Strategic Transition and Portfolio De-Risking

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• The Board initiated a review of strategic alternatives to enhance shareholder value, led by independent directors, with KKR evaluating potential participation as the largest shareholder.

• Management reported a significant book value decline of 13.7%, primarily driven by adjusting reserves and carrying values to reflect current monetization expectations for watch list and legacy office assets.

• Legacy office exposure was reduced to 18% of the portfolio, with a strategic target to bring this exposure below 10% by the end of 2026.

• The company is aggressively rotating the portfolio, with newer vintages (2024-2026) now representing 32% of the portfolio compared to 19% at the end of 2025.

• Repayment activity reached $800 million for the quarter, providing the necessary liquidity to fund new originations and execute share repurchases.

• Management believes the most significant book value impacts are now behind the company, positioning the firm for greater stability as watch list resolutions finalize.

• Life Science modifications increased to 39% of exposure, with management stating that the vast majority of expected reserves for this segment have now been recognized.

Earnings Outlook and Liquidity Targets

• Management expects distributable earnings to trough later in 2026 and remain at that level for several quarters before the benefits of portfolio repositioning emerge.

• The company targets reducing watch list exposure to zero by year-end 2026, with nearly half of these assets currently being marketed for sale.

• Total repayments for 2026 are projected to exceed $2 billion, representing over 35% of the portfolio's starting size for the year.

• Management anticipates total leverage will naturally return to the target range of 3.5x to 4.0x as elevated repayment activity continues through the second half of the year.

• Future capital allocation decisions, including share repurchases, will be integrated into the ongoing strategic review process.

Asset Resolutions and Risk Adjustments

• Reported a GAAP loss of $122 million, largely reflecting realized and unrealized losses associated with the accelerated monetization of legacy assets.

• Downgraded Chicago office and Carrollton Multifamily loans to risk rating 5, while a Dallas Multifamily asset was downgraded to risk rating 4 due to current market conditions.

• Transitioned a Boston Life Science loan into the REO portfolio, noting no material book value impact due to prior reserve positioning.

• Repurchased $38 million of common stock during the quarter at a weighted average price of $6.63, generating $0.32 per share of book value accretion.