our loans and certain of our commercial assets subject to net lease whose customer base could be adversely impacted. Rates can also impact the value of real estate, including the real estate we own as well as the real estate collateralizing our loans.
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It remains difficult to predict the full impact of recent events and any future changes in tariffs, interest rates, inflation and overall economic activity.

In addition, following the onset of the COVID-19 pandemic, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce and the multifamily sector has been strained by sustained higher interest rates. These negative factors have been considered in the determination of our current expected credit loss (“CECL”) allowance as discussed in Note 4 to the Condensed Consolidated Financial Statements. We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve. Any such reserve increases are difficult to predict.
Developments During the Third Quarter of 2025
Commercial and Residential Lending Segment
•Originated $1.4 billion of commercial loans during the quarter, including the following:
◦$550.0 million first mortgage and mezzanine loan secured by a 12-property multifamily portfolio located primarily in Arizona, which the Company fully funded.
◦$500.0 million first mortgage loan secured by a 42-asset industrial portfolio located in New York, of which the Company funded $483.6 million.
◦$161.0 million first mortgage and mezzanine loan secured by a multifamily property located in New York, of which the Company funded $145.2 million.
◦$64.0 million first mortgage loan secured by a multifamily community located in Illinois, of which the Company funded $61.7 million.
◦$52.2 million first mortgage and mezzanine loan secured by a luxury condominium tower located in New York, of which the Company funded $40.2 million.
•Funded $219.4 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $1.3 billion ($389.9 million, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Amended several commercial credit facilities resulting in an aggregate net upsize of $192.4 million and extended the weighted average maturity on amended facilities by 1.2 years to 2.6 years.
Infrastructure Lending Segment
•Committed $790.9 million for new infrastructure loans, of which the Company funded $678.3 million, and also funded $19.4 million of pre-existing infrastructure loan commitments.
•Received proceeds of $691.1 million from principal repayments on our infrastructure loans and bonds.
Property
•In July 2025, acquired Fundamental Income Properties, LLC (“Fundamental”) by way of merger. The purchase price totaled $2.2 billion, inclusive of $1.3 billion of indebtedness assumed. See Note 3 to the Condensed Consolidated Financial Statements for further discussion.
•Acquired eight additional net lease properties for cash of $39.3 million and the non-cash conversion of two existing loans for the development of net lease properties totaling $14.4 million. We also sold one net lease property for $0.5 million.
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•In August 2025, refinanced $185.1 million of the Woodstar Fund investments’ mortgage debt with $367.7 million of new debt that carries an initial term of 10 years, and a coupon of SOFR + 1.75%.
Investing and Servicing
•Originated commercial conduit loans of $242.0 million.
•Received proceeds of $169.3 million from sales of previously originated commercial conduit loans and priced $82.3 million of previously originated commercial conduit loans in two securitizations that settled subsequent to September 30, 2025.
•Obtained five new special servicing assignments for CMBS trusts with a total unpaid principal balance of $3.6 billion, while $6.7 billion matured, bringing our total named special servicing portfolio to $99.0 billion.
Corporate
•Issued 27.1 million shares of common stock for proceeds of $534.4 million.
•Entered into a $700.0 million term loan facility that carries a seven-year term, an annual interest rate of SOFR + 2.25%, and an issue discount of 50 bps.
•Amended our $682.6 million November 2027 and $893.3 million January 2030 term loan facilities, reducing the spreads by 50 bps and 25 bps, to SOFR + 1.75% and SOFR + 2.00%, respectively.
Developments During the Nine Months Ended September 30, 2025
Commercial and Residential Lending Segment
•Originated or acquired $4.7 billion of commercial loans during the period, including the following:
•$550.0 million first mortgage and mezzanine loan secured by a 12-property multifamily portfolio located primarily in Arizona, which the Company fully funded.
•$550.0 million first mortgage and mezzanine loan for the construction of a pre-leased data center located in Utah, of which the Company funded $315.1 million.
•$500.0 million first mortgage loan secured by a 42-asset industrial portfolio located in New York, of which the Company funded $483.6 million.
•$412.0 million first mortgage loan secured by a multifamily portfolio located in Texas, which the Company fully funded.
•$350.0 million first mortgage and mezzanine loan secured by a 272-unit high-rise luxury condominium located in New York, of which the Company sold the $280.0 million first mortgage and retained the $70.0 million mezzanine loan. The Company funded $58.8 million of the mezzanine loan. Refer to Note 12 to the Condensed Consolidated Financial Statements for further discussion.
•$287.7 million first mortgage loan for the construction of a fully leased data center located in Virginia, of which the Company funded $44.9 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•€220.5 million ($228.9 million) first mortgage loan secured by a portfolio of apartment buildings located in Germany, of which the Company funded $171.0 million.
•€189.7 million ($214.3 million) first mortgage loan secured by a logistics portfolio located in Czech Republic and Slovakia, of which the Company funded $187.0 million.
•$212.8 million first mortgage loan for the construction of a fully leased data center located in Virginia, of which the Company funded $131.4 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
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•$190.3 million first mortgage loan for the construction of a luxury 81 unit condominium project located in Florida, of which the Company funded $64.4 million. Refer to Note 16 to the Condensed Consolidated Financial Statements for further discussion.
•Funded $544.2 million of previously originated commercial loan commitments and investment securities.
•Received gross proceeds of $2.1 billion ($0.8 billion, net of debt repayments) from maturities and principal repayments on our commercial loans and investment securities.
•Sold an equity interest originally obtained in connection with a 2013 loan origination for gross proceeds of $70.0 million and recognized a gain of $51.4 million.
•Sold commercial real estate in Texas that was previously acquired through equity control in May 2022 for gross proceeds of $60.0 million and recognized a net gain of $4.1 million.
•Redeemed at par the third party financing for our STWD 2019-FL1 CLO for $220.1 million.
•Amended several commercial credit facilities resulting in an aggregate net upsize of $1.5 billion and extended the weighted average maturity on amended facilities by 1.4 years to 3.1 years.
Infrastructure Lending Segment
•Committed $2.2 billion for new infrastructure loans, of which the Company funded $1.9 billion, and also funded $28.0 million of pre-existing infrastructure loan commitments.
•Received proceeds of $1.4 billion from principal repayments on our infrastructure loans and bonds.
•Refinanced a pool of our infrastructure loans held-for-investment in April 2025 through a CLO, Starwood 2025-SIF5. The CLO has a contractual maturity of April 2037 and a weighted average cost of financing of SOFR + 1.94%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $500.0 million of notes, of which $413.5 million of notes were purchased by third party investors and $86.5 million of subordinated notes were retained by us. In connection therewith, we redeemed at par the third party financing for our STWD 2021-SIF2 CLO for $410.0 million and contributed certain loans previously held in that CLO to Starwood 2025-SIF5.
•Amended an infrastructure credit facility, increasing the facility size by $125.0 million and reducing the spread by 20 bps.
Property
•In July 2025, acquired Fundamental by way of merger. The purchase price totaled $2.2 billion, inclusive of $1.3 billion of indebtedness assumed. See Note 3 to the Condensed Consolidated Financial Statements for further discussion.
•Acquired eight additional net lease properties for cash of $39.3 million and the non-cash conversion of two existing loans for the development of net lease properties totaling $14.4 million. We also sold a net lease property for $0.5 million.
•In August 2025, refinanced $185.1 million of the Woodstar Fund investments’ mortgage debt with $367.7 million of new debt that carries an initial term of 10 years, and a coupon of SOFR + 1.75%.
Investing and Servicing Segment
•Originated commercial conduit loans of $1.0 billion.
•Received proceeds of $912.4 million from sales of previously originated commercial conduit loans and priced $82.3 million of previously originated commercial conduit loans in two securitizations that settled subsequent to September 30, 2025.
•Acquired CMBS for a purchase price of $69.0 million, of which $1.4 million related to non-controlling interests, and sold CMBS for gross proceeds of $4.2 million.
•Obtained eight new special servicing assignments for CMBS trusts with a total unpaid principal balance of $5.5 billion, while $16.1 billion matured, bringing our total named special servicing portfolio to $99.0 billion.
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Corporate
•Issued 27.1 million shares of common stock for proceeds of $534.4 million.
•Entered into a $700.0 million term loan facility that carries a seven-year term, an annual interest rate of SOFR + 2.25%, and an issue discount of 50 bps.
•Amended our $682.6 million November 2027 and $893.3 million January 2030 term loan facilities, reducing the spreads by 50 bps and 25 bps, to SOFR + 1.75% and SOFR + 2.00%, respectively.
•Issued $500.0 million of 6.50% Senior Notes due 2030 in April 2025 and swapped the notes to a floating rate of SOFR + 2.61%.
•Entered into a new ATM Agreement with a syndicate of financial institutions to sell shares of the Company’s common stock of up to $500.0 million from time to time, through an “at the market” equity offering program. During the nine months, we issued 1.6 million shares under the ATM Agreement for gross proceeds of $31.6 million at an average share price of $20.22.
•Repaid the remaining $250.0 million of $500.0 million 4.75% Senior Notes due March 2025 upon maturity.
•Amended our January 2030 term loan facility in January 2025, increasing the facility size to $900.0 million, reducing the spread by 73 bps and extending the maturity date from July 2026 to January 2030. We also amended our existing revolving credit facility, increasing the facility by $50.0 million, to $200.0 million, and extending the maturity date from April 2026 to January 2030.
Subsequent Events
Refer to Note 24 to the Condensed Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to September 30, 2025.
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Results of Operations
The discussion below is based on accounting principles generally accepted in the United States of America (“GAAP”) and therefore reflects the elimination of certain key financial statement line items related to the consolidation of securitization variable interest entities (“VIEs”), particularly within revenues and other income, as discussed in Note 2 to the Condensed Consolidated Financial Statements. For a discussion of our results of operations excluding the impact of Accounting Standards Codification (“ASC”) Topic 810 as it relates to the consolidation of securitization VIEs, refer to the section captioned “Non-GAAP Financial Measures.”
The following table compares our summarized results of operations for the three months ended September 30, 2025 and June 30, 2025 and for the nine months ended September 30, 2025 and 2024 by business segment (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
Revenues: September 30, 2025 June 30, 2025 $ Change September 30, 2025 September 30, 2024 $ Change
Commercial and Residential Lending Segment $ 343,126  $ 343,907  $ (781) $ 1,012,499  $ 1,209,615  $ (197,116)
Infrastructure Lending Segment 77,718  67,184  10,534  206,527  197,607  8,920 
Property Segment 46,196  16,477  29,719  79,222  53,437  25,785 
Investing and Servicing Segment 60,888  53,785  7,103  173,548  149,959  23,589 
Corporate 693  536  157  1,324  1,951  (627)
Securitization VIE eliminations (39,743) (37,606) (2,137) (121,779) (120,115) (1,664)
488,878  444,283  44,595  1,351,341  1,492,454  (141,113)
Costs and expenses:
Commercial and Residential Lending Segment 231,441  207,310  24,131  602,429  870,386  (267,957)
Infrastructure Lending Segment 48,337  48,334  3  139,536  132,054  7,482 
Property Segment 58,309  22,115  36,194  102,616  74,065  28,551 
Investing and Servicing Segment 33,909  37,725  (3,816) 107,338  112,762  (5,424)
Corporate 117,655  115,205  2,450  352,840  314,418  38,422 
Securitization VIE eliminations (207) (210) 3  (612) (626) 14 
489,444  430,479  58,965  1,304,147  1,503,059  (198,912)
Other income (loss):
Commercial and Residential Lending Segment 42,630  26,594  16,036  88,780  137,123  (48,343)
Infrastructure Lending Segment (497) 1,014  (1,511) 112  (736) 848 
Property Segment (8,256) 4,340  (12,596) (993) 100,326  (101,319)
Investing and Servicing Segment 22,219  36,058  (13,839) 50,540  (14,027) 64,567 
Corporate (1,793) 16,161  (17,954) 41,707  5,718  35,989 
Securitization VIE eliminations 39,536  37,396  2,140  121,167  119,489  1,678 
93,839  121,563  (27,724) 301,313  347,893  (46,580)
Income (loss) before income taxes:
Commercial and Residential Lending Segment 154,315  163,191  (8,876) 498,850  476,352  22,498 
Infrastructure Lending Segment 28,884  19,864  9,020  67,103  64,817  2,286 
Property Segment (20,369) (1,298) (19,071) (24,387) 79,698  (104,085)
Investing and Servicing Segment 49,198  52,118  (2,920) 116,750  23,170  93,580 
Corporate (118,755) (98,508) (20,247) (309,809) (306,749) (3,060)
93,273  135,367  (42,094) 348,507  337,288  11,219 
Income tax provision
 (13,343) (671) (12,672) (17,780) (27,533) 9,753 
Net income attributable to non-controlling interests
 (7,370) (4,882) (2,488) (16,098) (1,465) (14,633)
Net income attributable to Starwood Property Trust, Inc. $ 72,560  $ 129,814  $ (57,254) $ 314,629  $ 308,290  $ 6,339 
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Three Months Ended September 30, 2025 Compared to the Three Months Ended June 30, 2025
Commercial and Residential Lending Segment

Revenues

For the three months ended September 30, 2025, revenues of our Commercial and Residential Lending Segment decreased $0.8 million to $343.1 million, compared to $343.9 million for the three months ended June 30, 2025. This was primarily due to a decrease of $2.9 million in interest income from investment securities, reflecting lower balances due to payoffs, partially offset by an increase in interest income from loans of $2.3 million. The increase in interest income from loans was comprised of a $2.7 million increase from commercial loans primarily reflecting higher average balances, partially offset by a $0.4 million decrease from residential loans.

Costs and Expenses

For the three months ended September 30, 2025, costs and expenses of our Commercial and Residential Lending Segment increased $24.1 million to $231.4 million, compared to $207.3 million for the three months ended June 30, 2025. This increase was primarily due to increases of $23.1 million in the credit loss provision and $1.1 million in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio. The increase in the credit loss provision primarily reflects a $27.2 million specific allowance provided on a mezzanine loan deemed credit deteriorated in the 2025 third quarter. The increase in interest expense was primarily due to higher average borrowings outstanding.

Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Interest income from loans $ 315,894  $ 313,595  $ 2,299 
Interest income from investment securities 18,405  21,335  (2,930)
Interest expense (181,639) (180,494) (1,145)
Net interest income $ 152,660  $ 154,436  $ (1,776)

For the three months ended September 30, 2025, net interest income of our Commercial and Residential Lending Segment decreased $1.7 million to $152.7 million, compared to $154.4 million for the three months ended June 30, 2025. This decrease reflects the net decrease in interest income and the increase in interest expense on our secured financing facilities, both as discussed in the sections above.

During the three months ended September 30, 2025 and June 30, 2025, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:
For the Three Months Ended
September 30, 2025 June 30, 2025
Commercial 8.1  % 8.3  %
Residential 5.0  % 5.0  %
Overall 7.6  % 7.8  %

For the three months ended September 30, 2025, the weighted average unlevered yields on our commercial and residential loans were relatively consistent with the three months ended June 30, 2025.

During the three months ended September 30, 2025 and June 30, 2025, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.3% and 6.5%, respectively. Interest rate hedges had the effect of reducing these weighted average borrowing costs to 5.9% and 6.0% during the three months ended September 30, 2025 and June 30, 2025, respectively.

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Other Income

For the three months ended September 30, 2025, other income of our Commercial and Residential Lending Segment increased $16.0 million to $42.6 million compared to $26.6 million for the three months ended June 30, 2025. This increase was primarily due to (i) a $130.4 million favorable change in gain (loss) on derivatives and (ii) a $32.1 million greater increase in fair value of residential loans, partially offset by (iii) a $95.3 million unfavorable change in foreign currency gain (loss), (iv) a $30.6 million lesser gain on sale of investments and other assets and (v) the nonrecurrence of a $20.8 million gain on extinguishment of debt primarily related to the sale of a foreclosed property in the second quarter of 2025. The favorable change in gain (loss) on derivatives in the third quarter of 2025 reflects (i) a $113.6 million favorable change in gain (loss) on foreign currency hedges and (ii) a $16.8 million lower loss on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The unfavorable change in foreign currency gain (loss) and the favorable change in gain (loss) on foreign currency hedges reflect the strengthening of the U.S. dollar against the pound sterling (“GBP”) and Euro (“EUR”), partially offset by a weakening against the Australian dollar (“AUD”), in the third quarter of 2025, compared to a weakening of the U.S. dollar against each of those currencies in the second quarter of 2025.

Infrastructure Lending Segment

Revenues

For the three months ended September 30, 2025, revenues of our Infrastructure Lending Segment increased $10.5 million to $77.7 million, compared to $67.2 million for the three months ended June 30, 2025. This was primarily due to a $10.8 million increase in interest income from loans reflecting higher prepayment related income and average loan balances.

Costs and Expenses

For the three months ended September 30, 2025 and June 30, 2025, costs and expenses of our Infrastructure Lending Segment remained relatively unchanged at $48.3 million. A $2.3 million increase in interest expense, primarily reflecting higher average borrowings outstanding, was offset by decreases in other costs and expenses.

Net Interest Income (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Interest income from loans $ 76,724  $ 65,949  $ 10,775 
Interest income from investment securities 150  148  2 
Interest expense (41,402) (39,106) (2,296)
Net interest income $ 35,472  $ 26,991  $ 8,481 

For the three months ended September 30, 2025, net interest income of our Infrastructure Lending Segment increased $8.5 million to $35.5 million, compared to $27.0 million for the three months ended June 30, 2025. The increase reflects the increase in interest income from loans, partially offset by the increase in interest expense on the secured financing facilities used to fund this segment’s investment portfolio, both as discussed above.

During the three months ended September 30, 2025 and June 30, 2025, the weighted average unlevered yield on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, was 9.3% and 9.1%, respectively, primarily reflecting higher prepayment related income in the third quarter of 2025.

During both the three months ended September 30, 2025 and June 30, 2025, the Infrastructure Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 6.9%.

Other Income (Loss)

For the three months ended September 30, 2025, other income (loss) of our Infrastructure Lending Segment decreased $1.5 million to a loss of $0.5 million, compared to income of $1.0 million for the three months ended June 30, 2025, primarily due to an unfavorable change in earnings (loss) from unconsolidated entities.
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Property Segment

Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues
Depreciation and amortization
Other costs and
 expenses
 Gain (loss) on derivative
financial instruments		 Other income (loss) Income (loss) before
 income taxes
Fundamental
$ 28,934  $ 15,355  $ 20,182  $ (7,967) $ (35) $ (14,605)
Medical Office Portfolio 621  (50) 564  10  —  117 
Woodstar Fund 169  —  (1) —  (4,792) (4,622)
D.C. Multifamily Conversion
 —  —  —  —  (210) (210)
Other/Corporate (5) —  144  —  398  249 
Total $ 29,719  $ 15,305  $ 20,889  $ (7,957) $ (4,639) $ (19,071)
See Notes 6 and 7 to the Condensed Consolidated Financial Statements for a description of the above-referenced Property Segment assets.

Revenues

For the three months ended September 30, 2025, revenues of our Property Segment increased $29.7 million to $46.2 million, compared to $16.5 million for the three months ended June 30, 2025, primarily due to Fundamental, which contributed rental income for the period from July 23, 2025 to September 30, 2025.

Costs and Expenses

For the three months ended September 30, 2025, costs and expenses of our Property Segment increased $36.2 million to $58.3 million, compared to $22.1 million for the three months ended June 30, 2025, primarily due to Fundamental, which introduced (i) higher interest expense from the liabilities assumed and higher general and administrative expenses totaling $20.2 million and (ii) higher depreciation and amortization of $15.4 million from the assets acquired.

Other Income (Loss)

For the three months ended September 30, 2025, other income (loss) of our Property Segment decreased $12.6 million to a loss of $8.3 million compared to income of $4.3 million for the three months ended June 30, 2025. The decrease is primarily due to (i) an $8.0 million loss on derivatives which hedge the pending securitization of Fundamental collateral currently on a warehouse line and the pending refinance of an existing ABS facility, as well as (ii) a $4.8 million decrease in income attributable to investments of the Woodstar Fund, primarily related to unrealized fair value changes.

Investing and Servicing Segment

Revenues

For the three months ended September 30, 2025, revenues of our Investing and Servicing Segment increased $7.1 million to $60.9 million, compared to $53.8 million for the three months ended June 30, 2025. The increase in revenues is primarily due to (i) a $9.7 million increase in servicing fees principally related to default interest and consent fees, partially offset by (ii) a $3.1 million decrease in interest income from conduit loans primarily reflecting lower average balances held during the third quarter.

Costs and Expenses

For the three months ended September 30, 2025, costs and expenses of our Investing and Servicing Segment decreased $3.8 million to $33.9 million, compared to $37.7 million for the three months ended June 30, 2025. The decrease is primarily due to a $2.5 million decrease in general and administrative expenses, principally related to decreased loan securitization activity, and a $1.0 million decrease in interest expense primarily related to the financing of conduit loan balances.

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Other Income

For the three months ended September 30, 2025, other income of our Investing and Servicing Segment decreased $13.9 million to $22.2 million, compared to $36.1 million for the three months ended June 30, 2025. The decrease is primarily due to a $9.6 million lower gain in fair value of conduit loans and a $2.8 million decrease in earnings from unconsolidated entities.

Corporate and Other Items

Corporate Costs and Expenses

For the three months ended September 30, 2025, corporate expenses increased $2.5 million to $117.7 million, compared to $115.2 million for the three months ended June 30, 2025. This was primarily due to increases of $1.4 million in management fees and $1.0 million in interest expense.

Corporate Other Income (Loss)

For the three months ended September 30, 2025, corporate other income (loss) decreased $18.0 million to a loss of $1.8 million, compared to income of $16.2 million for the three months ended June 30, 2025. This was due to a an unfavorable change in gain (loss) on our fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.

Securitization VIE Eliminations

Securitization VIE eliminations primarily reclassify interest income and servicing fee revenues to other income (loss) for the CMBS and RMBS VIEs that we consolidate as primary beneficiary. Such eliminations have no overall effect on net income (loss) attributable to Starwood Property Trust. The reclassified revenues, along with applicable changes in fair value of investment securities and servicing rights, comprise the other income (loss) caption “Change in net assets related to consolidated VIEs,” which represents our beneficial interest in those consolidated VIEs. The magnitude of the securitization VIE eliminations is merely a function of the number of CMBS and RMBS trusts consolidated in any given period, and as such, is not a meaningful indicator of operating results. The eliminations primarily relate to CMBS trusts for which the Investing and Servicing Segment is deemed the primary beneficiary and, to a much lesser extent, some CMBS and RMBS trusts for which the Commercial and Residential Lending Segment is deemed the primary beneficiary.

Income Tax Provision

Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in taxable REIT subsidiaries (“TRSs”). For the three months ended September 30, 2025, our income tax provision increased $12.6 million to $13.3 million compared to $0.7 million for the three months ended June 30, 2025. This increase was due to higher taxable income of our TRSs in the third quarter of 2025 compared to the second quarter of 2025.

Net Income Attributable to Non-controlling Interests

During the three months ended September 30, 2025, net income attributable to non-controlling interests increased $2.5 million to $7.4 million, compared to $4.9 million during the three months ended June 30, 2025. The increase was primarily due to non-controlling interests in a favorable change in unrealized gains (losses) of a consolidated CMBS joint venture in the third quarter of 2025.

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Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Commercial and Residential Lending Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Commercial and Residential Lending Segment decreased $197.1 million to $1.0 billion, compared to $1.2 billion for the nine months ended September 30, 2024. This decrease was primarily due to decreases in interest income from loans of $183.0 million and investment securities of $26.5 million, partially offset by a $9.1 million increase in rental income from foreclosed properties. The decrease in interest income from loans reflects (i) a $176.2 million decrease from commercial loans, reflecting lower average index rates and spreads, additional loans placed on nonaccrual, lower prepayment related income and lower average balances, and (ii) a $6.8 million decrease from residential loans principally due to lower average balances. The decrease in interest income from investment securities was primarily due to lower average commercial investment balances due to repayments.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Commercial and Residential Lending Segment decreased $268.0 million to $602.4 million, compared to $870.4 million for the nine months ended September 30, 2024. This decrease was primarily due to decreases of $138.3 million in credit loss provision and $134.4 million in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio. The credit loss provision decreased primarily due to improvement in the macroeconomic outlook. The decrease in interest expense was primarily due to lower average borrowings outstanding due to paydowns from net loan repayments and excess cash balances and the effect of lower average index rates.

Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Interest income from loans $ 919,788  $ 1,102,810  $ (183,022)
Interest income from investment securities 63,629  90,170  (26,541)
Interest expense (527,684) (662,124) 134,440 
Net interest income $ 455,733  $ 530,856  $ (75,123)
For the nine months ended September 30, 2025, net interest income of our Commercial and Residential Lending Segment decreased $75.1 million to $455.7 million, compared to $530.9 million for the nine months ended September 30, 2024. This decrease reflects the decrease in interest income, partially offset by the decrease in interest expense on our secured financing facilities, both as discussed in the sections above.
During the nine months ended September 30, 2025 and 2024, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities, excluding retained RMBS and loans for which interest income is not recognized, were as follows:
For the Nine Months Ended September 30,
2025 2024
Commercial 8.3  % 9.7  %
Residential 5.0  % 5.0  %
Overall 7.8  % 9.0  %
The weighted average unlevered yield on our commercial loans decreased primarily due to lower average index rates and spreads and lower prepayment related income. The unlevered yield on our residential loans was relatively unchanged.
During the nine months ended September 30, 2025 and 2024, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.5% and 7.6%, respectively. The decrease in borrowing rates primarily reflects lower average index rates. Interest rate hedges had the effect of adjusting these weighted average borrowing costs to 5.9% and 6.7% during the nine months ended September 30, 2025 and 2024, respectively.
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Other Income
For the nine months ended September 30, 2025, other income of our Commercial and Residential Lending Segment decreased $48.3 million to $88.8 million, compared to $137.1 million for the nine months ended September 30, 2024. This decrease primarily reflects (i) a $179.3 million unfavorable change in gain (loss) on derivatives, partially offset by (ii) an $81.9 million increase in foreign currency gain, (iii) a $32.7 million net gain on sale of investments and other assets and (iv) a $20.6 million increased gain on extinguishment of debt primarily related to the sale of a foreclosed property in the nine months of 2025. The unfavorable change in gain (loss) on derivatives during the nine months ended September 30, 2025 reflects (i) a $100.5 million increased loss on foreign currency hedges and (ii) a $78.8 million unfavorable change in gain (loss) on interest rate swaps principally related to residential loans. The interest rate swaps are used primarily to hedge our interest rate risk on residential loans held-for-sale and to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The increased foreign currency gain and the increased loss on foreign currency hedges reflect the weakening of the U.S. dollar against the GBP, EUR and AUD during the nine months of 2025, compared to a lesser weakening of the U.S. dollar against each of those currencies in the nine months of 2024.
Infrastructure Lending Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Infrastructure Lending Segment increased $8.9 million to $206.5 million, compared to $197.6 million for the nine months ended September 30, 2024. This increase was primarily due to an $8.6 million increase in interest income from loans, reflecting higher average balances and prepayment related income, partially offset by the effects of lower average index rates and spreads.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Infrastructure Lending Segment increased $7.4 million to $139.5 million, compared to $132.1 million for the nine months ended September 30, 2024. The increase was primarily due to increases of $4.7 million in general, administrative and other expenses, $2.3 million in credit loss provision and $0.4 million in interest expense, reflecting higher average borrowings outstanding, partially offset by lower average index rates.
Net Interest Income (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Interest income from loans $ 203,129  $ 194,526  $ 8,603 
Interest income from investment securities 452  391  61 
Interest expense (115,662) (115,229) (433)
Net interest income $ 87,919  $ 79,688  $ 8,231 
For the nine months ended September 30, 2025, net interest income of our Infrastructure Lending Segment increased $8.2 million to $87.9 million, compared to $79.7 million for the nine months ended September 30, 2024. The increase reflects the increase in interest income from loans, partially offset by the increase in interest expense on the secured financing facilities, both as discussed in the sections above.
During the nine months ended September 30, 2025 and 2024, the weighted average unlevered yields on the Infrastructure Lending Segment’s loans and investment securities, excluding those for which interest income is not recognized, were 9.7% and 10.6%, respectively, reflecting lower average index rates and spreads, partially offset by higher prepayment related income, in the nine months of 2025.
During the nine months ended September 30, 2025 and 2024, the Infrastructure Lending Segment’s weighted average secured borrowing rates, inclusive of the amortization of deferred financing fees, were 6.9% and 8.0%, respectively, reflecting lower average index rates in the nine months of 2025.
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Other Income (Loss)
For the nine months ended September 30, 2025 and 2024, other income (loss) of our Infrastructure Lending Segment improved $0.8 million to income of $0.1 million, compared to a loss of $0.7 million for the nine months ended September 30, 2024, primarily due to an improvement in earnings (loss) of unconsolidated entities.
Property Segment
Change in Results by Portfolio (amounts in thousands)
$ Change from prior period
Revenues
Depreciation and amortization
Other costs and
 expenses
 Gain (loss) on derivative
 financial instruments		 Other income (loss) Income (loss) before
 income taxes
Fundamental
 $ 28,934  $ 15,355  $ 20,182  $ (7,967) $ (35) $ (14,605)
Master Lease Portfolio (4,821) —  (1,520) —  (90,795) (94,096)
Medical Office Portfolio 1,594  (129) (5,798) (1,557) 1,046  7,010 
Woodstar Fund 140  —  6  —  (955) (821)
D.C. Multifamily Conversion
 —  —  —  —  (1,153) (1,153)
Other/Corporate (62) —  455  —  97  (420)
Total $ 25,785  $ 15,226  $ 13,325  $ (9,524) $ (91,795) $ (104,085)
Revenues
For the nine months ended September 30, 2025, revenues of our Property Segment increased $25.8 million to $79.2 million, compared to $53.4 million for the nine months ended September 30, 2024. The increase was primarily due to Fundamental, which contributed rental income for the period from July 23, 2025 to September 30, 2025, the effect of which was partially offset by the sale of our Master Lease Portfolio on February 29, 2024.
Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Property Segment increased $28.5 million to $102.6 million, compared to $74.1 million for the nine months ended September 30, 2024. The increase is primarily due to Fundamental, which introduced (i) higher interest expense from the liabilities assumed and higher general and administrative expenses totaling $20.2 million and (ii) higher depreciation and amortization of $15.4 million from the assets acquired, the effect of which was partially offset by (iii) a $6.7 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, reflecting lower refinanced balances and index rates, and (iv) the sale of our Master Lease Portfolio on February 29, 2024.
Other Income (Loss)
For the nine months ended September 30, 2025, other income of our Property Segment decreased $101.3 million to a loss of $1.0 million, compared to income of $100.3 million for the nine months ended September 30, 2024. The decrease is primarily due to (i) the nonrecurrence of a $90.8 million net gain on sale of the Master Lease Portfolio in the first quarter of 2024 and (ii) an $8.0 million loss on derivatives which hedge the pending securitization of Fundamental collateral currently on a warehouse line and the pending refinance of an existing ABS facility.
Investing and Servicing Segment
Revenues
For the nine months ended September 30, 2025, revenues of our Investing and Servicing Segment increased $23.5 million to $173.5 million, compared to $150.0 million for the nine months ended September 30, 2024. The increase in revenues is primarily due to (i) a $20.3 million increase in servicing fees principally related to default interest and (ii) a $2.6 million increase in interest income from CMBS investments primarily due to higher interest recoveries.
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Costs and Expenses
For the nine months ended September 30, 2025, costs and expenses of our Investing and Servicing Segment decreased $5.5 million to $107.3 million, compared to $112.8 million for the nine months ended September 30, 2024. The decrease is primarily due to decreases of (i) $4.2 million in interest expense principally related to the financing of conduit loan balances and (ii) $2.7 million in general and administrative expenses.
Other Income (Loss)
For the nine months ended September 30, 2025, other income (loss) of our Investing and Servicing Segment improved $64.5 million to income of $50.5 million, compared to a loss of $14.0 million for the nine months ended September 30, 2024. The improvement was primarily due to (i) a $55.1 million lesser decrease in fair value of CMBS investments, (ii) a $7.6 million increase in earnings from unconsolidated entities and (iii) a $7.3 million favorable change in fair value of servicing rights, partially offset by (iv) the nonrecurrence of an $8.3 million gain on sale of an operating property in the nine months of 2024.
Corporate and Other Items
Corporate Costs and Expenses
For the nine months ended September 30, 2025, corporate expenses increased $38.4 million to $352.8 million, compared to $314.4 million for the nine months ended September 30, 2024. This increase was primarily due to (i) a $36.1 million increase in interest expense reflecting higher average balances of unsecured senior notes and secured term loans outstanding, partially offset by lower spreads and index rates on the secured term loans, and (ii) a $2.4 million increase in general and administrative expenses.
Corporate Other Income
For the nine months ended September 30, 2025, corporate other income increased $36.0 million to $41.7 million, compared to $5.7 million for the nine months ended September 30, 2024. This was due to an increased gain on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
Securitization VIE Eliminations

Refer to the preceding comparison of the three months ended September 30, 2025 to the three months ended June 30, 2025 for a discussion of the effect of securitization VIE eliminations.
Income Tax Provision
Our consolidated income taxes principally relate to the taxable nature of our loan servicing and loan securitization businesses which are housed in TRSs. For the nine months ended September 30, 2025, our income tax provision decreased $9.7 million to $17.8 million, compared to $27.5 million for the nine months ended September 30, 2024. This decrease was due to lower taxable income of our TRSs in the nine months of 2025 compared to the nine months of 2024.
Net Income Attributable to Non-controlling Interests
For the nine months ended September 30, 2025, net income attributable to non-controlling interests increased $14.6 million to $16.1 million, compared to $1.5 million for the nine months ended September 30, 2024. The increase was primarily due to non-controlling interests in lower unrealized losses of a consolidated CMBS joint venture.
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Non-GAAP Financial Measures
Distributable Earnings is a non-GAAP financial measure. We calculate Distributable Earnings as GAAP net income (loss) excluding the following: (i) non-cash equity compensation expense; (ii) the incentive fee due under our management agreement; (iii) acquisition and investment pursuit costs associated with successful acquisitions; (iv) depreciation and amortization of real estate and associated intangibles; (v) unrealized gains (losses), net of realized gains (losses), as described further below; (vi) other non-cash items; and (vii) to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein (i.e. the Woodstar II Class A units), with each of the above adjusted for any related non-controlling interest. Distributable Earnings may be adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by our Manager and approved by a majority of our independent directors.
As noted in (v) above, we exclude unrealized gains and losses 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. In order to present each of these items within our Distributable Earnings reconciliation tables in a manner which can be agreed more easily to our GAAP financial statements, we reverse the entirety of those items within our GAAP financial statements which contain unrealized and realized components (i.e. those assets and liabilities carried at fair value, including loans or securities for which the fair value option has been elected, investment company assets and liabilities, derivatives, foreign currency conversions, and accumulated depreciation related to sold properties). The realized portion of these items is then separately included in the reconciliation table, along with a description as to how the amount was determined.

The CECL reserve and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing policy for reporting 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. Non-recoverability may also be determined if, in our determination, it is nearly certain the carrying amounts will not be collected or realized upon sale. The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or expected to be received, and the Distributable Earnings basis of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the asset. The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding CECL reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.
We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends. We also use Distributable Earnings (previously defined as “Core Earnings”) to compute the incentive fee due under our management agreement.
Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of our GAAP cash flows from operations, a measure of our liquidity, taxable income, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.
As discussed in Note 2 to the Condensed Consolidated Financial Statements, consolidation of securitization variable interest entities (“VIEs”) results in the elimination of certain key financial statement line items, particularly within revenues and other income, including unrealized changes in fair value of loans and investment securities. These line items are essential to understanding the true financial performance of our business segments and the Company as a whole. For this reason, as referenced in Note 2 to our Condensed Consolidated Financial Statements, we present business segment data in Note 23 without consolidation of these VIEs. This is how we manage our business and is the basis for all data reviewed with our board of directors, investors and analysts. This presentation also allows for a more transparent reconciliation of the unrealized gain (loss) adjustments below to the segment data presented in Note 23.
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The weighted average diluted share count applied to Distributable Earnings for purposes of determining Distributable Earnings per share (“EPS”) is computed using the GAAP diluted share count, adjusted for the following:
(i)Unvested stock awards – Currently, unvested stock awards are excluded from the denominator of GAAP EPS. The related compensation expense is also excluded from Distributable Earnings. In order to effectuate dilution from these awards in the Distributable Earnings computation, we adjust the GAAP diluted share count to include these shares.
(ii)Convertible Notes – Conversion of our Convertible Notes is an event that is contingent upon numerous factors, none of which are in our control, and is an event that may or may not occur. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, we adjust the GAAP diluted share count to exclude the potential shares issuable upon conversion until a conversion occurs.
(iii)Subsidiary equity – The intent of a February 2018 amendment to our management agreement (the “Amendment”) is to treat subsidiary equity in the same manner as if parent equity had been issued. The Class A Units issued in connection with the acquisition of assets in our Woodstar II Portfolio are currently excluded from our GAAP diluted share count, with the subsidiary equity represented as non-controlling interests in consolidated subsidiaries on our GAAP balance sheet. Consistent with the Amendment, we adjust GAAP diluted share count to include these subsidiary units.    
The following table presents our diluted weighted average shares used in our GAAP EPS calculation reconciled to our diluted weighted average shares used in our Distributable EPS calculation (amounts in thousands):
For the Three Months Ended
For the Nine Months Ended
September 30, 2025 June 30, 2025
September 30, 2025
September 30, 2024
Diluted weighted average shares - GAAP EPS 360,394  337,145  344,299  315,302 
Add: Unvested stock awards 5,572  5,119  5,052  3,925 
Add: Woodstar II Class A Units 9,643  9,643  9,664  9,707 
Diluted weighted average shares - Distributable EPS 375,609  351,907  359,015  328,934 
As noted above, the definition of Distributable Earnings provides flexibility for management to make additional adjustments, subject to the approval of a majority of our independent directors, when appropriate in order for Distributable Earnings to be calculated in a manner consistent with its definition and objective. As a result of the Fundamental acquisition, we expect that straight-line rent will become a more significant component of our GAAP net income. Given that straight-line rent does not reflect the timing of cash received pursuant to the applicable leases and is not consistent with the determination of taxable income, we are adding an adjustment for straight line rents in the computation of Distributable Earnings. This adjustment was unanimously approved by our independent directors.
The following table summarizes our quarterly Distributable Earnings per weighted average diluted share for the nine months ended September 30, 2025 and 2024:

Distributable Earnings For the Three-Month Periods Ended
March 31, June 30, September 30,
2025
 $ 0.45  $ 0.43  $ 0.40 
2024
 0.59  0.48  0.48 
Distributable Earnings per weighted average diluted share for the nine months ended September 30, 2025 does not equal the sum of the individual quarters due to rounding and other computational factors.


