Real Estate Owned ("REO")

9 Months Ended

Sep. 30, 2025

Real Estate Owned (“REO”)

Property acquired through foreclosure are included on the Condensed Consolidated Balance Sheets as real estate owned and further categorized as held for sale or held for rental, described in detail below.

As of September 30, 2025 and December 31, 2024, real estate owned, net totaled $18.9 million and $18.6 million, respectively. During the nine months ended September 30, 2025, the Company recorded an impairment loss on real estate owned of $0.2 million compared to an impairment loss of $0.5 million for the year ended December 31, 2024, which is considered a Level 3 non-recurring fair market value adjustment.

The following table presents the Company’s REO activity during the nine months ended September 30, 2025:



	(in thousands)
Real estate owned at December 31, 2024	$	18,574
Principal basis transferred to real estate owned	17,185
Investment in real estate owned	235
Charge-offs on principal transferred	(8,344)
Proceeds from sale of real estate owned	(3,282)
Real estate owned transferred to investment in developmental real estate	(4,250)
Loans origination from sale of real estate owned	(840)
Impairment of real estate owned	(185)
Loss on sale of real estate owned	(181)
Real estate owned at September 30, 2025	$	18,912

As of September 30, 2025, REO included $0.8 million of real estate held for rental and $18.1 million of real estate held for sale. As of December 31, 2024, REO included $0.8 million of real estate held for rental and $17.8 million of real estate held for sale.

Properties Held for Sale

During the nine months ended September 30, 2025, the Company sold ten properties held for sale and recognized a loss on sale of $0.2 million. In addition, the Company transferred two properties held for sale to investments in developmental real estate carried at an aggregate value of $4.3 million. During the nine months ended September 30, 2024, the Company sold eleven property held for sale and recognized a gain on sale of $0.3 million. There were no properties

transferred from held for sale to investments in developmental real estate during the three and nine months ended September 30, 2024. Such sales are included in gain on sale of real estate owned and property and equipment, net on the Company’s Condensed Consolidated Statements of Operations.

Properties Held for Rental

As of September 30, 2025 and December 31, 2024, one property, a commercial building, was held for rental. The tenant signed a 5-year lease that commenced on August 1, 2021.

As of September 30, 2025, future minimum rents under this lease were as follows:


Years Ending December 31,	Amount
	(in thousands)
2025 (remaining three months)	$	18
2026	31
Total	$	49