RCC

• Balance sheet repositioning: Completed 2 portfolio sales, core and noncore portfolio splits, core portfolio expected denominator effect, noncore portfolio liquidation and REO activities.
• Small Business Lending operations: Growth opportunities despite government shutdown, $175 million SBA 7(a) loans originated, $67 million USDA production.
• 2026 debt maturities: Prioritizing management of $650 million debt maturities via multiple pathways like asset sales, new debt issuance.
• Dividend evaluation: Will evaluate dividend in December considering business plan progress, liquidity for 2026 maturities, etc.

Will address 2026 $650 million debt maturities via unencumbered assets, portfolio maturities/resolutions, asset sales, new debt issuance. Company to be more conservative on new investments and dividend policy, will evaluate dividend in December based on business plan progress, liquidity for managing 2026 maturities, etc.

Core portfolio accounts for 94% and noncore portfolio 6%. In core portfolio, due to accelerated payoffs and some loans migrating to delinquency, expected denominator effect to prevail. Quarter had $40 million core net delinquencies, $131 million core migrated to 60-day-plus, $91 million resolved via modification/liquidation, delinquencies at 5.9% of total, levered yields up 10 bps to 11%. Noncore portfolio liquidated $503 million in quarter, leaving 31 loans marked to 79% of UPB, had $8 million drag on earnings. REO: $648 million REO across 28 positions, sold 5 properties valued at $50 million, added 4 REO totaling $54 million via foreclosure. Small Business Lending: Originated $175 million of SBA 7(a) loans (50% below quarterly target), USDA production $67 million, Small Business Lending platform generated $11 million net income.

• Forward-looking statements subject to risks causing actual results to differ materially from expectations.
• Asset sale and repositioning risks, including impact on book value.
• Small Business Lending market access risks due to SBA staff turnover.
• Real estate market volatility risks affecting CRE portfolio and REO valuations.

Q: You talked about having a more conservative posture for the company going forward. Can you talk about where you think the right level of leverage to run the business, and so in thinking about how much debt do you need to refinance versus pay down?

A: Current gross leverage around 3.5x, looking at turn less than that on pro forma basis.

Q: Can you tell me what the current covenant is on the unencumbered asset ratio?

A: Well covered within 1.2x range, only $350 million debt at 1:1 so well covered.

Q: The comment about the restoration of financial health is well taken. The dividend cost, as you know, around, I think, $80 million a year, seems unjustifiable to continue paying it, and also spending money to buy back stock in the face of these corporate maturities and the company's plans to reduce leverage. So it just doesn't seem justifiable to continue to pay dividend and to also buy back stock. Can you please explain the rationale and what the plan is going forward?

A: Company adopting aggressive balance sheet repositioning, rank order of liquidity is reduce leverage first, then exit low-yielding assets, then potential asset repurchases, then reinvestment. Will evaluate dividend in December.

Q: On the Portland property, is that being carried at fair value or at cost?

A: Fair value, property broken into components, condos held for sale at fair value, other components held for use at cost.

Q: And would the Portland property be categorized as one of the unencumbered assets that Tom alluded to earlier?

A: No, currently leveraged on that asset.

Q: On the Big Pink property in Portland, given its valuation history, doesn't the valuation seem to be a concern?

A: Apples and oranges comparison, office sector forces benefiting small office in Ritz, hospitality part of Ritz not affected by office trend, RevPAR increased sequentially, Lincoln Property has experience with hospitality properties, 2 years into stabilization with positive trends.