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The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended September 30, 2025, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the Distributable Earnings reconciliation table for the nine months ended September 30, 2024.
Commercial
and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Total
Revenues $ 343,126  $ 77,718  $ 46,196  $ 60,888  $ 693  $ 528,621 
Costs and expenses (231,441) (48,337) (58,309) (33,909) (117,655) (489,651)
Other income (loss)
 42,630  (497) (8,256) 22,219  (1,793) 54,303 
Income (loss) before income taxes 154,315  28,884  (20,369) 49,198  (118,755) 93,273 
Income tax (provision) benefit
 (7,432) 234  6  (6,151) —  (13,343)
Income attributable to non-controlling interests
 (3) —  (4,366) (3,001) —  (7,370)
Net income (loss) attributable to Starwood Property Trust, Inc. 146,880  29,118  (24,729) 40,046  (118,755) 72,560 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units —  —  4,629  —  —  4,629 
Non-controlling interests attributable to unrealized gains/losses —  —  (4,323) 824  —  (3,499)
Non-cash equity compensation expense 2,840  733  1,565  1,327  8,225  14,690 
Depreciation and amortization 2,876  —  21,587  1,865  —  26,328 
Straight-line rent adjustment
 —  —  (467) 38  —  (429)
Interest income adjustment for loans and securities
 5,795  —  —  9,261  —  15,056 
Consolidated income tax provision (benefit) associated with fair value adjustments
 7,432  (234) (6) 6,151  —  13,343 
Other non-cash items 2  —  (83) (407) —  (488)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (40,544) —  —  (11,823) —  (52,367)
Credit loss provision, net
 26,805  1,554  —  —  —  28,359 
Securities (1,111) —  —  (4,531) —  (5,642)
Woodstar Fund investments —  —  (324) —  —  (324)
Derivatives (14,276) (7) 7,971  (1,295) 1,793  (5,814)
Foreign currency 11,995  210  10  —  —  12,215 
Loss (earnings) from unconsolidated entities
 —  294  —  (2,797) —  (2,503)
Sales of properties (1,095) —  21  —  —  (1,074)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
 (674) —  —  14,115  —  13,441 
Securities (4)
 (414) —  —  (8,326) —  (8,740)
Woodstar Fund investments (5)
 —  —  21,351  —  —  21,351 
Derivatives (6)
 11,072  46  486  (1,111) (7,499) 2,994 
Foreign currency (7)
 290  27  (11) —  —  306 
(Loss) earnings from unconsolidated entities (8)
 —  (110) —  3,252  —  3,142 
Sales of properties (9)
 1,095  —  (25) —  —  1,070 
Distributable Earnings (Loss) $ 158,968  $ 31,631  $ 27,652  $ 46,589  $ (116,236) $ 148,604 
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.43  $ 0.08  $ 0.08  $ 0.12  $ (0.31) $ 0.40 
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The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended June 30, 2025, by business segment (amounts in thousands, except per share data). Refer to the footnotes following the Distributable Earnings reconciliation table for the nine months ended September 30, 2024.
Commercial
and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Total
Revenues $ 343,907  $ 67,184  $ 16,477  $ 53,785  $ 536  $ 481,889 
Costs and expenses (207,310) (48,334) (22,115) (37,725) (115,205) (430,689)
Other income
 26,594  1,014  4,340  36,058  16,161  84,167 
Income (loss) before income taxes 163,191  19,864  (1,298) 52,118  (98,508) 135,367 
Income tax benefit (provision)
 5,495  88  —  (6,254) —  (671)
(Income) loss attributable to non-controlling interests
 (4) —  (5,326) 448  —  (4,882)
Net income (loss) attributable to Starwood Property Trust, Inc. 168,682  19,952  (6,624) 46,312  (98,508) 129,814 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units —  —  4,629  —  —  4,629 
Non-controlling interests attributable to unrealized gains/losses —  —  (3,383) (2,699) —  (6,082)
Non-cash equity compensation expense 2,844  723  107  1,367  8,389  13,430 
Management incentive fee —  —  —  —  183  183 
Depreciation and amortization 2,528  —  5,987  1,845  —  10,360 
Interest income adjustment for loans and securities 5,832  —  —  7,304  —  13,136 
Consolidated income tax (benefit) provision associated with fair value adjustments
 (5,495) (88) —  6,254  —  671 
Other non-cash items 5  —  316  (380) —  (59)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (8,425) —  —  (21,442) —  (29,867)
Credit loss provision, net
 3,663  2,003  —  —  —  5,666 
Securities 2,058  —  —  (3,728) —  (1,670)
Woodstar Fund investments —  —  (5,115) —  —  (5,115)
Derivatives 116,140  —  13  1,304  (16,161) 101,296 
Foreign currency (83,257) (630) 126  —  —  (83,761)
Earnings from unconsolidated entities
 (1,412) (1,167) —  (5,647) —  (8,226)
Sales of properties (4,128) —  —  —  —  (4,128)
Recognition of Distributable realized gains /
(losses) on:
Loans (2)
 (702) —  —  19,165  —  18,463 
Securities (4)
 (316) —  —  (4,223) —  (4,539)
Woodstar Fund investments (5)
 —  —  21,600  —  —  21,600 
Derivatives (6)
 17,555  50  (99) 347  (6,868) 10,985 
Foreign currency (7)
 1,671  91  (125) —  —  1,637 
Earnings (loss) from unconsolidated entities (8)
 1,412  (109) —  5,801  —  7,104 
Sales of properties (9)
 (44,438) —  —  —  —  (44,438)
Distributable Earnings (Loss) $ 174,217  $ 20,825  $ 17,432  $ 51,580  $ (112,965) $ 151,089 
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 0.49  $ 0.06  $ 0.05  $ 0.15  $ (0.32) $ 0.43 

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Three Months Ended September 30, 2025 Compared to the Three Months Ended June 30, 2025

Commercial and Residential Lending Segment

The Commercial and Residential Lending Segment’s Distributable Earnings decreased by $15.2 million, from $174.2 million during the second quarter of 2025 to $159.0 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $349.0 million, costs and expenses were $199.0 million, other income was $9.0 million and there was no income tax provision or benefit.

Revenues, consisting principally of interest income on loans, decreased by $0.8 million in the third quarter of 2025, primarily due to a decrease of $3.2 million in interest income from investment securities, reflecting lower balances due to payoffs, partially offset by an increase in interest income from loans of $2.5 million. The increase in interest income from loans was comprised of a $2.9 million increase from commercial loans, primarily reflecting higher average balances, partially offset by a $0.4 million decrease from residential loans.

Costs and expenses increased by $0.6 million in the third quarter of 2025, primarily due to a $1.1 million increase in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio, reflecting higher average borrowings outstanding.

Other income decreased by $13.8 million in the third quarter of 2025, primarily due to (i) the nonrecurrence of a $20.8 million gain on extinguishment of debt in the second quarter of 2025 primarily related to the sale of a foreclosed property and (ii) a $7.9 million decrease in realized gains on derivatives and foreign currency, partially offset by (iii) a $17.9 million favorable change in gain (loss) on sale of investments and other assets

Infrastructure Lending Segment

The Infrastructure Lending Segment’s Distributable Earnings increased by $10.8 million, from $20.8 million during the second quarter of 2025 to $31.6 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $77.7 million, costs and expenses were $46.1 million and other loss was nominal.

Revenues increased by $10.5 million in the third quarter of 2025, primarily due to a $10.8 million increase in interest income from loans, reflecting higher prepayment related income and average loan balances.

Costs and expenses increased by $0.4 million in the third quarter of 2025, primarily due to a $2.3 million increase in interest expense, reflecting higher average borrowings outstanding, partially offset by a $1.9 million decrease in other costs and expenses.

Other loss decreased by $0.7 million in the third quarter of 2025, primarily due to the nonrecurrence of a loss on extinguishment of debt in the second quarter of 2025.

Property Segment

Distributable Earnings by Portfolio (amounts in thousands)
For the Three Months Ended
September 30, 2025 June 30, 2025 Change
Woodstar Fund, net of non-controlling interests $ 17,687  $ 17,528  $ 159 
Fundamental
10,164  —  10,164 
Medical Office Portfolio 1,792  1,679  113 
D.C. Multifamily Conversion
 (845) (635) (210)
Other/Corporate (1,146) (1,140) (6)
Distributable Earnings $ 27,652  $ 17,432  $ 10,220 

The Property Segment’s Distributable Earnings increased by $10.3 million, from $17.4 million during the second quarter of 2025 to $27.7 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $46.1 million, costs and expenses were $35.7 million, other income was $21.4 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $4.1 million.
Revenues increased by $29.1 million in the third quarter of 2025, primarily due to the acquisition of Fundamental on July 23, 2025.
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Costs and expenses increased by $19.4 million in the third quarter of 2025, primarily due to the acquisition of Fundamental.

Other income increased by $0.6 million in the third quarter of 2025, primarily due to the acquisition of Fundamental.

Income attributable to non-controlling interests in the Woodstar Fund was relatively unchanged in the third quarter of 2025.

Investing and Servicing Segment

The Investing and Servicing Segment’s Distributable Earnings decreased by $5.0 million, from $51.6 million during the second quarter of 2025 to $46.6 million in the third quarter of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $70.2 million, costs and expenses were $31.2 million, other income was $9.7 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $2.1 million.

Revenues increased by $9.0 million in the third quarter of 2025, primarily due to a $9.7 million increase in servicing fees principally related to default interest and consent fees.

Costs and expenses decreased by $3.8 million in the third quarter of 2025, primarily due to a $2.5 million decrease in general and administrative expenses, principally related to decreased loan securitization activity, and a $1.0 million decrease in interest expense primarily related to the financing of conduit loan balances.

Other income includes profit realized upon securitization of loans by our conduit business, gains on sales of CMBS and operating properties, gains and losses on derivatives that were either effectively terminated or novated, and earnings from unconsolidated entities. These items are typically offset by a decrease in the fair value of our domestic servicing rights intangible which reflects the expected amortization of this deteriorating asset, net of increases in fair value due to the attainment of new servicing contracts. Derivatives include instruments which hedge interest rate risk and credit risk on our conduit loans and CMBS investments. For GAAP purposes, the loans, CMBS and derivatives are accounted for at fair value, with all changes in fair value (realized or unrealized) recognized in earnings. The adjustments to Distributable Earnings outlined above are also applied to the GAAP earnings of our unconsolidated entities. Other income decreased by $17.9 million in the third quarter of 2025, primarily due to (i) a $5.0 million decrease in realized gains on conduit loans, (ii) a $4.0 million increase in recognized credit losses on CMBS investments, (iii) a $3.5 million unfavorable change in other income (loss), (iv) a $2.5 million decrease in earnings from unconsolidated entities and (v) a $1.5 million unfavorable change in realized gain (loss) on derivatives which primarily hedge our interest rate risk on conduit loans and CMBS investments.

Income attributable to non-controlling interests decreased $0.1 million in the third quarter of 2025.

Corporate

Corporate loss increased by $3.2 million, from $113.0 million during the second quarter of 2025 to $116.2 million in the third quarter of 2025, primarily due to increases of $1.6 million in management fees and $1.0 million in interest expense.

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The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the nine months ended September 30, 2025, by business segment (amounts in thousands, except per share data):
Commercial
and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Total
Revenues $ 1,012,499  $ 206,527  $ 79,222  $ 173,548  $ 1,324  $ 1,473,120 
Costs and expenses (602,429) (139,536) (102,616) (107,338) (352,840) (1,304,759)
Other income (loss)
 88,780  112  (993) 50,540  41,707  180,146 
Income (loss) before income taxes 498,850  67,103  (24,387) 116,750  (309,809) 348,507 
Income tax (provision) benefit
 (2,231) 189  6  (15,744) —  (17,780)
Income attributable to non-controlling interests (10) —  (14,776) (1,312) —  (16,098)
Net income (loss) attributable to Starwood Property Trust, Inc. 496,609  67,292  (39,157) 99,694  (309,809) 314,629 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units —  —  13,917  —  —  13,917 
Non-controlling interests attributable to unrealized gains/losses —  —  (11,080) (6,378) —  (17,458)
Non-cash equity compensation expense 8,476  2,056  1,781  4,091  25,066  41,470 
Management incentive fee —  —  —  —  10,244  10,244 
Depreciation and amortization 9,146  —  33,545  5,562  —  48,253 
Straight-line rent adjustment
 —  —  307  104  —  411 
Interest income adjustment for loans and securities 17,843  —  —  31,727  —  49,570 
Consolidated income tax provision (benefit) associated with fair value adjustments
 2,231  (189) (6) 15,744  —  17,780 
Other non-cash items 10  —  (246) (1,219) —  (1,455)
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (91,543) —  —  (49,095) —  (140,638)
Credit loss provision, net
 4,709  4,317  —  —  —  9,026 
Securities (6,450) —  —  14,370  —  7,920 
Woodstar Fund investments —  —  (9,349) —  —  (9,349)
Derivatives 167,702  12  8,082  1,082  (41,707) 135,171 
Foreign currency (105,878) (656) 197  —  —  (106,337)
Earnings from unconsolidated entities
 (2,708) (251) —  (8,689) —  (11,648)
Sales of properties (5,223) —  21  —  —  (5,202)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
 (1,556) —  —  47,987  —  46,431 
Securities (4)
 (761) —  —  (15,082) —  (15,843)
Woodstar Fund investments (5)
 —  —  63,272  —  —  63,272 
Derivatives (6)
 57,668  149  290  (1,788) (21,401) 34,918 
Foreign currency (7)
 2,347  85  (197) —  —  2,235 
Earnings (loss) from unconsolidated entities (8)
 2,708  (327) —  9,659  —  12,040 
Sales of properties (9)
 (43,343) —  (25) —  —  (43,368)
Distributable Earnings (Loss) $ 511,987  $ 72,488  $ 61,352  $ 147,769  $ (337,607) $ 455,989 
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 1.43  $ 0.20  $ 0.17  $ 0.41  $ (0.94) $ 1.27 


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The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the nine months ended September 30, 2024, by business segment (amounts in thousands, except per share data):
Commercial
and
Residential
Lending
Segment		 Infrastructure
Lending
Segment		 Property
Segment		 Investing
and Servicing
Segment		 Corporate Total
Revenues $ 1,209,615  $ 197,607  $ 53,437  $ 149,959  $ 1,951  $ 1,612,569 
Costs and expenses (870,386) (132,054) (74,065) (112,762) (314,418) (1,503,685)
Other income (loss) 137,123  (736) 100,326  (14,027) 5,718  228,404 
Income (loss) before income taxes 476,352  64,817  79,698  23,170  (306,749) 337,288 
Income tax (provision) benefit
 (18,930) 414  —  (9,017) —  (27,533)
(Income) loss attributable to non-controlling interests
 (10) —  (15,010) 13,555  —  (1,465)
Net income (loss) attributable to Starwood Property Trust, Inc. 457,412  65,231  64,688  27,708  (306,749) 308,290 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units —  —  13,978  —  —  13,978 
Non-controlling interests attributable to unrealized gains/losses —  —  (9,028) (25,498) —  (34,526)
Non-cash equity compensation expense 7,320  1,485  288  4,797  17,612  31,502 
Management incentive fee —  —  —  —  22,593  22,593 
Depreciation and amortization 6,793  15  17,955  5,570  —  30,333 
Interest income adjustment for securities 15,891  —  —  25,603  —  41,494 
Consolidated income tax provision (benefit) associated with fair value adjustments
 18,930  (414) —  9,017  —  27,533 
Other non-cash items 10  —  834  (823) —  21 
Reversal of GAAP unrealized and realized (gains) / losses on: (1)
Loans (102,781) —  —  (47,498) —  (150,279)
Credit loss provision, net
 142,993  1,982  —  —  —  144,975 
Securities 4,352  —  —  69,445  —  73,797 
Woodstar Fund investments —  —  (10,304) —  —  (10,304)
Derivatives (11,636) (59) (1,442) (129) (5,718) (18,984)
Foreign currency (23,970) (479) 13  —  —  (24,436)
(Earnings) loss from unconsolidated entities
 (10,293) 694  —  (1,046) —  (10,645)
Sales of properties —  —  (92,003) (8,316) —  (100,319)
Recognition of Distributable realized gains / (losses) on:
Loans (2)
 (4,949) —  —  47,261  —  42,312 
Realized credit loss (3)
 —  (1,546) —  —  —  (1,546)
Securities (4)
 (9,302) —  —  (37,078) —  (46,380)
Woodstar Fund investments(5)
 —  —  54,246  —  —  54,246 
Derivatives (6)
 101,184  269  8,694  1,019  (31,750) 79,416 
Foreign currency (7)
 (12,209) 55  (13) —  —  (12,167)
Earnings (loss) from unconsolidated entities (8)
 4,272  (326) —  1,033  —  4,979 
Sales of properties (9)
 —  —  39,150  3,237  —  42,387 
Distributable Earnings (Loss) $ 584,017  $ 66,907  $ 87,056  $ 74,302  $ (304,012) $ 508,270 
Distributable Earnings (Loss) per Weighted Average Diluted Share $ 1.78  $ 0.20  $ 0.26  $ 0.23  $ (0.92) $ 1.55 
______________________________________________________________________________________________________________________

(1)The reconciling items in this section are exactly equivalent to the amounts recognized within GAAP net income (before the consolidation of VIEs), each of which can be agreed back to the respective lines within Note 23 to our Condensed Consolidated Financial Statements. They reflect both unrealized and realized (gains) and losses and, in the case of property sales, include the related gain or loss on extinguishment of debt associated with such sale, if any. For added transparency and consistency of presentation, the entire amount recognized in GAAP income is reversed in this section, and the realized components of these amounts are reflected in the next section entitled “Recognition of Distributable realized gains / (losses).”
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(2)Represents the realized portion of GAAP gains (losses) on residential and commercial conduit loans carried under the fair value option that were sold during the period or expected to be sold in the near term subject to a binding agreement. The amount is calculated as the difference between (i) the net proceeds received or expected to be received in connection with a securitization or sale of loans and (ii) such loans’ historical cost basis.
(3)Represents loan losses that are deemed nonrecoverable, which is generally upon a realization event, such as when a loan is repaid, or in the case of foreclosure, when the underlying asset is sold. Non-recoverability may also be determined if, in our determination, it is nearly certain that the carrying amounts will not be collected or realized upon sale. The loss amount is calculated as the difference between the cash received or expected to be received and the Distributable Earnings basis of the asset.
(4)Represents the realized portion of GAAP gains (losses) on CMBS and RMBS carried under the fair value option that are sold or impaired during the period. Upon sale, the difference between the cash proceeds received and the historical cost basis of the security is treated as a realized gain or loss for Distributable Earnings purposes. We consider a CMBS or an RMBS credit loss to be realized when such amounts are deemed nonrecoverable. Non-recoverability is generally at the time the underlying assets within the securitization are liquidated, but non-recoverability may also be determined if, in our determination, it is nearly certain that all amounts due will not be collected. The amount is calculated as the difference between the cash received and the historical cost basis of the security.
(5)Represents GAAP income from the Woodstar Fund investments excluding unrealized changes in the fair value of its underlying assets and liabilities. The amount is calculated as the difference between the Woodstar Fund’s GAAP net income and its unrealized gains (losses), which represents changes in working capital and actual cash distributions received.
(6)Represents the realized portion of GAAP gains or losses on the termination or settlement of derivatives that are accounted for at fair value. Derivatives are only treated as realized for Distributable Earnings when they are terminated or settled, and cash is exchanged. The amount of cash received or paid to terminate or settle the derivative is the amount treated as realized for Distributable Earnings purposes at the time of such termination or settlement.
(7)Represents the realized portion of foreign currency gains (losses) related to assets and liabilities denominated in a foreign currency. Realization occurs when the foreign currency is converted back to USD. The amount is calculated as the difference between the foreign exchange rate at the time the asset was placed on the balance sheet and the foreign exchange rate at the time cash is received and is offset by any gains or losses on the related foreign currency derivative at settlement.
(8)Represents GAAP earnings (loss) from unconsolidated entities excluding non-cash items and unrealized changes in fair value recorded on the books and records of the unconsolidated entities. The difference between GAAP and Distributable Earnings for these entities principally relates to depreciation and unrealized changes in the fair value of mortgage loans and securities.
(9)Represents the realized gain (loss) on sales of properties held at depreciated cost. Because depreciation is a non-cash expense that is excluded from Distributable Earnings, GAAP gains upon sale of a property are higher, and GAAP losses are lower, than the respective realized amounts reflected in Distributable Earnings. The amount is calculated as net sales proceeds less undepreciated cost, adjusted for any noncontrolling interest and any realized gain or loss on extinguishment of debt.

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Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Commercial and Residential Lending Segment
The Commercial and Residential Lending Segment’s Distributable Earnings decreased by $72.0 million, from $584.0 million during the nine months of 2024 to $512.0 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $1.0 billion, costs and expenses were $580.4 million, other income was $61.7 million and there was no income tax provision or benefit.
Revenues, consisting principally of interest income on loans, decreased by $195.4 million in the nine months of 2025, primarily due to decreases in interest income from loans of $178.2 million and investment securities of $29.4 million, partially offset by an $8.9 million increase in rental income from foreclosed properties. The decrease in interest income from loans reflects (i) a $171.4 million decrease from commercial loans, reflecting lower average index rates and spreads, additional loans placed on nonaccrual, lower prepayment related income and lower average balances, and (ii) a $6.8 million decrease from residential loans principally due to lower average balances. The decrease in interest income from investment securities was primarily due to lower average commercial investment balances due to repayments.
Costs and expenses decreased by $133.4 million in the nine months of 2025, primarily due to a $134.4 million decrease in interest expense associated with the various secured financing facilities used to fund a portion of this segment’s investment portfolio, reflecting lower average borrowings outstanding due to paydowns from net loan repayments and excess cash balances and the effect of lower average index rates.
Other income decreased by $10.0 million in the nine months of 2025, primarily due to (i) a $29.0 million decrease in realized gains on derivative financial instruments, net of related foreign currency gains (losses) and (ii) a $15.9 million net loss on sale of investments and other assets, partially offset by (iii) a $20.6 million increased gain on extinguishment of debt primarily related to the sale of a foreclosed property in the nine months of 2025, (iv) a $12.2 million decrease in recognized credit losses on RMBS investments and residential loans and (v) a $3.8 million decrease in other loss.
Infrastructure Lending Segment
The Infrastructure Lending Segment’s Distributable Earnings increased by $5.6 million, from $66.9 million during the nine months of 2024 to $72.5 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $206.5 million, costs and expenses were $133.1 million and other loss was $0.9 million.
Revenues increased by $8.9 million in the nine months of 2025, primarily due to an $8.6 million increase in interest income from loans, reflecting higher average balances and prepayment related income, partially offset by the effects of lower average index rates and spreads.
Costs and expenses increased by $3.0 million in the nine months of 2025, primarily due to (i) a $4.1 million increase in general, administrative and other expenses and (ii) a $0.4 million increase in interest expense, reflecting higher average borrowings outstanding, partially offset by lower average index rates, partially offset by (ii) the nonrecurrence of a $1.5 million recognized credit loss in the nine months of 2024.
Other loss increased by $0.3 million in the nine months of 2025.
Property Segment
Distributable Earnings by Portfolio (amounts in thousands)
For the Nine Months Ended September 30,
2025 2024 Change
Woodstar Fund, net of non-controlling interests $ 51,673  $ 44,239  $ 7,434 
Fundamental
 10,164  —  10,164 
Master Lease Portfolio —  40,714  (40,714)
Medical Office Portfolio 5,272  6,119  (847)
D.C. Multifamily Conversion
 (2,308) —  (2,308)
Other/Corporate (3,449) (4,016) 567 
Distributable Earnings $ 61,352  $ 87,056  $ (25,704)

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The Property Segment’s Distributable Earnings decreased by $25.7 million, from $87.1 million during the nine months of 2024 to $61.4 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $80.1 million, costs and expenses were $68.4 million, other income was $61.6 million and the deduction of income attributable to non-controlling interests in the Woodstar Fund was $11.9 million.
Revenues increased by $25.4 million in the nine months of 2025, primarily due to the acquisition of Fundamental on July 23, 2025, the effect of which was partially offset by the sale of our Master Lease Portfolio on February 29, 2024.
Costs and expenses increased by $6.6 million in the nine months of 2025, primarily due to (i) the acquisition of Fundamental on July 23, 2025, the effect of which was partially offset by (ii) an $11.4 million decrease in interest expense on variable rate borrowings of the Medical Office Portfolio, reflecting lower refinanced balances and index rates, and (iii) the sale of our Master Lease Portfolio on February 29, 2024.
Other income decreased by $42.6 million in the nine months of 2025, primarily due to the nonrecurrence of a $37.4 million net gain on sale of our Master Lease Portfolio and $14.2 million of realized gains on derivatives which primarily hedged our interest rate risk on borrowings secured by our Medical Office Portfolio, both of which were in the nine months of 2024, partially offset by a $9.0 million increase in distributable income from the Woodstar Fund.
Income attributable to non-controlling interests in the Woodstar Fund increased $1.9 million in the second half of 2025.
Investing and Servicing Segment
The Investing and Servicing Segment’s Distributable Earnings increased by $73.5 million from $74.3 million during the nine months of 2024 to $147.8 million in the nine months of 2025. After making adjustments for the calculation of Distributable Earnings, revenues were $205.6 million, costs and expenses were $99.1 million, other income was $49.0 million, there was no income tax provision or benefit, and the deduction of income attributable to non-controlling interests was $7.7 million.
Revenues increased by $29.8 million in the nine months of 2025, primarily due to a $20.3 million increase in servicing fees principally related to default interest and an $8.7 million increase in interest income from CMBS investments, primarily due to higher interest recoveries. The treatment of CMBS interest income on a GAAP basis is complicated by our application of the ASC 810 consolidation rules. In an attempt to treat these securities similar to our other investment securities, we compute distributable interest income pursuant to an effective yield methodology. In doing so, we segregate the portfolio into various categories based on the components of the bonds’ cash flows and the volatility related to each of these components. We then accrete interest income on an effective yield basis using the components of cash flows that are reliably estimable. Other minor adjustments are made to reflect management’s expectations for other components of the projected cash flow stream.
Costs and expenses decreased by $4.4 million in the nine months of 2025, primarily due to a $4.2 million decrease in interest expense principally related to the financing of conduit loan balances .
Other income increased by $35.1 million in the nine months of 2025, primarily due to (i) a $23.4 million decrease in recognized credit losses on CMBS, (ii) an $8.6 million increase in earnings from unconsolidated entities and (iii) a $7.3 million favorable change in fair value of servicing rights, partially offset by (iv) the nonrecurrence of $4.6 million of gains on sale of an operating property and certain CMBS investments in the nine months of 2024.
Income attributable to non-controlling interests decreased $4.2 million in the nine months of 2025, primarily due to the nonrecurrence of $2.9 million of non-controlling interests in the gain on sale of an operating property in the nine months of 2024.
Corporate
Corporate loss increased by $33.6 million, from $304.0 million during the nine months of 2024 to $337.6 million in the nine months of 2025, primarily due to (i) a $36.1 million increase in interest expense reflecting higher average balances of unsecured senior notes and secured term loans outstanding, partially offset by lower spreads and index rates on the secured term loans, and (ii) a $5.5 million increase in management fees, partially offset by (iii) a $10.3 million lower realized loss on fixed-to-floating interest rate swaps which hedge a portion of our unsecured senior notes.
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Liquidity and Capital Resources
Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay dividends to our stockholders, and other general business needs. 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 at least the next 12 months. Our strategy for managing liquidity and capital resources has not changed since December 31, 2024. Refer to our Form 10-K for a description of these strategies.
Sources of Liquidity
Our primary sources of liquidity are as follows:
Cash Flows for the Nine Months Ended September 30, 2025 (amounts in thousands)
GAAP VIE
Adjustments		 Excluding Securitization VIEs
Net cash provided by operating activities
 $ 489,102  $ —  $ 489,102 
Cash Flows from Investing Activities:
Origination, purchase and funding of loans held-for-investment (6,069,288) —  (6,069,288)
Proceeds from principal collections and sale of loans
 3,500,561  —  3,500,561 
Purchase and funding of investment securities (29,933) (61,638) (91,571)
Proceeds from sales, redemptions and collections of investment securities 308,444  104,338  412,782 
Proceeds from sales of real estate 60,480  —  60,480 
Proceeds from sale of interest in an unconsolidated entity 69,819  —  69,819 
Net cash paid in merger
 (878,493) —  (878,493)
Purchases and additions to properties and other assets (63,372) —  (63,372)
Net cash flows from other investments and assets 23,681  (11) 23,670 
Net cash used in investing activities
 (3,078,101) 42,689  (3,035,412)
Cash Flows from Financing Activities:
Proceeds from borrowings 9,994,652  —  9,994,652 
Principal repayments on and repurchases of borrowings (7,419,083) (331) (7,419,414)
Payment of deferred financing costs (57,326) —  (57,326)
Net proceeds from issuances of common stock 567,265  —  567,265 
Payment of dividends (490,645) —  (490,645)
Contributions from non-controlling interests 1,489  —  1,489 
Distributions to non-controlling interests (64,837) —  (64,837)
Repayment of debt of consolidated VIEs (61,980) 61,980  — 
Distributions of cash from consolidated VIEs 104,338  (104,338) — 
Net cash provided by financing activities
 2,573,873  (42,689) 2,531,184 
Net decrease in cash, cash equivalents and restricted cash
 (15,126) —  (15,126)
Cash, cash equivalents and restricted cash, beginning of period 553,995  —  553,995 
Effect of exchange rate changes on cash 238  —  238 
Cash, cash equivalents and restricted cash, end of period $ 539,107  $ —  $ 539,107 
The discussion below is on a non-GAAP basis, after removing adjustments principally resulting from the consolidation of the securitization VIEs under ASC 810. These adjustments principally relate to (i) the purchase of CMBS, RMBS, loans and real estate from consolidated VIEs, which are reflected as repayments of VIE debt on a GAAP basis and (ii) sales, principal collections and redemptions of CMBS and RMBS related to consolidated VIEs, which are reflected as VIE distributions on a GAAP basis. There is no net impact to overall cash resulting from these consolidations. Refer to Note 2 to the Condensed Consolidated Financial Statements for further discussion.
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Cash and cash equivalents decreased by $15.1 million during the nine months ended September 30, 2025, reflecting net cash used in investing activities of $3.0 billion, offset by net cash provided by financing activities of $2.5 billion and net cash provided by operating activities of $489.1 million.
Net cash provided by operating activities of $489.1 million during the nine months ended September 30, 2025 related primarily to cash interest income of $1.0 billion from our loans and $118.6 million from our investment securities. Other cash inflows included distributions from our affordable housing fund investments of $221.0 million (including $178.0 million of excess proceeds from mortgage debt refinancing), sales and principal collections, net of originations and purchases of loans held-for-sale of $83.6 million, net rental income of $70.6 million, servicing fees of $69.5 million and receipts from our interest rate derivatives of $21.8 million. Offsetting these cash inflows was cash interest expense of $870.6 million and general and administrative expenses of $236.5 million.

Net cash used in investing activities of $3.0 billion for the nine months ended September 30, 2025 related primarily to the origination and acquisition of loans held-for-investment of $6.1 billion, net cash paid in Fundamental merger of $878.5 million, purchase and funding of investment securities of $91.6 million and purchases and additions to properties and other assets of $63.4 million. Offsetting these cash outflows was proceeds received from principal collections and sale of loans held-for-investment of $3.5 billion and investment securities of $412.8 million, proceeds from the sale of an interest in an unconsolidated entity of $69.8 million and proceeds from the sale of real estate of $60.5 million.
Net cash provided by financing activities of $2.5 billion for the nine months ended September 30, 2025 related primarily to borrowings on our debt, net of repayments and deferred loan costs, of $2.5 billion and proceeds from issuances of common stock of $567.3 million. Offsetting these cash inflows was dividend distributions of $490.6 million.
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Our Investment Portfolio
The following is a review of our investment portfolio by segment.
Commercial and Residential Lending Segment
The following table sets forth the amount of each category of investments we owned across various property types within our Commercial and Residential Lending Segment as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Face
Amount		 Carrying
Value		 Asset Specific
Financing		 Net
Investment		 Unlevered
Return on
Asset (6)
September 30, 2025
First mortgages (1) $ 15,336,397  $ 15,282,765  $ 9,050,754  $ 6,232,011  7.9  %
Subordinated mortgages (2) 32,411  32,803  —  32,803  14.7  %
Mezzanine loans (1) 309,648  306,864  —  306,864  11.4  %
Other loans 51,688  51,093  —  51,093  9.3  %
Loans held-for-sale, fair value option, residential 2,516,397  2,308,388  2,061,331  247,057  4.4  % (5)
RMBS, available-for-sale 174,594  89,474  38,827  50,647  10.3  %
RMBS, fair value option 326,274  408,823  (3) 153,569  255,254  17.2  %
HTM debt securities (4) 143,728  143,458  36,243  107,215  6.5  %
Credit loss allowance N/A (440,182) —  (440,182)
Equity security 2,489  2,166  —  2,166 
Investments in unconsolidated entities  N/A 8,514  —  8,514 
Properties, net  N/A 764,063  29,751  734,312 
$ 18,893,626  $ 18,958,229  $ 11,370,475  $ 7,587,754 
December 31, 2024
First mortgages (1) $ 12,955,038  $ 12,931,333  $ 7,371,711  $ 5,559,622  8.3  %
Subordinated mortgages (2) 31,000  31,247  —  31,247  15.4  %
Mezzanine loans (1) 324,021  323,041  —  323,041  11.3  %
Other loans 46,688  46,255  —  46,255  13.2  %
Loans held-for-sale, fair value option, residential 2,694,959  2,394,624  2,125,990  268,634  4.5  % (5)
RMBS, available-for-sale 180,654  93,806  17,248  76,558  10.4  %
RMBS, fair value option 326,274  421,122  (3) 154,870  266,252  18.5  %
HTM debt securities (4) 405,404  404,081  121,832  282,249  8.9  %
Credit loss allowance N/A (451,205) —  (451,205)
Equity security 5,606  5,146  —  5,146 
Investments in unconsolidated entities N/A 26,441  —  26,441 
Properties, net N/A 650,966  87,750  563,216 
$ 16,969,644  $ 16,876,857  $ 9,879,401  $ 6,997,456 
__________________________________________
(1)First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzanine loans with carrying values of $1.3 billion and $0.9 billion being classified as first mortgages as of September 30, 2025 and December 31, 2024, respectively.
(2)Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
(3)Eliminated in consolidation against VIE liabilities pursuant to ASC 810.
(4)CMBS held-to-maturity (“HTM”) and mandatorily redeemable preferred equity interests in commercial real estate entities.
(5)Represents the weighted average coupon of residential mortgage loans.
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(6)Calculated using applicable index rates for variable rate investments as of the respective period end and excludes loans for which interest income is not recognized. In addition to cash coupon, unlevered return includes the amortization of deferred origination and extension fees, loan origination costs, and purchase discounts, as well as the accrual of exit fees.
As of September 30, 2025 and December 31, 2024, our Commercial and Residential Lending Segment’s investment portfolio, excluding residential loans, RMBS, properties and other investments, had the following characteristics based on carrying values:
Collateral Property Type September 30, 2025 December 31, 2024
Multifamily 37.0  % 34.5  %
Office 19.2  % 22.0  %
Industrial 16.3  % 8.9  %
Hotel 9.1  % 12.1  %
Mixed Use 4.7  % 9.6  %
Residential 2.6  % 1.6  %
Retail 2.1  % 1.6  %
Other 9.0  % 9.7  %
100.0  % 100.0  %

Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
South West 19.9  % 15.4  %
North East 19.9  % 18.4  %
South East 13.4  % 15.8  %
West 12.4  % 10.5  %
Mid Atlantic 5.6  % 9.3  %
Midwest 2.6  % 2.2  %
International:
United Kingdom 9.4  % 12.8  %
Other Europe 9.6  % 6.3  %
Australia 6.8  % 7.3  %
Bahamas/Bermuda 0.4  % 2.0  %
100.0  % 100.0  %
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Infrastructure Lending Segment
The following table sets forth the amount of each category of investments we owned within our Infrastructure Lending Segment as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Face
Amount		 Carrying
Value		 Asset Specific
Financing		 Net
Investment		 Unlevered
Return on
Asset (1)
September 30, 2025
First priority infrastructure loans and HTM securities $ 3,169,008  $ 3,105,760  $ 2,333,142  $ 772,618  8.4  %
Credit loss allowance N/A (25,381) —  (25,381)
Investments in unconsolidated entities N/A 54,356  —  54,356 
$ 3,169,008  $ 3,134,735  $ 2,333,142  $ 801,593 
December 31, 2024
First priority infrastructure loans and HTM securities $ 2,631,732  $ 2,580,775  $ 1,989,860  $ 590,915  8.9  %
Credit loss allowance N/A (21,553) —  (21,553)
Investments in unconsolidated entities N/A 54,105  —  54,105 
$ 2,631,732  $ 2,613,327  $ 1,989,860  $ 623,467 
__________________________________________
(1)Calculated using applicable index rates for variable rate investments as of the respective period end and excludes loans for which interest income is not recognized. In addition to cash coupon, unlevered return includes the amortization of deferred purchase discounts.
As of September 30, 2025 and December 31, 2024, our Infrastructure Lending Segment’s investment portfolio had the following characteristics based on carrying values:
Collateral Type September 30, 2025 December 31, 2024
Power
 62.1  % 57.1  %
Oil & gas - midstream 24.8  % 33.5  %
Oil & gas - downstream 10.4  % 8.5  %
Oil & gas - upstream
 —  % 0.9  %
Other
 2.7  % —  %
100.0  % 100.0  %

Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
North East 30.9  % 31.7  %
South West 22.7  % 20.5  %
Midwest 20.6  % 20.1  %
West 11.5  % 5.8  %
South East 10.0  % 17.0  %
Mid-Atlantic 0.8  % 1.4  %
Other 1.0  % 1.3  %
International:
United Kingdom
 1.6  % 1.9  %
Canada
 0.7  % —  %
Mexico 0.2  % 0.3  %
100.0  % 100.0  %
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Property Segment
The following table sets forth the amount of each category of investments held within our Property Segment as of September 30, 2025 and December 31, 2024 (amounts in thousands):
September 30, 2025 December 31, 2024
Properties, net $ 2,505,635  $ 657,246 
Lease intangibles, net 361,517  21,415 
Woodstar Fund 1,861,931  2,073,533 
$ 4,729,083  $ 2,752,194 
The following table sets forth our net investment and other information regarding the Property Segment’s properties and lease intangibles as of September 30, 2025 (dollars in thousands):
Carrying
Value		 Asset
Specific
Financing		 Net
Investment
Occupancy
Rate (1)
 Weighted Average
Remaining
Lease Term
Fundamental
 $ 2,215,960  $ 1,292,474  $ 923,486  99.8% 17.1 years
Office—Medical Office Portfolio
 789,757  481,502  308,255  88.0% 5.6 years
D.C. Multifamily Conversion
 117,050  —  117,050  N/A N/A
Subtotal—undepreciated carrying value 3,122,767  1,773,976  1,348,791 
Accumulated depreciation and amortization (255,615) —  (255,615)
Net carrying value $ 2,867,152  $ 1,773,976  $ 1,093,176 
__________________________________________
(1)Occupancy calculated based on number of properties for our single-tenant net lease properties and square footage for multi-tenant net lease properties.
As of September 30, 2025 and December 31, 2024, our Property Segment’s investment portfolio had the following geographic characteristics based on carrying values:

Geographic Location September 30, 2025 December 31, 2024
U.S. Regions:
South East 59.2  % 85.3  %
Midwest 13.4  % 2.2  %
West 8.3  % 2.5  %
North East 8.3  % 4.2  %
South West 6.1  % 2.9  %
Mid-Atlantic 4.5  % 2.9  %
International:
Canada
 0.2  % —  %
100.0  % 100.0  %
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Investing and Servicing Segment
The following table sets forth the amount of each category of investments we owned within our Investing and Servicing Segment as of September 30, 2025 and December 31, 2024 (amounts in thousands):
Face
Amount		 Carrying
Value		 Asset
Specific
Financing		 Net
Investment
September 30, 2025
CMBS, fair value option $ 2,737,089  $ 1,197,170  (1) $ 440,908  (2) $ 756,262 
Intangible assets - servicing rights N/A 63,916  (3) —  63,916 
Lease intangibles, net N/A 4,734  —  4,734 
Loans held-for-sale, fair value option, commercial 253,250  252,767  —  252,767 
Investments in unconsolidated entities N/A 32,964  (4) —  32,964 
Properties, net N/A 64,785  57,752  7,033 
$ 2,990,339  $ 1,616,336  $ 498,660  $ 1,117,676 
December 31, 2024
CMBS, fair value option $ 2,822,153  $ 1,225,024  (1) $ 445,966  (2) $ 779,058 
Intangible assets - servicing rights N/A 58,135  (3) —  58,135 
Lease intangibles, net N/A 5,545  —  5,545 
Loans held-for-sale, fair value option, commercial 125,695  121,384  86,753  34,631 
Investments in unconsolidated entities N/A 33,640  (4) —  33,640 
Properties, net N/A 65,466  58,375  7,091 
$ 2,947,848  $ 1,509,194  $ 591,094  $ 918,100 
______________________________________________

(1)Includes $1.17 billion and $1.20 billion of CMBS eliminated in consolidation against VIE liabilities pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively. Also includes $140.1 million and $148.6 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of September 30, 2025 and December 31, 2024, respectively.
(2)Includes $26.7 million and $30.3 million of non-controlling interests in the consolidated entities which hold certain debt balances as of September 30, 2025 and December 31, 2024, respectively.
(3)Includes $36.4 million and $35.7 million of servicing rights intangibles eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively.
(4)Includes $14.7 million and $14.8 million of investments in unconsolidated entities eliminated in consolidation against VIE assets pursuant to ASC 810 as of September 30, 2025 and December 31, 2024, respectively.

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Secured Borrowings
The following table is a summary of our secured borrowings as of September 30, 2025 (dollars in thousands):
Current
Maturity
Extended
Maturity (a)
Weighted
Average
Coupon
 Pledged
Asset
Carrying
Value		 Maximum
Facility
Size		 Outstanding
Balance
Approved
but
Undrawn
Capacity (b)
Unallocated
Financing
Amount (c)
Repurchase Agreements:
Commercial Loans Oct 2025 to May 2031
(d)
 Oct 2028 to Dec 2033
(d)
Index + 1.90%
(e)
 $ 11,792,848  $ 11,638,378 
(f)
$ 7,258,133  $ 983,942  $ 3,396,303 
Residential Loans Mar 2026 to Oct 2027 Mar 2026 to Apr 2028
SOFR + 1.65%
 2,305,757  3,450,000  2,061,738  4,853  1,383,409 
Infrastructure Loans Sep 2027 Sep 2029
Index + 2.20%
 426,353  650,000  326,743  —  323,257 
Conduit Loans Dec 2025 to Jun 2028 Dec 2026 to Jun 2029
SOFR + 2.15%
 —  375,000  —  —  375,000 
CMBS/RMBS Dec 2025 to Apr 2032
(g)
 Dec 2025 to Oct 2032
(g)
 (h) 1,215,230  906,650  645,886 
(i)
 62,171  198,593 
Total Repurchase Agreements 15,740,188  17,020,028  10,292,500  1,050,966  5,676,562 
Other Secured Financing:
Borrowing Base Facility Oct 2027 Oct 2029
SOFR + 2.00%
 267,632  1,250,000 
(j)
 8,000  194,968  1,047,032 
Commercial Financing Facilities Jan 2026 to Apr 2030 Jan 2027 to Dec 2033
Index + 1.97%
 687,866  977,423 
(k)
 477,187  —  500,236 
Infrastructure Financing Facilities Oct 2025 to Aug 2028 Oct 2027 to Jul 2033
SOFR + 1.87%
 997,100  1,175,000  773,710  65,877  335,413 
Property Financing
 Dec 2025 to Dec 2026 Dec 2025 to May 2029 (l) 1,304,254  1,130,240  942,397  —  187,843 
Term Loans and Revolver Nov 2027 to Sep 2032 N/A
SOFR + 2.00%
 N/A
(m)
 2,475,879  2,275,879  200,000  — 
STWD 2022-FL3 CLO Nov 2038 N/A
SOFR + 1.75%
 757,236  594,709  594,709  —  — 
STWD 2021-HTS SASB Apr 2034 N/A
SOFR + 3.26%
 144,227  123,615  123,615  —  — 
STWD 2021-FL2 CLO Apr 2038 N/A
SOFR + 1.76%
 916,701  693,802  693,802  —  — 
Starwood 2025-SIF5 CLO
 Apr 2037 N/A
SOFR + 1.73%
 518,977  413,500  413,500  —  — 
Starwood 2024-SIF4 CLO
 Oct 2036 N/A
SOFR + 1.93%
 612,678  496,200  496,200  —  — 
STWD 2024-SIF3 CLO
 Apr 2036 N/A
SOFR + 2.18%
 408,666  330,000  330,000  —  — 
ABS Master Series
 Mar 2028 to Oct 2029 Mar 2053 to Oct 2054
5.94%
(n)
 1,443,462  877,942  877,942  —  — 
Total Other Secured Financing 8,058,799  10,538,310  8,006,941  460,845  2,070,524 
$ 23,798,987  $ 27,558,338  $ 18,299,441  $ 1,511,811  $ 7,747,086 
Unamortized net discount (20,671)
Unamortized deferred financing costs (93,064)
$ 18,185,706 
___________________________________________
(a)Subject to certain conditions as defined in the respective facility agreement.
(b)Approved but undrawn capacity represents the total draw amount that has been approved by the lenders related to those assets that have been pledged as collateral, less the drawn amount.
(c)Unallocated financing amount represents the maximum facility size less the total draw capacity that has been approved by the lenders.
(d)For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.
(e)Certain facilities with an outstanding balance of $2.5 billion as of September 30, 2025 are indexed to EURIBOR, BBSY, SARON and SONIA. The remainder are indexed to SOFR.
(f)Certain facilities with an aggregate initial maximum facility size of $11.2 billion may be increased to $11.6 billion, subject to certain conditions. The $11.6 billion amount includes such upsizes.
(g)Certain facilities with an outstanding balance of $229.4 million as of September 30, 2025 carry a rolling 12-month term which may reset quarterly with the lender’s consent. These facilities carry no maximum facility size.
(h)A facility with an outstanding balance of $320.8 million as of September 30, 2025 has a weighted average fixed annual interest rate of 3.96%. All other facilities are variable rate with a weighted average rate of SOFR + 1.83%.
(i)Includes: (i) $320.8 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $26.7 million outstanding on one of our repurchase facilities that represents the 49% pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 15 to the Condensed Consolidated Financial Statements).
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(j)The maximum facility size as of September 30, 2025 of $615.0 million may be increased to $1.3 billion, subject to certain conditions. The $1.3 billion amount includes such upsize.
(k)Certain facilities with an aggregate initial maximum facility size of $877.4 million may be increased to $977.4 million, subject to certain conditions. The $977.4 million amount includes such upsizes.
(l)Certain facilities with an outstanding balance of $20.0 million as of September 30, 2025 have a weighted average fixed annual interest rate of 4.51%. All other facilities are variable rate with a weighted average rate of SOFR + 2.51%. Of the total balance, $414.6 million relates to Fundamental.
(m)These facilities are secured by the equity interests in certain of our subsidiaries which totaled $8.0 billion as of September 30, 2025.
(n)Includes: (i) $240.5 million outstanding under ABS Series 2024-1 with a weighted average fixed rate of 5.03%; (ii) $313.4 million outstanding under ABS Series 2023-2 with a weighted average fixed rate of 5.89% and (iii) $324.1 million outstanding under ABS Series 2023-1 with a weighted average fixed rate of 6.65%.
Refer to Note 10 to the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our secured financing arrangements, including a detailed discussion of new credit facilities and amendments to existing credit facilities executed since December 31, 2024.
Variance between Average and Quarter-End Credit Facility Borrowings Outstanding
The following table compares the average amount outstanding under our secured financing agreements during each quarter and the amount outstanding as of the end of each quarter, together with an explanation of significant variances (amounts in thousands):
Quarter Ended Quarter-End
Balance		 Weighted-Average
Balance During
Quarter		 Variance
December 31, 2024 14,440,425  14,767,193  (326,768)
March 31, 2025 15,701,971  14,882,903  819,068 
(a)
June 30, 2025 16,416,814  16,037,485  379,329 
September 30, 2025 18,299,441  17,404,418  895,023 
(b)
__________________________________________________
(a)Variance primarily due to secured debt advances utilized to fund new commercial loan originations at quarter end.
(b)Variance primarily due to debt assumed and drawn in connection with the Fundamental acquisition as well as issuance of corporate term loan at quarter end.
Borrowings under Unsecured Senior Notes
During the three months ended September 30, 2025 and 2024, the weighted average effective borrowing rate on our unsecured senior notes was 6.3% and 5.6%, respectively. During the nine months ended September 30, 2025 and 2024, the weighted average effective borrowing rate on our unsecured senior notes was 6.2% and 5.4%, respectively. The effective borrowing rate includes the effects of underwriter purchase discount.
Refer to Note 11 to the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our unsecured senior notes.
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Scheduled Principal Repayments on Investments and Overhang on Financing Facilities
The following scheduled and/or projected principal repayments on our investments were based on amounts outstanding and extended contractual maturities of those investments as of September 30, 2025. The projected and/or required repayments of financing were based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):
Scheduled Principal
Repayments on Loans
and HTM Securities		 Scheduled/Projected
Principal Repayments
on RMBS and CMBS
Projected/Required
Repayments of
Financing
 Scheduled Principal
Inflows Net of
Financing Outflows
Fourth Quarter 2025 $ 933,292  $ 56,581  $ (550,606) $ 439,267 
First Quarter 2026 432,554  8,052  (389,948) 50,658 
Second Quarter 2026 868,218  63,286  (552,259) 379,245 
Third Quarter 2026 813,768  30,630  (1,801,728) (957,330) (1)
Total $ 3,047,832  $ 158,549  $ (3,294,541) $ (88,160)
______________________________________________________________________________________________________________________

(1)Shortfall primarily relates to (i) $521.8 million of repayments under a Residential Loans repurchase facility which we have historically extended and intend to extend with lender's consent and (ii) $400.0 million of our unsecured senior notes that mature in July 2026 that we intend to repay with funds generated in the normal course of business.
In the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations.
Issuances of Equity Securities
We may raise funds through capital market transactions by issuing capital stock. There can be no assurance, however, that we will be able to access the capital markets at any particular time or on any particular terms. We have authorized 100,000,000 shares of preferred stock and 500,000,000 shares of common stock. At September 30, 2025, we had 100,000,000 shares of preferred stock available for issuance and 129,683,551 shares of common stock available for issuance.
Other Potential Sources of Financing
In the future, we may also use other sources of financing to fund the acquisition of our target assets and maturities of our unsecured senior notes, including other secured as well as unsecured forms of borrowing and sale of senior loan interests and other assets.
Leverage Policies
Our strategies with regards to use of leverage have not changed significantly since December 31, 2024. Refer to our Form 10-K for a description of our strategies regarding use of leverage.
Cash Requirements
Dividends
U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We generally intend to distribute substantially all of our taxable income (which does not necessarily equal our GAAP net income) to our stockholders each year, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. Refer to Note 17 to the Condensed Consolidated Financial Statements and our Form 10-K for a detailed dividend history.
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Contractual Obligations and Commitments
Our material contractual obligations and commitments as of September 30, 2025 are as follows (amounts in thousands):
Total Less than
1 year		 1 to 3 years 3 to 5 years More than
5 years
Secured financings (a) $ 14,769,673  $ 936,827  $ 3,019,678  $ 6,448,790  $ 4,364,378 
Securitized financing (b)
 3,529,768  963,463  769,319  545,378  1,251,608 
Unsecured senior notes 3,280,750  400,000  880,750  1,500,000  500,000 
Future funding commitments:
Commercial Lending (c) 1,474,096  913,775  538,741  21,580  — 
Infrastructure Lending (d) 449,415  368,553  80,862  —  — 
Property Segment (e)
 53,277  43,079  10,198  —  — 
__________________________________________________

(a)Represents the contractual maturity of the respective credit facility, inclusive of available extension options.  If investments that have been pledged as collateral repay earlier than the contractual maturity of the debt, the related portion of the debt would likewise require earlier repayment. Refer to Note 10 to the Condensed Consolidated Financial Statements for the expected maturities by year.

(b)Represents the fully extended maturity of the underlying collateral.

(c)Excludes $199.7 million of loan funding commitments in which management projects the Company will not be obligated to fund in the future due to repayments made by the borrower earlier than, or in excess of, expectations.

(d)Represents contractual commitments of $231.0 million under revolvers and letters of credit, $167.9 million under delayed draw term loans and $50.5 million of outstanding infrastructure loan purchase commitments.

(e)Represents future construction funding commitments in our Property Segment related to development projects which have estimated rental revenue commencement dates between October 2025 and August 2027.
The table above does not include interest payable, amounts due under our management agreement, amounts due under our derivative agreements or amounts due under guarantees as those contracts do not have fixed and determinable payments.
Our secured financings and the CLO and SASB portions of our securitized financing consist primarily of matched-term funding for our loans and investment securities and long-term mortgages on our owned properties. Repayments of such facilities are generally made from proceeds from maturities, prepayments or sales of such investments and operating cash flows from owned properties. In the normal course of business, we are in discussions with our lenders to extend, amend or replace any financing facilities which contain near term expirations. The ABS securitized financing of Fundamental’s properties is expected to be refinanced with similar ABS financing at or prior to its respective maturity.
Our unsecured senior notes are expected to be repaid from a combination of available cash on hand, approved but undrawn capacity under our secured financing agreements, and/or equity issuances or other potential sources of financing, as discussed above, including issuances of new unsecured senior notes.
Our future loan commitments are expected to be primarily matched-term funded under secured financing agreements with any difference funded from available cash on hand or other potential sources of financing discussed above.
Critical Accounting Estimates
Refer to the section of our Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” for a full discussion of our critical accounting estimates. Our critical accounting estimates have not materially changed since December 31, 2024.
Recent Accounting Developments
Refer to Note 2 to the Condensed Consolidated Financial Statements for a discussion of recent accounting developments and the expected impact to the Company.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risk can be quantified from historical experience and seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake. Our strategies for managing risk and our exposure to such risks, as described in Item 7A of our Form 10-K, have not changed materially since December 31, 2024 except as described below.
Credit Risk
Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.
We seek to further manage credit risk associated with our Investing and Servicing Segment loans held-for-sale through the purchase of credit instruments. The following table presents our credit instruments as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Face Value of
Loans Held-for-Sale		 Aggregate Notional Value of
Credit Instruments		 Number of
Credit Instruments
September 30, 2025 $ 253,250  $ 70,000  1
December 31, 2024 $ 125,695  $ 64,000  4
Interest Rate Risk
Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our investments and the related financing obligations. In general, we seek to match the interest rate characteristics of our investments with the interest rate characteristics of any related financing obligations such as repurchase agreements, bank credit facilities, term loans, revolving facilities and securitizations. In instances where the interest rate characteristics of an investment and the related financing obligation are not matched, we mitigate such interest rate risk through the utilization of interest rate derivatives of the same duration. As discussed in Note 13 to the Condensed Consolidated Financial Statements, we entered into a series of derivative transactions during 2024 related to our residential loan portfolio in an effort to extend hedge duration. These transactions involved a series of reverse swap trades which effectively locked a portion of positive cash flows from our original hedges for a period of time. We simultaneously entered into a forward starting swap which will not be effective until June 2027. While the fair value of the forward starting swap will impact earnings, it will not impact net investment income until its effective date.
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The following table presents financial instruments where we have utilized interest rate derivatives to hedge interest rate risk and the related interest rate derivatives as of September 30, 2025 and December 31, 2024 (dollars in thousands); however, consistent with Note 13 to the Condensed Consolidated Financial Statements, the notional value and number of interest rate derivatives excludes the residential lending reverse swap trades and forward starting swaps as well as certain other interest rate swaps that were not effective as of September 30, 2025 and December 31, 2024:
Face Value of
Hedged Instruments
Aggregate Notional Value of
Interest Rate Derivatives
Number of
Interest Rate Derivatives
Instrument hedged as of September 30, 2025
Loans held-for-sale $ 2,769,647  $ 2,370,700  36
RMBS, available-for-sale 174,594  40,000  1
CMBS, fair value option 105,256  57,380  2
HTM debt securities 7,315  5,520  1
Secured financing agreements 922,347  887,650  4
Unsecured senior notes 2,500,000  2,500,000  5
$ 6,479,159  $ 5,861,250  49
Instrument hedged as of December 31, 2024
Loans held-for-sale $ 2,820,654  $ 3,573,200  47
RMBS, available-for-sale 180,654  40,000  1
CMBS, fair value option 76,641  38,380  1
HTM debt securities 7,955  7,358  1
Secured financing agreements 507,895  531,746  4
Unsecured senior notes 2,250,000  2,235,000  5
$ 5,843,799  $ 6,425,684  59
The table below summarizes the estimated annual change in net investment income for our variable rate investments and our variable rate debt assuming increases or decreases in SOFR or other applicable index rates and adjusted for the effects of our interest rate hedging activities (amounts in thousands). However, this table excludes: (i) our floating rate residential loan debt along with its related hedges (see Note 13); (ii) certain other interest rate swaps that were not effective as of September 30, 2025 (see Note 13); and (iii) nonaccrual loans (see Note 4).
Income (Expense) Subject to Interest Rate Sensitivity Variable rate
investments and
indebtedness (1)		 1.00% Decrease 0.50% Decrease 0.25% Increase
Investment income from variable rate investments $ 17,850,356  $ (164,026) $ (85,447) $ 43,472 
Interest expense from variable rate debt, net of interest rate derivatives (16,451,515) 168,975  84,485  (42,361)
Net investment income from variable rate instruments $ 1,398,841  $ 4,949  $ (962) $ 1,111 
______________________________________________________________________________________________________________________
(1)Includes the notional value of interest rate derivatives.
Foreign Currency Risk
Our loans and investments that are denominated in a foreign currency are also subject to risks related to fluctuations in exchange rates. We generally mitigate this exposure by matching the currency of our foreign currency assets to the currency of the borrowings that finance those assets. As a result, we substantially reduce our exposure to changes in portfolio value related to changes in foreign exchange rates.
We intend to hedge our net currency exposures in a prudent manner. However, our currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments, and/or unequal, inaccurate, or unavailable hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.
Consistent with our strategy of hedging foreign currency exposure on certain investments, we typically enter into a series of forwards to fix the U.S. dollar amount of foreign currency denominated cash flows (interest income and principal payments) we expect to receive from our foreign currency denominated investments. Accordingly, the notional values and expiration dates of our foreign currency hedges approximate the amounts and timing of future payments we expect to receive on the related investments.
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The following table represents our assets and liabilities that are denominated in Pounds Sterling (“GBP”), Euros (“EUR”), Australian dollars (“AUD”), Swiss Francs (“CHF”) and Swedish Kronas (“SEK”) as well as our expected future net interest receipts (amounts in thousands):
September 30, 2025
GBP EUR AUD CHF
SEK
Foreign currency assets £ 1,191,583  € 1,140,244  A$ 1,643,014  Fr. 65,688  kr 533,964 
Foreign currency liabilities (837,600) (845,945) (1,141,239) (48,816) (403,561)
Foreign currency contracts - notional, net (401,377) (347,292) (733,716) (17,635) (172,019)
Subtotal (1)
 £ (47,394) € (52,993) A$ (231,941) Fr. (763) kr (41,616)
______________________________________________________________________________________________________________________

(1)     Primarily relates to expected net interest cash flows on the respective assets and liabilities over their term.

Substantially all of our net asset exposure to the GBP, EUR, AUD, CHF and SEK has been hedged with foreign currency forward contracts as of September 30, 2025, as indicated in the table above. Refer to Note 13 to the Condensed Consolidated Financial Statements for further detail regarding our foreign currency derivatives and their contractual maturities.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting. No change in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1.    Legal Proceedings.
Currently, no material legal proceedings are pending or, to our knowledge, threatened or contemplated against us, that could have a material adverse effect on our business, financial position or results of operations.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in our Form 10‑K, which include risk factors related to investing in net lease assets and risks of investment in real properties, except as discussed below.
We may not realize all of the benefits that we anticipate and underwrote in connection with the acquisition of Fundamental Income Properties, LLC or such benefits may take longer to realize than expected.

The success of our acquisition of Fundamental Income Properties, LLC (“Fundamental”) by way of merger will depend, in part, on our ability to realize the anticipated benefits from successfully integrating the business of Fundamental with ours. The combination of this business with ours may be a complex, costly and time consuming process, and we may be required to devote significant management attention and resources to integrating the business with ours. The integration process may disrupt our business and, if implemented ineffectively, could preclude us from realizing all of the potential benefits we expect to realize with respect to the acquisition. Our failure to meet the challenges involved in the integration could cause an interruption of, or a loss of momentum in, our business and could harm our results of operations. In addition, the integration may result in material unanticipated problems, expenses, liabilities, loss of business relationships and diversion of management’s attention, and may cause our stock price to decline. The difficulties of integrating Fundamental with our operations include, among others:

•the potential diversion of management focus and resources from other strategic opportunities and from operational matters and potential disruption associated with the acquisition;
•maintaining employee morale and retaining key management and other employees;
•integrating two business cultures;
•the possibility of faulty assumptions underlying expectations regarding the integration process;
•consolidating corporate and administrative infrastructures and eliminating duplicative operations;
•coordinating geographically separate organizations;
•unanticipated issues in integrating information technology, communications and other systems; and
•managing tax costs or inefficiencies associated with the integration process.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of securities or issuer purchases of equity securities during the three months ended September 30, 2025.
Item 3.    Defaults Upon Senior Securities.
None.
Item 4.    Mine Safety Disclosures.
Not applicable.
Item 5.    Other Information.
During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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Item 6.    Exhibits.
(a)Index to Exhibits
INDEX TO EXHIBITS
Exhibit No. Description
2.1
4.1
4.2
31.1 
31.2 
32.1 
32.2 
101.INS XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104  Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STARWOOD PROPERTY TRUST, INC.
Date: November 10, 2025 By:
/s/ BARRY S. STERNLICHT
Barry S. Sternlicht
Chief Executive Officer
Principal Executive Officer
Date: November 10, 2025 By:
/s/ RINA PANIRY
Rina Paniry
Chief Financial Officer, Treasurer, Chief Accounting Officer and Principal Financial Officer

112
EX-2.1 2 stwd_ex-21xq32025.htm EX-2.1 Document
EXECUTION VERSION
Exhibit 2.1



AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FUNDAMENTAL INCOME PROPERTIES, LLC,
TWELVE MERGER SUB, LLC,
STARWOOD PROPERTY TRUST, INC.,
AND
BSREP III FIP MEMBER LLC,
as Company Representative
Dated as of July 16, 2025




TABLE OF CONTENTS
(Continued)
Page
TABLE OF CONTENTS
Page
ARTICLE I DEFINITION    2
1.1    Certain Definitions.    2
1.2    Terms Defined Elsewhere in this Agreement    15
1.3    Other Definitional and Interpretive Matters.    17
ARTICLE II THE MERGER; CLOSING    18
2.1    The Merger    18
2.2    Closing    19
2.3    Effective Time    19
2.4    Effects of the Merger    19
2.5    Certificate of Formation and Company Operating Agreement of the Surviving Company.    19
2.6    Conversion of Units    19
2.7    No Further Rights of Transfers    20
ARTICLE III MERGER CONSIDERATION    20
3.1    Closing Date Payments by Parent.    20
3.2    Adjustment to the Merger Consideration.    21
3.3    Withholding    26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY    26
4.1    Organization and Good Standing    26
4.2    Authorization of Agreement    26
4.3    Conflicts; Consents of Third Parties.    27
4.4    Capitalization.    27
4.5    Subsidiaries.    28
4.6    Financial Statements    29
4.7    No Undisclosed Liabilities    30
4.8    Absence of Certain Developments    30
4.9    Taxes.    30
4.10    Real Property.    33
4.11    Intellectual Property and Information Technology.    35
ii

TABLE OF CONTENTS
(Continued)
Page
4.12    Material Contracts.    37
4.13    Employee Benefits Plans.    39
4.14    Labor.    41
4.15    Litigation    42
4.16    Compliance with Laws; Permits.    43
4.17    Anti-Corruption and Anti-Bribery Laws    43
4.18    Environmental Matters    44
4.19    Insurance    44
4.20    Material Suppliers.    45
4.21    No Unitholder Vote    45
4.22    Illustrative Closing Consideration Schedule    45
4.23    Related Party Agreements    45
4.24    Financial Advisors    45
4.25    Disclaimer of Warranties    46
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 46
5.1    Organization and Good Standing    46
5.2    Authorization of Agreement    47
5.3    Conflicts; Consents of Third Parties.    47
5.4    Litigation    48
5.5    Financial Advisors    48
5.6    Sufficient Funds    48
5.7    Solvency.    48
5.8    Certain Acknowledgements.    49
5.9    Merger Sub’s Operations    50
5.10    Disclaimer of Warranties    50
ARTICLE VI COVENANTS    51
6.1    Access to Information.    51
6.2    Conduct of the Business Pending the Closing.    52
6.3    Reasonable Best Efforts; Regulatory Approvals.    55
6.4    Further Assurances    55
iii

TABLE OF CONTENTS
(Continued)
Page
6.5    Confidentiality    56
6.6    Indemnification, Exculpation and Insurance.    56
6.7    Publicity.    57
6.8    Employee Matters    58
6.9    Certain Consents    59
6.10    Tax Matters.    59
6.11    Escrow Agreement    63
6.12    Data Room    64
ARTICLE VII CONDITIONS TO CLOSING    64
7.1    Conditions Precedent to Obligations of Parent, Merger Sub, and the Company    64
7.2    Conditions Precedent to Obligations of Parent and Merger Sub    64
7.3    Conditions Precedent to Obligations of the Company    65
7.4    Frustration of Closing Conditions    66
ARTICLE VIII TERMINATION    66
8.1    Termination of Agreement    66
8.2    Procedure upon Termination    66
8.3    Effect of Termination.    66
ARTICLE IX MISCELLANEOUS    67
9.1    Survival; Release; R&W Insurance Policy    67
9.2    Expenses    68
9.3    Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury.    69
9.4    Entire Agreement    70
9.5    Amendments and Waivers    70
9.6    Notices    70
9.7    Severability    71
9.8    Binding Effect; Assignment    71
9.9    Waiver of Conflicts Regarding Representations; Non-Assertion of Attorney-Client Privilege.    72
9.10    No Strict Construction    73
9.11    Non-Recourse    74
9.12    Specific Performance.    74
iv

TABLE OF CONTENTS
(Continued)
Page
9.13    Counterparts    75
9.14    Company Representative.    75
v

        
Exhibits
Exhibit A    Certificate of Merger
Exhibit B    Amended and Restated Certificate of Formation
Exhibit C    Prorated Rent

Schedules
Schedule 1.1(a)    Key Employees
Schedule 1.1(b)    Acquired Properties
Schedule 1.1(c)    Capital Expenditure Matters
Schedule 1.1(d)    Illustrative Closing Consideration Schedule
Schedule 1.1(e)    Illustrative Merger Consideration Calculation
Schedule 1.1(f)     Specified Property


AGREEMENT AND PLAN OF MERGER
Schedule 1.1(g) Specified Key Employees This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of July 16, 2025, by and among: (i) Starwood Property Trust, Inc., a Maryland corporation (“Parent”); (ii) Twelve Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“Merger Sub”); (iii) Fundamental Income Properties, LLC, a Delaware limited liability company (the “Company”); and (iv) BSREP III FIP Member LLC, a Delaware limited liability company, solely in its capacity as the Company Representative (as defined herein). Certain terms used in this Agreement are defined in Section 1.1.
W I T N E S S E T H:
WHEREAS, the Company, Parent and Merger Sub, desire to consummate the merger of Merger Sub with and into the Company, with the Company continuing as the surviving company in the merger (the “Merger”), pursuant to this Agreement and the Certificate of Merger, in accordance with the requirements of Section 18-209 of the Delaware Limited Liability Company Act (the “Act”), and upon the terms and subject to the conditions set forth in this Agreement.
WHEREAS, the board of managers of the Company has (a) determined that the Merger is fair to, and in the best interests of, the Company and the Unitholders, and has declared it advisable to enter into this Agreement, and (b) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, including the Merger.
WHEREAS, the board of managers or equivalent governing body of Parent and the board of managers or equivalent governing body of Merger Sub have (a) determined that the Merger is fair to, and in the best interests of, Parent and Merger Sub, respectively, and their respective owners, and have declared it advisable to enter into this Agreement and (b) approved the execution, delivery and performance by Parent and Merger Sub, respectively, of this Agreement and the consummation of the transactions contemplated hereby, including the Merger.
WHEREAS, in order to induce Parent and Merger Sub to enter into this Agreement, Brookfield Asset Management LLC, a Delaware limited liability company, and BSREP III FIP Member LLC, a Delaware limited liability company (together, “Brookfield”), have executed and delivered to Parent and the Company that certain release and non-solicitation agreement (the “Release and Non-Solicitation Agreement”), dated as of the date hereof, pursuant to which Brookfield has agreed to certain acknowledgment, release and non-solicitation terms, on the terms and subject to the conditions set forth in the Release and Non-Solicitation Agreement.
WHEREAS, in order to induce Parent and Merger Sub to enter into this Agreement, each of the employees of the Company set forth on Schedule 1.1(a) has executed and delivered to the Company an employment agreement (collectively, the “Employment Agreements”), dated as of the date hereof and to be effective as of the Closing Date (and contingent upon the occurrence of the Closing), pursuant to which he or she will serve as an employee of the Surviving Company, on the terms and subject to the conditions set forth in such Employment Agreement.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
Article IARTICLE I

DEFINITIONS
1.1Certain Definitions.
(a)For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:
“Acquired Property” means each of the real properties that is set forth on Schedule 1.1(b) with respect to which the acquisition by the Company or the Subsidiaries is consummated between the date hereof and the date immediately prior to the Closing Date.
“Acquired Property Value” means, with respect to each Acquired Property, an amount equal to the purchase price actually paid by the Company or the Subsidiaries, as applicable, under the applicable purchase contract for such Acquired Property entered into as of the date hereof, plus all transfer taxes, broker’s commissions and other out-of-pocket transaction costs actually paid by the Company or the Subsidiaries in connection with the acquisition of the applicable Acquired Property, in each case between the date hereof and the date immediately prior to the Closing Date, determined on a basis consistent with the Illustrative Merger Consideration Calculation; provided, that in no event shall the Acquired Property Value include any amounts reflected in (i) Cash, (ii) Debt, (iii) Net Working Capital, (iv) the CapEx Funding Adjustment Amount or (v) Prorated Rent.
“Adjustment Escrow Account” means the escrow account established pursuant to the Escrow Agreement in respect of the Adjustment Escrow Amount.
“Adjustment Escrow Amount” means an amount equal to $7,500,000.
“Adjustment Escrow Release Amount” means (i) the Adjustment Escrow Amount minus (ii) the Net Negative Merger Consideration Adjustment Amount (if any); provided, that if this adjustment amount is a negative number, the Adjustment Escrow Release Amount will be $0.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
2


“Antitrust Laws” means the HSR Act, the Sherman Act, the Clayton Act, the Federal Trade Commission Act, and any other United States or foreign Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or competition, or which otherwise relate to any direct or indirect foreign investment.
“Business Day” means any day of the year other than (a) a Saturday or a Sunday or (b) on which national banking institutions in New York, New York are required or authorized to be closed.
“Capital Expenditure Matters” means the matters that are set forth on Schedule 1.1(c).
“CapEx Funding Adjustment Amount” means the amount of capital expenditures with respect to the Capital Expenditure Matters that are actually funded by the Company or the Subsidiaries between the date hereof and the date immediately prior to the Closing Date (inclusive, for the avoidance of doubt, of any amounts funded by the Company or any of its Subsidiaries under any Lessor Real Estate Lease that is structured as a loan made by the Company or such Subsidiary), determined on a basis consistent with the Illustrative Merger Consideration Calculation; provided, that in no event shall the CapEx Funding Adjustment Amount include any amounts reflected in (i) Cash, (ii) Debt, (iii) Net Working Capital, (iv) the Acquired Property Value or (v) Prorated Rent.
“Cash” means, without duplication, all cash and cash equivalents, money market accounts, and marketable securities (however derived, including, without limitation, from capital contributions, operations, financings, sales or condemnations, insurance proceeds, the exercise of options or extraordinary events) of the Company and the Subsidiaries (including, for the avoidance of doubt, any security, escrow or similar deposits and any deposits, or cash held (a) as a guarantee in respect of performance of Contracts or (b) as collateral in respect of outstanding insurance policies, leases or letters of credit, and checks previously received by the Company or the Subsidiaries or their banks whether or not cleared and deposits in transit), determined on a basis consistent with the Illustrative Merger Consideration Calculation; provided, that in no event shall Cash include checks written but not cleared or cash amounts or deposits in transit to third parties.
“Certificate of Formation” means the Certificate of Formation of the Company, as amended from time to time in accordance with its terms and conditions.
“Class A Units” means the “Class A Units” in the Company as defined in the Company Operating Agreement.
“Class B Units” means the “Class B Units” in the Company as defined in the Company Operating Agreement.
“Clayton Act” means the Clayton Act of 1914.
3


“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code, or similar state or local Law.
“Code” means the Internal Revenue Code of 1986.
“Company Benefit Plan” means each “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”)), whether or not subject to ERISA, and each other compensation or benefit plan, program, policy, arrangement or agreement, including any pension, retirement, profit-sharing, bonus, commission, incentive, stock option, equity or equity-based compensation, deferred compensation, stock purchase, severance, retention, change of control, unemployment benefits, sick leave, vacation pay, paid time off, disability, hospitalization, health, medical, life insurance, fringe benefit, Tax gross-up, tuition reimbursement, flexible spending account or scholarship, employment, consulting, or similar plan, program, policy, arrangement or agreement, in each case, whether written or unwritten, (i) sponsored or maintained by the Company or any of the Subsidiaries or by the Management Pool (and, with respect to any plan, program, policy, arrangement or agreement sponsored or maintained by the Management Pool, to the extent one or more employees or natural person service providers of the Company or any of the Subsidiaries participate), (ii) to which the Company or any of the Subsidiaries is a party or has any obligation or Liability, provided, that “Company Benefit Plan” shall not include any plan, program, policy or arrangement maintained or sponsored by any Governmental Body.
“Company Operating Agreement” means the Amended and Restated Limited Liability Company Agreement of the Company, dated as of April 21, 2020.
“Company Transaction Expenses” means, without duplication, the following out-of-pocket costs, fees and expenses incurred by the Company or any of the Subsidiaries in connection with the preparation, negotiation and execution of the Transaction Documents and the performance and consummation of the Transactions which are unpaid: (i) all costs, fees and expenses for investment bankers, third party consultants, accountants, legal counsel and other third party advisors; (ii) all sale, change in control, success, retention, transaction or similar bonuses (including, for the avoidance of doubt, all transaction bonuses approved by the board of managers of the Company on the date hereof but, for the avoidance of doubt, not annual bonuses payable in the Ordinary Course of Business) and any severance payments or benefits, in each case, payable to any current or former officer, manager, employee or other individual service provider of the Company or the Subsidiaries in connection with or as a result of the consummation of the contemplated Transactions (but excluding any severance or termination payments, liabilities or obligations arising as a result of any termination of employment or service occurring after the Closing for which notice was not provided at or before the Closing); (iii) the employer’s portion of any social security, Medicare, unemployment or other employment or payroll Taxes payable in respect of, and employer contributions to retirement plans associated with, any bonus or payment described in the foregoing clause (ii) or the amounts payable in respect of the Management Pool Units (excluding, for clarity, any self-employment taxes imposed on the holders of Management Pool Units); (iv) 50% of the costs and expenses of obtaining a D&O Tail Policy in accordance with the terms hereunder; (v) all costs, fees and expenses incurred by or on behalf of any Unitholder in connection with the preparation, negotiation and execution of the Transaction Documents and the performance and consummation of the Transactions that the Company or any of the Subsidiaries is or will be obligated to pay or reimburse; provided, however, that 50% of the first $35,000, and all above $35,000, of the costs, fees or expenses incurred prior to the Closing by Unitholders in connection with the analysis, negotiation, evaluation, implementation, structuring, or documentation of, or advice related to, any post-Closing employment or service provider arrangement, including any compensation arrangement (including incentive compensation plans, awards or arrangements), employment agreements or related matters (including the Employment Agreements) that the Company or any of the Subsidiaries is or will be obligated to pay or reimburse will be deemed Company Transaction Expenses hereunder; (vi) 50% of the costs and fees associated with the Adjustment Escrow Account in accordance with the terms hereunder; and (vii) the Purchase Price (as defined in the Trademark Acquisition Agreement) and any other liabilities, costs, fees and expenses incurred by the Company or any of the Subsidiaries prior to or at the Closing in connection with the preparation, negotiation and execution of the Trademark Acquisition Agreement and the performance and consummation of the transactions contemplated by the Trademark Acquisition Agreement; provided, however, that Company Transaction Expenses shall exclude (1) costs and expenses paid by the Company or any of its Affiliates (including the Subsidiaries) prior to or as of the Closing, (2) costs and expenses contemplated to be paid by Parent or its Affiliates (not including the Company and the Subsidiaries) pursuant to this Agreement or any other Transaction Document and (3) costs and expenses incurred by the Company and the Subsidiaries after the Closing.
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“Confidential Information” means all information of a confidential nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to the business of the Company and the Subsidiaries or their respective suppliers, distributors, tenants, independent contractors or other business relations.
“Continuing Employee” means any individual employed by the Company or any of the Subsidiaries immediately prior to the Closing and who continues his or her employment with the Surviving Company following the Closing Date.
“Contract” means any legally binding contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, undertaking, arrangement, license or other obligation (whether written or oral).
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“Debt” means, without duplication, all outstanding obligations (including accrued interest and other amounts payable related thereto) of the Company and the Subsidiaries (i) for borrowed money, together with accrued and unpaid interest thereon and other amounts payable at retirement thereof; (ii) evidenced by notes, bonds, debentures, mortgages, letters of credit or similar instruments, but excluding letters of credit or similar instruments to the extent not drawn upon; (iii) for Company Transaction Expenses which have not been paid prior to the Closing; (iv) for accrued or earned and, in any case, unpaid bonuses (including signing bonuses), commissions, incentive compensation, unfunded deferred compensation or similar unfunded compensatory payment obligations, accrued or earned and unused paid time off, vacation or other leave and any unpaid severance owed to a former employee (or an employee who has received or provided notice of his or her termination of employment at or prior to the Closing), including in each case the employer share of any employment or payroll Taxes payable in respect of such payments; (v) any unfunded or underfunded liabilities with respect to any accrued or earned benefits under any Company Benefit Plan providing retirement benefits or post-termination welfare benefits, including any employer contributions to retirement plans related to the period prior to the Closing; (vi) for prepaid rent, security deposits or insurance holdbacks funded by any tenant under any Lessor Real Estate Leases; (vii) for the unpaid portion of any deferred purchase price actually payable in respect of any Owned Real Property or other properties, assets, goods, business or services, including any earn out payments or contingent consideration payment obligations; (viii) under any derivative instruments, hedges, swaps or similar arrangements (but in the case of this clause (viii), only the net value thereof (i.e, the fair value of the underlying liability less the fair value of the underlying asset)); (ix) all accrued and unpaid income Taxes of the Company or any Subsidiary and all accrued and unpaid franchise, sales, use, gross receipts, profits, net worth, equity capital or similar Taxes of the Company or any Subsidiary (other than property Taxes), in each case, which are attributable to a Pre-Closing Tax Period beginning on or after January 1, 2024 (determined with respect to a Straddle Period in accordance with Section 6.10(b)) and, in each case, that (A) shall be computed in accordance with GAAP and (B) shall exclude all Transfer Taxes; (x) for any declared but unpaid distributions to any Unitholder; (xi) for premiums, penalties, fees, expenses, and breakage costs, required to be paid in respect of any of the obligations of the types referred to in clauses (i) through (ix) upon repayment or prepayment thereof in connection with the consummation of the Transactions; (xii) pursuant to guaranties for obligations of the types referred to in clauses (i) through (xi) of another Person; in each case of clauses (i) through (xii), determined on a basis consistent with the Illustrative Merger Consideration Calculation; provided, that Debt shall not include any such liabilities or obligations between the Company and any of the Subsidiaries, or between any Subsidiary of the Company and another Subsidiary(ies) of the Company.
“Environmental Law” means any Law relating to or concerning pollution or protection of human health and safety (as it relates to exposure to Hazardous Materials), the environment or natural resources or concerning the use, storage, recycling, treatment, generation, management, manufacture, transportation, processing, handling, labeling, sale, distribution, Release or threatened Release of Hazardous Materials.
“ERISA Affiliate” means any entity, whether or not incorporated, that together with the Company is treated as a single employer under Section 4001(b)(1) of ERISA or Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) or (o) of the Code.
“Escrow Agent” means Wilmington Trust, N.A., as escrow agent under the Escrow Agreement, or any successor Person appointed in accordance with the terms of the Escrow Agreement.
“Escrow Agreement” means an escrow agreement in a mutually agreed form to be executed as of the Closing Date by and among Parent, the Company Representative and the Escrow Agent, providing for the holding and disbursement of certain funds held in escrow in accordance with the terms hereof and thereof.
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“Estimated Working Capital Adjustment” means (i) if the Estimated Working Capital exceeds the Net Working Capital Peg, the amount, if any, by which the Estimated Working Capital exceeds the Net Working Capital Peg, which amount shall be expressed as a positive number; (ii) if the Estimated Working Capital is less than the Net Working Capital Peg, the amount, if any, by which the Net Working Capital Peg exceeds the Estimated Working Capital, which amount shall be expressed as a negative number or (iii) if the Estimated Working Capital is equal to the Net Working Capital Peg, zero.
“Federal Trade Commission Act” means the U.S. Federal Trade Commission Act of 1914.
“Final Acquired Property Value” means Closing Acquired Property Value (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c) , (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final Acquired Property Value be more than the Company Representative’s calculation of Closing Acquired Property Value delivered pursuant to Section 3.2(c) or less than Parent’s calculation of Closing Acquired Property Value delivered pursuant to Section 3.2(b).
“Final Acquired Property Value Adjustment” means the amount, which may be positive or negative, equal to the Final Acquired Property Value minus the Estimated Acquired Property Value.
“Final CapEx Funding Adjustment Amount” means Closing CapEx Funding Adjustment Amount (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c), (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final CapEx Funding Adjustment Amount be more than the Company Representative’s calculation of Closing CapEx Funding Adjustment Amount delivered pursuant to Section 3.2(c) or less than Parent’s calculation of Closing CapEx Funding Adjustment Amount delivered pursuant to Section 3.2(b).
“Final CapEx Funding Adjustment Amount Adjustment” means the amount, which may be positive or negative, equal to the Final CapEx Funding Adjustment Amount minus the Estimated CapEx Funding Adjustment Amount.
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“Final Cash” means Closing Cash (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c), (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final Cash be more than the Company Representative’s calculation of Closing Cash delivered pursuant to Section 3.2(c) or less than Parent’s calculation of Closing Cash delivered pursuant to Section 3.2(b).
“Final Cash Adjustment” means the amount, which may be positive or negative, equal to the Final Cash minus the Estimated Cash.
“Final Debt” means Closing Debt (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c), (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final Debt be more than Parent’s calculation of Closing Debt delivered pursuant to Section 3.2(b) or less than the Company Representative’s calculation of Closing Debt delivered pursuant to Section 3.2(c).
“Final Debt Adjustment” means the amount, which may be positive or negative, equal to the Final Debt minus the Estimated Debt.
“Final Prorated Rent” means Prorated Rent (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c), (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final Prorated Rent be more than the Company Representative’s calculation of Prorated Rent delivered pursuant to Section 3.2(c) or less than Parent’s calculation of Prorated Rent delivered pursuant to Section 3.2(b).
“Final Prorated Rent Adjustment” means the amount, which may be positive or negative, equal to the Final Prorated Rent minus the Estimated Prorated Rent.
“Final Working Capital” means Closing Working Capital (i) as shown in Parent’s calculation delivered pursuant to Section 3.2(b) if no Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c); or (ii) if a Dispute Notice with respect thereto is duly delivered pursuant to Section 3.2(c), (A) as agreed by the Company Representative and Parent pursuant to Section 3.2(d) or (B) in the absence of such agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.2(d); provided, however, that in no event shall Final Working Capital be more than the Company Representative’s calculation of Closing Working Capital delivered pursuant to Section 3.2(c) or less than Parent’s calculation of Closing Working Capital delivered pursuant to Section 3.2(b).
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“Final Working Capital Adjustment” means the amount, which may be positive or negative, equal to (i) if the Final Working Capital exceeds the Estimated Net Working Capital, the amount, if any, by which the Final Working Capital exceeds the Estimated Net Working Capital, which amount shall be expressed as a positive number, (ii) if the Final Working Capital is less than the Estimated Net Working Capital, the amount, if any, by which the Estimated Net Working Capital exceeds the Final Working Capital, which amount shall be expressed as a negative number, or (iii) if the Final Working Capital is equal to the Estimated Net Working Capital, zero.
“Fraud” means a claim for actual intentional fraud under Delaware common law brought against a party hereto based on a representation of such party contained in this Agreement; provided, that at the time such representation was made (i) such representation was inaccurate, (ii) such party had actual knowledge (and not imputed or constructive knowledge), without any duty of inquiry or investigation, of the inaccuracy of such representation, (iii) such party had the specific intent to deceive another party hereto, (iv) the party to whom such representation was made acted in reliance on such inaccurate representation, and (v) the party to whom such representation was made suffered or incurred financial injury as a result of such inaccurate representation. For the avoidance of doubt, “Fraud” does not include any claim for equitable fraud, promissory fraud, unfair dealings fraud, or any torts (including a claim for fraud) based on negligence or recklessness.
“Fundamental Income Mark” means the service mark FUNDAMENTAL INCOME and its associated registration with the United States trademark registration number 6,054,306.
“Fundamental Representations” means the representations and warranties of the Company contained in the first, second and fourth sentences of Section 4.1 (Organization and Good Standing), Section 4.2 (Authorization of Agreement), Sections 4.3(a)(i)(A) (Conflicts with Company Organizational Documents), Section 4.4(a) and 4.4(b) (Capitalization), the first and second sentences of Section 4.5(a) and the first, second, third, fourth, fifth and sixth sentences of Section 4.5(b) (Subsidiaries), Section 4.20 (No Unitholder Vote), Section 4.22 (Illustrative Closing Consideration Schedule) and Section 4.24 (Financial Advisors).
“GAAP” means generally accepted accounting principles as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board.
“Governing Documents” means (i) the articles or certificate of incorporation and the bylaws of a corporation; (ii) the articles or certificate of organization and operating agreement of a limited liability company; (iii) the partnership agreement and any statement of partnership of a general partnership; (iv) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (v) the trust documents and related filings and formation documents of a trust; (vi) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person or related to the voting and/ or governance of a Person; (vii) any governance agreements related to the voting and/or governance of a Person; and (viii) any amendment to any of the foregoing.
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“Governmental Body” means any government, governmental or quasi-governmental, legislative, or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court, commission, body, agency, or arbitrator (public or private).
“Hazardous Materials” means any substance, material, waste, or chemical (a) defined, classified, identified or regulated as “hazardous” or “toxic” or as a “pollutant” or “contaminant” or words of similar meaning or regulatory effect under any Environmental Law; (b) asbestos in any form, polychlorinated biphenyls, per- and polyfluoroalkyl substances, crude oil, petroleum or petroleum products, radioactive materials or wastes, radon gas and urea formaldehyde; and (c) any other substance, material, waste, or chemical regulated by, or for which liability or standards of care are imposed under, Environmental Law.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Illustrative Closing Consideration Schedule” means the sample Closing Consideration Schedule, which is based upon the Illustrative Merger Consideration Calculation and the terms of the Company Operating Agreement and the Management Pool Operating Agreement (each as in effect immediately prior to the Merger), set forth on Schedule 1.1(d), which is solely for illustrative purposes.
“Illustrative Merger Consideration Calculation” means the sample calculation of the Merger Consideration (and each component thereof) as set forth on Schedule 1.1(f), which is solely for illustrative purposes.
“Intellectual Property” means all intellectual property and intellectual property rights worldwide, including such rights arising from or in respect of the following: (i) patents and applications therefor; (ii) trademarks, service marks, trade names, service names, logos, Internet domain names, d/b/a’s, symbols, trade dress and trade names and other indicia of origin; (iii) works of authorship, whether or not copyrightable, and copyrights therein or thereto; (iv) trade secrets and confidential or proprietary know-how, including methods, processes, models, prototypes, proprietary data and databases, customer lists and supplier lists; (v) software (including source code, object code and embedded data, databases, collections of data, firmware and related information, documentation and manuals); and (vi) applications, registrations and any common law rights of or for any of the foregoing.
“Interest Rate” means (i) the rate of interest published from time to time by The Wall Street Journal, Eastern Edition, as the “prime rate” at large U.S. money center banks during the period from the date that payment is due to the date of payment, plus (ii) two percent (2.0%).
“IRS” means the U.S. Internal Revenue Service and, to the extent relevant, the U.S. Department of Treasury.
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“Knowledge of Parent” means the actual knowledge (and not imputed or constructive knowledge), including that which would reasonably be expected to be gained after reasonable inquiry and investigation, of Qahir Madhany.
“Knowledge of the Company” means the actual knowledge (and not imputed or constructive knowledge), including that which would reasonably be expected to be gained after reasonable inquiry and investigation, of any of Chris Burbach, Alexi Panagiotakopoulos and Matt Burbach.
“Law” means any applicable U.S. federal, state, local or non-U.S. law, statute, code, ordinance, rule, regulation, Order, principle of common law, or any other requirement or pronouncement having the effect of law of any Governmental Body.
“Legal Proceeding” means any civil, criminal or administrative action, suit, demand, litigation, arbitration, claim, action, complaint, investigation, citation, review, examination, audit, proceeding, hearing or other dispute (public or private) by or before a Governmental Body.
“Lessor Real Estate Leases” means all leases, subleases, licenses, concessions or other agreements, including any respective amendments, modifications, extensions and/or assignments thereto or thereof, in effect as of the date hereof, as set forth on Section 1.1(a) of the Company Disclosure Schedule, together with any such similar leases, subleases, licenses or other agreements (i.e., where the Company or one of the Subsidiaries is the lessor or landlord of a real property) entered into after the date hereof but prior to the Closing (including any such arrangements structured as loans).
“Liability” means any debt, financial obligation, expense, damages, judgements, costs or other monetary liability of any Person, whether asserted or unasserted, absolute or contingent, known or unknown, accrued or unaccrued.
“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, trust deed, security interest, lease, charge, option, right of first refusal or first offer, easement, servitude, collateral security agreement, UCC financing statement, reservation, equitable interest, preference, priority license, title or survey defect, sublease, conditional sale or other title retention agreement, hypothecation, covenant, right of way, encroachment, variance, warrant, claim, community property interest, right of others, proxy, restrictive covenant, condition, equitable interest, or similar restriction, matter of record or encumbrance of any kind.
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“Material Adverse Effect” means any effect, change, event, occurrence, development or circumstance (any such item, an “Effect”) that, individually or in the aggregate, has, or would reasonably be expected to have, a material adverse effect on the financial condition, business, or results of operations of the Company and the Subsidiaries, taken as a whole; provided, however, that no Effect caused by or resulting from any of the following, either alone or in combination, shall constitute or be taken into account in determining whether there has been, or would reasonably expected to be, a Material Adverse Effect: (i) any Effect affecting the economy generally (whether the global economy, the United States economy or any other region or market), including changes in the credit, debt, capital or financial markets (including changes in interest or exchange rates); (ii) any Effect affecting the industries in which the Company or any Subsidiary conducts business; (iii) any Effect arising in connection with or resulting from (A) earthquakes, hurricanes, tornadoes, fires or other natural disasters or (B) global, national or regional political conditions, including pandemics (including COVID-19) and epidemics, hostilities, military actions, political instability, acts of terrorism or war (including those existing or underway as of the date hereof) or any escalation or material worsening of any such hostilities, military actions, political instability or cyberattacks; (iv) any failure by the Company or any Subsidiary to meet any internal or published projections, forecasts or revenue or earnings predictions for any period (it being understood that the facts or occurrences giving rise to such failure may be taken into account in determining whether there has been or will be, a Material Adverse Effect, unless such facts or circumstances are otherwise excluded by virtue of this proviso); (v) any action required to be taken by the Company or any Subsidiary under this Agreement; (vi) any Effect that results from any action taken at the request of Parent, or that otherwise results from the identity of Parent or any of its Affiliates; (vii) the announcement of the execution of this Agreement, or the pendency of the Transactions, including the effects of the Transactions on relationships with customers, suppliers, Governmental Bodies, employees, or other third-party relationships; or (viii) any actual or proposed change in Law (including the announcement, implementation, continuance, effectiveness, elimination or repeal of, or change to, any executive order, tariff or other Laws) or GAAP or interpretation thereof; except, in the cases of clauses (i), (ii), (iii) or (viii) above, to the extent such Effects disproportionately and adversely affect the Company and the Subsidiaries (taken as a whole), relative to other participants in the industries in which the Company or any Subsidiary conducts business (in which case, only the incremental disproportionate material impact shall be taken into account in determining whether there has been a Material Adverse Effect).
“Management Pool” means FIP IncentiveCo, LLC, a Delaware limited liability company.
“Management Pool Holders” means all Persons who hold any Management Pool Units immediately prior to the Effective Time.
“Management Pool Operating Agreement” means the Amended and Restated Limited Liability Company Operating Agreement of FIP IncentiveCo, LLC, dated as of April 21, 2020.
“Management Pool Units” means each outstanding membership interest or other equity interest in the Management Pool.
“Merger Consideration” means $2,152,876,614.39, plus (a) the Estimated Cash, plus (b) the Estimated Working Capital Adjustment, plus (c) the Estimated Prorated Rent, minus (d) the Estimated Debt, plus (e) the Estimated CapEx Funding Adjustment Amount, plus (f) the Estimated Acquired Property Value, minus (g) the Adjustment Escrow Amount.
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“Net Working Capital” means, without duplication, the consolidated current assets of the Company and the Subsidiaries, minus the consolidated current liabilities of the Company and the Subsidiaries, in each case determined on a basis consistent with the Illustrative Merger Consideration Calculation, using only the specific line items set forth therein (which line items shall be calculated in accordance with GAAP); provided, that in no event shall Net Working Capital include any amounts reflected in (i) Cash, (ii) Debt or (iii) Prorated Rent.
“Net Working Capital Peg” means $63,876.84.
“Order” means any order, injunction, judgment, decree, ruling, writ, assessment, arbitration award or similar directive of, or agreement with, any Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of day-to-day operations of the Company and the Subsidiaries consistent with past practice, taken as a whole.
“Pass-Through Tax Return” means an IRS Form 1065, and any other federal, state, local or foreign Tax Return used to report the income, gain, losses, deductions, credits, etc., from the operations of a partnership or other pass-through entity filed with respect to the Company or any Subsidiary where the results of operations reflected on such Tax Return are reflected on the Tax Returns of the direct or indirect (if any) owners thereof.
“Permits” means any approvals, authorizations, consents, clearances, waiting period expirations or terminations, licenses, permits, certifications, registrations, franchises, variances and exemptions issued or granted by a Governmental Body.
“Permitted Exceptions” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in (x) policies of title insurance of each Subsidiary that owns the Owned Real Property, provided that copies of such policies of title insurance have been made available to Parent and/or its agents prior to the date hereof; or (y) contained in reports provided by title agents or other advisors to Parent prior to the date hereof; (ii) Liens securing liabilities not yet delinquent which are reflected or adequately reserved against in the consolidated balance sheet of the Company prepared in accordance with GAAP, (iii) Liens for Taxes, assessments or other charges, in each case, imposed by a Governmental Body not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained as required by GAAP; (iv) landlords’, mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business with respect to any amounts not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established as required by GAAP; (v) zoning, building code and entitlement and other land use and Environmental Laws; (vi) title of a lessor under a capital or operating lease, and leases, subleases, and similar transactions in the Ordinary Course of Business; (vii) licenses of Intellectual Property; (viii)  pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation; (ix) Liens set forth on Section 1.1(b) of the Company Disclosure Schedule; and (x) such other imperfections in title, charges, easements, restrictions and encumbrances which would not be material to the Company and the Subsidiaries taken as a whole.
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“Person” means any individual, corporation, real estate investment trust, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity, whether or not a legal entity.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date, and, in the case of any Straddle Period, the portion of such period ending on and including the Closing Date.
“Prorated Rent” means the net amount of the items prorated between the Unitholders and Parent on Exhibit C, which net amount shall be deemed to be a positive number if such net amount is in the Unitholders’ favor (in which case it shall increase the amount payable by Parent at Closing, in accordance with the definition of Merger Consideration) or a negative number if such net amount is in Parent’s favor (in which case it shall decrease the amount payable by Parent at Closing, in accordance with the definition of the Merger Consideration).
“REIT” means a “real estate investment trust” within the meaning of Sections 856 through 860 of the Code.
“Related Party Agreement” means any Contract pursuant to which the Company or any Subsidiary receives a benefit or is subject to an obligation, in each case, which are made solely between or among any of the Company or any Subsidiary, on the one hand, and any Unitholder, any of its Affiliates, any Management Pool Holders or any manager, director or officer of the Company or any of its Subsidiaries, on the other hand (and excluding, in each case, employment arrangements).
“Release” means any release, spill, emission, leaking, pumping, pouring, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into or through the indoor or outdoor environment.
“Sherman Act” means the Sherman Antitrust Act of 1890.
“Specified Property” means that certain real property set forth on Schedule 1.1(g).
“Straddle Period” means any taxable period that begins on or before the Closing Date and ends after the Closing Date.
“Subsidiary” means any Person of which a majority of the outstanding share capital, voting or economic securities or other interests having the power to elect a majority of such entity’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of such entity, are owned, directly or indirectly, by the Company, as of the date of this Agreement.
“Tax” or “Taxes” means: (i) all U.S.
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federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net or gross income, gross receipts, windfall profits, production, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property, environmental, alternative or add-on minimum and estimated taxes, customs, duties, fees, assessments, and charges of any kind whatsoever; and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Body in connection with any item described in clause (i) of this definition.
“Tax Contest” means any audit, hearing, proposed adjustment, arbitration, deficiency, assessment, suit, dispute, claim, or similar proceeding commenced, filed or otherwise initiated or convened to investigate or resolve the existence and extent of a Liability for Taxes.
“Tax Return” means any return, report or statement required to be filed or sent with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, Pass-Through Tax Return, claim for refund, amended return or declaration of estimated Tax.
“Tax Sharing Arrangement” means any written or unwritten agreement or arrangement providing for the allocation or payment of Tax Liabilities or for Tax benefits between or among members of any group of corporations that files, will file, or has filed Tax Returns on a combined, consolidated or unitary basis.
“Taxing Authority” means the IRS and any other Governmental Body exercising any authority to impose, assess or collect any Tax or any other authority exercising Tax regulatory authority.
“Transaction Documents” means this Agreement, the Escrow Agreement and all other agreements and instruments to be executed by Parent, Merger Sub, the Company and/or the Company Representative at or prior to the Closing pursuant to this Agreement.
“Transactions” means the transactions contemplated by this Agreement and the other Transaction Documents.
“Transfer Taxes” means any real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, intangible property transfer, personal property transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any Taxing Authority or other Governmental Body in connection with the Transactions, including any payments made in lieu of any such Taxes or governmental charges that become payable in connection with the Transactions.
“Unitholder” means all Persons who directly hold one or more Units immediately prior to the Effective Time.
“Units” means, collectively, the Class A Units and Class B Units.
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1.2Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have meanings set forth in the Sections indicated:
Term
Section
Act
Recitals
Affiliated Persons
9.11
Agreement
Preamble
Amended and Restated Certificate of Formation
2.5(a)
Balance Sheet Date
4.6
Brookfield
Recitals
Certificate of Merger
2.3
Closing
2.2
Closing Acquired Property Value
3.2(b)
Closing CapEx Funding Adjustment Amount
3.2(b)
Closing Cash
3.2(b)
Closing Consideration Schedule
3.2(a)
Closing Date
2.2
Closing Debt
3.2(b)
Closing Statement
3.2(b)
Closing Working Capital
3.2(b)
Company
Preamble
Company Disclosure Schedule
Article IV
Company Documents
4.2
Company Representative
9.14(a)
Confidentiality Agreement
6.5
control
1.1(a)
Designated Person
9.9(a)
DESOS
2.3
Dispute Notice
3.2(c)
Domain Name Assignment Agreements
 4.11(b)
D&O Tail Policy
 6.6(c)
Effect
1.1(a)
Effective Time
2.3
Employment Agreements
 Recitals
ERISA
1.1(a)
Estimated Acquired Property Value
3.2(a)
Estimated CapEx Funding Adjustment Amount
3.2(a)
Estimated Cash
3.2(a)
Estimated Debt
3.2(a)
Estimated Prorated Rent
3.2(a)
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Term
Section
Estimated Statement
3.2(a)
Estimated Working Capital
3.2(a)
Existing Representation
9.9(a)
Financial Statements
4.6
government official
4.17
Indemnitees
6.7(a)
Independent Accountant
3.2(c)
Insurance Policies
4.19
IT Assets
4.11(d)
Leased Real Property
4.10(a)
Material Contracts
4.12(a)
Merger
Recitals
Merger Consideration Adjustment
3.2(d)
Merger Consideration Allocation
6.10(f)
Merger Sub
Preamble
Net Negative Merger Consideration Adjustment Amount
3.2(e)
Net Positive Merger Consideration Adjustment Amount
3.2(e)(i)
Non-Parties
9.11
Owned Real Property
4.10(d)
Parent
Preamble
Parent Documents
5.2
Parent Plans
6.8
Post-Closing Covenants
9.1(a)
Post-Closing Matter
9.9(a)
Post-Closing Representations
9.9(a)
Pre-Closing Designated Persons
9.9(b)
Pre-Closing Privileges
9.9(b)
Pre-Merger Company
9.14(a)
Prior Company Counsel
9.9(a)
Privileged Materials
9.9(c)
R&W Insurance Policy
9.1(c)
Real Property
4.10(d)
Real Property Lease
4.10(a)
Recourse Theory
9.11
Release and Non-Solicitation Agreement
Recitals
Released Parties
9.1(b)
Releasing Parties
9.1(b)
Rent Roll
4.10(b)
Revenue Procedures
4.4(c)
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Term
Section
Seller Prepared Tax Return
6.10(a)
Seller Tax Contest
6.10(c)(iii)
Straddle Period Tax Return
6.10(a)
Surviving Company
2.1
Termination Date
8.1(a)
Trademark Acquisition Agreement
4.11(b)
Updated Closing Consideration Schedule
3.2(f)

1.3Other Definitional and Interpretive Matters.
(a)Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:
(i)Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
(ii)Dollars. Any reference in this Agreement to “$” shall mean U.S. dollars. The specification of any dollar amount in the representations and warranties or otherwise in this Agreement or in the Exhibits or the Company Disclosure Schedule is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of such amounts or items, nor shall the same be used in any dispute or controversy between the parties to determine whether any obligation, item or matter (whether or not described herein or included in the Company Disclosure Schedule) is or is not material for purposes of this Agreement.
(iii)Exhibits/Schedules. The Exhibits to this Agreement and the Company Disclosure Schedule are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and the Company Disclosure Schedule annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any matter or item disclosed on one Section of the Company Disclosure Schedule shall be deemed to have been disclosed on each other Section of the Company Disclosure Schedule, in which it is reasonably apparent on the face of such disclosure that the information is required to be included. Disclosure of any item or matter on any Section of the Company Disclosure Schedule shall not constitute an admission or indication that such item or matter is material or has had or would reasonably be expected to have a Material Adverse Effect. No disclosure on a Section of the Company Disclosure Schedule relating to a possible breach or violation of any Contract, Law or Order shall be construed as an admission or indication that a breach or violation exists or has actually occurred. Any capitalized terms used in any Section of the Company Disclosure Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.
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(iv)Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.
(v)Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” or “Article” are to the corresponding Section or Article of this Agreement unless otherwise specified.
(vi)Herein. The words “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(vii)Including. The word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(viii)Made Available. Any reference in this Agreement to something that has been “made available” (or words of similar import) means a document or other information that was posted to the virtual data room hosted by Donnelley Financial Solutions Venue for Project Twelve prior to the execution and delivery of this Agreement.
(ix)As Amended. Where a reference in this Agreement is made (A) to any Contract (including this Agreement) or Law, such reference will be to (except as the context may otherwise require) the Contract or Law as amended, modified, supplemented, restated or replaced from time to time (in the case of a Contract, to the extent permitted by the terms thereof) and (B) to any Law, such reference will also be to any rules or regulations promulgated thereunder.
(x)Same Meaning. The words “will” and “shall” will be deemed to have the same meaning and be understood to denote a directive and obligation, and not an option. The word “or” is not exclusive and means “and/or.”
(xi)Reflected On or Set Forth In. An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (A) there is a reserve, accrual or other similar item underlying a number and specifically referenced on such balance sheet or financial statements that related to the subject matter of such representation or warranty, (B) such item is specifically set forth on the balance sheet or financial statements or (C) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.
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(b)The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
Article IIARTICLE II

THE MERGER; CLOSING
2.1The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Act, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving company in the Merger (the “Surviving Company”).
2.2Closing. The closing of the Merger (the “Closing”) shall take place at 10:00 a.m. (Eastern Time) on July 23, 2025 (unless Parent elects in its sole discretion that the Closing shall take place on an earlier date and provides written notice thereof to the Company at least one (1) Business Day in advance), subject to the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time). The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date.”
2.3Effective Time. Subject to the provisions of this Agreement, on the Closing Date, the parties shall (a) cause a Certificate of Merger, substantially in the form attached as Exhibit A hereto (the “Certificate of Merger”), to be duly executed and filed with the Secretary of State of the State of Delaware (the “DESOS”) in accordance with the Act, and (b) make any other filings, recordings or publications required to be made by the Company or Merger Sub (or the owners thereof) under such statutes in connection with the Merger. The Merger shall become effective at the time the Certificate of Merger is accepted for record by the DESOS on the Closing Date (the time at which the Merger becomes effective is herein referred to as the “Effective Time”).
2.4Effects of the Merger. The Merger shall have the effects set forth in the Act, this Agreement, and the Certificate of Merger. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall transfer to, vest in and devolve on the Surviving Company, and all debts, obligations, liabilities and duties of the Company and Merger Sub shall become the debts, obligations, liabilities and duties of the Surviving Company.
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2.5Certificate of Formation and Company Operating Agreement of the Surviving Company.
(a)Certificate of Formation. The Certificate of Formation, as in effect immediately prior to the Effective Time, shall be amended and restated upon the consummation of the Merger to be in the form of Exhibit B (the “Amended and Restated Certificate of Formation”), which shall be attached as an exhibit to the Certificate of Merger, via the filing of the Certificate of Merger with the DESOS.
(b)Company Operating Agreement. The Company Operating Agreement, as in effect immediately prior to the Effective Time, shall be amended and restated in its entirety upon the consummation of the Merger in the form of the limited liability company operating agreement of the Merger Sub as in effect immediately prior to the Effective Time, except that references to Merger Sub shall be replaced with references to the Surviving Company, and, as so amended, shall become the limited liability company operating agreement of the Surviving Company, until amended in accordance therewith.
2.6Conversion of Units.
(a)At the Effective Time, subject to the adjustment provisions of Section 3.2, all Units issued and outstanding immediately prior to the Effective Time (other than Units to be canceled and retired in accordance with Section 2.6(b)) shall be converted into the right to receive an amount in cash equal to a portion of the Merger Consideration, payable pursuant to the terms of Section 3.1(a) (and as set forth in the Closing Consideration Schedule), as adjusted (and including any Adjustment Escrow Release Amount to which the Unitholders are entitled) pursuant to Section 3.2 (and as set forth in any Updated Closing Consideration Schedule), plus the right to receive the amounts set forth in Section 6.10(c), if any, in each case at the respective times and subject to the conditions set forth herein. From and after the Effective Time, all such Units shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and the Unitholders shall cease to have any rights with respect thereto, except the right to receive an amount in cash, without interest thereon, in accordance with the terms of Section 3.1(a) (and as set forth in the Closing Consideration Schedule), as adjusted (and including any Adjustment Escrow Release Amount to which the Unitholders are entitled) pursuant to Section 3.2 (and as set forth in any Updated Closing Consideration Schedule), plus the right to receive the amounts set forth in Section 6.10(c), if any, in each case at the respective times and subject to the conditions set forth herein.
(b)At the Effective Time, any Units that are owned by Parent, Merger Sub or the Company or any of their respective direct or indirect wholly owned Subsidiaries shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor.
(c)At the Effective Time, the membership interests of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for the membership interests of the Surviving Company such that, immediately after the Effective Time, the holders of the issued and outstanding membership interests of Merger Sub immediately prior to the Effective Time shall be the holders of all of the issued and outstanding membership interests of the Surviving Company.
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2.7No Further Rights of Transfers. At and after the Effective Time, each holder of Units shall cease to have any rights as a holder of a Unit or any interest in the Company (or the Surviving Company), except as otherwise required by applicable Law and except for the right to receive the consideration as set forth herein. The consideration paid or payable as set forth herein shall be deemed to have been paid or payable in full satisfaction of all rights pertaining to the Units, and at and after the Effective Time there shall be no further registration of transfers of Units.
Article IIIARTICLE III

MERGER CONSIDERATION
3.1Closing Date Payments by Parent.
(a)Payments in Respect of Units. At the Effective Time on the Closing Date, Parent shall pay, or cause to be paid, by wire transfer of immediately available funds, directly to each Unitholder, an amount of cash equal to such Unitholder’s portion of the Merger Consideration, as set forth in the Closing Consideration Schedule; provided, however, that the Management Pool has directed that the portion of the Merger Consideration payable to the Management Pool shall be paid, or caused to be paid, by Parent at the Effective Time to the Company (instead of to the Management Pool) and Parent shall cause the Company to disburse to each Management Pool Holder on behalf of the Management Pool (as promptly as practical, but in any event no later than its next regularly-scheduled payroll run) the portion of the Merger Consideration to which such Management Pool Holder is entitled as set forth in the Closing Consideration Schedule.
(b)Payments in Respect of Debt and Company Transaction Expenses.
(i)On the Closing Date, Parent shall pay, or cause to be paid, by wire transfer of immediately available funds, on behalf of the Company and the Subsidiaries, directly to the Persons listed on Section 3.1(b) of the Company Disclosure Schedule, an amount sufficient to repay all Debt of the type described in clause (i) of the definition thereof outstanding and owed to such Persons at the Closing as set forth on the Estimated Statement, and the Company shall procure and obtain and deliver to Parent debt payoff letters signed by such Persons evidencing the full satisfaction and repayment of all amounts owing under such Debt, in form and substance reasonably acceptable to Parent.
(ii)On the Closing Date, Parent shall pay, or cause to be paid, by wire transfer of immediately available funds, on behalf of the Company and the Subsidiaries, (A) directly to each applicable third party service provider that is not an employee such portion of the Company Transaction Expenses outstanding and unpaid as of immediately prior to (but giving effect to) the Closing as described in clause (i) of the definition of Company Transaction Expenses and (B) directly to the Company such portion of the Company Transaction Expenses outstanding and unpaid as of immediately prior to (but giving effect to) the Closing as described in clause (ii) of the definition of Company Transaction Expenses as set forth on the Estimated Statement (and, in the case of clause (B) hereof, Parent shall cause the Company to disburse to each applicable service provider via payroll (in accordance with the terms of such payment (including the terms set forth in resolutions of the board of managers of the Company approving the same, dated as of the date hereof, as made available to Parent on the date hereof)) the portion of such Company Transaction Expenses to which such service provider is entitled).
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(c)Payments in Respect of Adjustment Escrow Amount. On the Closing Date, Parent shall pay, by wire transfer of immediately available funds, an amount equal to the Adjustment Escrow Amount, for deposit in accordance with this Agreement and the Escrow Agreement. The Adjustment Escrow Amount will not be used for any purpose except as expressly provided in this Agreement or in the Escrow Agreement. Any interest produced from such amount deposited with the Escrow Agent by Parent will be paid to the Company Representative, on behalf of the Unitholders (subject to Parent’s right to receive tax distributions pursuant to the Escrow Agreement).
3.2Adjustment to the Merger Consideration.
(a)Not later than five (5) Business Days prior to the Closing Date, the Company shall provide Parent with a written statement (the “Estimated Statement”) setting forth (i) the Company’s good faith estimate of Closing Cash (the “Estimated Cash”), (ii) the Company’s good faith estimate of Closing Working Capital (the “Estimated Working Capital”), (iii) the Company’s good faith estimate of the Prorated Rent (the “Estimated Prorated Rent”), (iv) the Company’s good faith estimate of Closing Debt (the “Estimated Debt”), (v) the Company’s good faith estimate of Closing CapEx Funding Adjustment Amount (the “Estimated CapEx Funding Adjustment Amount”) and (vi) the Company’s good faith estimate of Closing Acquired Property Value (the “Estimated Acquired Property Value”), in each case based upon the definitions contained herein, together with reasonable supporting calculations and documentation used in the preparation thereof. The Estimated Statement shall also include a calculation of the Merger Consideration based on the foregoing items, as well as a schedule (the “Closing Consideration Schedule”) setting forth (A) the name and address of each Unitholder and Management Pool Holder, (B) the number and type of Units and other equity interests held by each Unitholder and Management Pool Holder, and (C) the portion of the Merger Consideration to which each Unitholder and Management Pool Holder is entitled based on the terms of the Company Operating Agreement and the Management Pool Operating Agreement (each as in effect immediately prior to the Merger). The Estimated Statement shall be prepared on a basis consistent with the Illustrative Merger Consideration Calculation and the Illustrative Closing Consideration Schedule. Within two (2) Business Days of receipt of the Estimated Statement, Parent shall deliver to the Company and the Company Representative a detailed funds flow memorandum in excel format (including all underlying calculations, formulas and amounts therein) setting forth all payments to be made by or on behalf of the parties hereto on the Closing Date in accordance with this Agreement. Parent shall have an opportunity to review and comment on the Estimated Statement, and the Company shall reasonably consider in good faith any comments from Parent on the Estimated Statement, but in no event shall the Company be required to make any updates to the Estimated Statement in connection therewith, and in no event shall any such review or comment delay the Closing. The Estimated Statement, as updated by any of Parent’s comments that the Company elects to reflect, shall be binding on the Company, on the one hand, and Parent, on the other hand, for purposes of this Section 3.2(a) and shall be used to determine any adjustment to the Merger Consideration as set forth herein.
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(b)As promptly as practicable, but no later than sixty (60) days after the Closing Date, Parent shall cause to be prepared and delivered to the Company Representative a statement (the “Closing Statement”) setting forth: (i) Cash as of 11:59PM ET on the day immediately prior to the Closing Date (“Closing Cash”) and reasonable underlying documentation supporting the Closing Cash; (ii) Net Working Capital as of 11:59PM ET on the day immediately prior to the Closing Date (“Closing Working Capital”) and reasonable underlying documentation supporting the Closing Working Capital; (iii) Prorated Rent; (iv) Debt as of the Closing (the “Closing Debt”) and reasonable underlying documentation supporting the Closing Debt; (v) CapEx Funding Adjustment Amount as of 11:59PM ET on the day immediately prior to the Closing Date (“Closing CapEx Funding Adjustment Amount”); and (vi) Acquired Property Value as of 11:59PM ET on the day immediately prior to the Closing Date (“Closing Acquired Property Value”). The determination of Cash, Net Working Capital, Prorated Rent, Debt, CapEx Funding Adjustment Amount and Acquired Property Value reflected in the Closing Statement shall be prepared in accordance with the definitions contained herein.
(c)During the thirty (30) day period following receipt of the Closing Statement by the Company Representative, the Company Representative and its advisors shall have the right, upon reasonable notice to the Company, to reasonable access to the Company’s relevant books and records and employees as the Company Representative shall reasonably request in order to review the Closing Statement. The Closing Statement (and the computation of Closing Cash, Closing Working Capital, Prorated Rent, Closing Debt, Closing CapEx Funding Adjustment Amount and Closing Acquired Property Value) delivered by Parent to the Company Representative shall be conclusive and binding on all parties unless the Company Representative, prior to the end of the thirtieth (30th) day following receipt of the Closing Statement, delivers a notice to Parent stating that the Company Representative disagrees with such calculation and specifying in reasonable detail those items or amounts as to which the Company Representative disagrees and the basis therefor (any such notice, a “Dispute Notice”). The Company Representative shall be deemed to have agreed with all other items and amounts contained in the Closing Statement and the calculation of Closing Cash, Closing Working Capital, Prorated Rent, Closing Debt, Closing CapEx Funding Adjustment Amount or Closing Acquired Property Value, as applicable, delivered pursuant to Section 3.2(b) that are not the subject of a Dispute Notice.
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(d)If a Dispute Notice is delivered pursuant to Section 3.2(c), the Company Representative and Parent shall, during the thirty (30) days following such delivery, use their reasonable efforts to reach agreement on the disputed items or amounts set forth therein in order to determine, as may be required, the amount of Closing Cash, Closing Working Capital, Prorated Rent, Closing Debt, Closing CapEx Funding Adjustment Amount and Closing Acquired Property Value, as applicable. If, during such period, the Company Representative and Parent are unable to reach such agreement, they shall promptly thereafter cause Deloitte or, if such accounting firm declines to act as the independent accounting firm in accordance with this Section 3.2(d), such other nationally recognized independent accounting firm on which the Company Representative and Parent mutually agree, which agreement shall not be unreasonably withheld, as the case may be (the “Independent Accountant”), to review this Agreement and the disputed items or amounts for the purpose of calculating Closing Cash, Closing Working Capital, Prorated Rent, Closing Debt, Closing CapEx Funding Adjustment Amount and Closing Acquired Property Value, as applicable (it being understood that in making such calculation, the Independent Accountant shall be functioning as an expert and not as an arbitrator and shall not have any authority to interpret any provision of this Section 3.2 or any other provision of this Agreement). Each party agrees to execute, if requested by the Independent Accountant, a customary engagement letter. Parent and the Company Representative shall cooperate with the Independent Accountant and promptly provide, and Parent shall cause the Company to provide, all documents and information reasonably requested by the Independent Accountant. In making such calculation, the Independent Accountant shall (i) consider only those items or amounts as to which the Company Representative has disagreed in its Dispute Notice and (ii) the Independent Accountant’s determination shall be limited to calculating such items as required by the definitions provided in this Agreement, and not by any independent review. The Independent Accountant’s determination on each item in dispute shall not be greater than the greater value for such item claimed by either the Company Representative or Parent or less than the lower value for such item claimed by either the Company Representative or Parent. The Company Representative and Parent shall direct the Independent Accountant to deliver to the Company Representative and Parent, as promptly as practicable (but in any case no later than thirty (30) days from the date of its engagement), a report setting forth such calculation. Such report shall be final and binding upon the Company Representative and Parent, shall be deemed a final arbitration award that is binding on Parent and the Company Representative, and neither Parent nor the Company Representative shall seek further recourse to courts or other tribunals, other than to enforce such report. The Independent Accountant will determine the allocation of the cost of its review and report based on the inverse of the percentage its determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to Independent Accountant. For example, should the items in dispute total in amount to $1,000 and the Independent Accountant awards $600 in favor of the Company Representative’s position, sixty percent (60%) of the costs of its review would be borne by Parent and forty percent (40%) of the costs would be borne by the Company Representative.
(e)The “Merger Consideration Adjustment” will be an amount, which may be positive or negative, equal to (1) the Final Cash Adjustment, plus (2) the Final Working Capital Adjustment, plus (3) the Final Prorated Rent Adjustment, minus (4) the Final Debt Adjustment plus (5) the Final CapEx Funding Adjustment Amount Adjustment, plus (6) the Final Acquired Property Value Adjustment. If:
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(i)the Merger Consideration Adjustment is a positive number (the “Net Positive Merger Consideration Adjustment Amount”), then, as an adjustment to the dollar amount of the Merger Consideration: (A) Parent shall pay, or cause to be paid, an amount equal to the lesser of (x) $7,500,000 (the “Adjustment Cap”) and (y) the Net Positive Merger Consideration Adjustment Amount in cash to the Unitholders (with each Unitholder being entitled to the applicable portion thereof as set forth in the Updated Closing Consideration Schedule); and (B) Parent and the Company Representative shall jointly instruct the Escrow Agent to release an amount equal to the Adjustment Escrow Release Amount to the Unitholders (with each Unitholder being entitled to the applicable portion thereof as set forth in the Updated Closing Consideration Schedule); provided, however, that the Management Pool has directed that the portion of the Net Positive Merger Consideration Adjustment Amount and of the Adjustment Escrow Release Amount payable to the Management Pool shall be paid by, or caused to be paid by, Parent and the Escrow Agent to the Company (instead of to the Management Pool) and Parent shall cause the Company to disburse to each Management Pool Holder on behalf of the Management Pool (as promptly as practical, but in any event no later than its next regularly-scheduled payroll run) the portion of the Positive Merger Consideration Adjustment Amount and of the Adjustment Escrow Release Amount to which such Management Pool Holder is entitled as set forth in the Updated Closing Consideration Schedule. Without limiting the parties’ obligation to instruct the Escrow Agent to release the Adjustment Escrow Release Amount to the Unitholders as described in clause (B) above, Parent, Merger Sub, the Company and the Company Representative acknowledge and agree that none of Parent or Merger Sub or any other Person shall have any obligation or liability to the Unitholders or the Company Representative or any other Person for any Net Positive Merger Consideration Adjustment Amount that is in excess of the Adjustment Cap.
(ii)the Merger Consideration Adjustment is a negative number (the absolute value of such number, the “Net Negative Merger Consideration Adjustment Amount”), then, as an adjustment to the dollar amount of the Merger Consideration: Parent and the Company Representative shall jointly instruct the Escrow Agent to release to (1) Parent, an amount equal to the lesser of (x) the Adjustment Escrow Amount and (y) the Net Negative Merger Consideration Adjustment Amount, and (2) the Unitholders, an amount equal to the Adjustment Escrow Release Amount, if any (with each Unitholder being entitled to the applicable portion thereof as set forth in the Updated Closing Consideration Schedule); provided, however, that the Management Pool has directed that the portion of the Adjustment Escrow Release Amount payable to the Management Pool shall be paid by the Escrow Agent to the Company (instead of to the Management Pool) and Parent shall cause the Company to disburse to each Management Pool Holder on behalf of the Management Pool (as promptly as practical, but in any event no later than its next regularly-scheduled payroll run) the portion of the Adjustment Escrow Release Amount to which such Management Pool Holder is entitled as set forth in the Updated Closing Consideration Schedule. Parent, Merger Sub, the Company and the Company Representative acknowledge and agree that any Net Negative Merger Consideration Adjustment Amount shall be satisfied solely and exclusively out of the Adjustment Escrow Amount, and, without limiting the parties’ obligation to instruct the Escrow Agent to release the Adjustment Escrow Release Amount to Parent as described above, none of the Company or the Unitholders or Company Representative or any other Person shall have any obligation or liability to Parent or any other Person for any Net Negative
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Merger Consideration Adjustment Amount that is in excess of the Adjustment Escrow Amount.
For the avoidance of doubt, in the event that the Merger Consideration Adjustment equals zero, then Parent and the Company Representative shall jointly instruct the Escrow Agent to pay to the Unitholders the Adjustment Escrow Amount (with each Unitholder being entitled to the applicable portion thereof as set forth in the Updated Closing Consideration Schedule); provided, however, that the Management Pool has directed that the portion of the Adjustment Escrow Amount payable to the Management Pool shall be paid by the Escrow Agent to the Company (instead of to the Management Pool) and Parent shall cause the Company to disburse to each Management Pool Holder on behalf of the Management Pool (as promptly as practicable, but in any event no later than its next regularly-scheduled payroll run) the portion of the Adjustment Escrow Amount to which such Management Pool Holder is entitled as set forth in the Updated Closing Consideration Schedule.
(f)Any payment pursuant to Section 3.2(e) shall be made at a mutually convenient time and place within five (5) Business Days after Final Cash, Final Working Capital, the Final Prorated Rent, Final Debt, Final CapEx Funding Adjustment Amount and Final Acquired Property Value have been finally determined by wire transfer by Parent or the Escrow Agent, as the case may be, of immediately available funds to the applicable Person(s). In connection with the determination of such amounts, the Company Representative shall deliver to Parent and the Escrow Agent, as applicable, an updated version of the Closing Consideration Schedule (each, an “Updated Closing Consideration Schedule”) setting forth the portion of such amount to which each Unitholder and each Management Pool Holder is entitled, which shall be prepared on a basis consistent with the Illustrative Closing Consideration Schedule and, to the extent not addressed therein, the terms of the Company Operating Agreement and the Management Pool Operating Agreement (each as in effect immediately prior to the Merger) (taking into account previous amounts of consideration paid hereunder). All payments under this Section 3.2 shall be without interest, except that any amounts not paid when required by this Section 3.2 shall bear interest from the date due pursuant to this Section 3.2(f) to, and including, the date of payment at the Interest Rate.
(g)Any amount paid in respect of the Merger Consideration Adjustment pursuant to Section 3.2 (including any release of the Adjustment Escrow Amount) shall be treated by the parties as an adjustment to the dollar amount of the Merger Consideration for Tax purposes unless otherwise required under applicable Law.
3.3Withholding. Parent (and its Affiliates) and the Company, and any of their agents, shall be entitled to deduct and withhold from the consideration or amounts otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld under the Code, or under any provision of U.S. federal, state, local or non-U.S. Tax Law; provided, that Parent (or its Affiliates) shall, other than with respect to amounts withheld as compensation to current or former service providers of the Company or any of the Subsidiaries and provided that the Company Representative and each Unitholder has complied with its obligations under Section 6.10(f) hereof, (i) provide the Company Representative five (5)
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Business Days’ notice prior to withholding any amount, (ii) give the Company Representative a reasonable opportunity to provide additional information or to apply for an exemption from, or a reduced rate of, withholding and (iii) cooperate with the Company Representative in efforts to obtain reduction of or relief from, any deduction or withholding. For all purposes of this Agreement, any amounts deducted or withheld pursuant to this Section 3.3 and paid over to the appropriate Governmental Body shall be treated as paid to the applicable Person with respect to whom such deduction or withholding was made.
Article IVARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered to Parent prior to the execution of this Agreement (the “Company Disclosure Schedule”), the Company hereby represents and warrants to Parent and Merger Sub that:
4.1Organization and Good Standing. The Company is a limited liability company, duly formed and validly existing under the Laws of the State of Delaware. The Company has all requisite power and authority to own, lease and operate its properties and to carry on its business in all respects as now conducted. The Company is in good standing under the Laws of the State of Delaware. The Company is duly qualified or authorized to do business as a foreign corporation or entity and is in good standing to the extent such concepts are recognized under the Laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not, individually or in the aggregate be, or reasonably be expected to be, material to the Company. The Company has delivered or made available to Parent copies of the Governing Documents of (a) the Company, which are accurate and complete and (b) the Subsidiaries, which are accurate and complete in all material respects.
4.2Authorization of Agreement. The Company has all requisite power and authority to execute and deliver this Agreement and each other Transaction Document to be executed by the Company in connection with the consummation of the Transactions (the “Company Documents”), and to consummate the Transactions. The execution and delivery of this Agreement and the Company Documents by the Company and the consummation by the Company of the Merger and other Transactions have been duly authorized (including as required under the Company Operating Agreement), and no other action on the part of the Company (other than (a) as required by the Act and (b) the filing of the Certificate of Merger with the DESOS) is necessary to authorize the execution, delivery and performance of this Agreement and each of the Company Documents by the Company and the consummation of the Merger and other Transactions. This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Company Document when so executed and delivered will constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
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4.3Conflicts; Consents of Third Parties.
(a)None of the execution and delivery by the Company of this Agreement or the Company Documents, the consummation by the Company of the Transactions, or compliance by the Company with any of the provisions hereof or thereof will conflict with, or result in any breach, violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, loss of rights, adverse modification of provisions, recapture, right of first offer, right of first refusal, acceleration or cancellation under, or result in the creation of a Lien on any of the equity interests or assets of the Company or any Subsidiary under any provision of (i) the Governing Documents of (A) the Company and (B) the Subsidiaries; (ii) any Material Contract, or Permit to which the Company or any of the Subsidiaries is a party; or (iii) any Orders or Laws applicable to the Company or any of the Subsidiaries or by which any of the properties or assets of the Company or any of the Subsidiaries are bound, except in the case of clauses (ii) and (iii), as would not reasonably be expected to (1) be material to the Company and the Subsidiaries, taken as a whole, or (2) materially interfere with, prevent or materially delay the ability of the Company to enter into and perform its obligations under this Agreement or consummate the Transactions.
(b)No expirations of waiting periods under applicable Antitrust Laws and no consent, waiver, approval or authorization of, or declaration or filing with, or notice to, any Governmental Body is required in connection with the execution, delivery and performance by the Company of this Agreement or the Company Documents, the compliance by the Company with any of the provisions hereof or thereof, or the consummation of the Transactions, except (i) for the filing of the Certificate of Merger with the DESOS pursuant to the Act; and (ii) as would not reasonably be expected to (A) be material to the Company and the Subsidiaries, taken as a whole, or (B) materially interfere with, prevent or materially delay the ability of the Company to enter into and perform its obligations under this Agreement or consummate the Transactions.
4.4Capitalization.
(a)Section 4.4(a) of the Company Disclosure Schedule sets forth the issued and outstanding Units of the Company, together with the holders thereof. All Units have been duly authorized and validly issued in compliance with the Company’s Governing Documents and all of the Units have been offered, sold and delivered in compliance in all material respects with all applicable federal and state securities Laws. The Units are not subject to any unexpired preemptive right, right of first refusal, purchase option, call option or similar right. The Units constitute all of the equity interests outstanding in the Company. The Company does not have any outstanding bonds, debentures, notes or other obligations the holders of which, in the capacities as such holders, have the right to vote (or that are convertible into or exercisable for securities having the right to vote) with the Company’s Unitholders on any matter.
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(b)There is no outstanding option, warrant, call, right (including preemptive and appreciation rights), stock unit, commitment or Contract of any character to which the Company is a party requiring, and there are no securities of the Company outstanding (i) which upon conversion or exchange would require the issuance of any membership interests of the Company or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase membership interests of the Company or (ii) relating to the issuance, sale, purchase or redemption of any of the Units. The Company is not a party to any voting trust or other Contract with respect to the voting, redemption, sale, transfer or other disposition of the Units.
(c)Section 4.4(c) of the Company Disclosure Schedule sets forth a true, correct and complete list, with respect to each outstanding Management Pool Unit, of: (i) the holder thereof; (ii) the grant date; (iii) the distribution or participation threshold; and (iv) whether vesting of any unvested portion of the Management Pool Units will accelerate in connection with the transactions contemplated herein. Each Management Pool Unit constitutes a “profits interest” within the meaning of Revenue Procedure 93-27, 1993-2 C.B. 343, as clarified by Revenue Procedure 2001-43, 2001-2, C.B. 19. To the Knowledge of the Company, each Management Pool Holder made a valid and timely election pursuant to Section 83(b) of the Code with respect to the Management Pool Units. Neither the Company nor any of the Subsidiaries (i) has been or is required to withhold taxes on wages from any amount paid in respect of the Management Pool Units or (ii) has any liability under the Tax reporting and withholding requirements of applicable Law or for the payment of any payroll Taxes with respect to any payments in respect of the Management Pool Units. Neither the Company nor any of its Subsidiaries has any outstanding promise or obligation to grant any Management Pool Unit.
4.5Subsidiaries.
(a)Section 4.5(a) of the Company Disclosure Schedule sets forth the name of each of the Subsidiaries, and, with respect to each Subsidiary: (i) the jurisdiction in which each such Subsidiary is incorporated or organized; and (ii) the authorized capital stock, if applicable, and the number and class of shares or other equity interests thereof duly issued and outstanding, the names of all holders thereof and the number of shares of stock or other equity interests held by each such holder. Each of the Subsidiaries is a duly organized and validly existing corporation or other entity. Each of the Subsidiaries is in good standing to the extent such concept is recognized under the laws of the jurisdiction of its incorporation or organization, and has all requisite corporate (or similar entity) power and authority to own, lease and operate its properties and to carry on its business in all material respects as now conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Subsidiaries is duly qualified or authorized to do business as a foreign corporation or entity and is in good standing to the extent such concepts are recognized under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not, individually or in the aggregate, reasonably be expected to be material to the Company and the Subsidiaries, taken as a whole.
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(b)The outstanding shares or other equity interests of each of the Subsidiaries have been duly authorized and validly issued, and to the extent applicable, fully paid and non-assessable in compliance with each Subsidiary’s Governing Documents and applicable securities Laws. Each of the outstanding shares or other equity interests of each of the Subsidiaries are owned by the Company or by a direct or indirect wholly-owned Subsidiary of the Company, free and clear of any Liens, other than any restrictions on transfer arising under applicable securities Laws or the Governing Documents of a Subsidiary of the Company, as applicable. The outstanding shares or other equity interests of each of the Subsidiaries are not subject to any unexpired preemptive right, right of first refusal, purchase option, call option or similar right. The Subsidiaries do not have any outstanding bonds, debentures, notes or other obligations the holders of which, in their capacities as such holders, have the right to vote (or that are convertible into or exercisable for securities having the right to vote) with such entity’s equityholders on any matter. There is no outstanding option, warrant, call, right (including preemptive rights), commitment or Contract of any character to which any of the Company or any of the Subsidiaries is a party requiring, and there are no securities of any of the Subsidiaries outstanding, (x) which upon conversion or exchange would require the issuance of any shares of capital stock or other securities of any of the Subsidiaries or other securities convertible into, exchange for or evidencing the right to subscribe for or purchase shares of capital stock or other equity interests of any of the Subsidiaries or (y) relating to the issuance, sale, purchase or redemption of any of such shares of capital stock or other equity interest of any of the Subsidiaries. None of the Subsidiaries are a party to any voting trust or other Contract with respect to the voting, redemption, sale, transfer or other disposition of any shares of capital stock or other securities of any of the Subsidiaries. Neither the Company nor any of the Subsidiaries owns any stock, partnership interest, joint venture interest or other equity ownership interest in any Person other than the Subsidiaries.
4.6Financial Statements.
(a)The Company and the Subsidiaries’ books, accounts and records are, and have been, maintained in the Company and the Subsidiaries’ usual, regular and ordinary manner, in accordance with GAAP, and all material transactions to which any of the Company or any Subsidiary has been a party are properly reflected therein. The Company and the Subsidiaries have designed, implemented, and maintained sufficient internal controls such that the Financial Statements (as defined below) have been prepared and fairly presented free from material misstatement.
(b)Attached as Section 4.6(b) of the Company Disclosure Schedule are true, correct and complete copies of: (a) the audited consolidated balance sheet of the Company and the Subsidiaries as at December 31, 2024 and December 31, 2023, the related audited consolidated statements of operations, comprehensive income (loss), members’ equity and cash flow of the Company and the Subsidiaries for the fiscal years then ended; and (b) the unaudited consolidated balance sheet and the related consolidated statements of comprehensive income (loss) and cash flow of the Company and the Subsidiaries as of June 30, 2025 (the “Balance Sheet Date”) (such audited and unaudited statements, the “Financial Statements”). Except as set forth in the notes thereto, the Financial Statements fairly present in all material respects the consolidated financial position, results of operations and cash flow of the Company and the Subsidiaries as at the dates and for the periods indicated therein, in accordance with GAAP, consistently interpreted and applied (with the exception of the absence of normal year-end audit adjustments and footnotes in the unaudited Financial Statements, none of which if presented would materially differ from those presented in the audited Financial Statements).
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(c)Except as set forth on Section 4.6(c) of the Company Disclosure Schedule (i) none of the Company nor any of the Subsidiaries has any material Debt (with respect to clause (i) or (ii) of the definition thereof) and (ii) none of the Company nor any of the Subsidiaries (or any equityholder on behalf of the Company or any of the Subsidiaries) has made any applications that would result in the creation of any such Debt or made any requests for assistance or loans from any foreign, federal, state, local or other Governmental Body.
4.7No Undisclosed Liabilities. Neither the Company nor any of the Subsidiaries has any Liabilities of any kind, other than Liabilities: (a) specifically reflected in or reserved against on the balance sheet of the Company and the Subsidiaries as of the Balance Sheet Date; (b)  incurred in the Ordinary Course of Business after the Balance Sheet Date; (c) incurred as contemplated by this Agreement or otherwise in connection with the Transactions; (d) that are executory obligations under Contracts of the Company or the Subsidiaries (in each case of clauses (a), (b), and (d) that are not Liabilities for violation of Law, breach of Contract or warranty, tort, infringement or any Legal Proceeding); or (e) that would not reasonably be expected to be material to the Company and the Subsidiaries, taken as a whole.
4.8Absence of Certain Developments. Except as contemplated by this Agreement, since the Balance Sheet Date to the date hereof: (a) the Company and the Subsidiaries have conducted their respective businesses in the Ordinary Course of Business; and (b) there has not been any Material Adverse Effect.
4.9Taxes.
(a)The Company and each Subsidiary has duly and timely (i) filed all income and other material Tax Returns required to be filed by or with respect to such Person (taking into account applicable extensions), and all such Tax Returns are true, complete and correct in all material respects, and (ii) paid in full all income and other material Taxes (whether or not shown on any Tax Return) for which the Company or any Subsidiary is liable.
(b)No extension of time within which to file any income or other material Tax Return required to be filed by or with respect to the Company or any Subsidiary is in effect.
(c)No waiver of any statute of limitations relating to income or other material Taxes for which the Company or any Subsidiary is liable is in effect, and no written request for such a waiver is outstanding.
(d)There are no Liens with respect to Taxes upon any asset of the Company or any Subsidiary other than Liens which are Permitted Exceptions.
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(e)At all times since its formation, the Company has been treated as and properly classified as a disregarded entity or partnership, which is not a “publicly traded partnership” within the meaning of Section 7704 of the Code, for U.S. federal and state income Tax purposes. The Company is currently treated as and properly classified as a partnership, which is not a “publicly traded partnership” within the meaning of Section 7704 of the Code, for U.S. federal and state income Tax purposes. The Company has never made an election (i) to be treated as an association taxable as a corporation for U.S. federal income Tax purposes or (ii) to be excluded from the provisions of subchapter K of the Code.
(f)Other than FIP TRS, LLC and 1250 Garage Owner, LLC, each Subsidiary has (i) at all times since its formation, been treated and properly classified as an entity that is disregarded as separate from its owner for U.S. federal income Tax purposes and (ii) never made an election to be treated as an association taxable as a corporation for U.S. federal income Tax purposes.
(g)At all times since its formation, each of FIP TRS, LLC and 1250 Garage Owner, LLC has been treated and properly classified as an entity that is disregarded as separate from its owner for U.S. federal income tax purposes or as an association taxable as a corporation for U.S. federal income Tax purposes. Each of FIP TRS, LLC and 1250 Garage Owner, LLC is currently treated and properly classified as an association taxable as a corporation for U.S. federal income tax purposes.
(h)No claim has ever been made against the Company or any Subsidiary by any Taxing Authority that the Company is not a disregarded entity or partnership or that such Subsidiary (other than FIP TRS, LLC and 1250 Garage Owner, LLC) is not an entity disregarded as separate from its owner, the Company, or, in the case of FIP TRS, LLC and 1250 Garage Owner, LLC, a disregarded entity or a corporation, in each case, for U.S. federal income tax purposes.
(i)All amounts of Taxes required to be deducted or withheld by the Company or any of the Subsidiaries have been deducted or withheld and have been (or will be) duly and timely paid to the proper Taxing Authority.
(j)All deficiencies for income and other material Taxes asserted or assessed against the Company or any of the Subsidiaries have been paid in full or otherwise finally resolved.
(k)No Taxing Authority (whether within or without the United States) of a tax jurisdiction in which the Company or any Subsidiary has not filed a particular type of Tax Return or paid a particular type of Tax has asserted to the Company or such Subsidiary in writing that the Company or such Subsidiary is required to file such Tax Return or pay such type of Tax in such taxing jurisdiction.
(l)The Company and each Subsidiary has complied in all material respects with the intercompany transfer pricing provisions of Section 482 of the Code (and any analogous provision of any law relating to Taxes), including, but not limited to, the contemporaneous documentation and disclosure requirements thereunder.
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(m)(i) No action, suit, investigation, audit, claim, assessment or deficiency with respect to income or other material Taxes for which the Company or any Subsidiary may be liable is pending or has been proposed, threatened, asserted or assessed in writing against the Company or any of the Subsidiaries, (ii) no Tax Return of the Company or any of the Subsidiaries is under current examination by any Taxing Authority (iii) neither the Company nor any Subsidiary has entered into any transaction that constitutes a “listed transaction” within the meaning of Treasury Regulations Section 1.6011–4(b)(2) and (iv) with respect to each transaction in which the Company or any Subsidiary has participated that is a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(1), such participation has been properly disclosed on IRS Form 8886 (Reportable Transaction Disclosure Statement) and on any corresponding form required under state, local or other Law.
(n)The charges, accruals and reserves for Taxes with respect to the Company and the Subsidiaries reflected on the Financial Statements are adequate to cover Tax Liabilities accruing through the Balance Sheet Date, and since the Balance Sheet Date neither the Company nor any of the Subsidiaries has incurred any Tax Liability other than in the Ordinary Course of Business.
(o)Neither the Company nor any Subsidiary has received any Tax rulings or closing agreements, or requested any Tax rulings, in each case relating to Taxes for which the Company or any Subsidiary may be liable in any taxable period (or portion thereof) beginning after the Closing Date.
(p)Neither the Company nor any Subsidiary has granted any Person any power of attorney that will remain in force after the Closing with respect to any material Tax matter.
(q)Neither the Company nor any Subsidiary will be required to include or accelerate the recognition of any item in income, or exclude or defer any deduction or other tax benefit, in each case in any taxable period (or portion thereof) beginning after the Closing Date, as a result of any change in method of accounting; closing agreement; intercompany transaction; installment sale or open transaction disposition; or the receipt or accrual of any prepaid amount, advance payment or deferred revenue, in each case, prior to Closing.
(r)Neither the Company nor any Subsidiary has (i) been a member of an affiliated group filing a consolidated U.S. federal income Tax Return or (ii) any Liability for Taxes of another Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), under any agreement or arrangement, as a transferee or successor, or by Contract or otherwise by operation of Law, in each case excluding any commercial agreement entered into in the Ordinary Course of Business and the principal purpose of which does not relate to Taxes.
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(s)During the last three years, neither the Company nor any Subsidiary has been a party to any transaction treated by the Company or any Subsidiary as one to which Section 355 of the Code (or any similar provision of state law) applied.
(t)Neither the Company nor any Subsidiary is a “foreign person” within the meaning of Sections 1445 or 1446 of the Code and regulations issued thereunder. No Unitholder is a “foreign person” within the meaning of Sections 1445 or 1446 of the Code and the regulations issued thereunder.
(u)The Class L property tax incentive in respect of the Specified Property is the only material Tax credit, grant or similar amount that is or could be subject to clawback or recapture as a result of (i) the Transactions or (ii) a failure by the Company or any Subsidiary to satisfy one or more requirements on which the credit, grant or similar amount is or was conditioned.
(v)Neither the Company nor any Subsidiary is party to or bound by any Tax Sharing Arrangement, Tax indemnity or similar agreement in favor of any Person with respect to Taxes (including any advance pricing agreement or other similar agreement relating to Taxes with any Governmental Body), in each case excluding commercial agreements entered into in the Ordinary Course of Business and the principal purpose of which does not relate to Taxes.
(w)Neither the Company nor any Subsidiary has any material liability or obligations with respect escheat and unclaimed property and no Governmental Body has proposed, asserted or threatened any deficiency or claim against the Company or any Subsidiary with respect to escheat or unclaimed property.
4.10Real Property.
(a)Section 4.10(a)(i) of the Company Disclosure Schedule sets forth a true, accurate and complete list of all leases, subleases, licenses, concessions, occupancy agreements and other similar agreements of real property with respect to which the Company or a Subsidiary is the lessee (individually, a “Real Property Lease” and, collectively, the “Real Property Leases”) by which the Company or a Subsidiary leases, subleases, licenses, rents or otherwise occupies any real property, including any land, buildings, structures, improvements, fixtures or other interests thereon or therein (collectively, the “Leased Real Property”). True and complete copies of all Real Property Leases have been made available to Parent and/or its agents. The Company or a Subsidiary has a valid, existing, binding and enforceable leasehold estate in, and enjoys peaceful and undisturbed possession of, all the Leased Real Property. Each Real Property Lease is in full force and effect. Except as set forth on Section 4.10(a)(ii) of the Company Disclosure Schedule, there are no subleases, licenses or similar agreements granting to any Person other than the Company or any of the Subsidiaries the right to use or occupy any Leased Real Property. Except as set forth on Section 4.10(a)(iii) of the Company Disclosure Schedule, neither the Company nor any of the Subsidiaries has assigned, transferred, mortgaged, collaterally assigned, granted any other security interest in, or pledged any interest in any of the Real Property Leases. Neither the Company nor any of the Subsidiaries has received any written or oral notice from any counterparty of any Real Property Lease of, nor does the Company or any of the Subsidiaries have knowledge of the existence of, any material default, event, condition or circumstance that, with or without notice, lapse of time, or both, would constitute a material default under any of the Real Property Leases, or would permit termination, cancelation, material modification or acceleration of rent under such Real Property Lease. There are no Contracts or other agreements, letters of intent, discussions or negotiations to modify, amend, cancel or otherwise alter any Real Property Lease or the terms thereof that will not be effective as of the Closing Date.
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(b)Section 4.10(b)(i) of the Company Disclosure Schedule sets forth a true, accurate and complete list of all Lessor Real Estate Leases. True and complete copies of all Lessor Real Estate Leases have been made available to Parent and/or its agents. Section 4.10(b)(ii) of the Company Disclosure Schedule sets forth a rent roll (the “Rent Roll”) that is used by the Company in the Ordinary Course of Business for the real property subject to the Lessor Real Estate Leases (including a list of all security deposits (whether in the form of cash, letter of credit or otherwise) under such respective Lessor Real Estate Leases being held by the Company or any of the Subsidiaries) as of the date set forth thereon. The Rent Roll is true, accurate, and complete, and reflects all material terms, concessions and amendments (whether or not reduced to writing) applicable to such Lessor Real Estate Leases, including, without limitation, (i) the name of each tenant, subtenant, licensee or other occupant; (ii) the street address and square footage of the demised premises; (iii) the commencement date, scheduled expiration date and any renewal, extension or expansion options (whether exercised or not); (iv) the current fixed rent, all percentage rent or other variable rent obligations, operating expense reimbursements, real estate tax escalations and any other sums payable by the tenant, together with the timing and method of any scheduled or indexed increases; (v) the amount of any security deposit, letter of credit, guaranty, prepaid rent or other credit enhancement; (vi) the amount and payment status of any tenant improvement allowance, free-rent period, brokerage commission, inducement payment or other landlord obligation that is outstanding, then current or scheduled to accrue; and (vii) the identity of any brokerage firm and the commission structure applicable to such Lessor Real Estate Lease.
(c)Neither the Company nor any of the Subsidiaries has received written or oral notice from any counterparty under any Lessor Real Estate Lease, nor to the Knowledge of the Company, has there been any default, event, circumstance or condition that, with or without notice, lapse of time, or both, would constitute a default under any of the Lessor Real Estate Leases, or would permit termination, cancelation, material modification or acceleration of rent under such Lessor Real Estate Lease. To the Knowledge of the Company, no rent, charges or other material payments due pursuant to each Lessor Real Estate Lease remain unpaid and past due, and there are no deferred payments of rent or other amounts that remain unpaid and past due to either party pursuant to the terms of each Lessor Real Estate Lease, including without limitation, any tenant improvement allowances or letters of credit. To the Knowledge of the Company, no security deposit or portion thereof deposited pursuant to the terms of a Lessor Real Estate Lease has been applied in respect of a breach or default that has not been redeposited in full. To the Knowledge of the Company, there are no unpaid landlord or tenant obligations, commissions or other amounts payable to or on behalf of any brokers, finders, agents or similar parties in connection with the current term of any Lessor Real Estate Lease. Except as set forth on Section 4.10(c)(i) of the Company Disclosure Schedule, no Lessor Real Estate Lease is subject to any purchase option, right of first refusal, right of first offer, similar agreement or other contractual obligation to sell, assign or dispose of any of the Lessor Real Estate Leases or any portion thereof or interest therein to any Person. There are no Contracts or other agreements, letters of intent, discussions or negotiations to modify, amend, cancel or otherwise alter any Lessor Real Estate Lease or the terms thereof that will not be effective as of the Closing Date.
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(d)Section 4.10(d) of the Company Disclosure Schedule sets forth a true, accurate and complete list of all parcels of real property owned in fee by the Company or any of the Subsidiaries, including, any buildings, structures, facilities, fixtures, and/or improvements located thereon or appurtenant thereto (“Owned Real Property” and together with the Leased Real Property, the “Real Property”). The Company or a Subsidiary has good, valid and marketable fee simple title to each Owned Real Property free and clear of Liens, except for Permitted Exceptions. To the extent within the Company’s possession, true, accurate and complete copies of all deeds and other instruments (as recorded) by which the Company or a Subsidiary acquired such Owned Real Property, title insurance policies and surveys relating to the Owned Real Property have been made available to the Parent and/or its agents. No Owned Real Property is subject to any sales contract, purchase option, right of first refusal, right of first offer, similar agreement or other contractual obligation to sell, assign or dispose of any of the Owned Real Property or any portion thereof or interest therein to any Person. Except for the Lessor Real Estate Leases, the Company or a Subsidiary is in possession of the Owned Real Property and has not leased, licensed, sublicensed or otherwise granted the right to use, operate or occupy any parcel or any portion of any parcel of any Owned Real Property to any other Person. Neither the Company nor any Subsidiary is a party to any material Contract or option to purchase any real property or interest therein that has not closed as of the Closing Date.
(e)The Real Property constitutes all of the real property used and occupied by the Company and the Subsidiaries for the operation of the Company’s business as currently conducted. Neither the Company nor any Subsidiary has received any written notice, affecting any of the Real Property, of (i) any pending or threatened condemnation, eminent domain, taking, transfer in lieu thereof, rezoning or other similar proceedings by any Governmental Body, or any zoning, building code or other moratorium legal proceeding to impose any special assessment; or (ii) any material violations of any federal, state, local, zoning, building, traffic, fire, health, sanitation, air pollution, safety or similar Law, ordinance, permit or regulation regarding any of the Real Property that has not been cured to the reasonable satisfaction of the party issuing such notice.
(f)To the Knowledge of the Company, all buildings, structures, foundations, improvements, fixtures, buildings, systems and equipment, and all components thereof, located on the Real Property are in good operating condition and repair (normal wear and tear excepted) in all material respects, and no significant repairs thereof that would be material in cost are required for which the Company or any of the Subsidiaries would have an obligation to undertake. Except as set forth on Section 4.10(f) of the Company Disclosure Schedule, to the Knowledge of the Company, there is no ongoing or anticipated material construction, material development, material alterations or material renovations at the Real Property. None of the Real Property has been materially damaged or materially destroyed by fire or other casualty that has not been restored or is not in the process of being restored.
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4.11Intellectual Property and Information Technology.
(a)Section 4.11 of the Company Disclosure Schedule contains a list of all active registrations of, and all pending or applications to register, any of the following: patents, copyrights, trademarks and Internet domain name registrations owned by the Company or any of the Subsidiaries and the Fundamental Income Mark, specifying as to each item and as applicable, the owner(s) of record (in the case of Internet domain names, the registrant), jurisdiction of application or registration, the application or registration number and the date of application or registration. The Company and the Subsidiaries exclusively own the Intellectual Property set forth in Section 4.11 of the Company Disclosure Schedule, or in the case of the Fundamental Income Mark will exclusively own as of Closing, free and clear of any Liens other than Permitted Exceptions, and such Intellectual Property is duly registered in the name of the Company or one of the Subsidiaries, or in the case of the Fundamental Income Mark will be registered in the name of the Company upon recording of the Trademark Assignment with the United States Patent and Trademark Office, and, except as would not reasonably be expected to be material to the Company and the Subsidiaries taken as a whole, is valid, subsisting, and enforceable, and, to the Knowledge of the Company, not subject to any pending cancellation, interference, reissue or reexamination proceeding. No Intellectual Property set forth in Section 4.11 of the Company Disclosure Schedule is subject to any outstanding judgment, injunction, Order, or decree against the Company or any of the Subsidiaries materially restricting the Company’s or any Subsidiary’s use or licensing thereof.
(b)The Company has entered into (i) the trademark acquisition agreement (the “Trademark Acquisition Agreement”), dated as of the date hereof, with Fundamental Income Strategies, LLC, a Delaware limited liability company, and (ii) the Domain Name Assignments (the “Domain Name Assignment Agreements”), dated as of the date hereof, with Chris Burbach and Alexi Panagiotakopoulos. The Company has delivered or made available to Parent a copy of each of the Trademark Acquisition Agreement and the Domain Name Assignment Agreements, which is accurate and complete. Prior to the date hereof, the Company has removed from the website accessible at fundamentalincome.com all links to netleaseetf.com and all references to the NETLease Corporate Real Estate ETF.
(c)Except as would not reasonably be expected to be material to the Company and the Subsidiaries taken as a whole, (i) the Company and the Subsidiaries have not received any written communication in the last three (3) years alleging that the Company or the Subsidiaries or the operation of their business has infringed, misappropriated or violated any Intellectual Property of any Person or threatening any action in respect thereof and (ii) the conduct of the business of the Company and the Subsidiaries as currently conducted does not infringe, misappropriate or otherwise violate, and has not in the past three (3) years infringed, misappropriated or violated, the Intellectual Property rights of any third party. To the Knowledge of the Company, no third party is infringing, misappropriating or otherwise violating, and has not in the past three (3) years infringed, misappropriated or violated, any material Intellectual Property rights of the Company or the Subsidiaries, including the Fundamental Income Mark. To the Knowledge of the Company, no Intellectual Property listed on Section 4.11(c) of the Company Disclosure Schedule is the subject of any challenge relating to ownership, invalidity or unenforceability. To the Knowledge of the Company, in the three (3) years prior to the date hereof, the Company and the Subsidiaries have not sent any notice to any third party asserting any claim or threatening any action against any Person for infringement, misappropriation or violation of any material Intellectual Property rights of the Company or the Subsidiaries, including the Fundamental Income Mark.
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(d)None of the execution and delivery by the Company of this Agreement or the Company Documents, the consummation by the Company of the Transactions, or compliance by the Company or the Subsidiaries with any of the provisions hereof or thereof will result in the loss, termination or impairment of any rights of the Company or any of its Subsidiaries in, or trigger any requirement to pay additional royalties or other consideration for the continued use by the Company or any of its Subsidiaries of, any material Intellectual Property.
(e)The computer hardware, servers, workstations, routers, hubs, switches, circuits, networks and other information technology equipment owned, licensed or leased by the Company and the Subsidiaries and used in their businesses (collectively, the “IT Assets”) are in good working order and condition and sufficient in all material respects for the operation of the business of the Company and the Subsidiaries as currently conducted. The Company and the Subsidiaries maintain commercially reasonable security, data backup, disaster recovery and business continuity plans and procedures designed to ensure the continued operation of the IT Assets in the event of a disaster or business interruption. To the Knowledge of the Company, the IT Assets do not contain and have not been affected by, any material virus, spyware, malware, worm, Trojan horse, or other disabling codes or instructions, or other similar code or software routines or components. Except as would not reasonably be expected to be material to the Company and the Subsidiaries taken as a whole, there has been no unauthorized access to the IT Assets in the last three (3) years that has resulted in any unauthorized use, access, modification, deletion or corruption of any information or data contained therein.
(f)Except as set forth on Section 4.11(d) of the Company Disclosure Schedule, neither the Company nor any of the Subsidiaries own any material proprietary software.
4.12Material Contracts.
(a)Section 4.12 of the Company Disclosure Schedule sets forth all of the following Contracts to which the Company or any of the Subsidiaries is a party or by which it is bound, in each case, as of the date of this Agreement (collectively, the “Material Contracts”):
(i)Contracts with any current officer or manager of the Company or any of the Subsidiaries (other than Company Benefit Plans);
(ii)Contracts providing for any change in control, retention, severance payments or benefits, advance notice of termination, accelerated vesting or any other compensation or benefit to or for the benefit of any employee of the Company, in any case, that will be triggered or enhanced as a result of the consummation of the Transactions;
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(iii)Contracts with any labor union or association representing any employee of the Company or any of the Subsidiaries;
(iv)Contracts for the sale of any of the assets of the Company or any the Subsidiaries within the last three (3) years, in each case, for consideration in excess of $100,000;
(v)Contracts relating to any pending acquisition or disposition by the Company or any of the Subsidiaries of any operating business or the share capital or other equity securities or real properties or other material assets of any Person;
(vi)joint venture, partnership, or other similar agreements with a third party involving an investment by the Company or any of the Subsidiaries;
(vii)Contracts containing covenants (A) restricting or limiting in any material respect the ability of the Company or any of the Subsidiaries to compete in any business with any Person or in any geographic area (B) requiring the Company or any Subsidiaries to purchase or otherwise obtain any products or services exclusively from a single third party or (C) requiring a party to act as an exclusive agent for the Company or any Subsidiary in connection with the marketing, distribution or sale of any product of the Company or any Subsidiary;
(viii)each Contract containing a “most favored nation” or similar provision in favor of any counterparty of any of the Company or the Subsidiaries;
(ix)each Contract which contains a prohibition on the Company or any of the Subsidiaries relating to the solicitation or hiring of any Person, including the employees and contractors of any Person;
(x)Contracts relating to the incurrence of Debt of the type described in clause (i) or (ii) of the definition thereof, or the making of any loans by the Company or any of the Subsidiaries, in each case, involving amounts in excess of $500,000 (other than any such loans that are also Lessor Real Estate Leases (which are covered by clause (xix) below));
(xi)each Contract that relates to any settlement of litigation with, or an order of, a Governmental Body pursuant to which there are material outstanding obligations of or owing to the Company or any Subsidiary;
(xii)each Contract with a Material Supplier;
(xiii)any Contract with any Governmental Body;
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(xiv)each Related Party Agreement, except for any Company Benefit Plan;
(xv) any Contract pursuant to which any of the Company or any Subsidiary grants to or receives from a third party a license or similar use right under any Intellectual Property rights that are material to the business of the Company and its Subsidiaries, excluding (A) click-wrap and shrink-wrap licenses and other non-exclusive licenses for commercially available off-the-shelf software, (B) non-exclusive licenses granted by the Company or any Subsidiary in the Ordinary Course of Business and (C) non-disclosure agreements, invention assignments and employee- or contractor-related agreements entered into in the Ordinary Course of Business;
(xvi)each Contract providing for indemnification of any director, officer or employee of the Company or any Subsidiary (other than the Governing Documents of the Company and any Subsidiary);
(xvii)Contracts which involve any capital expenditure, in each case, of more than $100,000;
(xviii)each Real Property Lease;
(xix)the Lessor Real Estate Leases; and
(xx)the Trademark Acquisition Agreement and the Domain Name Assignment Agreements.
(b)Each Material Contract is a legal, valid, binding and enforceable obligation of the Company or a Subsidiary, as applicable, and, to the Knowledge of the Company, of each counterparty thereto, and is in full force and effect, except for such failures to be legal, valid, binding, enforceable or in full force and effect that would not reasonably be expected to be material to the Company or the Subsidiaries, taken as a whole. Each of the Company and the Subsidiaries has fulfilled and performed its respective obligations under each of the Material Contracts, and neither the Company nor any of the Subsidiaries, nor to the Knowledge of the Company, any other party thereto, is in, or alleged in writing (or, to the Company’s Knowledge, orally) to be in, breach of, or in default under (including, with respect to transactions under securitization, subject to repurchase transactions), nor is there alleged to be any basis for termination of any such Material Contract, and, to the Knowledge of the Company, no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder or would permit or cause the termination or modification thereof or acceleration or creation of any right or obligation thereunder that would have, or reasonably be expected to be material to the operations of the Company or any of the Subsidiaries taken as a whole, or, to the Knowledge of the Company, any other party thereto. The Company has made available true, correct and complete copies of the Material Contracts to Parent.
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4.13Employee Benefits Plans.
(a)Section 4.13(a) of the Company Disclosure Schedule lists each material Company Benefit Plan; provided, that Section 4.13(a) of the Company Disclosure Schedule shall not be required to list any individual employment offer letter that is consistent in all material respects with the form employment offer letter set forth on Section 4.13(a) of the Company Disclosure Schedule and that is terminable without notice without further liability and does not provide any change in control or severance payments. With respect to each Company Benefit Plan, the Company has made available to Parent correct and complete copies, as applicable, of: (i)  the plan document (or, with respect to any unwritten Company Benefit Plan, a summary of the terms thereof), related trust agreements and all amendments thereto; (ii) the three (3) most recent annual reports on Form 5500 (and accompanying schedules and financial statements) filed with the IRS (if any such report was required); (iii) the most recent opinion or determination letter from the IRS; (iv) the most recent summary plan description for which such summary plan description is required (and all summaries of material modifications thereto); (v) insurance contracts and policies and certificates of coverage and all amendments thereto; (vi) annual testing (including nondiscrimination and coverage) results for the three (3) most recently completed plan years; and (vii) all material, non-routine correspondence received from or provided to any Governmental Body with respect to such Company Benefit Plan within the past three (3) years.
(b)(i) All Company Benefit Plans that are intended to be tax qualified under Section 401(a) of the Code are so qualified and have received favorable and currently effective determination letters (or opinion letters, if applicable) from the IRS or have been established under pre-approved plans for which a current favorable IRS opinion letter has been obtained by the pre-approved plan provider and on which the Company is entitled to rely; and (ii)  no event has occurred and no circumstances exist that would reasonably be expected to adversely affect the qualification of such plan or result in a material Tax in connection with the disqualification of such plan.
(c)With respect to each Company Benefit Plan: (i)  each such Company Benefit Plan has been established, documented, maintained, and administered in accordance with its terms and applicable Laws in all material respects, (ii) there are no Legal Proceedings (other than routine claims for benefits) pending or, to the Knowledge of the Company, threatened against or involving any of the Company Benefit Plans, and (iii) all contributions, premiums, fees and administrative expenses required to be paid by the Company or any of the Subsidiaries have been timely paid or have been properly accrued to the extent required in accordance with GAAP.
(d)Neither the Company nor any of its ERISA Affiliates sponsors, maintains, contributes to, or is obligated to contribute to, or has any liability (including contingent liability) for or has, within the past six (6) years, sponsored, maintained, contributed to, had an obligation to contribute to, or had any liability in respect of, (i) a plan which is subject to Section 412 of the Code or Section 302 or Title IV of ERISA, including a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) or (ii) a multiple employer plan subject to Section 4063 or 4064 of ERISA. Neither the Company nor any Subsidiary sponsors, contributes to, has an obligation to contribute to or has any liability (including contingent liability) with respect to (or has, within the past six (6) years, sponsored, contributed to, or had an obligation to contribute to) a multiple employer welfare arrangement (as defined in Section 3(40)(A) of ERISA) or a voluntary employees’ beneficiary association under Section 501(c)(9) of the Code. Neither the Company nor any of its Subsidiaries has any material liability as a result of a violation of COBRA, whether directly or as a result of any of its ERISA Affiliates.
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(e)No Company Benefit Plan, and neither the Company nor any of the Subsidiaries, provides, or has any obligation to provide, current or former employees thereof (or any beneficiaries thereof) welfare benefits after such Person terminates employment with the Company or any of the Subsidiaries, except for the coverage continuation requirements of COBRA or other applicable Laws. No Company Benefit Plan and neither the Company nor any of the Subsidiaries, provides or has any obligation to provide welfare benefits to any Person who is not a current or former employee of the Company or any of the Subsidiaries, or a beneficiary thereof. Neither the Company nor any of the Subsidiaries has incurred any excise Taxes under Chapter 43 of the Code with respect to any Company Benefit Plan and nothing has occurred with respect to any Company Benefit Plan that could reasonably be expected to subject the Company or any of the Subsidiaries to any such Taxes. Neither the Company nor any of the Subsidiaries, no fiduciary (within the meaning of Section 3(21) of ERISA) of any Company Benefit Plan subject to Part 4 of Subtitle B of Title I of ERISA has, committed a breach of fiduciary duty with respect to that Company Benefit Plan that could subject the Company or any of the Subsidiaries to any material liability (including liability on account of an indemnification obligation) for breach of such fiduciary duty. No Company Benefit Plan is maintained primarily for the benefit of any employees primarily providing services in any jurisdiction outside of the United States of America.
(f)Except as set forth in Section 4.13(f) of the Company Disclosure Schedule, neither the execution of this Agreement nor the consummation of the Transactions contemplated hereby (either alone or in combination with another event) will or can be reasonably expected to (i) entitle any current or former employee, director, or consultant to any compensatory payment (including severance pay or similar compensation), any cancellation of indebtedness, or any increase in compensation or benefits; (ii) result in the acceleration of payment, funding or vesting under any Company Benefit Plan; or (iii) result in any increase in benefits payable under any Company Benefit Plan. No amount paid or payable (whether in cash, in property, or in the form of benefits) in connection with the Transactions contemplated hereby (either alone or in combination with another event) will be an “excess parachute payment” within the meaning of Section 280G of the Code. None of the Company or the Subsidiaries has any obligation to make a “gross-up” or similar payment in respect of any Taxes that may become payable under Section 4999 or Section 409A of the Code.
4.14Labor.
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(a)Neither the Company nor any of the Subsidiaries is a party to any labor or collective bargaining agreement or other Contract with any labor organization or other representative of any Company employees, or is any such Contract, as of the date of this Agreement, being negotiated. No labor union or other collective bargaining unit represents or, to the Knowledge of the Company, claims to represent any of the Company’s or any Subsidiary’s employees; and to the Knowledge of the Company, there is no union campaign being conducted to solicit cards from employees to authorize a union to request a National Labor Relations Board certifications election with respect to the Company’s or any Subsidiary’s employees (if applicable).
(b)Since the Balance Sheet Date, there has not been, nor is there pending or, to the Knowledge of the Company, threatened, any material labor dispute between the Company or any Subsidiary and any labor organization, or any strike, work stoppage, work slowdown, picketing or lockout involving any employee of, or affecting the Company or any Subsidiary. There are no unfair labor practice charges, grievances or complaints pending or, to the Knowledge of the Company, threatened by or on behalf of any employee or group of employees of the Company or any of the Subsidiaries.
(c)Set forth on Section 4.14(c) of the Company Disclosure Schedule is a true, accurate and complete list of all current employees and natural person independent contractors of the Company and the Subsidiaries, containing: (i) their names and status as an employee or contractor; (ii) the entity with which they are employed or engaged and their location (state, city); (iii) their hire dates and positions, job titles or function; (iv) their fulltime, part-time, or temporary status, if applicable; (v) their base salaries or base hourly wage or contract rate; (vi) their target bonus rates or target commission rates, if applicable; (vii) any other compensation payable to them (including compensation payable pursuant to any other bonus, deferred compensation, commission arrangements or other compensation, and/or severance payments); (viii) their visa status, if applicable; and (ix) designation of whether they are classified as exempt or non-exempt for purposes of the Fair Labor Standards Act and any similar state law, if applicable.
(d)The Company and the Subsidiaries (i) are, and at all times during the past three (3) years have been, in material compliance with all applicable Laws pertaining to employment and employment practices, including, but not limited to, wages, hours, compensation, employee classification (either as exempt or non-exempt, or as a contractor versus employee), fringe benefits, paid sick leave, employment or termination of employment, leave of absence rights, employment policies, immigration, terms and conditions of employment, labor or employee relations, affirmative action, equal employment opportunity and fair employment practices, disability rights or benefits, workers’ compensation, unemployment compensation and insurance, health insurance continuation, whistle-blowing, privacy rights, harassment, discrimination, retaliation, and working conditions or employee safety or health; and (ii) have no liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Body with respect to unemployment compensation benefits or social security Tax for any Company employee (other than routine payments to be made in the normal course of business and consistent with past practice).
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(e)There are no currently pending, and have not been during the past three (3) years, any actions, suits, claims (oral or written), charges, formal complaints or grievances, arbitrations, investigations or other legal proceedings against the Company or any of the Subsidiaries, or to the Knowledge of the Company, threatened to be brought or filed, by or with any Person or any Governmental Body or arbitrator in connection with the employment or engagement of any current or former employee, natural person independent contractor, or other natural person service provider of the Company or any of the Subsidiaries, including, without limitation, any such action relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage or hours violations, unpaid wages, misclassification, unpaid commissions, wrongful termination or any other employment related matter arising under applicable Laws. During the past three (3) years, neither the Company nor the Subsidiaries have implemented or effectuated a “plant closing,” “mass layoff,” partial “plant closing,” “relocation,” or “termination” (each as defined in the Worker Adjustment and Retraining Notification Act or similar state or local Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or any of the Subsidiaries.
(f)During the past three (3) years, each Person providing services to the Company and the Subsidiaries that has been characterized as an independent contractor and not as an employee has been properly characterized pursuant to applicable Law as such and, to the Knowledge of the Company, the Company and its Subsidiaries are not subject to material liability arising out of treating any such Person as an independent contractor and not as an employee . During the past three (3) years, all employees of the Company and the Subsidiaries have been correctly classified as exempt or non-exempt for purposes of the Fair Labor Standards Act and any similar state law, and overtime has been properly recorded and paid for all such employees classified as non-exempt, to the extent applicable. Each employee of the Company and the Subsidiaries has the lawful right to work in the United States and the Company has in its files a Form I-9 that, to the Knowledge of the Company, was completed in accordance with applicable Law for each employee from whom such form is required under applicable Law.
(g)During the past three (3) years, (i) to the Knowledge of the Company, no allegations of sexual or other harassment, discrimination or material misconduct have been made against any (A) officer or director of the Company or the Subsidiaries, or (B) any employee of the Company or the Subsidiaries who, directly or indirectly, supervises or has managerial authority over other employees or service providers of the Company or the Subsidiaries, and (ii) the Company and the Subsidiaries have not entered into any settlement agreement or conducted any investigation related to allegations of sexual or other harassment, discrimination or material misconduct by any officer, director or employee of the Company or the Subsidiaries.
4.15Litigation. There are no, and for the last three (3) years there have been no, Legal Proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of the Subsidiaries by any Person that, if decided against the Company or any of the Subsidiaries would, or would reasonably be expected to, (a) be material to the business, operations or financial condition of the Company or the Subsidiaries, taken as a whole, or (b) prevent, materially delay or materially impair the consummation of the Transactions. Neither the Company nor any of the Subsidiaries are, or during the last three (3) years have been, subject to any Order which has had or would, or would reasonably be expected to (x) be material to the business, operations or financial condition of the Company or the Subsidiaries, taken as a whole, or (y) prevent, materially delay or materially impair the consummation of the Transactions.
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4.16Compliance with Laws; Permits.
(a)Each of the Company and the Subsidiaries is, and for the last three (3) years there has been, in compliance, in all material respects, with all Laws and Orders. Neither the Company nor any of the Subsidiaries have received any written or, to the Knowledge of Seller, oral communication or been charged with any material noncompliance with any such Laws that has not been cured.
(b)The Company and the Subsidiaries have obtained and are in compliance in all material respects with all Permits which are required for the operation of their respective businesses as presently conducted. All such Permits are in full force and effect, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened before any Governmental Body that seek the revocation, cancellation, suspension or adverse modification thereof except as would, or would reasonably be expected to be, material to the business, operations or financial condition of the Company or the Subsidiaries, taken as a whole, or prevent, materially delay or materially impair the consummation of the Transactions. Neither the Company nor any of the Subsidiaries has materially breached or is in default or violation in any material respect of, and no condition exists that with notice of lapse of time or both would constitute a material breach, default under, or violation of, any term, condition or provision of any material Permit to which it is a party.
(c)Except as would not be material to the Company and the Subsidiaries, taken as a whole, the business of the Company and the Subsidiaries with respect to the ongoing origination and servicing of Lessor Real Estate Leases has been conducted in compliance with all applicable Laws.
4.17Anti-Corruption and Anti-Bribery Laws. During the last five (5) years, neither the Company nor the Subsidiaries nor any manager, director, officer, employee, or, to the Knowledge of the Company, any agent or any other Person acting for or on behalf of the Company or the Subsidiaries, has, directly or indirectly, except as would not be material to the Company and the Subsidiaries, taken as a whole:
(a)made, authorized, offered or promised, directly or indirectly, any bribe, rebate, payoff, payment, kickback, loan or transfer of anything of value or received or retained funds in violation of any applicable Laws, including any reward, advantage or benefit of any kind, to or for the benefit of any government official, candidate for public office, political party or political campaign, for the purpose of corruptly (i) influencing any act or decision of such government official, candidate, party or campaign, (ii) inducing such government official, candidate, party or campaign to do or omit to do any act in violation of a lawful duty, (iii) obtaining or retaining business for or with any Person, (iv) expediting or securing the performance of official acts of a routine nature, or (v) otherwise securing any improper advantage;
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(b)paid, offered, or promised to pay or offer any bribe or other similar unlawful payment of any nature in violation of any applicable Laws relating to the prevention of corruption and bribery, including the U.S. Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., and the UK Bribery Act 2010 (the “Anti-Corruption Laws”); or
(c)otherwise violated any applicable provisions of the Anti-Corruption Laws, anti-money laundering and/or anti-bribery Laws applicable to the Company or the Subsidiaries.
For purposes of this Section 4.17, “government official” includes any officer or employee of a government or any department, agency or instrumentality thereof (including wholly or partially owned enterprises or institutions), or of a public international organization, or any Person acting in an official capacity for or on behalf of any such government or department, agency or instrumentality, or for or on behalf of any such public international organization.
4.18Environmental Matters. Except as set forth on Section 4.18 of the Company Disclosure Schedule, (a) the Company and the Subsidiaries are, and for the past five (5) years have been, in compliance in all material respects with all applicable Environmental Laws; (b) the Company and the Subsidiaries have all Permits required under Environmental Laws for the operation of their respective businesses as presently conducted, the Company and the Subsidiaries are, and for the past five (5) years have been, in compliance in all material respects with all such Permits, all such Permits are valid and in full force and effect, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened that seek the revocation, cancellation, suspension or material adverse modification of such Permits; (c) neither the Company nor any of the Subsidiaries has received any written notice, demand, request for information, citation or summons, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened alleging that the Company or any of the Subsidiaries is in violation in any material respect of or has material liability under any Environmental Law or any Permit required under any Environmental Law to operate its business as presently operated; (d) neither the Company nor any Subsidiary is subject to any material Order arising under Environmental Law; (e) there are no Hazardous Materials present at concentrations in excess of those permitted under Environmental Law at any real property owned or leased by the Company or any Subsidiary, and there has been no Release of, or exposure to, any Hazardous Materials on, at, under or from any property currently or, to the Knowledge of the Company, formerly owned, leased or operated by the Company or any Subsidiary or any other location, in each case, that has given rise to, or could be reasonably expected to give rise to, any material remedial or corrective action obligation or any material Liability on the part of the Company or any Subsidiary under Environmental Laws; (f) neither the Company nor any of the Subsidiaries has assumed or provided indemnity against any material Liability of any other Person under any Environmental Laws, including any obligation for corrective or remedial action; and (g) the Owned Real Property is free and clear of all Liens arising under Environmental Law that could affect the continued commercial or industrial use of such property.
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4.19Insurance. Section 4.19 of the Company Disclosure Schedule sets forth a true and complete list and brief description (including nature of coverage, name of the insurer, policy number, policy term, and total premiums) of all insurance policies maintained, owned or held by or for the benefit of the Company or the Subsidiaries (collectively, the “Insurance Policies”). All such policies are with reputable insurance carriers and provide adequate coverage customary for similarly situated companies in the same or similar industries and as required by applicable Law. All of such insurance policies are in full force and effect. With respect to each such insurance policy (a) neither the Company, nor any of the Subsidiaries, is in material breach or material default (including any such breach or default with respect to the payment of premiums or the giving of notice of claims), and, to the Knowledge of the Company, no event has occurred which, with notice or the lapse of time or both, would constitute such a material breach or material default, or permit termination or modification, under any such policy and (b) no written, or to the Knowledge of the Company, oral notice of cancellation or termination has been received other than in connection with ordinary renewals. Section 4.19 of the Company Disclosure Schedule sets forth all claims made or pending, during the last three (3) years, under any Insurance Policies.
4.20Material Suppliers.
(a)Section 4.20(a) of the Company Disclosure Schedule sets forth a complete and accurate list of the top ten (10) vendors or suppliers (measured by dollar volume of purchases) of the Company for the twelve (12)-month period ended December 31, 2024 and the six (6)-month period ended June 30, 2025 based on aggregate payments made to each Person during such periods (each, a “Material Supplier”).
(b)During the past twelve (12) months, no Material Supplier has cancelled or otherwise terminated its relationship with the Company (other than automatic termination that occurs in accordance with the terms thereof) and the Company has not received any written notice or written threat of termination from any Material Supplier or any written indication from any Material Supplier that such Person intends to materially decrease the amount or frequency or materially and adversely modify its relationship with the Company.
4.21No Unitholder Vote. No vote or other action of the Unitholders or the Management Pool Holders that has not been obtained or completed is required under the Governing Documents of the Company or the Management Pool or applicable Law to consummate the Transactions.
4.22Illustrative Closing Consideration Schedule. The Illustrative Closing Consideration Schedule is based on and consistent with the terms of the Governing Documents of the Company and the Management Pool.
4.23Related Party Agreements. Except for (a) the arrangements set forth on Section 4.23 of the Company Disclosure Schedule, (b) advances to employees in the Ordinary Course of Business, (c) employment arrangements entered into in the Ordinary Course of Business, (d) participation by employees, officers, and managers in any Company Benefit Plans and (e) the Governing Documents of the Company and the Subsidiaries, there are no Related Party Agreements.
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4.24Financial Advisors. Except as set forth on Section 4.24 of the Company Disclosure Schedule, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for the Company in connection with the Transactions and no such Person is entitled to any fee or commission or like payment from the Company in respect thereof.
4.25Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE IV (AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULE) OR THE CERTIFICATE DELIVERED UNDER SECTION 7.2(b), THE COMPANY EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING ANY SUCH REPRESENTATION OR WARRANTY AS TO THE CONDITION OR QUALITY OF THE COMPANY AND THE SUBSIDIARIES OR THEIR ASSETS, AND THE COMPANY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE COMPANY’S AND THE SUBSIDIARIES’ ASSETS, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, AND EACH OF PARENT AND MERGER SUB SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF. EXCEPT THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV HEREOF (AS MODIFIED BY THE COMPANY DISCLOSURE SCHEDULE) OR THE CERTIFICATE DELIVERED UNDER SECTION 7.2(b), THE COMPANY HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FOR ANY REPRESENTATION, WARRANTY, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO PARENT, MERGER SUB OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED BY ANY MEMBER, DIRECT OR INDIRECT EQUITYHOLDER, UNITHOLDER, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR OTHER REPRESENTATIVE OF THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES). NONE OF THE COMPANY NOR ANY OF ITS AFFILIATES OR REPRESENTATIVES NOR ANY OTHER PERSON MAKES OR HAS MADE ANY REPRESENTATIONS OR WARRANTIES TO PARENT REGARDING ANY PROJECTION OR FORECAST REGARDING FUTURE RESULTS OR ACTIVITIES OR THE PROBABLE SUCCESS OR PROFITABILITY OF THE COMPANY OR THE SUBSIDIARIES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 4.25, NOTHING IN THIS SECTION 4.25 SHALL BE DEEMED TO LIMIT THE RIGHTS OF ANY NAMED PARTY TO (OR THIRD PARTY BENEFICIARY OF) ANY TRANSACTION DOCUMENT AGAINST ANY OTHER NAMED PARTY TO SUCH TRANSACTION DOCUMENT IN ACCORDANCE WITH THE TERMS THEREOF.
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Article VARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth on the disclosure schedule delivered to the Company prior to the execution of this Agreement, each of Parent and Merger Sub hereby represents and warrants to the Company that:
5.1Organization and Good Standing. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite power and authority to own, lease and operate its properties and to carry on its business in all material respects as now conducted. Merger Sub is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and to carry on its business in all material respects as now conducted.
5.2Authorization of Agreement. Each of Parent and Merger Sub has all requisite power and authority to execute and deliver this Agreement and each other Transaction Document to be executed by Parent or Merger Sub in connection with the consummation of the Transactions (the “Parent Documents”), and to consummate the Transactions. The execution and delivery of this Agreement and the Parent Documents by each of Parent and Merger Sub and the consummation by Parent and Merger Sub of the Merger and other Transactions have been duly authorized by all necessary action on behalf of Parent and Merger Sub, and no other corporate action on the part of Parent or Merger Sub (other than (a) as required by the Laws of the State of Delaware and (b) the filing of the Certificate of Merger with DESOS) is necessary to authorize the execution, delivery and performance of this Agreement and each of the Parent Documents by each of Parent and Merger Sub and the consummation of the Merger and other Transactions. This Agreement has been, and each of the Parent Documents will be at or prior to the Closing, duly and validly executed and delivered by Parent and Merger Sub, as applicable, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Parent Document (assuming the due authorization, execution and delivery by the other parties hereto and thereto) when so executed and delivered will constitute, the legal, valid and binding obligation of Parent and Merger Sub, as applicable, enforceable against Parent and Merger Sub, as applicable, in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
5.3Conflicts; Consents of Third Parties.
(a)None of the execution and delivery by Parent or Merger Sub of this Agreement or the Parent Documents, the consummation by Parent or Merger Sub of the Transactions, or compliance by Parent or Merger Sub with any of the provisions hereof or thereof will conflict with, or result in any breach, violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, loss of rights, adverse modification of provisions, recapture, right of first offer, right of first refusal, acceleration or cancellation under, or result in the creation of a Lien on any of the equity interests or assets of Parent or Merger Sub under any provision of (i) the Governing Documents of (A) Parent or (B) Merger Sub; (ii) any material Contract or Permit to which Parent or Merger Sub is a party; or (iii) any Orders or Laws applicable to Parent or Merger Sub or by which any of the properties or assets of Parent or Merger Sub are bound, other than, in the case of clauses (ii) and (iii), as would not reasonably be expected to materially interfere with, prevent or materially delay the ability of Parent or Merger Sub to enter into and perform its obligations under this Agreement or consummate the Transactions.
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(b)No expiration of waiting periods under applicable Antitrust Laws and no consent, waiver, approval or authorization of, or declaration or filing with, or notice to, any Governmental Body is required in connection with the execution, delivery and performance by Parent or Merger Sub of this Agreement or the Parent Documents, the compliance by Parent or Merger Sub with any of the provisions hereof or thereof, or the consummation by Parent or Merger Sub of the Transactions, except for (i) the filing of the Certificate of Merger with the DESOS pursuant to the Act; and (ii) as would not reasonably be expected to materially interfere with, prevent or materially delay the ability of Parent or Merger Sub to enter into and perform its obligations under this Agreement or consummate the Transactions.
5.4Litigation. There are no Legal Proceedings pending or, to the Knowledge of Parent, threatened in writing against Parent or Merger Sub that would reasonably be expected to prohibit or restrain the ability of Parent or Merger Sub to enter into this Agreement or consummate the Transactions. Neither Parent nor Merger Sub is subject to any Order except to the extent the same would not reasonably be expected to prohibit or restrain the ability of Parent or Merger Sub to enter into this Agreement or consummate the Transactions.
5.5Financial Advisors. No Unitholder nor any of their Affiliates will be responsible for any brokerage payments, investment banking fees, commissions, brokers’ fees, finders’ fees or other similar payments to any broker, finder or financial advisor engaged by Parent or its Affiliates (determined prior to the Closing) in connection with the Transaction.
5.6Sufficient Funds. The obligations of Parent and Merger Sub under this Agreement are not subject to any conditions regarding Parent’s, Merger Sub’s, their respective Affiliates’, or any other Person’s ability to obtain financing for the consummation of the Transactions contemplated hereby. Parent has sufficient cash on hand or available to consummate the Transactions contemplated hereby in accordance with the terms hereof.
5.7Solvency.
(a)Immediately after giving effect to the Merger and the consummation of the other Transactions, the payment of the Merger Consideration pursuant to Section 3.1(a) (including, in each case, any adjustments thereto pursuant to Section 3.2), and payment of all related fees and expenses:
(i)the fair saleable value (determined on a going concern basis) of the assets of Parent and each of its subsidiaries (including the Surviving Company and the Subsidiaries) shall be greater than the total amount required to pay their liabilities (including all liabilities, whether or not reflected in a balance sheet prepared in accordance with GAAP, and whether direct or indirect, fixed or contingent, secured or unsecured, disputed or undisputed);
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(ii)Parent and each of its subsidiaries (including the Surviving Company and the Subsidiaries) shall be able to pay their debts, obligations, and liabilities in the Ordinary Course of Business as they become due; and
(iii)Parent and each of its subsidiaries (including the Surviving Company and the Subsidiaries) shall not have unreasonably small capital for the operation of the businesses in which they are engaged or proposed to be engaged thereafter.
(b)In completing the Transactions, Parent does not intend to hinder, delay or defraud any present or future creditors of Parent or the Surviving Company or the Subsidiaries.
5.8Certain Acknowledgements.
(a)Notwithstanding anything contained in this Agreement to the contrary, each of Parent and Merger Sub acknowledges and agrees that neither the Company nor any other Person is making any representations or warranties whatsoever, express or implied, at law or in equity, beyond those expressly given by the Company in Article IV (as modified by the Company Disclosure Schedule), and the certificate delivered to Parent and Merger Sub pursuant to Section 7.2(b), and any representations or warranties other than those set forth in Article IV (as modified by the Company Disclosure Schedule) and certificate delivered to Parent and Merger Sub pursuant to Section 7.2(b) are hereby disclaimed and waived. Each of Parent and Merger Sub hereby acknowledges and agrees to such disclaimer and waiver of any representations or warranties beyond those expressly given by the Company in Article IV (as modified by the Company Disclosure Schedule) and the certificate delivered to Parent and Merger Sub pursuant to Section 7.2(b). Each of Parent and Merger Sub acknowledges and agrees that, except for the representations and warranties contained in Article IV and the certificate delivered to Parent and Merger Sub pursuant to Section 7.2(b), the assets and the business of the Company and the Subsidiaries are being transferred on a “where is” and, as to condition, “as is” basis.
(b)Each of Parent and Merger Sub further acknowledges and agrees that none of the Company, the Unitholders, any of their Affiliates or any other Person will have or be subject to any Liability or indemnification obligation on any basis (including in contract or tort, under applicable federal or state securities Laws or otherwise) to Parent or any other Person resulting from the sharing with Parent, Merger Sub or its representatives, or Parent’s or Merger Sub’s use of any information, documents, projections, forecasts or other materials made available to Parent, Merger Sub or their representatives in the electronic data room established by or on behalf of the Company in connection with the Transactions or management presentations (or omissions therefrom) in expectation of the Transactions or otherwise. It is understood and Parent and Merger Sub acknowledge that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations provided or addressed to Parent or Merger Sub are not and shall not be deemed to be or to include representations and warranties (express or implied) of the Company, the Subsidiaries, their respective Affiliates or representatives or any other Person (including as to the accuracy or completeness of any such information), and no Person will have or be subject to any objection or Liability to Parent or the Surviving Company or any other Person resulting from the distribution to Parent or the Surviving Company or its representatives or Parent’s or Surviving Company’s use of, any such information. Each of Parent and Merger Sub acknowledges and agrees that they have conducted to their satisfaction, their own independent investigation of the condition, operations and business of the Company and the Subsidiaries and, in making their determination to proceed with the Transactions, Parent and Merger Sub have relied on the results of their own independent investigation. Each of Parent and Merger Sub acknowledges that they are informed and sophisticated Persons, and have engaged advisors experienced in the evaluation and purchase of companies such as the Company and the Subsidiaries as contemplated hereunder.
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(c)In furtherance of the foregoing, and not in limitation thereof, Parent and Merger Sub specifically acknowledge and agree that none of the Company, the Unitholders or their respective Affiliates or any other Person makes or has made any representation or warranty, express or implied, with respect to any financial projection, forward-looking statement, forecast, estimate and business plan information delivered to Parent or Merger Sub with respect to the performance of the Company or its Subsidiaries either before or after the Closing Date. Parent and Merger Sub acknowledge and agree, on its own behalf and on behalf of its former, current or future Affiliates, representatives or any of their respective assignees or successors or any former, current or future Affiliate, representative, assignee or successor of any of the foregoing, that (i) such projections, forward-looking statements, forecasts, estimates and business plan information are being provided solely for the convenience of Parent and Merger Sub to facilitate its own independent investigation of the Company and its Subsidiaries, (ii) there are uncertainties inherent in attempting to make such projections, forward-looking statements, forecasts, estimates and business plan information, (iii) Parent and Merger Sub are familiar with such uncertainties and (iv) Parent and Merger Sub are taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections, forward-looking statements, forecasts, estimates and business plan information (including the reasonableness of the underlying assumptions).
(d)Notwithstanding anything to the contrary in this Section 5.8, nothing in this Section 5.8 shall be deemed to limit the rights of any named party to (or third party beneficiary of) any Transaction Document against any other named party to such Transaction Document in accordance with the terms thereof.
5.9Merger Sub’s Operations. Parent owns beneficially and of record all of the outstanding capital stock of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions and has not (and as of the Closing, will not have) engaged in any business activities or conducted any operations other than in connection with such Transactions.
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5.10Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE V AND THE CERTIFICATE DELIVERED UNDER SECTION 7.3(b), EACH OF PARENT AND MERGER SUB EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED. EXCEPT THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE V HEREOF OR THE CERTIFICATE DELIVERED UNDER SECTION 7.3(b), EACH OF PARENT AND MERGER SUB HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FOR ANY REPRESENTATION, WARRANTY, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO THE COMPANY, ANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED BY ANY MEMBER, DIRECT OR INDIRECT EQUITYHOLDER, UNITHOLDER, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR OTHER REPRESENTATIVE OF PARENT OR MERGER SUB OR ANY OF THEIR RESPECTIVE AFFILIATES). NONE OF PARENT NOR MERGER SUB NOR ANY OF THEIR AFFILIATES OR REPRESENTATIVES NOR ANY OTHER PERSON MAKES OR HAS MADE ANY REPRESENTATIONS OR WARRANTIES TO THE COMPANY OR ANY SUBSIDIARY REGARDING ANY PROJECTION OR FORECAST REGARDING FUTURE RESULTS OR ACTIVITIES OR THE PROBABLE SUCCESS OR PROFITABILITY OF THE COMPANY OR THE SUBSIDIARIES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 5.10, NOTHING IN THIS SECTION 5.10 SHALL BE DEEMED TO LIMIT THE RIGHTS OF ANY NAMED PARTY TO (OR THIRD PARTY BENEFICIARY OF) ANY TRANSACTION DOCUMENT AGAINST ANY OTHER NAMED PARTY TO SUCH TRANSACTION DOCUMENT IN ACCORDANCE WITH THE TERMS THEREOF.
Article VIARTICLE VI

COVENANTS
6.1Access to Information.
(a)Prior to the Closing or earlier termination of this Agreement, the Company shall from time to time provide Parent with reasonable access (during normal business hours) to the offices, properties, appropriate officers, books and records of the Company and the Subsidiaries. Any such investigation and examination shall be conducted during regular business hours upon reasonable advance written notice and under reasonable circumstances and shall be subject to restrictions under applicable Law; provided, that any such access must be coordinated through the Company. Parent and its representatives shall cooperate with the Company and its representatives and shall use their reasonable best efforts to minimize any disruption to the business. Notwithstanding anything herein to the contrary, no such investigation or examination shall be permitted to the extent that it would require the Company or any of the Subsidiaries to disclose information subject to attorney-client privilege or conflict with any confidentiality or other contractual obligations to which the Company or any of the Subsidiaries is bound or cause any violation of applicable Law. Notwithstanding anything to the contrary contained herein, prior to the Closing, without the prior written consent of the Company, which may be withheld for any reason in the sole and absolute discretion of the Company, (i) Parent shall not (A) have access to (1) personnel records of the Company’s employees, including records relating to individual performance or evaluation records, medical histories, individual employee benefit information or other information which in the Company’s opinion is sensitive or the disclosure of which could subject the Company, the Subsidiaries or any of their respective Affiliates or direct or indirect equity holders to risk of liability or (2) any information relating to the sale process, bids received from other Persons in connection with the transactions contemplated by this Agreement and information and analysis (including financial analysis) relating to such bids (or Parent’s bid) or (B) contact any employee or contractors of, or suppliers or lessors to, or customers or lessees of, the Company or any of the Subsidiaries (except that it may contact any such suppliers, lessors, customers or lessees if such contact is in the ordinary course of Parent’s business and is unrelated to the Transactions (and does not disclose any information related to the Transactions)), and (ii) Parent shall have no right to perform invasive or subsurface investigations of, including sampling or testing of environmental media at, the properties or facilities of the Company or any of the Subsidiaries.
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(b)Subject to applicable Law, for a period of seven (7) years after the Closing, Parent shall cause the Surviving Company to provide the Company Representative and its representatives reasonable access to the appropriate books and records (at the Company Representative’s sole expense) of the Surviving Company during Surviving Company’s regular business hours upon reasonable advance notice and under reasonable circumstances to books and records transferred to the Surviving Company to the extent necessary for the preparation of insurance claims, financial statements in respect of periods ending on or prior to the Closing, regulatory filings, Tax Returns of the Unitholders or their respective Affiliates in respect of periods (or portions thereof) ending on or prior to the Closing Date or in connection with any Legal Proceedings. Notwithstanding the foregoing provisions of this Section 6.1(b), Parent and the Surviving Company may withhold access, documents or information that in the reasonable judgment of Parent, the Surviving Company or any of their respective Affiliates would result in the disclosure of any trade secrets of third parties, violate any of Parent’s or the Surviving Company’s obligations with respect to confidentiality or Orders or applicable Law to which Parent or the Surviving Company, or any of the Subsidiaries, is subject or waive any privilege which any of them may possess (it being understood that Parent shall cause the Surviving Company to take commercially reasonable actions to eliminate any such impediments to providing such information). Parent agrees to cause the Company to use commercially reasonable efforts to retain the books and records of the Company and the Subsidiaries existing on the Closing Date and not to destroy or dispose of any thereof for a period of seven (7) years from the Closing Date or such longer time as may be required by Law.
6.2Conduct of the Business Pending the Closing.
(a)Prior to the Closing or earlier termination of this Agreement, except (i) as required by applicable Law, (ii) as otherwise contemplated by this Agreement, (iii) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned) or (iv) as set forth in Section 6.2 of the Company Disclosure Schedule, the Company shall (A) use commercially reasonable efforts to conduct the Company’s and the Subsidiaries’ business in all material respects in the Ordinary Course of Business and (B) use commercially reasonable efforts to preserve substantially intact their business organization and goodwill as well as the Company’s relationships with key business counterparties.
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(b)Without limiting the generality of the foregoing, prior to the Closing or earlier termination of this Agreement, except (i) as required by applicable Law, (ii) as otherwise contemplated by this Agreement, (iii) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), or (iv) as set forth in Section 6.2(b) of the Company Disclosure Schedule, the Company shall not, and shall cause the Subsidiaries not to:
(i)transfer, issue, sell or dispose of any shares of capital stock or other securities of the Company or any of the Subsidiaries or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of the Company or any of the Subsidiaries;
(ii)effect any recapitalization, reclassification or like change in the capitalization of the Company or any of the Subsidiaries;
(iii)amend the Certificate of Formation, the Company Operating Agreement or comparable organizational documents of any of the Subsidiaries, or enter into or amend any other Governing Documents of the Company or the Subsidiaries;
(iv)other than as required by Law or Contract, or except to the extent included within Company Transaction Expenses, increase the level of cash compensation or compensation opportunities or employee benefits of any director, manager or executive officer of the Company or any of the Subsidiaries;
(v)subject any of the properties or assets (whether tangible or intangible) of the Company or any of the Subsidiaries to any material Lien, except for Permitted Exceptions;
(vi)acquire any real properties (other than the Acquired Properties) or any other material properties or assets or sell, assign, license, transfer, convey, or otherwise dispose of any of the real properties or other material properties or assets of the Company and the Subsidiaries, taken as a whole (except in the Ordinary Course of Business or for the purpose of disposing of obsolete or worthless assets);
(vii)pay any capital expenditures with respect to matters that are not Capital Expenditure Matters;
(viii)cancel or compromise any material debt or claim owing to the Company;
(ix)settle any Legal Proceeding;
(x)other than pursuant to the Company’s 2025 budget provided to Parent prior to the date hereof, enter into any commitment for capital expenditures of the Company and its Subsidiaries in excess of $1,000,000 for all commitments in the aggregate;
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(xi)create, incur, assume, guarantee, amend or otherwise modify in any material respect any Debt of the type described in clause (i) of the definition thereof;
(xii)(A) enter into any Contract that would have been a Material Contract if in effect on the date hereof or (B) terminate, amend or otherwise modify in any material respect any Material Contract (other than any automatic termination that occurs in accordance with the terms thereof);
(xiii)enter into or agree to enter into any merger or consolidation with any Person (other than a merger of any wholly-owned Subsidiary of the Company into the Company or one of the Company’s Subsidiaries);
(xiv)adopt or make any material change to any of its methods of accounting for Tax purposes, except insofar as may be required by a change in GAAP (or any interpretation thereof) or applicable Law;
(xv)(A) prepare or file any Tax Return inconsistent with past practice, (B) make, change or revoke any Tax election (including taking any position, making any election or adopting any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods), (C) file any amended Tax Return, (D) initiate, settle or compromise any liability, audit, proceeding, assessment or claim related to Taxes or initiate any discussion with any Taxing Authority (including any discussion with respect to any voluntary disclosure agreements, initiatives or otherwise), (E) enter into any closing agreement or similar agreement relating to Taxes, (F) otherwise settle any dispute relating to Taxes, (G) surrender any right to claim a Tax refund, offset or other reduction in Tax liability, (H) request any ruling or similar guidance with respect to Taxes, or (I) incur any Tax outside the Ordinary Course of Business consistent with past practice; or
(xvi)agree to do anything prohibited by this Section 6.2(b).
(c)Notwithstanding anything to the contrary contained herein (but subject to the immediately subsequent sentence), during the period from the date hereof until the Effective Time, the Company and the Subsidiaries shall be permitted to utilize any and all available Cash: (i) to pay Company Transaction Expenses; (ii) to repay outstanding Debt; and (iii) to declare, pay, or set aside dividends or other distributions to the holders of Units so long as such amounts are paid prior to the Closing Date, in each case, at such times and in such amounts as the Company or the applicable Subsidiary shall deem necessary, appropriate, or desirable. From 11:59 PM on the day immediately prior to the Closing Date, until the Closing, the Company shall not use any Cash to make any payments (including to pay any Debt or Company Transaction Expenses, dividends or distributions to the Unitholders, amounts under any Contract, amounts to any employees or otherwise) without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned).
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(d)Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Section 6.2 or in Section 6.10 shall prohibit the Company from taking any action, at any time prior to the Closing Date, that, consistent with the advice of counsel, is reasonably necessary for any REIT Member (as defined in the Company Operating Agreement) to avoid failing to qualify as a REIT; provided that, prior to taking any such action, the Company shall be required to (i) provide written notice of any such proposed action, including sufficient documentation supporting the conclusion that such action is required to be taken to avoid such REIT Member failing to qualify as a REIT, to Parent and (ii) obtain Parent’s written consent, not to be unreasonably withheld, conditioned or delayed, to such action; provided, further, that it shall not be reasonable for Parent to withhold, condition or delay its consent unless Parent determines that such action would reasonably be expected to materially and adversely affect it or its subsidiaries or the Company or any of the Subsidiaries or the benefits of the Transaction reasonably expected as of the date hereof.
(e)Notwithstanding anything to the contrary set forth in this Agreement, none of the Company or any of its Subsidiaries shall be deemed to have failed to perform any obligation or agreement or failed to comply with any covenant or condition required by this Agreement to be performed or complied with by them to the extent such failure arose from any action (i) that Parent directed such Person to take or (ii) that the Company or any of its Subsidiaries proposed to be taken but that Parent directed such Person not to take, and such action or inaction prevented such Person from performing any obligation or agreement or caused them to fail to comply with any covenant or condition required by this Agreement.
(f)Without in any way limiting any party’s rights or obligations under this Agreement, the parties hereto understand and agree that prior to Closing nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the operation of the Company and the Subsidiaries, and prior to Closing, the Company and the Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective businesses and operations.
6.3Reasonable Best Efforts; Regulatory Approvals.
(a)Each party shall (and shall cause its respective Affiliates to) use its reasonable best efforts to take, or cause to be taken, all actions, to file, or cause to be filed, all documents and to do, or cause to be done, all things necessary, proper or advisable to consummate the Transactions and to cause the fulfillment at the earliest practicable date of all of the conditions to its respective obligations to consummate and make effective the Transactions, including preparing and filing as promptly as practicable all documentation to obtain or satisfy all necessary filings, consents, waivers, approvals, authorizations, Permits or Orders from all Governmental Bodies, subject to the terms and conditions set forth herein.
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(b)Further, and without limiting the generality of the rest of this Section 6.3, each of the parties shall reasonably cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry and shall promptly (i) furnish to the other such necessary information and reasonable assistance as the other parties may reasonably request in connection with the foregoing, (ii) inform the other of any communication from any Governmental Body regarding any of the Transactions, and (iii) provide counsel for the other parties with copies of all filings made by such party, and all correspondence between such party (and its advisors) with any Governmental Body and any other information supplied by such party and such party’s Affiliates to a Governmental Body or received from such a Governmental Body in connection with the Transactions; provided, however, that materials may be redacted as necessary to comply with contractual arrangements and with applicable Law. Each party hereto shall, subject to applicable Law, permit counsel for the other parties to review in advance, and consider in good faith the views of the other parties in connection with, any proposed written communication to any Governmental Body in connection with the Transactions. The parties agree not to participate, or to permit their Affiliates to participate, in any substantive meeting or discussion, either in person or by telephone, with any Governmental Body in connection with the Transactions unless it consults with the other parties in advance and, to the extent not prohibited by such Governmental Body, gives the other parties the opportunity to attend and participate.
(c)Further, and without limiting the generality of the rest of this Section 6.3, each party shall use its reasonable best efforts to take any and all steps necessary to avoid or eliminate each and every impediment under any Antitrust Law or other Law that may be asserted by any Governmental Body or private party with respect to this Agreement so as to make effective as promptly as practicable the Transactions and to avoid any suit or proceeding, which would otherwise have the effect of preventing or delaying the Closing beyond the Termination Date (and, for the avoidance of doubt, so as to avoid an in-depth or second phase review by the relevant Governmental Body), subject to the terms and conditions set forth herein.
6.4Further Assurances. Each party shall (and shall cause its respective Affiliates to) use its reasonable best efforts to execute and cause to be delivered to each other party such instruments and other documents, and take such other actions, as any other party may reasonably request following the Closing for the purpose of carrying out or evidencing any of the Transactions.
6.5Confidentiality. Each of Parent and Merger Sub acknowledges that the information provided to them in connection with this Agreement and the Transactions is subject to the terms of the confidentiality agreement SCG Global Holdings, L.L.C. and the Company dated April 1, 2025 (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference. Effective upon, and only upon, the Closing, the Confidentiality Agreement shall terminate.
6.6Indemnification, Exculpation and Insurance.
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(a)For a period of six (6) years from the Closing Date, Parent shall cause the Surviving Company and each Subsidiary to indemnify, defend and hold harmless, to the fullest extent required or permitted under their applicable Governing Documents, the Persons who at or prior to the Effective Time were trustees, directors, managers and officers, of the Company or any of the Subsidiaries (collectively, the “Indemnitees”), with respect to all acts or omissions by them in their capacities as such or taken at the request of the Company or any of the Subsidiaries, in each case, at or prior to the Effective Time. Parent agrees that all rights of the Indemnitees to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time as provided in the Certificate of Formation, the Company Operating Agreement, or Governing Documents of any of the Subsidiaries as in effect on the date hereof shall survive the Closing and shall continue in full force and effect in accordance with their terms. Such rights shall not be amended or otherwise modified in any manner that would adversely affect such rights of the Indemnitees, unless such modification is required by Law. In addition, for a period of six (6) years from the Closing Date, Parent shall, or shall cause the Surviving Company to, advance any expenses (including fees and expenses of legal counsel) of any Indemnitee under this Section 6.6 (including in connection with enforcing the indemnity and other obligations referred to in this Section 6.6), as incurred, to the fullest extent permitted under applicable Law, provided that the Person to whom expenses are advanced provides an undertaking to repay such advances to the extent required by applicable Law.
(b)For a period of six (6) years from the Closing Date, Parent shall, and shall cause the Surviving Company to, cause (i) the Certificate of Formation and Company Operating Agreement of the Surviving Company to contain provisions no less favorable to the Indemnitees with respect to limitation of certain liabilities of trustees, directors, managers and officers and indemnification than are set forth as of the date of this Agreement in the Certificate of Formation and the Company Operating Agreement and (ii) the certificate of formation and operating agreement or other Governing Documents of each Subsidiary to contain provisions no less favorable to the Indemnitees regarding indemnification of trustees, directors, managers and officers which provisions in each case, during such six (6) year period, shall not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees, except as required by applicable Law.
(c)The Company, prior to the Closing, will obtain a directors’ and officers’ liability “tail” or “runoff” insurance policy covering the Company’s and the Subsidiaries’ directors and officers with respect to their acts and omissions occurring prior to the Effective Time for a period of six (6) years after the Effective Time (such coverage in all respects regarding coverage, deductibles and amounts shall not be materially less favorable to the Company’s and the Subsidiaries’ directors and officers in the aggregate than such coverage as of the date hereof, and otherwise on terms reasonably consistent with those that have been agreed among employees of the Parties as of the date hereof) (the “D&O Tail Policy”). To the extent paid or payable by the Company or the Subsidiaries, 50% of the costs and expenses of obtaining such D&O Tail Policy shall be treated as Company Transaction Expenses hereunder.
(d)The provisions of this Section 6.6: (i) are intended to be for the benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and his or her representatives; and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by Contract or otherwise.
(e)In the event that Parent, the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving company or entity of such consolidation or merger; or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, Parent shall cause the legal successors and assigns of Parent and of the Surviving Company, as applicable, to assume all of the obligations of Parent and the Surviving Company set forth in this Section 6.6.
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6.7Publicity.
(a)None of the Company, Parent, Merger Sub or Company Representative shall issue any press release or public announcement concerning this Agreement or the Transactions without obtaining the prior written approval of the other parties hereto, unless, in the sole judgment of the Company, Parent, Merger Sub or Company Representative, as applicable, and subject to the terms of Section 6.7(b), disclosure is otherwise required by applicable Law or stock exchange rules; provided, that each of the Company Representative and Parent are permitted to report and disclose the status of this Agreement and the Transactions, including economic terms, to their direct or indirect limited partners or current or prospective investors (provided that such limited partners or investors are subject to an obligation of confidentiality) in connection with fund raising, marketing, information or reporting activities (and shall be permitted to disclose the consummation of the Transactions (but not, without the consent of the other parties hereto, economic terms or (except to the extent otherwise included in a release approved in accordance with this Section 6.7(a)) the name of such other party)) on their websites and otherwise in the ordinary course of their business (provided that such disclosure is consistent with the content of any press release or public announcement permitted by this Section 6.7(a)).
(b)Each of Parent, Merger Sub and the Company agree that the terms of this Agreement shall not be disclosed or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or filing is required by applicable Law or stock exchange rules and only to the extent required by such Law or stock exchange rules. In the event such disclosure, availability or filing is required by applicable Law or stock exchange rules, each of Parent, Merger Sub and the Company (as applicable) agrees, to the extent practicable, to share a copy of such disclosure, availability or filing with the other parties hereto in advance of it being issued, released or filed publicly and the non-disclosing parties hereto shall be provided with an opportunity to review and propose comments thereon.
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6.8Employee Matters. For a period of twelve (12) months following the Effective Time (or such shorter period as such Continuing Employee remains an employee of Parent or any of its Affiliates), Parent shall provide, or shall cause to be provided, to each Continuing Employee, (a) an annual base salary or base wages, as applicable, and target short-term cash incentive compensation opportunities (excluding equity and equity-based compensation and change in control, sale, retention bonuses or other similar one-time arrangements), that are no less favorable in the aggregate than such annual base salary or base wages, as applicable, and target short-term cash incentive compensation opportunities (excluding equity and equity-based compensation and change in control, sale, retention bonuses or other similar one-time arrangements) provided to such Continuing Employee immediately prior to the Effective Time and either set forth on Section 4.14(c) of the Company Disclosure Schedule or communicated to Parent in writing before the date hereof (or, to the extent a change to annual base salary, base wages or target short-term cash incentive compensation opportunities is made after the date hereof and prior to the Closing Date in compliance with Section 6.2(b), before the Closing Date), and (b) health, welfare, retirement, fringe and other employee benefits that are substantially comparable in the aggregate to the corresponding health, welfare, retirement, fringe, and other employee benefits provided to such Continuing Employee immediately prior to the Effective Time pursuant to the Company Benefit Plans scheduled on Section 4.13(a) of the Company Disclosure Schedule. For purposes of eligibility, vesting, and accrual rates with respect to employee benefits (including severance levels and vacation accrual rates, but excluding for clarity for any purpose under defined benefit pension, retiree medical, and equity or equity-based incentive plans and programs) under any employee benefit plans of Parent or its Affiliates providing benefits to Continuing Employees (the “Parent Plans”), Parent shall credit each Continuing Employee with his or her years of service with the Company, the Subsidiaries and any predecessor entities, to the same extent as such Continuing Employee was entitled immediately prior to the Closing to credit for such service under any similar Company Benefit Plan (in each case, except as would result in duplication of benefits and except for a new plan where similarly situated employees of Parent are not given credit for past service). Parent shall use commercially reasonable efforts to (x) cause to be waived all applicable pre-existing condition limitations, actively-at-work requirements and waiting periods to the extent waived or not applicable under, or previously satisfied by such Continuing Employee under, the relevant Company Benefit Plan in which any applicable Continuing Employee participated, and (y) cause each Continuing Employee to be given credit under the applicable Parent Plan providing for group medical benefits for amounts paid under a corresponding Company Benefit Plan by the Continuing Employee prior to the date on which such Continuing Employee commences participation in such Parent Plan for purposes of applying deductibles, co-payments and out-of-pocket maximums for the applicable plan year, in each case of (x) and (y) for the plan year in which the Continuing Employee transitions to Parent Plans provided such plan year ends on or prior to December 31, 2026. The provisions contained in this Section 6.8 shall not (A) be treated as an establishment, amendment or other modification of any Company Benefit Plan or other employee benefit plan, agreement or other arrangement, (B) limit the right of Parent to terminate the employment of any Continuing Employee following the Closing for any reason, (C) create any third party rights, benefits or remedies of any nature whatsoever in any employee or other service provider of the Company or any of the Subsidiaries (or any beneficiaries or dependents thereof) or any other Person that is not a party to this Agreement, or (D) alter or limit Parent’s or any of its Affiliates’ ability to amend, modify or terminate any specific benefit plan, program, agreement or arrangement at any time. The Company agrees to timely provide Parent with such information that is reasonably requested by Parent and reasonably necessary for Parent to comply with this Section 6.8 (subject in all cases to compliance with applicable Law).
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6.9Certain Consents. The parties hereto acknowledge and agree that certain consents to the Transactions may be required from Governmental Bodies or parties to Contracts to which the Company or any Subsidiary thereof is a party and that such consents may have not been obtained as of the date hereof and may not be obtained prior to the Closing. The parties hereto acknowledge and agree that (a) none of the Company or the Unitholders or any other Person will have any Liability whatsoever to Parent, Merger Sub or their Affiliates (and no such Person will be entitled to assert any claims) arising out of or relating to the failure to obtain any consents that may have been or may be required in connection with the Transactions or because of the default, acceleration or termination of or loss of right under any such Contract or other agreement as a result of the Transactions and failure to obtain any such consent (except to the extent the failure to obtain such consent resulted from the breach of a representation or warranty contained herein which constituted Fraud), and (b) there will be no condition of Parent or Merger Sub requiring any such consent to be obtained in order to consummate and make effective the Transactions. Notwithstanding anything herein to the contrary, none of the Company, the Unitholders, any of their respective Affiliates or any other Person shall be obligated to make any payments or otherwise pay any consideration to, or agree to any concession in favor of, any third party to obtain any applicable consent, waiver or approval. For the avoidance of doubt, nothing in this Section 6.9 shall apply to, modify or otherwise affect any rights or obligations under the R&W Insurance Policy.
6.10Tax Matters.
(a)Tax Returns. Except as otherwise provided in this Section 6.10(a), Parent shall prepare or cause to be prepared and file or cause to be filed when due (taking into account extensions) all Tax Returns that are required to be filed by or with respect to the Company or the Subsidiaries after the Closing, including any Tax Returns that relate to a Straddle Period (a “Straddle Period Tax Return”), and shall pay any Taxes due in respect of such Tax Returns (including estimated Taxes). Parent shall prepare the portion of any such Straddle Period Tax Return that relates to a Pre-Closing Tax Period in a manner consistent with past practices of the Company or the relevant Subsidiary, as applicable, except as otherwise required by applicable Law. The Company Representative shall prepare, in a manner consistent with past practices of the Company or the relevant Subsidiary, and file when due (taking into account extensions) all Tax Returns that are required to be filed by or with respect to the Company or any Subsidiary for all taxable periods ending on or before the Closing Date (including any such Tax Return due after the Closing Date) (each such Tax Return, a “Seller Prepared Tax Return”), and Parent shall pay any Taxes due in respect of such Tax Returns (including estimated Taxes) other than any Taxes in respect of Pass-Through Tax Returns for Pre-Closing Tax Periods that the Unitholders (or any beneficial owners thereof) are obligated to pay under applicable Tax Law. To the extent that Parent is required to prepare a Pass-Through Tax Return of the Company or any Subsidiary that relates to Taxes attributable to a Pre-Closing Tax Period, Parent shall (i) submit any such Pass-Through Tax Return (together with schedules, statements and reasonably requested supporting documentation) prepared by it pursuant to this Section 6.10(a) to the Company Representative for its review at least thirty (30) days prior to the due date thereof, (ii) consider in good faith any reasonable comments of the Company Representative delivered within a reasonable time following Parent’s delivery of such Pass-Through Tax Return; and (iii) to the extent any such Pass-Through Tax Return relates to Taxes attributable to a Pre-Closing Tax Period which the Unitholders (or any beneficial owners thereof) are obligated to pay under applicable Tax Law or which would reasonably be expected to adversely affect the REIT status of any REIT Member or cause any REIT Member to incur a non-de minimis amount of Taxes, not file any such Pass-Through Tax Return without the Company Representative’s express written consent (which consent shall not be unreasonably withheld, conditioned, or delayed). The Company Representative shall (i) submit any Seller Prepared Tax Return (together with schedules, statements and reasonably requested supporting documentation) prepared by it pursuant to this Section 6.10(a) to Parent for its review at least thirty (30) days prior to the due date thereof, (ii) consider in good faith any reasonable comments of Parent delivered within a reasonable time following Company Representative’s delivery of such Seller Prepared Tax Return; and (iii) not file any such Seller Prepared Tax Return without Parent’s express written consent (which consent shall not be unreasonably withheld, conditioned, or delayed). Parent shall not (and shall not cause or permit the Company or any Subsidiary to) amend, re-file or otherwise modify (or grant an extension of any statute of limitations with respect to (other than as may be the result of the filing of a timely and valid extension of the deadline for filing a Tax Return)) any Pass-Through Tax Return required to be filed by or with respect to the Company or any Subsidiary with respect to Taxes that are attributable to any Pre-Closing Tax Period to the extent that such amendment, re-filing or other modification would adversely affect the Company Representative or any Unitholder or any of their Affiliates without the prior consent of the Company Representative (which consent shall not be unreasonably withheld, conditioned or delayed). Without limiting the foregoing, Parent shall not make any election, to the extent any such election is within its control, under Section 6226 or Section 6221(b) of the Code with respect to the Company, or any Subsidiary treated as a partnership for U.S. federal income tax purposes as of the date of this Agreement, without the prior written consent of the Company Representative (which consent may be withheld in the Company Representative’s sole discretion).
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(b)Straddle Periods. The Company and Parent shall, and the Company Representative shall cause the Unitholders to, unless prohibited by applicable Law, close the taxable period of the Company as of the end of the day on the Closing Date. The portion of any Taxes (other than state or local franchise Taxes described below) attributable to the portion of such Straddle Period ending on the Closing Date shall be determined: (i) in the case of real property, business personal property and ad valorem Taxes which are not payable by a tenant directly to the relevant Taxing Authority pursuant to the applicable Lessor Real Estate Lease, by apportioning such Taxes on a per diem basis and (ii) in the case of all other Taxes, on a closing of the books basis. For purposes of this Section 6.10(b), any exemption, deduction, credit or other item the amount of which is calculated on an annual basis shall be apportioned on a per diem basis. Notwithstanding the foregoing, any state or local franchise Taxes payable with respect to any Straddle Period shall be allocated to the period during which the income, operations, assets or capital comprising the base of such Tax is measured, regardless of whether the right to do business for another period is obtained by the payment of such franchise Tax.
(c)Tax Contests.
(i)In the event (A) the Company Representative (or any of its Affiliates) or (B) Parent (or any of its Affiliates) receives notice of any pending or threatened Tax Contest relating to the Company or any Subsidiary with respect to any Pre-Closing Tax Period or Straddle Period, the party in receipt of such notice shall promptly notify the other party of such matter in writing.
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(ii)The Company Representative shall have the right to represent, at its sole expense, the interests of the Company and each Subsidiary in any Tax Contest primarily relating to Taxes in a Pre-Closing Tax Period that could reasonably be expected to adversely affect any Unitholder or its Affiliates by more than a de minimis amount (each, a “Seller Tax Contest”), and to employ counsel of its choice at its sole expense; provided, however, the Company Representative shall have no right to represent the Company or any Subsidiary in any Seller Tax Contest unless it provides written notice to Parent of such intent and the identity of its counsel, if any, chosen in connection therewith. If the Company Representative elects to control a Seller Tax Contest, (A) Company Representative shall keep Parent reasonably informed of all material developments with respect to such Tax Contest, (B) Parent shall be permitted at Parent’s sole expense to fully participate in any such Tax Contest, including the review of any correspondence and providing reasonable comments to any documents related to such Tax Contest, and (C) Company Representative shall not settle or compromise such Tax Contest without Parent’s written consent, such consent not to be unreasonably withheld, conditioned or delayed. Parent shall represent the interests of the Company and any Subsidiary in all Tax Contests, other than Seller Tax Contests that the Company Representative elects to control pursuant to this Section 6.10(c), and employ counsel of Parent’s choice at its sole expense; provided, that, if such Tax Contest relates to Taxes attributable to a Pre-Closing Tax Period or Taxes attributable to the portion of any Straddle Period ending on and including the Closing Date and, in each case, would reasonably be expected to adversely affect any Unitholder or its Affiliates by more than a de minimis amount, (A) Parent shall keep the Company Representative reasonably informed of all material developments with respect to such Tax Contest, (B) the Company Representative shall be permitted at the Company Representative’s sole expense to fully participate in any such Tax Contest, including the review of any correspondence and providing reasonable comments to any documents related to such Tax Contest, and (C) Parent shall not settle or compromise any such Tax Contest without the Company Representative’s consent, such consent not to be unreasonably withheld, conditioned or delayed; provided, further, in the event that Parent requests Company Representative’s consent to settle or compromise any such Tax Contest and Company Representative refuses to provide such consent, Parent may settle or compromise such Tax Contest if Parent determines, in its sole discretion, that such settlement or compromise is reasonable unless Company Representative provides, along with its refusal to provide consent, written notice to Parent electing to represent, at its sole expense, the interests of the Company or any Subsidiary with respect to the portion of any such Tax Contest relating to Taxes attributable to a Pre-Closing Tax Period and Company Representative may employ counsel of its choice at its sole expense and, in such case, (1) Company Representative shall keep Parent reasonably informed of all material developments with respect to such Tax Contest, (2) Parent shall be permitted at Parent’s sole expense to fully participate in any such Tax Contest, including the review of any correspondence and providing reasonable comments to any documents related to such Tax Contest, and (3) Company Representative shall not settle or compromise such Tax Contest without Parent’s written consent, such consent not to be unreasonably withheld, conditioned or delayed.
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(d)Transfer Taxes. All Transfer Taxes shall be paid, or cause to be paid, by Parent. The party required under applicable Law to file any Tax Return with respect to any such Transfer Taxes will prepare and timely file any such Tax Return.
(e)Tax Forms. Prior to Closing, each Unitholder shall deliver to Parent a properly completed and duly executed IRS Form W-9 establishing a complete exemption from any withholding pursuant to the Code and, to the extent legally able to be delivered, any state tax form reasonably requested by Parent to establish a complete exemption from any tax withholding by the applicable state; provided, that, notwithstanding anything in this Agreement to the contrary, Parent’s sole right if any Unitholder fails to provide any such form shall be to make appropriate withholding pursuant to and in accordance with Section 3.3.
(f)Assistance and Cooperation. After the Closing Date, each of the Company Representative and Parent shall (and shall cause their respective Affiliates to): (i) reasonably cooperate to file Tax Returns or other reports with respect to, Transfer Taxes; (ii) reasonably assist the other party in preparing any Tax Returns which such other party is responsible for preparing and filing in accordance with this Section 6.10, and in connection therewith, provide the other party with any necessary powers of attorney; (iii) reasonably cooperate in preparing for and defending any audits of, or disputes with Taxing Authorities regarding, any Tax Returns of the Company and each Subsidiary; (iv) make available to the other party and to any Taxing Authority as reasonably requested all information, records, and documents relating to Taxes of the Company and each Subsidiary; and (v) furnish the other party with copies of all correspondence received from any Taxing Authority in connection with any Tax audit or information request with respect to any Taxes or Tax Returns of the Company and each Subsidiary; provided, that Parent (and its Affiliates) shall only be obligated to furnish copies of such correspondence to Company Representative to the extent such audit or information request relates to Taxes attributable to a Pre-Closing Tax Period or any Straddle Period and, in each case, such Tax audit or information request relates to Taxes of the Company or could reasonably be expected to adversely affect any Unitholder or their Affiliates by more than a de minimis amount.
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(g)Merger Consideration Allocation. The parties agree that the Merger Consideration (including all other amounts treated as consideration for U.S. federal income tax purposes) shall be allocated among assets of the Company in accordance with Sections 741, 743, 751, 755 and 1060 of the Code and the Treasury Regulations promulgated thereunder (and any similar provision of state, local or non-U.S. Law, as appropriate) and the principles set forth in Treasury Regulations Section 1.338-6(b) (the “Merger Consideration Allocation”). Within ninety (90) days after the determination of the post-Closing adjustments to the Merger Consideration (including any Adjustment Escrow Release Amount payable) pursuant to Section 3.2, Parent shall deliver a draft of the Merger Consideration Allocation to the Company Representative. The Company Representative shall, within thirty (30) days after the receipt of such draft of the Merger Consideration Allocation, notify Parent whether the Company Representative agrees with such allocation, and if the Company Representative does not notify Parent that the Company Representative disagrees with such allocation within such thirty (30) day period, the Company Representative shall be deemed to have agreed with such allocation, and the Merger Consideration Allocation shall be final and binding on the parties. If the Company Representative disagrees with such Merger Consideration Allocation, Parent and the Company Representative shall make a good faith effort to resolve the dispute. If Parent and the Company agree, or the Company Representative is deemed to have agreed, on the Merger Consideration Allocation, the Merger Consideration Allocation, as finally so agreed by the parties pursuant to this Section 6.10(g), shall be conclusive and binding on the parties and shall be adjusted, as necessary, to reflect any subsequent adjustments to the Merger Consideration (and any Adjustment Escrow Release Amount payable) pursuant to this Agreement. Any such adjustment shall be allocated, consistent with this Section 6.10(g), to the assets of the Company to which such adjustment is attributable. If Parent and the Company Representative are unable to resolve their differences within thirty (30) days after Parent has been notified by the Company Representative of the Company Representative’s disagreement, then each party may report the Merger Consideration Allocation (including, without limitation, on any and all Tax Returns or other filings with any U.S. federal, state, local or non-U.S. Tax Authority) based on its own determination and in its reasonable discretion, and such party informs the other party in writing of its Merger Consideration Allocation. The parties agree (i) that no party will take a position on any Tax Return, before any Taxing Authority, or in any judicial proceeding, that is in any way inconsistent with the Merger Consideration Allocation, as finally agreed to by the parties pursuant to this Section 6.10(g) or as determined in accordance with the immediately preceding sentence, except pursuant to a final determination within the meaning of Section 1313 of the Code (or any similar provision of state, local or non-U.S. Law); provided, however, that nothing contained herein shall prevent the parties from settling any proposed deficiency or adjustment by any Taxing Authority based upon or arising out of the Merger Consideration Allocation, and no party shall be required to litigate before any court any proposed deficiency or adjustment by any Taxing Authority challenging the Merger Consideration Allocation.
(h)Tax Treatment. Parent, Company Representative, the Unitholders and each of their respective Affiliates intend that, pursuant to “Situation 2” in Revenue Ruling 99-6, 1999-1 C.B. 432, for all U.S. federal income tax purposes, the Transactions shall be treated as a sale and exchange of the Units under Section 741 of the Code with respect to the Unitholders and that, with respect to Parent, the Company shall be deemed to make a liquidating distribution of its assets to the Unitholders and Parent shall be deemed to acquire such assets in exchange for the Merger Consideration and other amounts treated as consideration for U.S. federal income tax purposes. Unless prohibited by applicable Law or otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, Parent, Company Representative, Unitholders and each of their respective Affiliates agree to treat the Transactions as described in the preceding sentence for all U.S. federal and applicable state and local income tax purposes (including, without limitation, on any and all filings with any U.S. federal, state, or local Taxing Authority) and agree not to take any action inconsistent with such treatment; provided, however, that nothing contained herein shall prevent the parties from settling any proposed deficiency or adjustment by any Taxing Authority based upon or arising out of such treatment, and no party shall be required to litigate before any court any proposed deficiency or adjustment by any Taxing Authority challenging such treatment.
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6.11Escrow Agreement. At or prior to the Closing, each of the Company Representative and Parent shall duly execute and deliver to each other the Escrow Agreement, and shall cause the Escrow Agent to do the same.
6.12Data Room. Within two (2) Business Days following the Closing Date, the Company Representative shall deliver to Parent a true and correct copy of the contents of the virtual data room hosted by Donnelley Financial Solutions Venue for Project Twelve on behalf of the Company in connection with the Transactions, which will be delivered to Parent on a USB drive or by other means reasonably acceptable to Parent.
Article VIIARTICLE VII

CONDITIONS TO CLOSING
7.1Conditions Precedent to Obligations of Parent, Merger Sub, and the Company. The respective obligations of Parent, Merger Sub, and the Company to consummate the Transactions are subject to the fulfillment, on or prior to the Closing Date, of the following condition (which may be waived by Parent, Merger Sub and the Company in whole or in part to the extent permitted by applicable Law):
(a)there shall not then be in effect any Order by a Governmental Body of competent jurisdiction enjoining or prohibiting the consummation of the Transactions.
7.2Conditions Precedent to Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Transactions is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Parent and Merger Sub in whole or in part to the extent permitted by applicable Law):
(a)(i) The Fundamental Representations shall be true and correct in all material respects (other than representations and warranties set forth in the first sentence of Section 4.4 (Capitalization), which shall be true and correct in all but de minimis respects) as of the Closing Date as if made on and as of the Closing Date (except to the extent that any such representation or warranty, by its terms, is expressly limited to a specific date, in which case, as of such specific date) and (ii) the other representations and warranties of the Company set forth in Article IV shall be true and correct (without giving effect to any “material”, “materially”, “materiality”, “Material Adverse Effect”, “material adverse change” or similar qualifiers contained in any of such representations and warranties), except for such failures to be true and correct that do not have and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, as of the Closing Date as if made on and as of the Closing Date (except to the extent that any such representation or warranty, by its terms, is expressly limited to a specific date, in which case, as of such specific date), and Parent shall have received a certificate signed by an authorized officer of the Company, dated the Closing Date, to the foregoing effect;
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(b)The Company shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by it on or prior to the Closing Date, and Parent shall have received a certificate signed by an authorized officer of the Company, dated the Closing Date, to the foregoing effect;
(c)Since the date of this Agreement, there shall not have occurred any Material Adverse Effect;
(d)Each of the Company Representative and the Escrow Agent shall have duly executed and delivered to Parent the Escrow Agreement;
(e)Each of the Employment Agreements with the employees of the Company set forth on Schedule 1.1(g) shall be in full force and effect, in the same form as delivered or made available to Parent as of the date hereof and without any waivers of the terms thereof having been provided;
(f)The Trademark Acquisition Agreement shall be in full force and effect, in the same form as delivered or made available to Parent as of the date hereof and without any waivers of the terms thereof having been provided, and the transactions contemplated thereby shall have been consummated or will be consummated substantially concurrently with Closing (including the Company being delivered the Trademark Assignment (as defined in the Trademark Acquisition Agreement) in accordance with the terms thereof); and
(g)Each of the Domain Name Assignment Agreements shall be in full force and effect, in the same form as delivered or made available to Parent as of the date hereof and without any waivers of the terms thereof having been provided, and the transactions contemplated thereby shall have been consummated or will be consummated substantially concurrently with Closing.
7.3Conditions Precedent to Obligations of the Company. The obligations of the Company to consummate the Transactions are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Company in whole or in part to the extent permitted by applicable Law):
(a)The representations and warranties of Parent and Merger Sub set forth in Article V shall be true and correct (without giving effect to any “material”, “materially”, “materiality”, “material adverse effect”, “material adverse change” or similar qualifiers contained in any of such representations and warranties), except for such failures to be true and correct that do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business or operations of Parent or Merger Sub or prohibit or restrain the ability of Parent or Merger Sub to consummate the Transactions as of the Closing Date as if made on and as of the Closing Date (except to the extent that any such representation or warranty, by its terms, is expressly limited to a specific date, in which case, as of such specific date), and the Company shall have received a certificate signed by an authorized officer of Parent and Merger Sub, dated the Closing Date, to the foregoing effect;
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(b)Parent and Merger Sub shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Parent and Merger Sub on or prior to the Closing Date, and the Company shall have received a certificate signed by an authorized officer of Parent and Merger Sub, dated the Closing Date, to the foregoing effect; and
(c)Each of Parent and the Escrow Agent shall have duly executed and delivered to the Company Representative the Escrow Agreement.
7.4Frustration of Closing Conditions. None of the Company, Parent or Merger Sub may rely, either as a basis for not consummating the Merger or for terminating this Agreement and abandoning the Merger, on the failure of any condition set forth in Sections 7.1, 7.2, or 7.3, as the case may be, to be satisfied if such failure was caused by any breach of a covenant, agreement, representation, or warranty of this Agreement by such party.
Article VIIIARTICLE VIII

TERMINATION
8.1Termination of Agreement. This Agreement may be terminated prior to the Effective Time as follows:
(a)At the election of the Company or Parent on or after July 25, 2025 (the “Termination Date”) if the Closing shall not have occurred by such date; provided, that the right to terminate this Agreement pursuant to this Section 8.1(a) shall not be available to a party if such failure of the Closing to occur was primarily due to the failure of such party to perform any of its obligations under this Agreement;
(b)by mutual written consent of the Company and Parent;
(c)by either the Company or Parent if there shall have been a breach by Parent or Merger Sub, on the one hand, or the Company or Company Representative, on the other hand, of any of its representations, warranties, covenants or obligations contained in this Agreement, which breach would result in the failure to satisfy one or more of the conditions set forth in Section 7.2 (in the case of a breach by the Company or Company Representative) or Section 7.3 (in the case of a breach by Parent or Merger Sub), and in any such case such breach shall be incapable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (i) ten (10) Business Days after providing written notice of such breach to the other party and (ii) the Termination Date; or
(d)by the Company or Parent if there shall be in effect a final, nonappealable Order of a Governmental Body of competent jurisdiction permanently enjoining or prohibiting the consummation of the Transactions; provided, however, that the right to terminate this Agreement under this Section 8.1(d) shall not be available to a party if such Order was primarily due to the failure of such party to perform any of its obligations under this Agreement.
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8.2Procedure upon Termination. In the event of termination and abandonment by Parent or the Company, or both, pursuant to Section 8.1 hereof, written notice thereof shall forthwith be given to the other party or parties, which written notice shall specify the provision or provisions hereof pursuant to which such termination is being effected, and this Agreement shall terminate (subject to the provisions of Section 8.3(a)), and the Transactions shall be abandoned, without further action by Parent or the Company.
8.3Effect of Termination.
(a)In the event that this Agreement is validly terminated in accordance with Sections 8.1 and 8.2, this Agreement shall immediately become null and void and the parties hereto shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without Liability to Parent, Merger Sub, or the Company; provided, that (i) no such termination shall relieve any party hereto from Liability for Fraud or for any breach of any of its covenants or agreements or any willful and intentional breach of any of its representations and warranties contained in this Agreement prior to termination, and the damages recoverable by the non-breaching party shall include all attorneys’ fees reasonably incurred by such party in connection with the Transactions, and (ii) the provisions of Section 6.7, this Section 8.3 and Article IX hereof shall survive any such termination and shall remain in full force and effect.
(b)The Confidentiality Agreement shall survive any termination of this Agreement and nothing in this Section 8.3 shall relieve the parties hereto of their obligations under the Confidentiality Agreement.
Article IXARTICLE IX

MISCELLANEOUS
9.1Survival; Release; R&W Insurance Policy
(a)None of the representations and warranties of the Company, Parent or Merger Sub contained in this Agreement or any of the other Transaction Documents (including any certificate to be delivered under Article VII of this Agreement) and none of the covenants of any party required to be performed by such party before the Closing shall survive the Closing, and thereafter none of the parties hereto, any of the Unitholders, their respective Affiliates or any of their respective current and former managers, officers, trustees, directors, employees, partners, direct and indirect equityholders, members, advisors, consultants, agents, representatives, successors or assigns, or any other Non-Parties, shall have any Liability whatsoever with respect to any such representation, warranty, covenant or agreement and no claim for breach of any such representation or warranty, detrimental reliance or other right or remedy (whether in contract, in tort or at law or in equity) may be brought after the Closing with respect thereto; provided, however, that the representations and warranties set forth in Section 4.25, Section 5.8 and Section 5.10 shall survive the Closing. Notwithstanding the forgoing, the provisions of this Section 9.1(a) and the other provisions of this Agreement (including Sections 4.25, 5.8, 5.10 and 6.9) will not, however, prevent or limit any claim or cause of action against or any Liability of a party hereto in the case of Fraud or otherwise with respect to the covenants and agreements set forth in this Agreement which by their terms are required to be performed after the Closing (“Post-Closing Covenants”), which Post-Closing Covenants shall survive the Closing until they have been performed or satisfied in accordance with their terms.
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(b)Effective as of the Closing Date immediately following the Closing, each of Parent and the Company, on behalf of itself and each of its Affiliates and each of their respective current and former managers, officers, trustees, directors, employees, partners, direct and indirect equityholders, members, successors and assigns, and any other Non-Parties (collectively, the “Releasing Parties”), hereby irrevocably and unconditionally releases and forever discharges the Company Representative, the Unitholders, their respective Affiliates and each of their respective current and former managers, officers, trustees, directors, employees, partners, direct and indirect equityholders, members, successors and assigns, and any other Non-Parties (collectively, the “Released Parties”), of and from any and all actions, causes of action, suits, proceedings, executions, judgments, duties, debts, dues, accounts, bonds, contracts and covenants (whether express or implied), and claims and demands whatsoever whether in law or in equity which the Releasing Parties may have against each of the Released Parties, now or in the future, in each case, in respect of any cause, matter or thing relating to any of the Released Parties occurring or arising on or prior to the date of this Agreement, in each case other than any rights or obligations under this Agreement (including claims of Fraud) or the Transaction Documents in accordance with the terms hereof and thereof. From and after the Closing, no party or any of its Affiliates shall be entitled to seek the rescission of this Agreement, any other Transaction Document or the transactions contemplated by hereby or thereby, and each party waives (on behalf of itself and its Affiliates) and disclaims all remedies, actions or claims for rescission of this Agreement, any other Transaction Document or the transactions contemplated by hereby or thereby.
(c)Notwithstanding anything in this Agreement to the contrary, the sole and exclusive remedy for claims with respect to any and all losses, Liabilities and claims of Parent and its Affiliates and their respective members, partners, shareholders, officers, employees and directors based upon, arising out of, with respect to or by reason of any breach of any representation or warranty by the Company contained in this Agreement or in any of the other Transaction Documents shall be to recover under any buyer side representations and warranties policy obtained by Parent in connection with the transactions contemplated by this Agreement and the other Transaction Documents (the “R&W Insurance Policy”), regardless of whether or not the R&W Insurance Policy is invalid, invalidated, disputed or ineffective, and regardless of whether or not any or all of the coverage intended to be provided thereunder is disputed, denied or otherwise unavailable in whole or in part; provided, however, that the foregoing will not limit any claim or cause of action by a party hereto against another party hereto, or any resulting Liability therefrom, in the case of Fraud.
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(d)Parent has obtained or, prior to the Closing, will obtain a R&W Insurance Policy. Such R&W Insurance Policy expressly provides that the insurer has no subrogation rights against, and will not pursue any claim against, the Company, the Company Representative, the Unitholders, their respective Affiliates and each of their respective current and former managers, officers, trustees, directors, employees, partners, direct and indirect equityholders, members, advisors, consultants, agents, representatives, successors and assigns, and any other Non-Parties, except in the case of Fraud. Parent shall not amend the subrogation waiver in the R&W Insurance Policy such that the immediately foregoing sentence is not accurate without the prior written consent of the Company Representative. The entire cost (including premiums, taxes, commissions and fees) of, and all expenses associated with, the R&W Insurance Policy shall be borne solely by Parent.
9.2Expenses. Whether or not the Transactions are consummated, and except as otherwise provided in this Agreement, each party to this Agreement will bear its respective fees, costs and expenses incurred in connection with the preparation, negotiation, execution and performance of this Agreement or the Transactions (including legal, accounting and other professional fees), and the Company will bear the fees, costs and expenses incurred by the Unitholders in connection with the negotiation, execution and performance of this Agreement and the Transactions. Without limiting the foregoing, Parent will pay and be solely responsible for (i) 50% of the costs and fees associated with the Adjustment Escrow Account, (ii) Transaction related fees and expenses of Parent, Merger Sub and any of their respective Affiliates (as of prior to the Closing), (iii) 50% of the costs and expenses of obtaining a D&O Tail Policy in accordance with the terms hereunder, (iv) all fees and expenses related to financing transactions incurred by Parent, Merger Sub or any of their Affiliates or at their express direction (including by the Company at the express direction of Parent, Merger Sub or any of their Affiliates) in connection with the Closing and (v) all costs, premiums, taxes, commissions, fees and expenses associated with the R&W Insurance Policy.
9.3Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury.
(a)This Agreement and any Legal Proceeding of any kind or any nature (whether at law or in equity, based upon contract, tort or otherwise) that is in any way related to this Agreement or any of the transactions related hereto (including the interpretation, construction, validity and enforcement of this Agreement, or the negotiation, execution or performance of any of the transactions related hereto (including any Legal Proceeding based upon, arising out of, or related to any representation or warranty expressly made in this Agreement)) shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, applicable to contracts executed in and to be performed entirely within that State without regard to the conflict of laws rules thereof, except to the extent that the Merger and other transactions contemplated hereby are required to be governed by the Act.
(b)All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in the Chancery Court of the State of Delaware and any state appellate court therefrom within the State of Delaware (or if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court sitting in the State of Delaware and any federal appellate court therefrom) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.
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(c)Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof (other than by facsimile) in accordance with the provisions of Section 9.6.
(d)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH ACTION OR PROCEEDING. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER; (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) IT MAKES THIS WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.3(D).
9.4Entire Agreement. This Agreement (including the Company Disclosure Schedule and any Exhibits hereto), the other Transaction Documents and the Confidentiality Agreement, represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and thereof, and supersede all prior agreements among the parties with respect to the Transactions.
9.5Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto. Any provision of this Agreement can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant, or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
9.6Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand, (b) when sent by e-mail (with confirmation of transmission (including by receipt of confirmatory
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electronic mail from recipient) or if no failure to send message is generated), or (c) one Business Day following the day sent by reputable overnight courier, in each case at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):
If to the Company or the Company Representative to:
BSREP III FIP MEMBER LLC
Fundamental Income Properties, LLC
c/o Brookfield Asset Management
250 Vesey Street, 15th Floor
New York, New York 10281
Attention: Josh Shandell
Email:    joshua.shandell@brookfield.com; realestatenotices@brookfield.com
With a copy (which shall not constitute notice) to each of:
c/o Brookfield Asset Management
250 Vesey Street, 15th Floor
New York, New York 10281
Attention: Murray Goldfarb
E-mail: murray.goldfarb@brookfield.com
and (with respect to any notice or other communication regarding Section 6.10 of this Agreement):
Attention:     Brookfield Tax
Email:        BSREP_Tax@brookfield.com
and:
Latham & Watkins LLP
1271 Avenue of the Americas
New York, New York 10020
Attention: Michael Haas; Jonathan Solomon
Email: michael.haas@lw.com; jonathan.solomon@lw.com
If to Parent or Merger Sub, to:
Starwood Property Trust, Inc. 2340 Collins Avenue, Suite 700 Miami Beach, Florida 33139 Attention: Legal Department; Heather Bennett, General Counsel and Chief Compliance Officer Email: hbennett@starwood.com; STWDGeneralCounsel@starwood.com With a copy (which shall not constitute notice) to:
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Sidley Austin LLP
One South Dearborn
Chicago, Illinois 60603
Attention: Michael A. Gordon; Joseph P. Michaels; Thomas Guzman
Email: mgordon@sidley.com; joseph.michaels@sidley.com; tguzman@sidley.com
9.7Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the Transactions are consummated as originally contemplated to the greatest extent possible.
9.8Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. This Agreement is for the sole benefit of the parties and their respective successors and permitted assigns and nothing herein expressed or implied will give or be construed to give any Person, other than the parties and such successors and permitted assigns, any legal or equitable rights hereunder; provided, however, that the parties hereto specifically acknowledge and agree that: (a) the provisions of Section 6.6 hereof are intended to be for the benefit of, and shall be enforceable by, all Indemnitees (in all of their capacities) affected thereby; (b)  the provisions of Section 9.9 are intended to be for the benefit of, and shall be enforceable by, Latham & Watkins LLP; and (c) the provisions of Section 4.25, Section 5.8, Section 6.9, Section 9.1 and Section 9.11 hereof are intended to be for the benefit of, and shall be enforceable by the Company, the Company Representative, the Unitholders, their respective Affiliates and each of their respective current and former managers, officers, trustees, directors, employees, partners, direct and indirect equityholders, members, advisors, consultants, agents, representatives, successors and assigns, and any other Non-Parties, as applicable. No assignment of this Agreement or of any rights or obligations hereunder may be made by any party hereto, directly or indirectly (by operation of Law or otherwise), without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void. No assignment of any obligations hereunder shall relieve the parties hereto of any such obligations.
9.9Waiver of Conflicts Regarding Representations; Non-Assertion of Attorney-Client Privilege.
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(a)Conflicts of Interest. Parent acknowledges that Latham & Watkins LLP (“Prior Company Counsel”) has, on or prior to the Closing Date, represented one or more of the Unitholders, Company Representative, the Company, and the Subsidiaries and other Affiliates, and their respective officers, employees and directors (each such Person, other than the Surviving Company and the Subsidiaries, a “Designated Person”) in one or more matters relating to this Agreement or any other Transaction Document or the Transactions (including any matter that may be related to a litigation, claim or dispute arising under or related to this Agreement or such other Transaction Document or in connection with the Transactions) (each, an “Existing Representation”), and that, in the event of any post-Closing matters in which Parent or any of its Affiliates (including the Surviving Company and the Subsidiaries), on the one hand, and one or more Designated Persons, on the other hand, are or may be adverse to each other (each, a “Post-Closing Matter”), the Designated Persons reasonably anticipate that Prior Company Counsel will represent them in connection with such matters. Accordingly, each of Parent and the Surviving Company hereby (i) waives and shall not assert, and agrees after the Closing to cause its Affiliates to waive and to not assert, any conflict of interest arising out of or relating to the representation by one or more Prior Company Counsel of one or more Designated Persons in connection with one or more Post-Closing Matters (the “Post-Closing Representations”), and (ii) agrees that, in the event that a Post-Closing Matter arises, Prior Company Counsel may represent one or more Designated Persons in Post-Closing Matter even though the interests of such Person(s) may be directly adverse to Parent or any of its Affiliates (including the Surviving Company and the Subsidiaries), and even though Prior Company Counsel may (A) have represented the Company and the Subsidiaries in a matter substantially related to such dispute or (B) be currently representing Parent, the Company or any of their respective Affiliates.
(b)Attorney-Client Privilege. Each of Parent and the Surviving Company (on behalf of itself and its Affiliates) waives and shall not assert, and agrees after the Closing to cause its Affiliates to waive and to not assert, any attorney-client privilege, attorney work-product protection or expectation of client confidence with respect to any communication between any Prior Company Counsel, on the one hand, and any Designated Person or the Company or the Subsidiaries (collectively, the “Pre-Closing Designated Persons”), on the other hand, or any advice given to any Pre-Closing Designated Person by any Prior Company Counsel, occurring during one or more Existing Representations prior to the Closing (collectively, “Pre-Closing Privileges”) in connection with any Post-Closing Representation, including in connection with a dispute between any Designated Person and one or more of Parent, the Surviving Company and their respective Affiliates, it being the intention of the parties hereto that all rights to such Pre-Closing Privileges, and all rights to waiver or otherwise control such Pre-Closing Privilege, shall be retained by the Company Representative, and shall not pass to or be claimed or used by Parent or the Surviving Company, except as provided in the last sentence of this Section 9.9(b). Furthermore, each of Parent and the Surviving Company (on behalf of itself and its Affiliates) acknowledges and agrees that any advice given to or communication with any of the Designated Persons shall not be subject to any joint privilege (whether or not the Surviving Company or the Subsidiaries also received such advice or communication) and shall be owned solely by such Designated Persons. Notwithstanding the foregoing, in the event that a dispute arises between Parent or the Surviving Company or the Subsidiaries, on the one hand, and a third party other than a Designated Person, on the other hand, the Surviving Company shall (and shall cause its Affiliates to) assert the Pre-Closing Privileges on behalf of the Designated Persons to prevent disclosure of Privileged Materials to such third party (at the cost of Company Representative); provided, however, that such privilege may be waived only with the prior written consent of Company Representative.
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(c)Privileged Materials. All such Pre-Closing Privileges, and all books and records and other documents of the Surviving Company or the Subsidiaries containing any advice or communication that is subject to any Pre-Closing Privilege (“Privileged Materials”), shall be excluded from the Merger, and shall be distributed to Company Representative (on behalf of the applicable Designated Persons) immediately prior to the Closing with (in the case of such books and records) no copies retained by the Surviving Company and the Subsidiaries. Absent the prior written consent of Company Representative, neither Parent nor (following the Closing) the Surviving Company nor the Subsidiaries shall have a right of access to Privileged Materials.
(d)Miscellaneous. Parent hereby acknowledges that it has had the opportunity (including on behalf of its Affiliates and the Surviving Company) to discuss and obtain adequate information concerning the significance and material risks of, and reasonable available alternatives to, the waivers, permissions and other provisions of this Agreement, including the opportunity to consult with counsel other than Prior Company Counsel. This Section 9.9 shall be irrevocable, and no term of this Section 9.9 may be amended, waived or modified, without the prior written consent of Company Representative and Prior Company Counsel.
9.10No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. Each of the parties hereto hereby acknowledges that this Agreement embodies the justifiable expectations of sophisticated parties derived from arm’s-length negotiations; all parties to this Agreement specifically acknowledge that no party has any special relationship with another party that would justify any expectation beyond that of an ordinary purchaser and an ordinary seller in an arm’s-length transaction.
9.11Non-Recourse. This Agreement may only be enforced against, and any Legal Proceeding that may be based upon, in respect of, arise under, out of or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution, performance or breach (whether willful, intentional, unintentional or otherwise), of this Agreement, including, without limitation, any representation or warranty made or alleged to have been made in, in connection with, or as an inducement to, this Agreement (each of such above-described legal, equitable or other theories or sources of liability, a “Recourse Theory”) may only be made or asserted against (and are expressly limited to) the Persons that are expressly identified as the parties hereto in the preamble to and signature pages of this Agreement and solely in their capacities as such. No Person who is not a party hereto (including without limitation, (i) any former, current or future direct or indirect equity holder, controlling Person, management company, incorporator, member, partner, manager, trustee, director, officer, employee, agent, Affiliate, attorney or representative of, and any financial advisor or lender to (all above-described Persons in this subclause (i), collectively, “Affiliated Persons”) a party hereto or any Affiliate of such party, and (ii) any Affiliated Persons of such Affiliated Persons but specifically excluding the parties hereto (the Persons in subclauses (i) and (ii), together with their respective successors, assigns, heirs, executors or administrators, collectively, but specifically excluding the parties hereto, “Non-Parties”)) shall have any liability whatsoever in respect of, based upon or arising out of any Recourse Theory. Without limiting the rights of any party hereto against the other parties hereto as set forth herein, in no event shall any party hereto, any of its Affiliates or any Person claiming by, through or on behalf of any of them institute any Legal Proceeding under any Recourse Theory against any Non-Party. Notwithstanding anything to the contrary in this Section 9.11, nothing in this Section 9.11 shall be deemed to limit the rights of any named party to (or third party beneficiary of) any Transaction Document against any other named party to such Transaction Document in accordance with the terms thereof.
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9.12Specific Performance.
(a)The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that money damages or legal remedies would not be an adequate remedy for any such damages. Therefore, it is accordingly agreed that prior to the termination of this Agreement in accordance with Section 8.1, each party shall be entitled to an injunction or injunctions to prevent or restrain any breach or threatened breach of this Agreement by any other party and to enforce specifically the terms and provisions of this Agreement, to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of any other party, in any court of competent jurisdiction, and appropriate injunctive relief shall be granted in connection therewith. Any party seeking an injunction, a decree or order of specific performance or other equitable remedy shall not be required to provide any bond or other security in connection therewith and any such remedy shall be in addition to and not in substitution for any other remedy to which such party is entitled at law or in equity. Each party hereto waives any defenses, and agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on the basis, that (i) the other party has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or in equity.
(b)The remedies available to the parties hereto pursuant to this Section 9.12 shall be in addition to any other remedy to which any of them is entitled at law or in equity, and the election to pursue an injunction or specific performance shall not restrict, impair or otherwise limit any party hereto from seeking to obtain such other remedies. For the avoidance of doubt, the parties further agree that (i) by seeking the equitable remedies provided for in this Section 9.12, a party shall not in any respect waive its right to seek at any time any other form of relief that may be available to a party in accordance with the terms of this Agreement in the event that this Agreement has been terminated or in the event that the equitable remedies provided for in this Section 9.12 are not available or otherwise are not granted, and (ii) nothing set forth in this Section 9.12 shall require any party hereto to institute any Legal Proceeding for (or limit any party’s right to institute any Legal Proceeding for) specific performance under this Section 9.12 prior or as a condition to exercising any termination right under Section 8.1 (and pursuing monetary damages after such termination to the extent permitted in accordance with this Agreement), nor shall the commencement of any Legal Proceeding pursuant to this Section 9.12 or anything set forth in this Section 9.12 restrict or limit any party’s right to terminate this Agreement in accordance with the terms of Section 8.1 or pursue any other remedies under this Agreement.
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9.13Counterparts. This Agreement may be executed in one or more counterparts including by facsimile or other means of electronic transmission, such as by electronic mail in “.pdf” form, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
9.14Company Representative.
(a)BSREP III FIP Member LLC, is hereby, effective from and after the date hereof, appointed, authorized and empowered to act as the representative, for the benefit of, and as the exclusive agent and attorney-in-fact to act on behalf of, all Unitholders (the “Company Representative”) in connection with and to facilitate the consummation of the transactions contemplated hereby and to take all acts to be taken or that may be taken by the Company (as it exists prior to the Merger) under this Agreement, and the Unitholders (such Unitholders and the Company hereinafter collectively referred to in this Section 9.14 as the “Pre-Merger Company”), which shall include the power and authority:
(i)to execute and deliver such waivers and consents, and to make all decisions on behalf of the Pre-Merger Company in connection with this Agreement and the consummation of the transactions contemplated hereby and thereby as the Company Representative, in its sole discretion, may deem necessary or desirable;
(ii)to communicate with the Parent, the Escrow Agent and any third Person and to direct where all or any portion of the Merger Consideration is to be disbursed in accordance with the terms of Section 3.1(a) of this Agreement;
(iii)to instruct the Escrow Agent to release all or any portion of the Adjustment Escrow Amount (or amounts contained in the Adjustment Escrow Account) in accordance with the terms of the Escrow Agreement and this Agreement;
(iv)to enforce and protect the rights and interests of the Pre-Merger Company and to enforce and protect the rights and interests of the Company Representative arising out of or under or in any manner relating to this Agreement and each other Transaction Document, and to take any and all actions which the Company Representative believes are necessary or appropriate under this Agreement or any Transaction Document for and on behalf of the Pre-Merger Company (including in respect of the Adjustment Escrow Amount or amounts contained in the Adjustment Escrow Account), including asserting or pursuing any claim, action, proceeding or investigation against Parent and/or Merger Sub, consenting to, compromising or settling any such claim, action, proceeding or investigation, conducting negotiations with Parent and/or Merger Sub and their representatives regarding such claim, action, proceeding or investigation, and, in connection therewith, to: (A) assert any claim or institute any action, proceeding or investigation; (B) investigate, defend, contest or litigate any claim, action, proceeding or investigation initiated by Parent, Merger Sub or any other Person, or by any federal, state or local Governmental Body against the Company Representative and/or the Pre-Merger Company, and receive process on their behalf in any such claim, action, proceeding or investigation and compromise or settle on such terms as the Company Representative shall determine to be appropriate, and give receipts, releases and discharges with respect to, any such claim, action, proceeding or investigation; (C) file any proofs of debt, claims and petitions as the Company Representative may deem advisable or necessary; and (D) file and prosecute appeals from any decision, judgment or award rendered in any such action, proceeding or investigation, it being understood that, in each case, the Company Representative shall not have any obligation to take any such actions, and shall not have any Liability for any failure to take any such actions;
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(v)to refrain from enforcing any right of the Pre-Merger Company and/or the Company Representative arising out of or under or in any manner relating to this Agreement or any other agreement, instrument or document in connection with the foregoing; provided, however, that no such failure to act on the part of the Company Representative, except as otherwise provided in this Agreement, shall be deemed a waiver of any such right or interest unless such waiver is in writing signed by the waiving party or by the Company Representative; and
(vi)to make, execute, acknowledge and deliver all such other agreements, amendments to Transaction Documents, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, instruments, letters and other writings, and, in general, to do any and all things and to take any and all action that the Company Representative, in its sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the transactions contemplated by this Agreement and all other agreements, documents or instruments referred to herein or therein or executed in connection herewith or therewith.
(b)Parent and Merger Sub shall have the right to rely upon all actions taken or omitted to be taken by the Company Representative pursuant to this Agreement (without further inquiry or investigation), all of which actions or omissions shall be legally binding upon the Pre-Merger Company and the Unitholders as if expressly confirmed and ratified in writing by such the Pre-Merger Company. All defenses which may be available to the Pre-Merger Company and the Unitholders to contest, negate or disaffirm the action of the Company Representative taken in good faith under this Agreement are hereby waived. All references in this Agreement (other than those in Section 6.10) to actions to be taken by or rights of the Company Representative shall be deemed to mean the Company Representative, on behalf of the Unitholders.
(c)The grant of authority provided for herein and the powers, immunities and rights granted to the Company Representative (i) are coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of the Pre-Merger Company and shall be binding on any successor thereto, and (ii) shall survive the consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers, as of the date first written above.
PARENT:

STARWOOD PROPERTY TRUST, INC.


By: /s/ Jeffrey F. DiModica________________
    Name: Jeffrey F. DiModica
    Title:     President
MERGER SUB: TWELVE MERGER SUB, LLC By: /s/ Jeffrey F. DiModica________________ Name: Jeffrey F. DiModica Title: President COMPANY: FUNDAMENTAL INCOME PROPERTIES, LLC By: /s/ Chris Burbach_____________________ Name: Chris Burbach Title: Chief Executive Officer



COMPANY REPRESENTATIVE:

BSREP III FIP MEMBER LLC


By: /s/ Murray Goldfarb___________________
    Name: Murray Goldfarb
    Title: Managing Partner



Exhibit A
Certificate of Merger



CERTIFICATE OF MERGER
OF
TWELVE MERGER SUB, LLC
INTO
FUNDAMENTAL INCOME PROPERTIES, LLC
_________________________________________
Pursuant to Section 18-209 of the Limited Liability
Company Act of the State of Delaware
_________________________________________
1:The name and jurisdiction of formation or organization and domicile of each of the constituent entities is: Fundamental Income Properties, LLC, which was formed as and is a Delaware limited liability company (the “Company”), and Twelve Merger Sub, LLC, which was formed as and is a Delaware limited liability company (the “Merger Sub”).
2: The constituent entities have entered into an Agreement and Plan of Merger, dated as of July 16, 2025 (as the same may be amended, modified, restated or supplemented from time to time, the “Merger Agreement”), by and among (i) Starwood Property Trust, Inc., a Maryland corporation (“Parent”); (ii) the Merger Sub; (iii) the Company; and (iv) BSREP III FIP Member LLC, a Delaware limited liability company, solely in its capacity as the Company Representative (as set forth in the Merger Agreement), providing for the merger of the Merger Sub with and into the Company pursuant to Section 18-209 of the Limited Liability Company Act of the State of Delaware (the “DLLCA”). The Merger Agreement has been approved, adopted, certified, executed and acknowledged by each of the constituent limited liability companies in accordance with Section 18-209 of the DLLCA.
3: The Company shall be the surviving entity of the merger (the “Surviving Company”) and the name of the Surviving Company shall be Fundamental Income Properties, LLC.
4: The merger is to become effective upon the filing of this Certificate of Merger with the Secretary of State of the State of Delaware.
5:The certificate of formation of the Surviving Company shall be amended and restated in its entirety as set forth on Exhibit A attached hereto (the “Amended and Restated Certificate of Formation”), and the Amended and Restated Certificate of Formation shall hereby become the certificate of formation of the Surviving Company.

    

6:The Merger Agreement is on file at the offices of the Surviving Company at 2425 East Camelback Road, Suites 700-800, Phoenix, Arizona 85016. A copy of the Merger Agreement will be furnished by the Surviving Company, on request and without cost, to any member of either constituent entity.

    

IN WITNESS WHEREOF, the Surviving Company has caused this Certificate of Merger to be signed this [●] day of [●], 2025.
FUNDAMENTAL INCOME PROPERTIES, LLC
By:__________________________
Name:
Title:

[Signature Page to Certificate of Merger of Fundamental Income Properties, LLC]
    


Exhibit B
Amended and Restated Certificate of Formation


AMENDED AND RESTATED
CERTIFICATE OF FORMATION

OF

FUNDAMENTAL INCOME PROPERTIES, LLC
[], 2025
FIRST: The name of the limited liability company is Fundamental Income Properties, LLC.
SECOND: The address of the registered office of the Company in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, New Castle County, Delaware 19801. The name of the registered agent of the Company for service of process at such address is The Corporation Trust Company.





Exhibit C
Prorated Rent
Unless otherwise provided in this Exhibit C, the items below are to be adjusted and prorated between the Unitholders and Parent as of 11:59PM ET on the day immediately prior to the Closing Date, based upon a 365-day year, with Parent being deemed to be the owner of the Owned Real Property (and the landlord under the Lessor Real Estate Leases) during the entire day of the Closing Date and being entitled to receive all operating income of the Owned Real Property (and under the Lessor Real Estate Leases), and being obligated to pay all operating expenses of the Owned Real Property (and under the Lessor Real Estate Leases), with respect to the Closing Date; and the net amount thereof under this Exhibit C shall be deemed to be a positive number if such net amount is in the Unitholder’s favor (in which case it shall increase the amount payable by Parent at Closing, in accordance with the definition of Merger Consideration) or a negative number if such net amount is in Parent’s favor (in which case it shall decrease the amount payable by Parent at Closing, in accordance with the definition of the Merger Consideration):
a.    Base or fixed rent (“Fixed Rent”) payable by any tenant under the applicable Lessor Real Estate Lease shall be prorated as of 11:59PM ET on the day immediately prior to the Closing Date, with (i) Parent receiving a credit at the Closing for any Fixed Rent paid by a tenant to the Company or a Subsidiary prior to 11:59PM ET on the day immediately prior to the Closing Date that relates to the period following such time, and (ii) the Unitholders receiving a credit at the Closing for any Fixed Rent that relates to the period prior to 11:59PM ET on the day immediately prior to the Closing Date but that has not been received by the Company or the applicable Subsidiary as of such time, in an amount equal to the unpaid rent.
b.    If base or fixed rent is subject to escalation based on the Consumer Price Index (“Escalated Rent”), and such Escalated Rent has not been determined or collected as of the Closing Date, Escalated Rent to be paid by tenants under such Lessor Real Estate Leases shall be prorated as of 11:59PM ET on the day immediately prior to the Closing Date based on the reasonable estimate of the Company Representative (which reasonable estimate shall be based on the applicable Consumer Price Index in respect of which such Escalated Rent is payable). Parent shall receive a credit at the Closing for any Escalated Rent paid by a tenant to the Company or a Subsidiary prior to 11:59PM ET on the day immediately prior to the Closing Date that relates to the period following as of 11:59PM ET on the day immediately prior to the Closing Date. The Unitholders shall receive a credit at the Closing for the estimated Escalated Rent that relates to the period prior to 11:59PM ET on the day immediately prior to the Closing Date but that has not been received by the Company or the applicable Subsidiary as of such time, in an amount equal to the unpaid estimated Escalated Rent.


c.    Amounts payable in respect of interest (“Loan Return Amounts”) under any Lessor Real Estate Leases that are structured as loans made by the Company or a Subsidiary shall be prorated as of 11:59PM ET on the day immediately prior to the Closing Date, with (i) Parent receiving a credit at the Closing for any Loan Return Amounts paid to the Company or the Subsidiaries prior to 11:59PM ET on the day immediately prior to the Closing Date that relate to the period following such time, and (ii) the Unitholders receiving a credit at the Closing for any Loan Return Amounts payable to the Company or the Subsidiaries that relate to the period prior to 11:59PM ET on the day immediately prior to the Closing Date but that have not been received by the Company or the Subsidiaries prior to such time, in an amount equal to such unpaid Loan Return Amount.
EX-31.1 3 stwd_ex-311xq32025.htm EX-31.1 Document

Exhibit 31.1
Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Barry S. Sternlicht, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Starwood Property Trust, Inc. for the period ended September 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 10, 2025
/s/ BARRY S. STERNLICHT
Barry S. Sternlicht
Chief Executive Officer


EX-31.2 4 stwd_ex-312xq32025.htm EX-31.2 Document

Exhibit 31.2
Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Rina Paniry, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Starwood Property Trust, Inc. for the period ended September 30, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 10, 2025
/s/ RINA PANIRY
Rina Paniry
Chief Financial Officer


EX-32.1 5 stwd_ex-321xq32025.htm EX-32.1 Document

Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with Starwood Property Trust, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Report”), I, Barry S. Sternlicht, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 10, 2025 /s/ BARRY S. STERNLICHT
Barry S. Sternlicht
Chief Executive Officer


EX-32.2 6 stwd_ex-322xq32025.htm EX-32.2 Document

Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with Starwood Property Trust, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Report”), I, Rina Paniry, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 10, 2025
/s/ RINA PANIRY
Rina Paniry
Chief Financial Officer